When The Going Gets Tough, The Tough Go B2B

  • Written by  Brandon Spears, MSTS

0aaBrandon Spear MSTSLast year was a tough one for many retailers. There were at least 19 retail bankruptcies in 2017 including Toys “R” Us, Gymboree and Wet Seal. In early 2018, Sears announced it was shutting 39 Sears and 64 Kmart stores. Some in the press labeled it a “retail apocalypse.”

In a large part, the movement has been attributed to e-Commerce. As consumers continue to shift to online retail, Forrester Research predicts that e-Commerce sales will jump from 12.9% of all retail sales in 2017 to 17% by 2022.

While most B2C retailers have aspired to become more like Amazon and provide an omnichannel presence, there’s another option to boosting revenues: by creating a B2B e-Commerce presence. For success stories, look no further than Staples, whose B2B sales now account for as much as 60% of total revenues. At The Home Depot, professional customers comprise about 45% of sales, and are growing much faster than the company’s B2C business. Warehouse club BJ’s also added a B2B business last year.

For some retailers adding an e-Commerce B2B unit should be a no-brainer. There are no Black Friday or 50% off sales for B2B customers, so margins are higher over the long term. Going B2B can also provide increased marketing opportunities and leverage of existing assets, like your supply chains or stores, so it’s worth looking at the benefits and logistics of making such a move. Many retailers, however, are unsure about how to go about making the leap. It doesn’t have to be a complex affair, and in fact there are third-party service providers that can help handle many of the more involved aspects of running such a business.

The 6 Components Of B2B That Make It Different From B2C

Embarking on B2B e-Commerce sales means catering to a new type of customer, and there are individual components of a B2B e-Commerce business that are necessary for success. These include creating a dedicated sales force; setting up a B2B-centric e-Commerce presence; creating a system for payments; adding pricing flexibility; and expanding fulfillment capability.

  1. Create a B2B marketing team: B2B marketing is a different skill than B2C marketing, which is why it’s necessary to create a new team to handle such outreach. B2B marketing requires an understanding of target businesses and their particular issues. Reaching B2B decision makers also means placing more emphasis on content marketing and loyalty programs. Unlike the retail consumer who walks in the door at seemingly random times, the B2B buyer is usually a very regular customer.
  2. Create a B2B sales force: Similarly, catering to the B2B buyer takes a different level of sales expertise and experience. B2B sales cycles are longer and often involve sign-off from several different people at a company.
  3. Set up a B2B e-Commerce presence: B2B customers expect to be able to review their pricing, their payment terms, their lines of credit as well as their invoices, which often means a different e-Commerce presence.
  4. Initiate a new type of payment system: In addition to receiving invoices rather than paying at point of sale, B2B customers expect that their partners will extend them credit. This may mean creating an accounts receivable and credit and underwriting functions.
  5. Offer pricing flexibility: B2B customers expect volume-based price breaks, pricing rebates at certain tiers and SKU-level discounts. There are tons of solutions AmberPOS and Square and more comprehensive retail management software suites like Oracle’s NetSuite.
  6. Expand fulfillment capability: One of the biggest differences between B2C and B2B e-Commerce is that B2B customers buy in big quantities, which is good news. Before launching a B2B offering, determine what measures will need to be taken to expand your fulfillment capability so you can sell in bulk.

Tools For Going B2B E-Commerce

A few years ago, transitioning from B2C to B2B e-Commerce might have been a larger endeavor. But now, off-the-shelf tools can help with each of the steps outlined above. SaaS solutions like Salesforce can aid the sales and marketing process while retail management software can help B2C businesses expand to a new type of retail business. Credit-as-a-Service is an exciting new option that can help retailers offer the types of payment solutions that B2B customers expect.

In addition, retailers adding a B2B e-Commerce presence should be aware that such customers have high expectations. A recent McKinsey survey of 1,000 B2B decision makers found that lack of speed was those customers’ No. 1 pain point, mentioned twice as often as price. Some 86% of respondents said they’d rather use a self-service tool for such transactions than deal with a live sales rep. This is where a B2B-focused e-Commerce retailer can often find an edge. Traditional B2B companies are often slow to respond, providing days to provide a quote. Then they keep consumers in the dark about the status of their order.

While the right software will address some of those issues, that’s only part of the solution. To successfully carry out an e-Commerce B2B pivot, companies need to make sure to hire the right people and ensure that they have the structure in place to support adding a new line of business.

If the move makes sense though, it’s worth considering providing a sideline to help bolster your business in a brutally competitive climate. Who knows? It might even become your main business.

Brandon Spear serves MSTS  as president and has a background in managing large global teams, from diverse multi-cultural backgrounds, and with operating revenue of ~$150 million. His strength is discerning and focusing on the most important challenges facing an organization at a particular point in time and unifying all stakeholders behind accomplishing a set of specific goals. Spear has a unique ability to connect across all levels of an organization and motivate staff with diverse skill sets while ensuring a common alignment and results.Prior to joining MSTS in 2014, Brandon served at SAP where he was senior vice president of Global Cloud Organization. He also served in officer-level roles at Ariba and Quadrem.

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