Companies like Amazon, Shopify, and Alibaba heralded the shift to digital commerce in the 21st century. Historically, this shift was primarily focused on B2C commerce while B2B remained largely offline. But in the last couple of years, online B2B commerce has also picked up steam. More and more companies are migrating to remote, digital processes to buy and sell goods. From being compelled to move online due to COVID to embracing digital selling and buying as the new normal, the world of B2B commerce is witnessing a massive shift. And the most exciting part? This shift is only getting started. Even though total global B2B commerce is pegged at a massive $218 trillion, only $21 trillion of it happens online today. This $200 trillion gap spells a great opportunity for companies in the B2B eCommerce space.
According to Mckinsey, 70-80% of B2B decision-makers prefer digital and remote interactions, with 75% calling this model more effective than the offline one. Driven by key advantages such as self-service and supplier accessibility, 79% of these companies are looking to permanently adopt this model. It’s clear that B2B eCommerce is here to stay. This presents opportunities for buyers and sellers alike.
Opportunities of B2B e-commerce for Buyers
Access to more suppliers
B2B buyers and procurement executives track two common factors before purchasing: cost and quality. The traditional offline model limited their picks to those available in their immediate geographic area or network, handicapping them in terms of negotiation leverage. B2B eCommerce gives them access to a much wider suppliers network, giving them the necessary leverage to negotiate better prices and ensure they are maximizing the quality of their products.
More efficient procurement processes
The online nature of B2B marketplaces immediately eliminates the constraints of borders, time zones, and the need for human intervention in the sales cycle (not applicable to all goods or industries). By procuring online, buyers can access products and services from anywhere at any time, leading to a faster time-to-market.
B2B marketplaces' core focus is digitizing the entire procurement cycle. This brings about huge efficiencies to what were traditionally analog processes such as searching/finding goods, ordering, and contracting. By no longer having to invest endless hours on offline processes, buyers can invest their time and resources into initiatives that drive growth.
Opportunities of B2B e-commerce for Suppliers
Access to new markets and geographic expansion
Similar to buyers, eCommerce makes it easier for sellers to transcend borders. Before eCommerce, suppliers’ ability to reach new prospects in new markets and expand across geographies was difficult. Going digital gives them direct access to new buyers and reaches a much wider audience in order to grow sales and revenue.
Data, data, data
B2B commerce moving online provides the opportunity to create and gather massive amounts of critical customer data. This data helps suppliers to make data-driven decisions to more quickly identify market-product fit, the best sales strategies, the most valuable customers, etc. Much like B2C eCommerce, data empowers decision-makers with the insights required to build customer experiences that maximize conversion and grow revenue. The B2B eCommerce sector is still young and quickly growing, but you can bet that in the near future the biggest winners in the space will be the ones that master data and utilize it to offer the best online purchasing experience.
So what’s missing?
From our conversation with 150+ B2B marketplaces and merchants we learned the largest gap in B2B eCommerce is the ability to offer online payment terms at scale. Payment terms are at the core of cash flow management for all businesses. The prospect of disrupting the cash flow operation of a potential buyer usually results in the lack of adoption of these new B2B e-commerce channels. It’s a complex problem, however. Historically, payment terms have been decided on the basis of trust. But the concept of trust is completely different in an online environment than in the offline world (I’ll dive deeper into this at a different time!) This has led to B2B marketplaces not finding a suitable, scalable payments solution that helps meet their growth and geographic expansion goals.
This is why we are building Sprinque. We manage and automate the end-to-end process to help B2B marketplaces easily offer their buyers the payment terms they need to complete their purchase, while suppliers get paid out instantly and eliminate all risk. The entire Sprinque platform is API enabled, can be integrated into any B2B eCommerce channel, and service any procurement flow.
To learn more about B2B payments and what Sprinque offers, visit Sprinque.com or get in touch at founders@sprinque.com.