Point-of-sale financing is quickly becoming an attractive feature for consumers shopping online and in-store. Retail giants like Walmart are working with FinTechs to extend POS financing to customers, allowing shoppers to finance their purchases without accessing external credit that could impact credit scores. For sellers, POS financing can mean lower cart abandonment rates and happier customers.
As B2B commerce continues to embrace online channels, it’s a natural progress for the sector to adopt POS financing with a similar vision of limiting card abandonment rates and providing a better online shopping experience for corporates. Yet as the B2B commerce industry has seen in recent years, while B2C can offer a valuable, albeit general, idea of how to approach digitization, there are unique hurdles that both buyers and suppliers need to address.
Daniel Lipinski, founder and CEO of POS financing firm CreditDigital, explained to PYMNTS how the consumer eCommerce arena has influenced eProcurement’s own evolution in payments and buyer financing.
“In 2019, business customers are expecting similar payment experiences and processes to that of their personal lives,” he said in an interview, adding that business shoppers should have the same convenience of payment flexibility, choice and digitization.
Rising demands in online payment experience make the point of sale a critical part of B2B suppliers’ online sales strategy. On-demand financing means mitigated risk of late or non-payment from buyers and enhanced cash flow management for suppliers, Lipinski said, along with an enhanced experience for their own customers. The financial opportunity is massive. In 2018, Forrester Research predicted that B2B eCommerce would be worth more than twice the B2C market and would reach a $1 trillion valuation in 2019 (a figure that grows exponentially when taking into consideration online B2B purchasing through channels like eProcurement systems).
Corporate buyers’ demand for a better online purchasing experience has vendors quickly realizing that simply accepting orders online is an insufficient strategy.
“The biggest challenge we see for B2B sellers is that they are simply amending their traditional sales processes to an eCommerce journey, and [they] aren’t focused on the customer experience,” noted Lipinski, “which includes, most importantly, the payment.”
The retail sector has built its payment strategy “from the ground up,” he added. But without the luxury of time to do the same, the B2B space must quickly zero in on customer needs at the point of sale.
Lipinski explained this means offering flexible and customized payment terms, including the ability to batch many orders under a single invoice and purchase in bulk – challenging demands to meet, particularly for suppliers that struggle to even accept online payments. As such, Lipinski noted, cart abandonment rates in the B2B eCommerce market can be as high as 67 percent.
Other analysts, however, say it’s significantly lower, particularly when compared to the B2C landscape. While a consumer may abandon their online shopping cart because they are shopping around for competitive prices or products, or simply browsing with no intention to actually buy, corporate buyers rarely behave in a similar fashion. Instead, they often establish a relationship with their vendors before visiting a supplier’s eCommerce platform, and the reasons behind cart abandonment can be very different.
According to analysis from B2B eCommerce platform Corevist, businesses often abandon their electronic carts because they never intended to procure goods on the supplier’s website. Rather, items were added to a cart to check pricing and product availability, and then completing the actual purchasing and payment process using their internal tools, most often via electronic data interchange (EDI).
Further, Corevist found, because B2B relationships often come with a vendor representative to manage the relationship with a buyer, cart abandonment does not necessarily mean a lost sale. Rather, when a cart is abandoned, that relationship manager is notified and can follow up with the buyer.
POS Financing Comes to B2B
Even if a sale is eventually made, Corevist’s research exemplifies how an inadequate POS experience can limit corporates’ use of supplier eCommerce portals. In order to address that issue, Lipinski said CreditDigital has been heavily influenced by players like PayPal to focus on the B2B customer experience in payments and financing at the POS.
But the ability to integrate POS financing into vendors’ proprietary sales channels is critical, too, he said, because no matter how much the B2C eCommerce space influences the B2B arena, suppliers will always want to retain parts of the B2B sales journey. By offering a way for businesses to immediately finance their purchases, suppliers don’t have to pay credit card processing fees, while buyers still have a digital, streamlined payment experience that supports their unique needs in payment terms and flexibility.
Lipinski said the B2B eCommerce space still has a long journey ahead to digitization and efficiency, but as consumers see newer innovations from FinTech providers, corporates will see the same – and shape their own future demands for the sector.
“I would say the B2B space is about eight to 10 years behind the consumer world,” he said of the B2B market’s adoption of POS financing solutions. “This is primarily driven by the complexity of credit-checking businesses, as no two businesses are the same. But that gap is shortening.”