Industrial B2B eCommerce - A Mid-2019 Update

B2B electronic transactions now exceed manual ones Image credit and source: The 2019 U.S. B2B eCommerce Market Report, B2B Manufacturer 300.

Let’s start with a story

Today peoples’ smart phones may be handling their banking, ordering their groceries, reminding them of all their appointments, monitoring their workouts, automatically redirecting their driving around traffic blockages, informing them how many yards to the center of the green and much more. Their personal life has become far more convenient with tools like these that both satisfy a need, and make meeting that need easier. Imagine then that they want to place a B2B order for an industrial product. They might have to call the B2B supplier to ask how to place an order and get sent several paper forms, be told to fill them in and fax them back, and then wait a week for a quote. Then once they accept the quote, with another paper form, wait a few weeks for delivery, with no means of tracking the order status in the meantime.

That story could be an exaggeration but you might be surprised how many industrial B2B suppliers still operate like that.  For their customers it feels like going back to pre-internet days. For industrial suppliers, it’s obvious why customer expectations have changed. Assuming your intent is to both satisfy customer needs, and make it easier for them, let's review the latest research advice.

2019 U.S. B2B eCommerce Market Report

According to this report from DigitalCommerce360 (and the chart above) B2B eCommerce is the smallest but also the fastest-growing sales channel for manufacturers. Last year total manufacturing electronic sales, including EDI, procurement networks and eCommerce sites, increased 1.4% to $3.55 trillion (more than half of all U.S. manufacturing sales of about $6.03 trillion). But B2B sales through eCommerce sites as a separate channel are growing at a much faster rate for manufacturers. In 2018 the combined B2B web sales of U.S. manufacturers grew nearly 23% to $356.4 billion. For most industrial suppliers (manufacturers and distributors) eCommerce remains a small percentage of their business though for some it has become dominant. For example, last quarter MSC Industrial Supply exceeded 60% of total revenue via eCommerce.

Use Digital Systems to Better Meet B2B Customer Needs

All the research we've seen on the topic indicates that customers want a seamless and consistent experience across different touch-points, which means it’s time for B2B organizations to offer an omni-channel customer experience. Combine different channels, both online and offline, and tie those experiences together across these touch-points to ensure customers interact with you at whatever time, and through whatever channel, they prefer. Of course, personalization during those touch-points is key to delighting clients and earning their advocacy but you also need to track how their expectations change over time.

In that regard PROS commissioned Hanover Research to do a 10 country study, “What B2B Buyers Want in 2019: Speed, Personalization and Intelligence.” They asked more than 1,000 procurement and purchasing leaders, across a variety of industries (including industrial manufacturing):

  • Why they select certain suppliers?
  • What causes them to switch to new suppliers?
  • What they value in the purchase experience?

The answers are that they prefer suppliers whose purchasing processes direct them to personalized offers and pricing that represent meaningful value. A majority of respondents prefer to maintain relationships with existing vendors but 64% would probably switch to a vendor that featured real-time, personalized pricing.

This survey also showed that B2B eCommerce continues to accelerate. Two years ago, only 15% of buyers were completing the majority of purchases on digital platforms. Now, 30% are transacting more than half their purchases on digital platforms and that number is expected to grow to 44% within two years.

Add New Value with Anticipation, Prediction and Proactive Customer Service

Digitalization has created many new ways in which vendors can deliver value to their customers - some mentioned above. But now, artificial intelligence (AI) analysis of buyer behavior can help predict and anticipate buyer’s needs and preferences. Of those polled, 69% agree that personalized offers empower them to get more value from their vendors and about half will pay higher prices for tailored products and services. 93% desire personalized pricing and incentives, and 44% need them, while 92% want personalized recommendations and 42% need them. 61% would pay 1% more for instant pricing information and 47% would pay 3% more for it.

Response times are also critical to the purchase process. Half of responders say that it should not take more than two hours to receive a quote response. Knowing that kind of expectation helps reactive services meet the expectation but things have changed a lot in customer service. Today, proactive customer service is improving customer engagement, solving issues before they even arise (for example by arranging remote or on-site maintenance based on an IIoT alert). This kind of anticipation by customer service teams is naturally turning their clients into loyal advocates.

Latest Buyer Funnel Research

According to a recent Sana Commerce report, today's B2B buyer funnel consists of five phases: Problem identification, information search, evaluation of alternatives, purchase decision, and post-purchase decision. They report that each step on average takes between 4.5 and 6.4 days to complete. But today, customers are experiencing hurdles so frequently that this timeline is often longer. Just a one-day delay caused by unnecessary friction draws the purchase process out by 15-22%, and it’s likely that delays are even longer than 24 hours. Most B2B buyer journeys today begin online, however, customers are forced offline by blockages, such as lack of critical information, which contributes to delays and that ‘funnel friction’ risks losing revenue.

4 Conclusions and Recommendations

1. eCommerce can be a primary driver of industrial B2B business growth - just look at MSC or Grainger.

2. Establishing an online presence is nowhere near enough to keep today’s B2B buyers satisfied - your online experience should operate across omni-channels, educate your buyers, add value (such as personalized pricing and quotes), present inventory availability, part or product details (including CAD models when applicable), delivery info, and build deep personal relationships with each customer while simplifying the purchase process for them.

3. Buyer expectations will continue to evolve so just accept that you’re never going to be ‘done’. Obviously you can’t do everything at once so how do you decide what to do next?

  • What is driving customers to contact you offline, is it available online?
  • If it is can you make accessing and using it easier than pushing them offline?
  • What will provide you with more effective time to spend with customers?
  • What will make customer interactions more productive?

4. A recommended action plan should:

  • Fulfill all current customer needs – understand what they need and meet them as far as possible online
  • Make life easier for customers – be easier to do business with in seamless, responsive, hassle-free online ways. Remember this craving for personalization offline too - when sending emails, making phone calls or engaging in face-to-face meetings with prospects and customers.
  • Be proactive rather than passive – anticipate needs and fix things before they are a pain

As always, if you have comments or suggestions please make them below, click to ask us a question or call for a discussion. In the meantime we'll continue to keep you up-to-date on eCommerce and new technologies impacting industrial suppliers

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