B2B Payments

B2B’s Mission To Replicate B2C’s Point-of-Purchase Financing Success

The Amazon-effect is back at it again in the B2B world. With eCommerce now a mainstay for consumers, B2B eCommerce is quickly coming into the fold, too.

There is a lot of money to be earned. Statistics estimates that retail eCommerce sales will hit $4.5 trillion by 2021, a more than 246 percent increase from 2014. B2B eCommerce, on the other hand, is already estimated to enable $7.7 trillion in online sales about 235 percent more than B2C’s current sales volume. Separate data from Forrester predicts B2B eCommerce sales in the U.S. alone will reach $1.2 trillion by 2021.

However, in true B2B form, the industry lags behind its B2C cousin in terms of technological advancement. John Tomich, co-founder and CEO of eCommerce point-of-purchase financing company Credit Key, estimates that the B2B eCommerce market is 10-15 years behind B2C’s. Twice the size, but years behind: That’s the B2B eCommerce market in a nutshell, compared to B2C.

But, Tomich told PYMNTS, it’s changing.

“It’s important to note there is a revolution and that’s probably not even too strong of a word to describe what’s happening with businesses utilizing eCommerce and transitioning their processes into a digital world,” he said. “Businesses are buying supplies from other businesses of all shapes and sizes. That’s moving online, and the way in which businesses pay and interact with each other is moving online.”

Research from eCommerce platform BigCommerce found that online merchants are increasingly embracing corporate customers. A survey published last month found 80 percent of merchants say they accept B2B orders online, and 78 percent of them have been doing this for at least two years. Furthermore, 83 percent of B2B sellers that don’t yet have an online sales channel said they will add one in the next two years.

Some analysts point to Amazon’s role in this trend: The eCommerce giant that revolutionized B2C sales will inevitably spread its influence into the B2B market, as corporate buyers demand the same online shopping experiences they have in their personal lives. The company launched Amazon Business in 2015, which, today, services more than 1 million business customers.

The rise in B2B eCommerce means easier shopping experiences for buyers, easier selling processes for sellers and the add-on effect of B2B payments innovation, as more companies demand the ability to send and receive payment online.

Tomich told PYMNTS that this paradigm shift must also begin affecting how businesses finance their purchases, too.

“We’re really bullish on the investment and product development thesis around payment options in the shopping cart for B2B eCommerce, because that’s where buyers and sellers are going to be,” he said. “If a professional, buying equipment of their business, is used to B2C features and functionality, they’re used to the Amazon experience they don’t want to flip through a catalog and call a sales representative and have a conversation.”

With these changing buyer habits in mind, Credit Key is announcing the launch of Pay with Credit Key, a solution that enables businesses to access trade credit while in the online checkout process. Tomich likened the solution to Bill Me Later, which was acquired by PayPal in 2008 and relaunched as PayPal Credit. A decade later, Tomich says B2B eCommerce is ready for a similar product.

“If a business uses a corporate credit card or a traditional trade credit line, then Credit Key is an option for them,” he said. “Customers utilize PayPal Credit in the B2C environment even though they have other credit cards. In the B2B realm, buyers have stronger purchase intent with higher average order values.”

Access to financing at the time of checkout reduces friction for buyers, as they no longer have to exit their shopping carts and go to a separate page to apply for credit elsewhere, said Tomich.

“We’re targeting folks that need more credit that isn’t available on their credit cards or through trade credit lines,” he said. “We’re targeting new customers to a business that potentially don’t want to go through the user-interface process to sign up for trade credit, which can be really cumbersome. It can take 48 hours  you have to fax in an application, they call trade references and so on.”

According to Tomich, the introduction of PayPal Credit can mean as much as a 10 percent increase in incremental sales for B2C sellers. He’s hoping that Credit Key will produce the same sales boost to corporate sellers, while enabling buyers to access financing in two minutes or less that they can repay in monthly installments.

Change in payment behavior is not easy, though, and that’s particularly true in B2B commerce, where paper checks remain common. Checks still account for about half of B2B payments in the U.S., according to the Association for Financial Professionals (AFP), and financial service providers remain challenged to encourage businesses to not only shop online, but to make the payment online, too. Encouraging companies to change the way they seek financing is likely to face similar hurdles.

Tomich said, though, that he has faith in B2B eCommerce’s ability to (eventually) catch up to the B2C market.

“We’ve seen the evolution in payments technology in B2C eCommerce and how that has driven incremental sales,” he said. “We’re pretty confident there will be a similar innovation in B2B eCommerce.”

As B2B buyers and sellers move online (and as their payment options do, too), Tomich said it’s time for this progress to expand into the financing realm.

“Having watched the evolution of B2B, it really is 10 years behind,” he said. “A lot of folks I know, that build out B2C eCommerce solutions, are now spending at least half of their time on B2B. There’s a real, wide-open opportunity right now.”

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