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B2B_marketplace_and_ecommerce_experience

How the B2B ecommerce experience is changing

By Adrien Nussenbaum, CEO of Mirakl Inc.

 

The online shopping experience has never been better, thanks in large part to Amazon. The company’s unparalleled focus on delivering first-class customer experience has given consumers greater expectations in terms of service, delivery, choice and price transparency.

Amazon would not have been able to achieve such tremendous results without launching its online marketplace, providing increased product choice, competitive prices and superior customer experience, without the restraints of inventory and logistics.

Today many other brick and mortar retailers have followed suit and launched their own online marketplaces in an effort to strengthen their position and reinforce their omnichannel offering.

As seen with the phenomenal success of Alibaba, this trend is also a major threat to B2B firms. Whether they be distributors or manufacturers of their own products, the rise of ecommerce and the service provided by many of the pure-players in the sector is having profound impact on their business. B2B buyers, procurement managers and indeed anyone responsible for purchasing equipment or services in businesses has had their expectations changed forever by B2C ecommerce. They now expect a more customised omnichannel purchasing experience with an equivalent level of choice, price transparency and service. Online marketplaces can definitely help address this.

This new model is now being adopted by many distributors keen to capture a share of the B2B market, which is estimated at over 780 billion dollars in the US alone[1]. Staples, one of the leading distributors of office supplies, has thus made its marketplace, launched in 2014, a key focus of its ecommerce strategy.

In addition to the generalists, we are witnessing specialised marketplaces that seek to position themselves as ‘one stop shops’ for clearly identified markets. Indeed, marketplaces are a particularly suitable sales model for niche or vertical business areas, insofar as they allow for extremely broad and deep ranges to be offered, as well as bring together significant communities of buyers and/or vendors. Compared to generalist marketplaces, vertical marketplaces offer a shopping experience that sticks to sector specific codes.

How can this new model work in a B2B setting? What are the main issues facing B2B companies to successfully embrace the marketplace revolution?

B2B ecommerce is adapting to new expectations

B2B buyers are changing the rules of the game by conducting their research and purchasing online. According to Forrester[2], B2B ecommerce is expected to exceed 1 trillion dollars by 2020 in the US alone. The agency’s forecasts for 2015 totalled $780 billion, more than double those of B2C ecommerce, which ‘only’ reached $305 billion[3].

In the Forrester report, all of the B2B distributors surveyed agreed that their main growth driver lay in online sales, and reported a 20% increase in their online turnover. Nearly 50% of companies with an Internet storefront estimated that more than half of their client portfolio would fully or partly migrate to the Web channel over the next three years[4]. This movement is expected to accelerate with the arrival of a new generation of procurement professionals already well versed in e-commerce.

Until recently, B2B companies would rely mainly on paper catalogues, a sales force on the ground and significant call centre resources to manage their sales and customer relationships. Now that a growing number of purchasers are searching and buying online (using both computers and mobile devices), these companies are forced to rethink their strategies for acquiring and engaging customers. The customer service provided by an individual has now been replaced by the relevance of algorithm results and search engine recommendations, as well as the exhaustive product sheet content.

Surveys of procurement professionals all confirm that B2B purchasing behaviour is changing to become more and more like that of B2C purchasing. 49% of major B2B buyers surveyed by Accenture[5] prefer to use B2C websites to make their purchases, and 52% plan to carry out more than half their purchases on ecommerce pure-player platforms in the next three years. Expectations concerning the smoothness and simplicity of purchasing processes are so high that 56% of buyers said they would pay up to 30% more to benefit from a better online experience.

When asked in the Accenture report what they deemed to be the 3 essential features when making a purchase online:

  •  60% of the buyers focused on search and catalogue navigation functions
  •  58% emphasised the importance of customer ratings for products and vendors
  •  50% highlighted the importance of personalised recommendations.

Marketplace can help B2B distributors adapt to new requirements

Faced with these new requirements, distributors are investing heavily in maximising their online experience and aligning themselves with the best practices of B2C. Amazon has become the reference model for B2B players investing in the ecommerce channel, so much so that many of them aspire to recreate the ‘Amazon experience’ on their own websites. This is hardly surprising given how many of us use the site as consumers, but recreating this experience is as much a question of breadth of range as of ergonomics and service quality. Much of the challenge for candidates thus lies in how to cover the long tail in various categories.

For a distributor, the marketplace can also be a very good tool to strengthen cooperation with suppliers. Most B2B distributors do not source their suppliers’ entire catalogue, instead selecting part of it to include in their offering. When a distributor opens his marketplace, it can offer its suppliers an additional turnkey sales channel for all the products it does not buy from them. The integration of a partner can also go further than a simple catalogue import. If the supplier has a brand to promote, the distributor can propose a dedicated sales area on the marketplace, via a corner presenting its offering under its own brand.

The marketplace can also be an excellent lever to strengthen the integration of online and in-store offerings. We are witnessing the accelerated convergence of physical sales and online sales. Buyers now expect a unified offering from one sales channel to another. The contribution of mobile technology plays a key role here by increasingly blurring the line between offline and online.

It is very interesting to observe, in this context, a growing number of physical chains, like Staples in the US or Retif in France, that are opening marketplaces in addition to their ecommerce sites. This is often explained by the fact that, without the contribution of a marketplace, most of these players would be left to propose an online offering that would be less significant than that of their physical points of sale.

Conclusion

Make no mistake the traditional boundaries of B2B commerce are being completely remodelled, and marketplaces are the main driver of this transformation. Tomorrow’s leaders of B2B ecommerce will be those that manage to capitalise on this model to stand out from the crowd, by meeting the increasingly demanding requests of B2B buyers.

Footnotes:

[1] Portals to Business, Internet Retailer, 2015

[2] Digital is busy transforming B2B ecommerce, Forrester, 2015

[3] US Department of Commerce, 2015

[4] Digital is busy transforming B2B ecommerce, Forrester,2015

[5] Building The B2B Omni Channel Platform Of The Future, Accenture hybris, 2014 (https://www.accenture.com/us-en/_acnmedia/Accenture/Conversion-Assets/Do…)

 

B2B_Customer

The Consumer Shopping Experience is Changing B2B Ecommerce Forever

Adrien Nussenbaum, US CEO and Co-Founder of  Mirakl, gives his view on the future of B2B Ecommerce

The online shopping experience has never been better, thanks in large part to Amazon. The company’s unparalleled focus on delivering first-class customer experience has given consumers greater expectations in terms of service, delivery, choice and price transparency.

Further, Amazon would not have been able to achieve such tremendous results without launching its online marketplace, providing increased product choice, competitive prices and superior customer experience, without the restraints of inventory and logistics. Today many other click-and-mortar retailers have followed suit and launched their own online marketplaces in an effort to strengthen their position and reinforce their omnichannel offering.

As seen with the phenomenal success of Alibaba, this trend is also a major threat to B2B firms. Whether they are distributors or manufacturers of their own products, the rise of e-commerce and the service provided by many of the pure-players in the sector is having profound impact on their business. B2B buyers, procurement managers and indeed anyone responsible for purchasing equipment or services in businesses has had their expectations changed forever by B2C e-commerce. They now expect a more customized omnichannel purchasing experience with an equivalent level of choice, price transparency and service. Online marketplaces can definitely help address this.

Many distributors keen to capture a share of the B2B market are now adopting this new model. Staples, one of the leading distributors of office supplies, has made its marketplace, launched in 2014, a key focus of its ecommerce strategy.

In addition to the generalists, we are witnessing specialized marketplaces that seek to position themselves as ‘one stop shops’ for clearly identified markets. Indeed, marketplaces are a particularly suitable sales model for niche or vertical business areas as they allow for extremely broad and deep product ranges to be offered, as well as bring together significant communities of buyers and vendors. Compared to generalist marketplaces, vertical marketplaces offer a shopping experience that sticks to sector specific codes.

How can this new model work in a B2B setting? What are the main issues facing B2B companies to successfully embrace the marketplace revolution?

B2B Ecommerce is Adapting to New Expectations

B2B buyers are changing the rules of the game by conducting their research and purchasing online. According to Forrester, all of the B2B distributors surveyed agreed that their main growth driver lay in online sales, and nearly 50% of companies with an Internet storefront estimated that more than half of their client portfolio would fully or partly migrate to the Web channel over the next three years. This movement is expected to accelerate with the arrival of a new generation of procurement professionals already well versed in e-commerce. As well, traditional “customer service” method has now been replaced by the relevance of algorithm results and search engine recommendations, as well as exhaustive product sheet content.

Surveys of procurement professionals all confirm that B2B purchasing behavior is changing to become more and more like that of B2C purchasing. In fact, 49% of major B2B buyers surveyed by Accenture prefer to use B2C websites to make their purchases, and 52% plan to carry out more than half their purchases on e-commerce pure-player platforms in the next three years. Expectations concerning the smoothness and simplicity of purchasing processes are so high that 56% of buyers said they would pay up to 30% more to benefit from a better online experience.

Marketplace Can Help B2B Distributors Adapt to New Requirements

Faced with these new requirements, distributors have invested heavily in maximizing the online experience and aligning themselves with the best practices of B2C. No surprise, Amazon has become the reference model for B2B players investing in the e-commerce channel, but the challenge quickly becomes how to cover the long tail in various categories.

For a distributor, the marketplace can also be a good tool to strengthen cooperation with suppliers. Most B2B distributors do not source their suppliers’ entire catalog, instead only selecting part of it to include in their offering. When a distributor opens his marketplace, it can offer its suppliers an additional turnkey sales channel for all the products it does not buy from them. The integration of a partner can also go further than a simple catalog import. If the supplier has a brand to promote, the distributor can propose a dedicated sales area on the marketplace, via a corner presenting its offering under its own brand.

The marketplace can also be an excellent lever to strengthen the integration of online and in-store offerings. Because of the accelerated convergence of physical sales and online sales, buyers now expect a unified offering from one sales channel to another. A growing number of physical chains, like Staples in the U.S. or Retif in France, have opted to open marketplaces in addition to their e-commerce sites or otherwise be left to propose an online offering that would be less significant than that of their physical points of sale.

Conclusion

Make no mistake, the traditional boundaries of B2B commerce are being completely remodeled, and marketplaces are the main driver of this transformation. Tomorrow’s leaders of B2B ecommerce will be those that manage to capitalize on this model to stand out from the crowd, by meeting the increasingly demanding requests of B2B buyers.

B2B_secret_weapon

Online Marketplaces, B2B’s Secret Weapon

By Adrien Nussenbaum, US CEO and Co-Founder of Mirakl

Online marketplaces have been a significant trend in retail for over a decade. Three of the world’s biggest e-commerce firms – Amazon, eBay and Alibaba – are all based on marketplace platforms. Many brick-and-mortar retailers have launched their online marketplace, attracted by the value proposition of increased product choice, competitive pricing and a superior customer experience, without the restraints of inventory and logistics. The National Retail Federation’s “State of Retailing Online 2015 report” notes that thirty-two percent of retailers planned to spend more on online marketplaces in 2015 vs 2014, as online marketplaces play a prominent role in customer acquisition.

B2B has been slower to consider online marketplaces, yet the principles apply just as much as they do to B2C. In B2C, legacy retailers underestimated the potential of e-commerce; B2B players are aware of this, and online marketplaces are a cost-effective, scalable opportunity for them to leverage digital technology and drive their businesses forward. As B2B continues to feel increased pressure from pure players, and retailers look for a viable method to further engage their customers, online marketplaces will be their most powerful weapon to gain ground over their competition and retain their customer base rather than surrendering it to Amazon and Alibaba.

Changing behaviors of B2B stakeholders

The traditional way of conducting B2B business is changing: rapid delivery, greater product choice and transparency over pricing are elements we’ve come to expect in both personal and professional settings. B2B companies can capitalize on these expectations through an online marketplace.

Specifically, three major trends – changing technologies, network effects and the changing business landscape – are driving B2B businesses to consider implementing online marketplaces.

Evolving technologies are redefining the expectations of B2B buyers. Today, instant access to products, reviews, and customer support have become the norm. Users expect a seamless, comfortable experience both in their private and professional interactions, leading B2B players to ramp up their digital investments.

The rising importance of network effects is also influencing the B2B industry, as businesses do not buy products in isolation anymore, but leave reviews, comment, and increasingly expect to find everything in one place.

Lastly, the business landscape has transitioned from local to global: businesses are now competing with every other B2B company in the world, and buyers can source their purchases from a greater variety of actors. Companies that embrace these trends will outperform those that don’t.

Marketplaces and B2B

Being smart in retail essentially means giving the customer what they want: choice, price and service, the three core principles of retail. Pure-players can deliver on this promise, and B2B companies must tweak their models to ensure they can compete.

A recent Forrester report[1] showed that eighty-two percent of B2B buyers would purchase again from the same supplier because of that supplier’s broad selection. Eighty-four percent of B2B buyers would buy again from the same supplier because of consistently low prices.

An online marketplace is a business model that meets these criteria, and more. It not only helps drive commerce but also offers a greater scope for expansion as well as higher profit growth and lower risk; it helps better serve customers in an innovative way and puts them at the core of business.

Quality of service has never been so important in commerce, with customers ready, willing and empowered to go elsewhere if standards are not met. An online marketplace allows an organization to offer improved customer service, greater product choice, and competitive pricing.

B2B marketplaces in action

An online marketplace can deliver in a variety of ways in the world of B2B. A distributor, whether with or without physical stores, can use a marketplace to significantly broaden his product offering without carrying extra inventory; these products can be complementary to those already offered, or new categories into which he wants to venture. The Staples Exchange is an example of this type of B2B online marketplace.

For a manufacturer of B2B products, an online marketplace is a great means of federating and controlling his distribution network, providing them with a new sales channel as well as streamlining their inventory management, and gaining valuable insight on their performance.

What’s more, B2B businesses can gain more end-consumers knowledge and provide more value to them through product transparency and availability on their own marketplaces, as well as a single sales portal.

By granting customers a 360-degree view of every product – including pricing, origin and availability – and collecting feedback, marketplaces can tailor their product selection to their customer base. This is impossible on third-party marketplaces such as Amazon or Alibaba, where they have no control over other vendors or website visitors as a whole.

The future of B2B online marketplaces is bright

A single seller of B2B products can only store and distribute a finite number of products, however big his business. Furthermore, the threat posed by pure-players cannot be under-estimated, but that’s not to say that B2B companies are already beaten. Those in the B2B space have to think creatively about how to engage customers and add value to their purchasing journey. If they are unable or unwilling to innovate, they will see their customers flock to pure-players, which will dominate the market.

 
[1] Forrester, “Building The B2B Omni-Channel Commerce Platform Of The Future,” November 2014