B2B Commerce Technology in 2021 - Whitepaper - Joshua Warren - Creatuity
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Joshua Warren
B2B Commerce
Technology in
2021
Whitepaper
Whitepaper Creatuity.com 1
Table of Contents:
Introduction 3
How to Use This Whitepaper 5
Your company currently has a B2B commerce platform... 5
Your company is considering launching a B2B commerce platform for the first time
or replatforming... 5
You don’t know where to start at all... 5
eB2B Common Challenges - Selecting a Platform 6
eB2B Common Challenges - Replatforming 8
eB2B Common Challenges - Channel Conflict 9
eB2B Common Challenges - Real-time Inventory 11
eB2B Common Challenges - Will Customers Really Self Serve? 12
2021 Trends - Distributors 14
2021 Trends - B2B Marketplaces 15
2021 Trends - B2B2C 17
2021 Trends - Repair and Refurbishment Services 18
Meet the author 20
Schedule a Free Consultation 21
Whitepaper Creatuity.com 2
Introduction
2021 presents many challenges and opportunities for B2B commerce technology. With so many
opportunities and options, the businesses that win are the ones that are able to cut through the noise
in the marketplace and find the right approach to enable them to meet the needs of their specific
customers.
This whitepaper breaks down a number of these areas of B2B commerce technology, focusing on best
practices and real results. Our hope is that by cutting through all the complexity and buzzwords around
B2B ecommerce we can help business leaders at distributors, wholesalers and manufacturers know they
are making the right investments in technology to meet the needs of their customers in 2021.
This is a challenge because there are hundreds of platforms, technology providers and agencies selling
the latest and greatest features of their specific platform instead of focusing on the needs of each specific
B2B business. It’s can be challenging to find the right path and build momentum for your B2B commerce
technology projects when you combine this with:
• The continued push for a modern, online B2B purchasing experience from your buyers
• Internal arguments over channel conflict
• Conflict between departments about ROI, how budget for technology projects will be allocated and
who is responsible for the P&L results of these projects
At Creatuity, we believe this process shouldn’t be so complicated and taxing. Many of our customers have
struggled during the purchasing process to determine the best option for their B2B business. We have
helped over 400 businesses solve their technology challenges and understand not just the technology
changes they need to make but also the best policy and budgeting decisions to make. Most recently,
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we have solved these challenges for Fittings Unlimited, a mid-sized international distributor of hydraulic fittings and adapters. Based on this experience, we’ve prepared this whitepaper to cover a number of critical topics our B2B clients have faced. Our hope is that after reviewing this whitepaper, you will be able to: • Understand what your business needs to know about B2B ecommerce • Make the right platform and systems decisions • Have the right policies in place • Make your customers, salespeople, vendors and retailers/resellers happy Whitepaper Creatuity.com 4
How to Use This Whitepaper This whitepaper is designed to assist B2B commerce professionals in three distinct situations. Your company currently has a B2B commerce platform... If your company currently has a B2B commerce platform, you probably already know a specific pain point or area you’d like to focus on. In that case, skip to the section of the whitepaper that relates to that specific area. Your company is considering launching a B2B commerce platform for the first time or replatforming... If your company is considering launching a B2B commerce platform for the first time, start with the section “Selecting a Platform” and from there, read through the Common Challenges and Trend sections that relate to your specific business. If you’re replatforming, use the same approach but start with the “Replatforming” section. You don’t know where to start at all... If you’re new to B2B commerce or new to considering managing your B2B business online, you may not know where to start at all, and that’s OK! In that case, this whitepaper could become overwhelming, so feel free to contact Creatuity and we’d be more than happy to have an introductory conversation to understand your business and guide you to the topics in this whitepaper that could help you the most. Whitepaper Creatuity.com 5
eB2B Common Challenges
- Selecting a Platform
Selecting an online B2B platform can be challenging - it seems like every platform, including B2C
platforms, ERPs that stretch themselves to claim to have online ordering and others that may not be a
great fit all are marketing B2B solutions now. For now, ignore all the options and focus on your business,
and ask yourself a few key questions.
1. Is your business purely B2B, or is there a current or future opportunity for B2C or direct to consumer
sales?
2. Does your business ship from a single country, or do you have divisions or locations in multiple
countries?
3. Are there key systems, both within your business and at your largest customers, that you need to
integrate with or provide data feeds to and from?
4. Do you have an existing system that serves as a central hub and integration point for your product
and order related data? Is it easy to integrate with?
5. Do you have an internal development team that has the experience and available capacity to
implement your new B2B platform, or do you need a partner to provide development resources? If
you have an internal development team, what programming language or languages do they focus
on?
Knowing this information and focusing on it during the platform evaluation process can help you quickly
filter out solutions that aren’t a good fit. For instance, if your business has a current or future opportunity
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for B2C or direct to consumer sales, you will want to find a platform that can demonstrate live customer sites that showcase both a strong B2B and B2C customer experience. If your business has divisions or locations in multiple countries, you’ll want to ask for reference clients that have live sites demonstrating multi-currency and multi-language support. If you have key systems to integrate with, at a minimum you need to ensure that the B2B platform you’re evaluating has the right type of API and integration options to integrate with those key systems, and in an ideal world you’d be able to obtain a positive reference from an existing user of that platform that has integrated with your key systems. The B2B commerce platform space is highly competitive, and each platform will strive to win your business. In this environment, it’s important to look beyond feature brochures and even demos and ask to be connected with reference clients that are live with the features that your business needs based on your answers to the five questions above. Some platforms advertise features and compatibilities that are currently technically possible but that haven’t actually been used in a production environment before. This is why asking to see these features demonstrated on a live production site is so critical when selecting a platform. You might even take it a step further to ask to speak with the reference client and/or know a general range of their implementation budget. Some systems could be cost prohibitive to yield a similarly functioning site. Whitepaper Creatuity.com 7
eB2B Common Challenges - Replatforming Replatforming represents a special case of selecting a new B2B platform. In addition to the questions asked in the ‘Selecting a Platform’ section of this whitepaper, it’s also very important to determine why your business is considering moving platforms. Work with managers involved in the operation of your existing platform to determine specifically what they like and dislike about the existing platform. As you build out this list, utilize it to ask potential new platforms for demonstrations of their live customer websites that demonstrate the items your company likes about its existing platform and shows how it overcomes the dislikes you have with your current platform. B2B replatforming can be a long, complicated, expensive process so it’s important to know exactly why a change is being made and that the platform you select will provide a higher return on investment than your current platform. Whitepaper Creatuity.com 8
eB2B Common Challenges - Channel Conflict As B2B ecommerce has grown over the years, two forms of channel conflict have emerged - external channel conflict and internal channel conflict. If you’re familiar with channel conflict, external channel conflict is probably the type of channel conflict you’re thinking of. This is where a manufacturer or brand sells direct to consumers via the web via either a separate B2C platform or a hybrid B2B2C platform, bypassing their existing distribution channels such as distributors or retailers. In addition to this external channel conflict, internal channel conflict has emerged as a common challenge when deploying a B2B platform. In internal channel conflict, existing sales personnel, including sales managers and salespeople view the website as a threat to their earning potential, as they fear the ease of the new web-based purchasing options will drive their existing customers to order online instead of through their current sales representative. Both internal and external channel conflict can be managed through careful communication and planning. A strong pricing policy is a must to avoid external channel conflict. Brands can provide a level playing field for all of their channels if the manufacturer and retailers are all selling at the MSRP or MAP pricing policy level. In this case, while there will be competition between the manufacturer and the retailers, it will be based on who can provide the most compelling customer experience for each customer - and Whitepaper Creatuity.com 9
in some cases, that will be the manufacturer and in others it will be the local retailers, allowing everyone to continue to thrive. Providing “find a retailer” and other channel-friendly features on your new B2B2C platform to demonstrate to retailers that they are still a key part of your sales strategy will also help mitigate external channel conflict. Your existing distributors or retailers may also find the benefits of inventory feeds, integrations that allow for easy drop shipping and other technical features provided by your new B2B2C platform so useful that they are less concerned about the potential for channel conflict. In addition to providing these features, open communication in advance of the launch of your B2B2C platform to inform your existing channels of the new platform launch and reassuring them that it does not represent a desire to work against or harm your existing channels and highlighting these steps you’re taking to avoid channel conflict can help avoid a backlash from your distributors and retailers. While external channel conflict tends to only occur with B2B2C platform launches, internal channel conflict is a challenge faced by both B2B and B2B2C platform launches. In this type of channel conflict, sales representatives, customer service reps and others within your company may view the website as a threat to their job, leading to reactions ranging from increased turnover and lower job satisfaction all the way to undermining your new B2B platform launch. A common solution to this potential challenge is to select a B2B platform that enables you to represent and enhance existing sales/customer relationships via the new website. At a minimum, your B2B platform should allow you to tie customer accounts to their assigned sales rep, but the best launches also include the ability to tie new customer accounts to sales reps based on territory or other factors and facilitating negotiations, requests for custom quotes, etc., between sales reps and their customers. In this way, the website can be positioned as helping your existing employees service their current customers more efficiently and acquire new customers that otherwise may have never purchased from your reps when they had to purchase via calls, in person sales meetings and other offline sales methods. Whitepaper Creatuity.com 10
eB2B Common Challenges - Real-time Inventory Providing an online B2B platform means your customers can receive and increasingly truly expect to receive real-time inventory status across your entire product assortment. For some businesses, this ‘simply’ means displaying inventory status online. However, some manufacturers and distributors are facing calls from their customers to provide inventory information via ongoing data feeds or an API that can be consumed by those customers and used on their website. For instance in 2020 the B2C furniture site Wayfair.com required their suppliers to provide inventory and supply chain data in a way that could be automatically processed and then displayed on Wayfair.com. Whether you’re providing inventory data to your customers via a feed or API or just displaying it on the website, you need to start by mapping out the number of potential inventory sources - warehouses, local distributors, storefronts, drop shippers and more. The number of sources and the frequency with which they update will direct how to architect the processes to store and distribute inventory data. For instance, if none of your inventory sources provide more than nightly updates, there’s little reason to set- up a process to update your inventory every hour. Inventory data complexity can increase exponentially - for instance, one Creatuity client had over 120 potential inventory sources for over 100,000 products, and each of those sources updated at least every 15 minutes. That adds up to as many as 800,000 inventory transactions per minute or 48,000,000 per hour. Whitepaper Creatuity.com 11
eB2B Common Challenges - Will Customers Really Self Serve? Many manufacturers, distributors and other B2B vendors are unsure how many of their existing customers will convert from paper, fax, email or phone orders to a self-serve online B2B commerce experience. Considering that across the entire B2B space, 53% of all distributor sales still take place via a manual method, this is a valid question. Thanks to shifts in recent years towards more remote work and distributed teams, B2B buyers and their supporting accounts payable teams are looking for an online purchasing and payment experience more than ever. In 2004, 81% of B2B payments in the US were made by paper check. By 2019 that had fallen to 42% of B2B payments and it dropped to a new record low in 2020. It’s clear that companies don’t just want to place their B2B orders online - they want to be able to pay for those orders electronically as well. Analyzing data from Creatuity’s B2B clients, when launching a new B2B commerce portal you should expect 20% to 50% of your offline B2B order volume to transition to online B2B ordering each year. So if you don’t have an online option at all and you’re starting with 100% offline orders, by the end of your first year you will see between 20% and 50% of your total order volume coming via the B2B commerce portal and 50% - 80% remaining offline. In the 2nd year, you will then see 30% - 75% of your orders come via your online portal, and so on. Where you fall in that range depends on a few factors, primarily user experience, your industry and internal resistance. Some B2B brands have launched online experiences that don’t provide the product or inventory data that their buyers are looking for, or they launch using B2B-only platforms that provide a very frustrating, dated experience and not the modern B2C-like purchasing experience most B2B buyers prefer. These Whitepaper Creatuity.com 12
frustrating experiences will slow adoption of your new B2B portal, leading to your business falling closer to 20% of your offline order volume shifting online each year. Conversely, those brands that invest in a platform that provides a modern buying experience and combine that with the right product and inventory data generally see faster adoption and land closer to the high end of the range with 50% of their previously offline order volume moving online each year. The influence of your specific industry on the adoption of an online B2B ordering process is dropping each year as buyers in all industries are growing to expect a modern, online purchasing process. However, there are still a few industries with incredibly complex workflows and completely custom, made-to-order products that are still more likely to see slower adoption of online purchasing, closer to 20% a year shifting online than 50%. Finally, one of the biggest factors and the factor that gets far too little attention while planning and deploying an online B2B experience is internal resistance. Simply put - if your company culture, your managers or key salespeople are resistant to the idea of customers ordering online instead of via a manual process, your customers will be slower to adopt your new online processes. This is why obtaining internal buy-in and managing channel conflict can be as important as any technical work you do on your B2B commerce platform project. For instance - if the sales and customer service reps that your customers reach when they call, chat or email your company sound enthusiastic about the online self- serve options when they work with their customers, you’re much more likely to see adoption rates closer to 50% a year. But if customers are greeted with snide or passive aggressive remarks from your frontline staff when the subject of the website comes up, you’re much more likely to see slower adoption, closer to the 20% a year mark. Whitepaper Creatuity.com 13
2021 Trends - Distributors Research from Digital Commerce 360 shows that distributors specifically are seeing offline/manual orders drop by almost 20% per year. Offline sales for distributors in the US peaked in 2019 at $3.60 trillion before dropping to $2.99 trillion in 2020, and are expected to continue to drop. According to the 2020 Distributor 300 report, online sales for US distributors reached a new high of $2.61 trillion in 2020, and that number is expected to grow substantially each year. Watsco, one of the largest distributors of HVAC products and services in the United States, reported a 19% increase in online orders in 2020, and 33% of their orders are now placed online. They attribute the increase to the launch of two new digital tools. The first, OnCall Air, is a platform for connecting contractors with consumers and allowing those contractors to provide compelling, interactive digital proposals. The second, CreditForComfort, is a digital platform for accepting and processing financing applications to finance the installation of new HVAC equipment. In previous years, simply launching an online purchasing experience was enough for a distributor to keep up. Now, buyers are taking their business not just to the distributors that offer a compelling online experience, but that also provide value added tools and services via the distributor’s online B2B platform that help customers manage and grow their business. In the Watsco example, once companies experience the ease of use of OnCall Air and build their entire proposal process around it, they’re locked in to the Watsco platform and are substantially less likely to purchase their HVAC equipment from other distributors. Whitepaper Creatuity.com 14
2021 Trends - B2B Marketplaces 2021 may be the year that B2B Marketplaces move from emerging trend to standard practice. Gartner noted that in early 2019 only 11% of B2B companies were participating in B2B marketplaces online, with only a small level of interest from other businesses into expanding into B2B marketplaces. However, by early 2021 one marketplace - Amazon Business - has repeatedly doubled in annual transaction volume, is on track to exceed $52 billion in gross sales by 2023 and is expected to grow larger than Amazon’s B2C marketplace in the near future. A recent Digital Commerce 360 report shows that Amazon Business is “coming for the construction industry”, where Amazon plans to disrupt the parts, fixtures and fitting supply industries. Under the current model a parts manufacturer may sell to a distributor who sells to a local dealer who supplies the tradespeople in their local area. However, as Amazon Business rolls into an industry they shake up the model where a parts manufacturer uses Amazon Business to sell directly to those local tradespeople, oftentimes while leveraging Amazon’s fulfillment network to offer same day jobsite delivery. This represents a huge opportunity for manufacturers that are ready to embrace B2B marketplaces, but can represent a threat to the distributors and dealers. Manufacturers can prepare to embrace B2B marketplaces by ensuring they have accurate pricing, photography, inventory and product data for all of their SKUs in a format that can be easily digested by Amazon Business and other marketplaces. The difference between one manufacturer’s part selling well in an online marketplace and a competing manufacturer’s part not selling at all can be as simple as the successful manufacturer providing product data that allows buyers to easily filter their products to determine which ones are lead free and which ones aren’t. The fight for success in online B2B marketplaces often comes down to minor advantages in product data feeds - whether it’s filterable attributes, restocked inventory updating faster or pricing feeds reacting faster to changes in underlying commodity prices. Whitepaper Creatuity.com 15
Distributors have a few choices to counter the threat of B2B marketplaces like Amazon Business. Some take the “if you can’t beat them, join them” approach and list their products onto platforms like Amazon Business even if they are competing against Amazon and the manufacturers that make the products they sell. In this case, success depends on providing an edge the manufacturer doesn’t have - in some cases it’s an existing network of warehouses and a fulfillment process that delivers the parts faster. However, an advantage built on fulfillment speed and efficiency can be wiped out in a moment if the manufacturer partners with Amazon and moves their products into Amazon’s fulfillment centers. Other distributors elect to avoid the online marketplace and instead build their own unique presence on the web, focusing on providing product knowledge and industry-specific service that can’t be matched by marketplaces such as Amazon Business. Some manufacturers have little to no digital product data about their products, opening the door for a distributor to build out that data and provide it exclusively on the distributor’s website. In this case, to avoid B2B buyers simply using the distributor’s website to find the right product and then purchasing from Amazon Business, the purchase process has to be frictionless and engaging so that buyers elect to place their purchase with the distributor and not Amazon, despite Amazon often offering lower prices due to the direct-from-the-manufacturer model. Other distributors are providing service, training and educational resources on their website to keep customers coming back to them but these efforts also can suffer if the purchase process isn’t frictionless as customers will simply take advantage of the training and educational resources while still purchasing from an online marketplace such as Amazon Business. Dealers need to be thinking about how they will counter the threat of B2B marketplaces like Amazon business the most. This represents a major shift in buying behavior, and if dealers don’t account for it they will find themselves replaced by these marketplaces. For many dealers the best counter to this is to ensure that they have a website that provides a quick and easy online purchasing experience combined with continuing to build personal relationships with key accounts and providing services tailored to those key accounts. This requires a specific approach to technology that enables rather than competes with the traditional B2B salesperson and sales model. Salespeople must have accurate, up to date information about the browsing and purchasing behavior of their assigned B2B buyers as well as alerting to changes in that behavior such as a sudden drop off of reorders so that they can respond and maintain their accounts. Whitepaper Creatuity.com 16
2021 Trends - B2B2C Each year, more and more manufacturers and distributors begin selling directly to consumers online. The hybrid approach, sometimes called B2B2C and it combines business to business (B2B) and business to consumer (B2C) selling on a single platform, is becoming more popular as consumers begin to expect more brands to sell directly to them online. B2B2C can drive a higher ROI on your B2B platform investment -- with the right plan, implementing a B2B2C web platform can cost just a fraction more than implementing a pure B2B platform. Utilizing a commerce platform that has robust B2B and B2B features and functionality means that you have one shared system to maintain that supports all transactions instead of maintaining separate systems or foregoing direct to consumer sales altogether. B2B2C can create channel conflict, which is discussed earlier in this paper. Assuming that channel conflict is addressed, generally the challenges of adding a B2C operation to your B2B platform come from fulfillment and customer service. B2C sales generally have a lower average order value at a higher volume. This means that if your fulfillment operations are setup to only ship case packs, pallets or other large volume purchases you will need to determine the best way to break cases and pallets, how to manage that inventory and how to ship those orders. Additionally, consumers and B2B buyers have different levels of knowledge and customer service expectations - many manufacturers are surprised at the volume of calls and chats for customer service when they add a B2C aspect to their online presence. These challenges, however, come with the benefit of selling at retail instead of wholesale pricing, so given the appropriate planning and budgeting, adding B2C to your existing or planned B2B platform can have a large return on your investment. Whitepaper Creatuity.com 17
2021 Trends - Repair and Refurbishment Services Many manufacturers and dealers offer repair and refurbishment services for their products, but until recently, few integrated those services into their B2B commerce platform. However, 2020 saw the shift of more of these businesses beginning to explore and offer repair and refurbishment service purchase and scheduling online. There’s a few different ways to approach this, primarily depending on the existing service capabilities of your business. These break down between offering in-house services on your B2B commerce platform or positioning your B2B commerce platform as a service marketplace. For businesses that have service capabilities in-house, it often makes the most sense to add the ability for customers to purchase, schedule, coordinate and track those services on your B2B commerce platform. In this case, providing the ability for customers to see common repairs and maintenance intervals for the products they have purchased in the past is critical. For lengthy overhaul or refurbishment type services the ability to see the length of time equipment may be out of service for repair and the ability to schedule those services in advance via the commerce platform is critical. Businesses that lack in-house service capabilities still have an opportunity to generate services revenue via their B2B commerce platform. In this case, you may be able to leverage an existing network of certified service professionals that your business already has in place. If a network doesn’t already exist, web technologies make it possible to create a network. A strong example of this is the site PartsSource.com, a distributor of millions of medical equipment parts that sells to thousands of hospitals. In 2020, PartsSource. Whitepaper Creatuity.com 18
com launched the largest network of healthcare equipment service providers. When B2B buyers login to place an order from PartsSource.com, they’re also able to request a quote for service for MRI machines, CT scanners, X-ray machines and other large equipment. This request is routed to a local service provider from the network of over one thousand service providers that PartsSource.com has vetted and approved. This allows healthcare buyers to utilize one website for parts and equipment purchases as well as repair and maintenance contracts, and it generates an additional revenue stream for PartsSource.com. Whether in-house or leveraging an external network of providers, B2B commerce portals should provide the ability to not just request a quote but to manage the entire repair or refurbishment service process from start to finish. Service interval reminders, quote negotiation, estimated repair times and repair tracking all can and should be built into your B2B commerce portal. Whitepaper Creatuity.com 19
Meet the author Joshua Warren is the CEO of Creatuity, a Magento Gold Solutions Partner based in Dallas, Texas. He has worked in eCommerce since 1999, and earned the 2016 Magento Master distinction for thought-leadership in the Magento ecosystem. Joshua is also the Chairman of the Board of the Magento Association, the trade association that represents all Magento merchants, agencies and users worldwide. As a frequent conference speaker and author, he is constantly exploring the future of commerce and how technology will provide richer, more engaging shopping experiences both online and offline. Whitepaper Creatuity.com 20
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