Customer Preferences Drive B2B E-Commerce Growth

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Business-to-business e-commerce will reach $1.2 trillion by 2021, accounting for 13.1 percent of all B2B sales in the United States, according to a report from Forrester. 

The report also projects that B2B e-commerce will reach $889 billion by the end of this year, making up 11 percent of all B2B sales in the US. The increase from 2017 to 2021 is represented by a compound annual growth rate of 7.4 percent.

“We’re seeing significant channel shift,” says Andy Hoar, vice president and principal analyst serving e-business and channel strategy professionals at Forrester. “People who used to buy offline, either in person, over the phone, or by fax machine, are now actually making those purchases in an online environment. It’s convenient, it’s easy, and frankly, in many cases, it’s a better experience overall.”

That experience is aided by the fact that there is so much more that people can do online, according to Hoar. “When you’re talking to a human, there’s only so much that person knows,” he explains. “Online, you can go from site to site, you can do searches, companies can use algorithms to make recommendations, your order history is right there in front of you.”

Hoar also points out that B2B e-commerce is currently more than twice the size of business-to-consumer e-commerce. “I wouldn’t be surprised in 10 or 15 years if it’s four to five times the size of B2C,” he says. 

This growth in B2B e-commerce is driven in large part by customer preferences for researching and buying online. According to the report, 64 percent of B2B buyers currently research at least half of their work purchases online, while 38 percent complete at least half of their work purchases online. By 2020, that figure is expected to increase to 55 percent. 

Moreover, B2B companies can reduce the cost of serving customers by moving them into an online self-service e-commerce environment. For example, Coca-Cola reported that moving offline B2B customers online reduced its average cost per interaction by 85 percent; Levi Strauss told Forrester that its B2B online ordering system enabled it to cost-effectively reach thousands of mom-and-pop stores as well as expand lines of business, reduce cost-to-serve, and improve order-fill rate.

Hoar also notes that B2B companies might discover new customer segments by increasing their online operations. “We’re seeing far more incremental revenue being generated online,” he states. “Online they suddenly discover a whole new segment of customers. These are customers that maybe you’ve never heard of before, customers who do a Google search because it’s easy and then, because of organic search results or paid search results, they end up finding your particular website.”

The report asserts that B2B companies need to become more digitally savvy to remain competitive amid this changing landscape. It identifies several ways of doing so. Companies need to future-model B2B buyer behavior and perform forward-looking SWOT (strengths, weaknesses, opportunities, and threats) analyses. They should also work with partners and industry experts to hire data and analytics experts, develop customer-focused processes, cultivate expertise with technologies designed to engage with B2B customers in real time, and shift their selling channels from legacy, offline-first models to ones that align with the expectations of digitally savvy B2B buyers.

The report also identifies three parts to the B2B e-commerce life cycle: the research phase, where customers decide what to buy; the actual purchase; and then the post-transaction servicing phase.

“Some people would argue there’s a fourth one, which is you’ll tell people about it,” Hoar says. “They can definitely tell other people about it using social media.”

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