With social distancing as the prime method adopted to combat the COVID-19 pandemic and the subsequent lockdown measures undertaken by governments globally, we have seen an almost total immediate reliance on digital sales as a result of mandated closure of brick-and-mortar stores. As a result of the crisis, digitalization is rapidly growing and solidifying their presence both in the way we interact and make purchases (e.g. digital business conferencing, home-based online learning, online food order & delivery as well as virtual social interactions amongst friends). Many consumers have turned to digital channels and apps to shop given safety precautions, creating significant business growth for companies who enable business-to-consumer (B2C) online retail shopping.
According to the "COVID-19 Impact on GlobalE-Commerce & Online Payments - 2020" report from ResearchandMarkets.com, many have turned to online and mobile shopping due to COVID-19, resulting in a double-digit share of online shoppers with more digital purchases. Some are even embracing this mode of shopping for the first time during the outbreak. Hence, if we were to observe the current B2C landscape, the same report highlighted that the share of global retail sales generated via e-commerce is rising and is projected to reach one-third by 2024.This crisis has forced many who are less digitally oriented to accept new digital possibilities, facilitating greater growth in the B2C sector. However, such online shopping is not new to B2C businesses, many of whom have already established digital channels as part of their business strategies prior to the pandemic.
However, are we seeing the same kind of momentum from business-to-business (B2B) companies adopting digital transformation in the way businesses are conducted as a result of this crisis?
Is COVID-19 increasing B2B digital adoption?
B2B and B2C eCommerce are completely different business propositions. B2B transactions are more complex and of higher price value than those dealing in the B2C space, thus demanding a more complex set of capabilities like product configurators and real-time inventory information, request for quotation and procurement approval flows.
However, COVID-19 has raised the imperious need for digital channels for B2B companies. According to a recent survey by McKinsey, sales leaders on average rate digital channels approximately twice as important now as they were prior to the pandemic. The necessity of remote selling as a result of quarantine was also responded incredibly quickly by B2B sellers, where around 90% of them are working via videoconferencing or phone. In technology, media and telecommunications sectors, that figure is near 100%. Consequently, many B2B customers have to quickly understand and adopt online purchasing as well. This has made COVID-19 a catalyst for significant growth in the B2B eCommerce landscape.
Frost & Sullivan predicted prior to the pandemic that the global B2B eCommerce sales were to reach over $6.6 trillion by this year, surpassing B2C valued at $3.2 trillion by 2020. However, with digital sales potentially being the only available option in the interim, this growth trajectory can be hastened further with B2B companies needing to digitally transform their current sales channels and processes. As such, B2B companies that invested in digitalization and eCommerce prior to the crisis would have the upper hand. In contrast, those who had decided to wait and previously invested little in eCommerce will have to play catch-up – presuming that they are able to tide through the pandemic.
A shift towards digital B2B payments
Another thrust in the B2B eCommerce arena in which COVID-19 is also having a big influence in accelerating, is the growth in adoption of B2B payment processes. It’s a matter of time before we will see the end of manual check printing and physical mailing and companies begin to be more comfortable in digital B2B payments.
The B2B payments market in the APAC region has been booming even before the Covid-19 pandemic, driven by the growing adoption of eCommerce and financial technology solutions, according to Frost & Sullivan. B2B payments revenue is estimated to double, reaching $1,356.28 billion by 2025. This is up from $671.32 billion in 2018 and represents a compound annual growth rate (CAGR) of 10.5%.
This growth can only get more pronounced with greater travel restrictions between countries. As a result, most businesses would be conducted digitally and hence the flow of funds for goods purchase will also happen digitally. This may in fact drive greater innovation in the area of B2B payments beyond just escrow into other areas such as eKYC (know-your-customers), eContracts enforcement and potentially the use of blockchain to authenticate and verify documents as well as in the area of trade finance.
B2C’s influence on B2B
There are, however, significant characteristics of B2C eCommerce that the B2B space can greatly learn from. The user experience that B2C eCommerce consumers currently enjoy could potentially lead to similar expectations for B2B eCommerce experience, with a key difference being bulk purchases as opposed to individual item purchases.
Given that the B2C shopping experience has been in existence for more than two decades, this would hence set the benchmark for the digital user experience and transactions under B2B eCommerce. Buyers want to be able to search quickly and place orders without hassle, coupled with very detailed product information, quick order processing and delivery, and an enjoyable customer journey. In other words, self-service is increasingly becoming a requirement for many buyers who prefer independence over spending time clarifying with a staff member.
These are pointers that B2B companies should be taking into consideration amidst growing their business digitally. There will however be some B2B-specific nuances to the user flows which would have to include features such as digital purchase order creation, purchase approval processes and integration into third-party inventory and logistic systems to necessitate bulk orders and special wholesale pricing.
Turning this pandemic into your advantage
There is no short-term panacea to bringing your B2B business online. As previously mentioned, B2B eCommerce is much more complex and requires B2B companies to relook at their business strategies once again and adapt them to the digital arena.
We’ve added a list of tips to help take advantage of the digital push for B2B eCommerce businesses:
· Go back to the drawing board and formulate a clear online business strategy
Similar to B2C, a customer journey should be focused consistently on customer benefit. B2B-specific details have to be considered, such as extensive purchasing and approval processes and real-time inventory information. Thus, being strategic and thoughtful in the brainstorming process would help B2B businesses be better prepared and adaptable to similar situations in the future.
· Be transparent
Whether it is for your online product information, order fulfilment or availability of stocks, be realistic and translate that information to your customers regularly. During any crisis, everyone has more questions than answers. As such, transparency and support is necessary to reassure and strengthen your customer relations.
· Don’t wait anymore
If anyone thinks they can wait on their eCommerce plans, the coronavirus pandemic would have clearly signaled that there is no time to waste, particularly given that digital sales is the only viable option at this juncture. Even so, be strategic in how you roll out your online channels.
COVID-19 is surely going to create a new norm for all of us, in every aspect of our lives. In the case of B2B companies, the momentum that eCommerce is accelerating at as a result of the pandemic could potentially become a permanent fixture post-crisis as well. Quoting McKinsey once again, we believe that we are at a digital inflection point, where B2B sales operations going forward will look fundamentally different from what they were before the pandemic. The level of change would, however, depend on how B2B businesses strategize and effectively ride on this new digital wave.
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