B2B commerce has a reputation for being slow to digitize and lagging behind the B2C eCommerce space, but considering analysis that forecasts U.S. B2B eCommerce to reach $9 trillion this year – more than twice that of B2C eCommerce – that reputation may need a facelift.
Indeed, B2B manufacturers are not only comfortable embracing the online sales world, they’re demanding it, according to Corevist Co-founder and CEO Dr. Sam Bayer, Ph.D. But what’s holding back B2B commerce from greater digital frontiers, he said, is the complexity of business-to-business transactions.
In a recent conversation with PYMNTS, Dr. Bayer explores some of the greatest complexities of B2B eCommerce that stifle the success of some eCommerce platforms and limits adoption among B2B companies. Plus, he discusses the imperativeness of back-office integration, and why Amazon isn’t the threatening disruptor of B2B commerce that many expect it to be.
A Customized Approach
Many of the complexities regarding B2B eCommerce stem from the fact that each business customer has a unique set of rules related to a purchase, and thus each customer needs a personalized experience on a B2B eCommerce platform. Unlike consumer online shopping, businesses procuring goods from a manufacturer need to see their unique contractual agreements, pricing agreements, availability, credit terms, shipping options and more.
“Everyone wants to do eCommerce,” Dr. Bayer said of the manufacturing industry’s adoption of digital tools. “The thing that’s slowing people down is all of those complicated rules.”
B2B eCommerce platforms can struggle to adhere to those unique rules on a client-by-client basis, he added, leading to a displeasing online shopping experience that can cause a business buyer to go back to the legacy method of calling up a customer representative on the phone.
Payments, Dr. Bayer explained, are another key area of complexity for the B2B market. While there is an argument for allowing businesses to add items to their cart and pay via credit card or ACH at online checkout – similar to an Amazon experience – businesses need the option to not only be invoiced, but to also receive those invoices digitally and pay them online.
“One of the big trends we’re seeing is not only to present invoices on a website, but to pay those invoices selectively,” he said. “That’s been a big source of friction in the market. People will get invoiced, but the payments process is a bit circuitous at times, and it has a lot of friction in it.”
Corporate buyers need to dictate which invoices they are paying and obtain monthly statements about their outstanding bills. Often, however, businesses may send money to a manufacturer, which then chooses to apply the funds to an invoice. This process slows down the overall invoice payments process, leaving less cash flow for the manufacturer and less credit with which a company can buy more goods, resulting in a lose-lose scenario on both ends of the transaction.
In many of these points of friction, the solution can be found in data integration. Dr. Bayer noted that such integration was the motivation behind Corevist’s recent integration with electronic payments company Delego. Both companies are integrated with the SAP ERP system, as well as with one another.
That integration allows Corevist to automatically display the unique business rules that are stored within the SAP ERP system for each customer on a manufacturer’s online storefront. Integrating with Delego enables electronic bill presentment and payment acceptance, while offering both the pay-at-checkout and invoice payment options that can trip up B2B eCommerce experiences.
“It’s all about the integrations,” Dr. Bayer said of the challenge in addressing B2B eCommerce friction.
The integration challenge is even more critical for B2B than B2C eCommerce, he continued, adding that while the B2B space may have learned from the Amazons of the world how to merchandise and display product information, the business-to-business online sales market is vastly more complex.
Amazon Steps In
The stereotype of B2B eCommerce’s digitization journey has been one to mimic the rise of Amazon and provide a “consumer-like” shopping experience for businesses – yet the complexities of the industry show that mentality is an oversimplification. Even so, Amazon has been steadily moving into the business-to-business market via Amazon Business, which has been expanding throughout Europe in recent months and reached $10 billion in global annualized sales in 2018, growing significantly faster than its consumer-facing operations.
But Dr. Bayer isn’t concerned that Amazon Business will emerge as a competitive disruptor in the space. Rather, the company is fueling the digitization journey.
“They’re not disrupting it,” he said. “What they’re really doing is energizing it. People really have to get on board with the digital economy, including manufacturers – even the most traditional manufactures, selling pumps and adhesives, those selling to farmers. They have to become digital.”