March 4, 2009

Next Generation B2B eCommerce

By Srini Rangaswamy, Product Manager, IBM® WebSphere® Commerce

B2B eCommerce Trends

Over the last decade, Business-to-Business (B2B) eCommerce has evolved dramatically from basic communication and transactions to the incorporation of customer communities as part of the buying experience. This increased focus on the customer is driven by key trends including Business-to-Consumer (B2C)-B2B convergence and product-centered to buyer-centric transformation. The B2C-B2B convergence is driven by both B2B sellers and B2B buyers. Sellers want to provide online retail-like experience by offering product recommendations and promotions to help them increase sales and the B2B buyers expect the same rich and personalized experience that B2C sites offer. For example, when making a business purchase B2B buyers expect to view product ratings and reviews, which are used when doing personal shopping on B2C sites.

Delivering a similar, rich B2C experience alone will not yield results if the experience is centered on products and not on the buyer. Now, B2B firms are shifting the focus from products they want to sell to focus on the buyers by placing buyers at the center of the experience. For example, an engineer visiting a B2B site will be interested in viewing product specifications to understand technical details, while a procurement manager might be looking for product promotions.

B2B eCommerce Challenges

While B2B firms largely see value in the notion of becoming buyer-centric and embracing some of the B2C concepts, many firms are still faced with basic challenges around operations, marketing and services.

AMR Research (Source: AMR Research “Benchmarking B2B E-Business: The Value Is in There”1) shows that over 50% of companies still handle quote-to-cash processes (i.e., operations) manually, which may result in increased order error rates, high overhead costs and potential lost sales, due to high turnaround time. Marketing tends to be critical for B2B due to the smaller customer base and the high costs of acquiring new customers, but according to Forrester Research (Source: Forrester Research “B2B Marketing Needs A Makeover — Now” 2) 54% out of 569 B2B marketers surveyed indicated “Reaching decision-makers” as the top challenge. Finally, as products are becoming more complex, service and support functions have generally become expensive and Forrester Research (Source: Forrester Research “Trends 2007: eService Is Customer Service” 3) shows that the web channel meets only 41% of customers needs, leaving lots of room for improvement.

Next Generation B2B eCommerce

To respond to the B2B trends and to address the challenges, your company can focus on a strategic framework (see Fig 1) with three key elements – Operational Management, Buyer-centric Marketing, and Rich Customer Experience. These three elements come together to help deliver the next generation B2B eCommerce or B2B 2.0 that is designed to be efficient, personalized and offer a rich experience.

Operational Management

The primary goal of operational management is to deliver “zero-touch perfect order in the least amount of time”. The key to achieving this objective is to replace phone, fax and e-mail based manual processes with a web-based, self-service solution. Research has shown that the cost of an average web self-service session is less than $1, compared to $10 for an email response and $33 for a telephone call. In addition to helping to reduce order errors, automated operations may improve turnaround time which may provide significant cost savings.

Imagine if a buyer is able to get contract-based price, submit a quote for special pricing request, check inventory availability, place order and track the order without calling the sales department. With this level of quote-to-cash automation, B2B firms may reduce sales cycle from hours to a few minutes, reduce cost-to-serve and improve cash flows.

Buyer-centric Marketing

Unlike mass marketing, buyer-centric marketing is focused on a deep understanding of customer needs, segments, and behavior with the intent of delivering targeted and contextual marketing messages to help influence the decision makers. Examples of buyer-centric marketing include cross/up-sell, quantity-based promotions (e.g. 10% off when ordering 100 widgets), incentives for placing orders online, and new product campaigns. These marketing tactics, similar to a B2C site, may enable B2B firms to transition from “order takers to order makers” and help them increase customer account penetration (i.e., wallet share).

Buyer-centric marketing may also help build company/product brand, loyalty and community. Forrester Research (Source: Forrester Research “B2B Marketers Dip A Toe Into Emerging Tactics”4) indicates B2B marketers are increasingly relying on interactive marketing tactics like email, branded micro-sites, search marketing, and rich media to help promote their brand and attract customers.

Rich Customer Experience

Delivering a rich experience is fundamentally about “becoming easy to do business with,” which includes delivering a rich online experience, providing access to information like contract-based price or stock availability to aid in purchasing decisions, and online communities to support customers post-purchase. The challenge is that B2B sites typically tend not to focus on site experience, which may result in increased call center volume, high administrative cost and low customer satisfaction. A solution is to adopt some of the proven technologies and concepts from B2C world like Rich Internet Application, Web 2.0 technologies, and Social Commerce capabilities, including ratings, reviews, and communities, to help streamline buying experiences and reduce costs.

Summary

As costs are increasing and margins are squeezed, it is time for B2B sellers to automate quote-to-cash operations to reduce costs and leverage some of the proven concepts from B2C eCommerce to increase sales, brand loyalty, and customer satisfaction. The B2B eCommerce 2.0 strategic framework can assist in transforming your business into the next generation B2B eCommerce.

About the Author

Srini Rangaswamy is a product manager for IBM WebSphere Commerce and in this role he studies B2B market trends, works with customers to understand business needs and then define and execute B2B eCommerce product strategy.

Trademarks

IBM and WebSphere are registered trademarks of International Business Machines Corporation in the United States, other countries or both. Other company, product, or service names may be trademarks or service marks of others.

1AMR Research, “Benchmarking B2B E-Business: The Value Is in There” – http://www.amrresearch.com/content/View.asp?pmillid=20074 2Forrester, “B2B Marketing Needs A Makeover — Now” – http://www.forrester.com/Research/Document/Excerpt/0,7211,39553,00.html 3Forrester, “Trends 2007: eService Is Customer Service” – http://www.forrester.com/Research/Document/Excerpt/0,7211,41059,00.html 4Forrester, “B2B Marketers Dip A Toe Into Emerging Tactics” – http://www.forrester.com/Research/Document/Excerpt/0,7211,42391,00.html