Understanding B2B Commerce Market Forces and Opportunities
If you’re running a business, you don’t need to be told that there are some new dynamics at work in today’s marketplace. Yet it might surprise you to hear that a significant part of the change is being driven by an increasingly young group of decision-makers in B2B commerce. Those who win big in this new B2B era will be those aware of and equipped for this new reality.
Your Morning Cup Begins with B2B Commerce
Before we go further, we should clearly define what we mean by B2B commerce. In basic terms, B2B commerce refers to the transactions made between businesses, as opposed to transactions between a business and a consumer. Think of it this way: it’s when a company that builds refrigerators buys parts from a business that manufacturers them. The building company relies on other businesses – thus participates in B2B commerce – in order to assemble the final product and sell it to consumers.
B2B is, in many ways, the engine that keeps the marketplace moving. Beyond cups, your favorite coffee shop relies on transactions with other businesses for its coffee beans, brewing machines, supplies, furnishings, signage, Wi-Fi, and even the space it occupies.
All of these transactions are examples of what we refer to as B2B commerce, whereas when you walk through the coffee shop door tomorrow morning to purchase your drink, you become a part of a B2C (business-to-consumer) transaction.
Millennials Join the Decision-Making Process
B2B deals often come with a high price tag and a longer sales cycle, and they often have a significant impact on profitability (for instance, think about the decision to invest in new enterprise software, purchase a new fleet of transport trucks, or invest in a corporate jet.)
Once the internet started playing a larger role in B2B transactions, the promise of eCommerce began to flex its sales muscles. More than becoming a new way to buy, eCommerce deals became the preferred way; one great study even found that today 68% of B2B buyers would rather bypass a face-to-face presentation – even with your best sales employees – in favor of independent research online.
In 2014, Google conducted research indicating that more and more buying decisions were being made online. With the meteoric rise of online marketplaces, it’s fair to say that this trend has continued – but here’s the something less evident: nearly 50% of initial research on B2B purchasing (the research that results in the shortlist of vendors invited to make a presentation, proposal or pitch) was being done by millennials.
There are a lot of millennials working in this market, and the increased influence of these “digital natives,” which are basically millennials who have grown up living and breathing the internet, is not expected to dwindle anytime soon.
How Big is the B2B Potential?
What can you expect the B2B market potential to be – especially compared to B2C? Well, there are clearly more total consumers than there are businesses in the marketplace, but don’t let that mislead you. We shouldn’t knee-jerk to the conclusion that this means B2C equates to greater potential.
Selling to another company is very different than selling to customers. Instead of selling a lot of inexpensive products right to consumers, B2B companies sell to businesses that can buy millions of dollars’ worth of products. Their focus might be on one specific industry or it might aim to cross industries and capitalize on a larger number of clients. Regardless, neither method is inherently more lucrative than the other.
Let’s go back to the café. While the coffee shop can sell to everyone that walks through its doors, consider the B2B transactions that make it possible. Each one of these businesses, from the coffee bean growers and cup manufacturers to the equipment and furniture producers and beyond, represent an entire market vertical.
The dollar value represented in the B2B supply chain likely outstrips the value of the coffee shop’s market by a significant amount. It’s also interesting to note that in many ways the coffee shop facilitates a whole new string of B2B verticals, represented by every businessperson who logs on to the Wi-Fi and uses the coffee shop as an office.
Winning in B2B Commerce
One thing we should underscore at this point is the increased role eCommerce plays in the B2B world. According to one study, eCommerce accounted for 12% of the total B2B market in 2018. The research indicates this will climb to 17% by the end of 2022.
And based on the increased role of digital-native millennials in the buying process, the climb could be even more dramatic.
This has significant implications for marketers who plan to win in B2B commerce. Here are a few considerations that should be taken into account:
- Mobile Should be Front and Center. Fully-functional, fast, and complete representations of a company’s offerings and brand should be available on mobile phones.
- Extend Support: The client/user experience, both online and face-to-face, ought to align with and support the brand promise.
- Ease of Use: The buying experience, online and otherwise, must be easy and seamless.
- Privacy Concerns: Issues of privacy and security must be addressed with integrity and transparency.
The market is lucrative, dynamic, and rife with change. To come out on top, B2B companies have to keep an ear to the ground and stay on top of changes in their field. Winners in this new B2B commerce era will proactively reinvent the digital relationship with clients and redefine the way businesses navigate the buying process – so our coffee shop will keep going strong, cup after cup.