While retailers have been quick to capitalise on the growth of online sales, b2b distributors have been much more cautious about embracing the benefits of ecommerce. In fact, Modern Distribution Management’s 2015 State of Ecommerce Study, says that only 4.3% of distributors accrue more than 40% of their revenues from trading online. For the majority, this means they’re missing out on the higher sales volumes and margins that established ecommerce businesses can realise.
Many b2b distributors are failing to recognise that times have changed from the days when buyers were happy to phone-in or fax orders. Increasingly, today’s corporate buyers are tech-savvy millennials who’ve grown up with the Internet and want to research and purchase their company’s products online, in the same way they go about shopping for themselves. With Forrester predicting that by the end of 2017, over 55% of b2b companies will be buying more than half their purchases online, distributors who are unable to offer an easy-to-use b2b ecommerce facility therefore risk losing customers.
What’s more, a recent Grant Thornton survey found that margins for distributors and manufacturers who sell through ecommerce sites was around 4.5% higher than those who don’t. Buyers tend to spend more when they purchase online, while easy-to-navigate sites with tailored offers, promotions and product suggestions all encourage additional sales. On top of this, the cost-of-sale is lower for products sold online because the process is automated and self-service. You don’t need banks of telephone sales reps to guide buyers through purchases, supply them with prices or manually input orders. It’s all done by your ecommerce platform.
This doesn’t mean that sales reps are redundant. Their time can be used more productively to help with high-value sales and nurture long-term client relationships, rather than dealing with commodity products or small value repeat orders. An analyst’s report in Modern Distribution Management estimates that order entry costs for a normal sale were cut by between 50-80% using an ecommerce system – and that’s before you consider the cost of printing, mailing and human error.
But while the benefits for distributors of switching to ecommerce are clear, there are many factors to consider before making the investment in an online platform. These include ensuring that ecommerce aligns with the overall business strategy, the cost of the investment and ROI, along with practical considerations such as integration with accounting and payment systems, and the ability to generate high quality content. However, the advantages of lower costs, higher margins, and greater customer satisfaction mean that even smaller b2b companies must have ecommerce capabilities if they want to remain competitive and grow their business.