B2B companies have grown twice as quickly as B2C, partially due to B2C practices.
B2B eCommerce is a big deal in 2022 and it’s set to get even bigger in the following years. The COVID pandemic was responsible for the most recent boom in B2B growth but B2B itself was already experiencing a surge–18.2% year over year–in 2018 and 2019. The major eCommerce platform providers have taken note of this industry trend and once such provider, BigCommerce, intends on leading the charge of the B2B revolution.
BigCommerce has been on a B2B push as of late. In February, the Austin, TX-based eCommerce SaaS provider acquired longtime partner, B2B Ninja and in March, BigCommerce entered a new partnership with business lender SellersFunding to help provide working capital directly to BigCommerce merchants. Then in April, BigCommerce completed the purchase of BundleB2B, who previously assisted in the development of BigCommerce’s B2B Edition which launched last June. These significant acquisitions and partnerships have put the entire eCommerce industry on notice that BigCommerce is stone-cold serious about their B2B initiative that was announced back in March 2019.
As reported by PYMNTS.com, BigCommerce’s Brent Bellm discussed with analysts VIA conference call that B2B, which accounts for one third of the company’s current business–is slated to expand up to 40% of BigCommerce’s total platform spend. Bellm states that B2B growth rates are 2X over B2B. In regards to those figures, Bellm also says, “The future could not be brighter for us as a SaaS platform.”
BigCommerce estimates the global B2B market is expected to hit $25.65 trillion by 2028 with a year-over-year growth rate of over 18%. Comparatively, B2C eCommerce is only growing 10% as measured by compound annual growth rate.
While B2B was already experiencing healthy growth in 2018 and 2019, the onset of the global COVID pandemic was the deciding factor in regards to B2B’s current prominence. Businesses of all sizes, including midmarket and major firms, had to adapt to the Internet if they hadn’t done so already because their continued existence essentially depended on it. “The consumers and the businesses had no alternative than to start buying and selling in ways that would have otherwise taken them a lot longer,” said BigCommerce’s Brent Bellm, “We’ve all changed. Consumers and businesses have been forced to learn new ways of doing business and new ways of doing it all online. And we now are experiencing the joy and the ease and the efficiency of that.”
The same has now been applied to both business and consumer payments. Back when it was introduced in 2003, Amazon’s one-click checkout was seen as a major innovation but it took a decade and a half for the next important step to emerge with PayPal’s Digital Wallet (launched in 2018).
On the other hand, a significant cause for this period of slowed development could be attributed to Amazon themselves. Like most of their own proprietary technologies and features, Amazon’s one-click also came with a patent that was originally filed in 1997 and granted by the USPTO in 1999. When that patent expired in September 2017 and Amazon chose not to reapply, there was a rush of new companies offering alternative payment options in the vein of Amazon’s formerly-patented one-click checkout. This led to the emergence of secure wallets and individual merchant websites that store financial data with two-factor authentication in place of traditional accounts with logins.
Bellm says, “So, what we’re seeing now [with those businesses] is what you can do on Amazon, which is to go back and repurchase things, quickly, now happening on sites without requiring the creation of an account or the login to an account.”
The other landmark development in alternative payments is the widespread use of Buy Now, Pay Later (BNPL) programs. BNPL programs have proved popular with retailers who sell upmarket and/or high-ticket merchandise and the consumers who desire such merchandise. BNPL succeeds both the traditional store layaway programs and bank payday loans as consumers now have virtually-direct access to instant credit, even those with poor credit or are in the process of credit rebuilding. BNPL helps to persuade consumers into making these high-ticket orders by spreading payments throughout a set period of time, as they would most likely not even consider making the purchase without such an option in place.
The diversification of payment options stems from B2C eCommerce, but it is seeing greater implementation in B2B–especially, as B2B continues to expand. “The customer experience is being redefined by the expectations that business buyers, who are themselves consumers, are getting from B2C sites,” says Bellm.
With the aforementioned B2B push by BigCommerce, BigCommerce are already in the works to accommodate as many of those features into their B2B program as possible. Bellm says, “A half dozen of the most popular B2B capabilities are now being integrated, natively, into BigCommerce.” Due to BigCommerce’s purchase of Bundle B2B and B2B Ninja, the BigCommerce platform itself has grown even more B2B friendly; it has become easier for admins to extend purchasing rights to their employees and fast-track approval processes through the BigCommerce platform.
However, the steps are rather complex to incorporate B2C functionality and useability into the B2B market. A B2B transaction is considerably more involved than a B2C transaction. Businesses can sell to other businesses, consumer goods companies can sell to a wholesaler or to other retailers, and then there’s the whole cutting-out-the-middleman process itself with the direct-to-consumer business model. At the end of the day, the goals are pretty much the same between B2B and B2C.
Traditionally, B2B payments were done offline through inefficient and time-consuming systems but Bellm hopes for more B2C-inspired automation during the B2B checkout process. “The more that can be automated, the smoother and faster the experience will be.” The ideal situation would be that at the point of checkout, a business buyer would instantly be able to authorize a bank-based payment. The seller would then give the customer an incentive or discount for immediate payment upfront to avoid the additional costs and downtime that’s associated with the releasing of funds and traditional payment processing which can take up to several days. An incentive-based direct payment system can help establish a more collaborative working relationship, which can also be monetized.
Brent Bellm: “What I want to see happen is that the leading payments players in the world of card acceptance come out with easy-to-use ACH-facilitated payments — where they are not trying to capture the same 3% that they do off cards.” Bellm also reiterates the different growth rates of B2B and B2C with B2B showing a clear advantage over B2C. BigCommerce’s B2C-inspired features for B2B (such as custom, personalized shopping experiences and multiple payment options) can help nurture this continued growth. “There should not be a choice between credit card ‘only’ with its minimum 2% interchange tax–or if you want to pay by bank, you have to deal with checks or some other payment ‘off’ platform,” says Bellm. Bellm also suggested that 36 cents and 0% should be the typical transaction ‘going rate’.
Similar to how it’s not uncommon to see lower prices when paid in cash, suppliers often choose to discount products if it means quicker, if not instantaneous, delivery of payment. Bypassing the multi-day timeframe that it would require for ACH transactions to settle can crucially improve cash flow visibility.
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