B2B eCommerce already differs substantially from typical B2C eCommerce, but B2B adds another set of obstacles that Internet merchants must face.
B2C eCommerce, or business to consumer, is the standard breed of Internet sales and shopping that the average consumer engages in every day. But B2C typically cannot happen without B2B, or business to business. A retailer purchases saleable products from a supplier to resell to the consumer. Even companies that manufacture their own products for sale must deal with outside vendors every now and then for parts, ingredients, materials, etc. Quite often, several B2B companies are involved in the process of producing a single piece of product before it goes on sale to the general public. This can be amplified thousand-fold for businesses that sell a wide assortment of related or unrelated products under their umbrella.
Since B2C companies inherently operate differently from traditional ‘brick-and-mortar’ physical establishments, they already have a set list of hurdles to overcome to compensate for the lack of face-to-face interpersonal interaction over the Internet. Some industries, such as in the Fashion, Jewelry, and Automotive sectors, compound these obstacles with additional nuances that are unique to themselves. With B2B, not only does the method of selling change because of commerce over the Internet, it’s businesses interacting with other businesses as customers as opposed to the consumer public.
Here is our list of 10 common and uncommon challenges in the field of B2B eCommerce.
B2B eCommerce Challenges
- Proper marketing and presentation
- Expanded personalization
- The complexities of B2B eCommerce
- Individual pricing and shipping requirements
- Multiple payment options
- Returns and refunds
- ROI calculation
- Data siloing
- Security
- Using an inappropriate or unsuitable eCommerce platform
Proper Marketing and Presentation
While we humans are all different with our own likes, dislikes, and personal preferences, regular B2C retailers, especially those ‘big box’ or ‘everything-under-one-roof’-types of mega retailers generally consider the consumer public as a singular entity. Marketing and advertising efforts tend to target the general public, whereas B2B marketing has to convert leads into paying customers. Leads are lists of interested parties that are yet to be fully converted into sales; they’re shopping around for the best deals and the quickest turnaround. Also, B2B has to appeal to the corporate side of commerce as it does deal with numerous company executives, professionals, and purchasing departments than an ordinary consumer. In B2B, it becomes less about selling the brand and more about selling the product. Both are crucial in retail, but this type of corporate customer has to be handled differently–but no less important–than the ordinary consumer.
Expanded Personalization
B2B customers also differ from regular consumers in that they have inside knowledge of the field and industry in which they operate versus the general public. Personalization in eCommerce is already of high importance but the same kind of personalization used for the general consumer might not be appropriate for corporate shoppers. Corporate shoppers typically require more options than regular shoppers but like regular shoppers, they also appreciate doing business with companies that take care of them. Creating and maintaining customer relationships in eCommerce is one of the biggest obstacles that all B2B companies have to deal with and one of the best and most effective ways to breed customer loyalty is through personalization and service. B2B personalization involves smarter, more focused marketing, presentation, and–most of all–communication for the B2B customer. Examples include stronger calls to action, stricter market-specific product categorization, and additional automation for repeat buyers. Just because B2B eCommerce is between businesses, the business on the receiving end should still be treated as openly and as warmly as an individual customer. After all, behind that business title is still a real life flesh-and-blood human being that will be spending real life money.
The Complexities of B2B eCommerce
B2B eCommerceisn’t as quick and immediate as the ‘one-click’ shopping of Amazon or a regular consumer retailer, nor is it as simple. B2B eCommerce involves complex procurement processes, sometimes involving multiple sources within the supply chain, as well as multiple parties involved. From product specialists, purchasing departments, finance, and even corporate management, B2B eCommerce is significantly more complicated than B2C. A B2B sale itself can also take months up to a year (or years) to complete and each business involved will have their own respective demands, requirements, and flexibility. Still, each individual representative under one business name has to be addressed as a collective unit which will more often than not be vastly different than another business customer. In many instances, B2B eCommerce happens internationally, so additional attention must be paid to accommodate multiple languages and regions in the world. When dealing with the individual companies, transparency of information is critical. The B2B customer on the other end needs to access the proper information necessary to begin and complete the purchasing process as efficiently as possible. For first time B2B customers, this attention to detail in providing service can plant the seeds for a long-term relationship.
Individual Pricing and Shipping Requirements
The B2B customer on the other end of the transaction, the one doing the purchasing, will become a B2C seller for a customer from the general consumer public. And while multiple companies may be in the same field, selling the same or same kind of product, they’ll still all be different from one another in the end. The main differences are usually narrowed down to purchasing budget and shipping/receiving time constraints. Each company will operate on their own shipping and receiving schedules but it’s up to the B2B business that is acting as the supplier to deliver the goods to the B2B customer as to not interrupt the purchasing and inventory cycle. B2B customer orders are almost always in bulk (save for special one-off orders for individual customers, if offered) but the quantities are rarely the same. Obviously, this will necessitate separate pricing structures according to the order and order frequencies. Some businesses may set aside extra time in order to complete the purchase and allow for extra procurement time from the supply chain while others may rush and want their orders fulfilled and received ASAP. Each of these types of customers have their own requirements and they’re going to expect the supplier to honor them individually, not with one generic solution.
Multiple Payment Options
Just as it is with regular B2C eCommerce, giving customers more choices in how to pay will help cultivate long-term relationships. With regards to payment, the most common types of B2B payment methods are checks, ACH payments, wire transfer, credit cards, and good ol’ cash. Paper checks are still the most common of all types of payment for B2B, despite the advancements in electronic currency transfer over the Internet. 80% of B2B transactions are paid by way of check. The second most popular is cash, which accounts for 70% of small business transactions. Credit cards, while widely used, are sometimes reserved as ‘last chance’ options because vendors would like to avoid the additional processing fees that go with credit card purchases. Some companies may also issue special corporate credit accounts internally for their most trusted and loyal customers. Of course, this depends on whether or not the B2B vendor/supplier on the other end is financially stable enough to provide such a service. Keeping a variety of available payment options for new and long-term B2B customers will help grow and maintain positive business relationships.
Returns and Refunds
Every retailer, both in the physical world and over the Internet, has to deal with returns, refunds, and will be asked to put out a customer fire every now and then. The difference between returns and refunds in B2B versus B2C is that B2B returns and refunds are often on the grand scale, both in quantity and monetary value. Returns and refunds are an unavoidable aspect of all retail, but it’s magnified so much more under B2B. There are many reasons for a return or refund in B2B. Unlike in typical B2C retail, these reasons are more rooted in financial situations and logistical complications. Products that arrive late, miss the buying rush, or arrive in unsellable condition could lose money for the seller, thus opening the door for them to blow out the inventory at wholesale to recoup the cost or, in the worst case scenario, initiate a mass RMA for unwanted and unsaleable merchandise. Because the stakes are higher with B2B returns and refunds, policies must absolutely be transparent and have firm guidelines but not so firm that they cancel out any possibility of goodwill leniency (depending on case-by-case situations or relationships with loyal previous buyers). Also, if a business’ policies and guidelines are too hardlined, B2B buyers may be reluctant or outright refuse to purchase from them, just as B2C customers would refrain from purchasing from a company that gives them very little reason to trust them.
ROI Calculation
The difference between revenue and cost is ROI, or return on investment. It is far more challenging to calculate ROI in a B2B environment than in regular retail because of a myriad of B2B-specific situations. This is even further complicated as B2B moved onto the Internet, replacing many of the old tropes of business-to-business selling such as traveling salespeople and other additional physical bodies involved in the process. When it comes to B2B eCommerce ROI, the variables often involve the level of overhead needed in each transaction. Since B2B websites include (or should include) automation services and are designed as self-serve operations, this cuts down on the amount of additional hands in the cookie jar; especially, with EDI customers that log onto a B2B website for instantaneous stock availability data and then purchase through EDI. Or, when it takes a committee of purchasing agents from one company to approve and initiate a B2B purchase. Upon approval, they may choose to work with a trusted representative and interact in the traditional interpersonal sense, though the bulk of the legwork was actually done by a member of the purchasing agent committee perusing the website. Basically, any time a B2B website’s function replaces the need for a flesh-and-blood human being, overhead is reduced which can affect ROI. But because every company will take different approaches to corporate order fulfillment, in order for ROI to be accurately calculated, each individual case has to be examined. Rough estimates are insufficient with so many adjustments and inconsistencies between B2B customer clients.
Data Siloing
A data silo is a collection of data that is controlled and stored by one department or business unit within a company, which is isolated from the rest of the company, much like a silo used for grains or grass on a farm that is closed off from the outside world. Siloed data is usually accessed from a single system and is incompatible with other groups of data. Consequently, users inside and outside the organization will find it difficult to use the data in a way that is convenient. In a B2B environment and if a company sells through multiple channels, data siloing can occur which can be counterproductive. An effective solution to data siloing is for companies to incorporate ERP (Enterprise Resource Planning) software into their backend systems. ERP software can be used to integrate billing, accounting, and a 360-degree view of clients into a single, real-time system in order to more efficiently manage back-office operations. It can also be used to customize workflow and administrative operations.
Security
Another issue that plagues B2B eCommerce is the lack of adequate data and security measures. eCommerce businesses retain records such as customers’ names, contact information, order histories, and payment methods and other pertinent bits of customer information in order to serve them more efficiently. The consumers, especially the regular and habitual customers, trust that these businesses will manage and protect this information with the utmost care and security. B2B suppliers need to educate and train their staff on how to protect valuable data from leaking. They need to be able to identify potential breaches and suspicious activities and be prepared to rectify them immediately. Preparation includes frequent password changes, encryption, scheduled security and software updates, and a disaster fallback plan in case of cyberattack. While all businesses and retailers will have to deal with malicious activities such as fraud and theft, eCommerce businesses are targeted regularly on a 24/7 basis and if they deal internationally, they have to contend with thieves from all around the world versus a local brick-and-mortar location that typically receives threats within its own region.
Using an Inappropriate or Unsuitable eCommerce Platform
Although all eCommerce platforms are intended to accomplish the same thing, they are not all designed to accomplish it in the same way. After all, the eCommerce platform market wouldn’t be so saturated if there existed a singular, generic ‘be-all, end-all’ solution. Depending on the size and industry of the business, certain eCommerce platforms are designed to cater to specific sizes and types of businesses better than others. Even though a seller has the freedom to choose the platform they prefer, they may be sacrificing valuable features and functions that would simplify their operations and reduce their operating costs. Alternatively, they could also choose a platform that’s far too advanced for their needs and far more expensive to operate. Any Internet company in search of a stable platform on which to build the basis of its website operations should do their research on the options available on the market and how they would be able to meet their practical requirements.