The Future of B2B eCommerce, Part 1: The Challenges

To cut right to the chase, there’s been an ecommerce explosion in the business-to-consumer marketplace—and progress is burning a little slower in the B2B space. There’s nothing unusual about the consumer market paving the way for the business market, however, as individual shoppers tend to face fewer obstacles to technology adoption and are usually ready and willing to embrace digital processes. In fact, the consumer-side demand for technology is usually well established before the majority of retailers offer the capabilities. And by now, they do, even if they don’t transact with their business partners in quite the same way.

Even so, digital B2B procurement is on the rise. Forrester Research forecasts the B2B eCommerce segment will be a $1.13 trillion market by 2020, with growth dependent on business adoption of consumer-like technology and processes and a closer alignment between various B2B channel partners. Today, most corporate buyers simply don’t have access to the same set of digital tools and resources for making purchases on behalf of their companies. Corporate procurement is simply more complicated. Let’s take a look at the reasons why:

Complex Sales Cycles

The online sales process is inherently data-rich and shopper-friendly, giving sellers the opportunity to target products and customized offers to individual buyers. This is one of the reasons both vendors and consumers support eCommerce—it’s personalized and adds value. In B2B sales, depending on the industry and nature of the purchase, of course, the buying process isn’t always as simple as getting online to search for a product, view its price, pick an offer, fill a virtual shopping cart, and make a payment.

When a purchase isn’t so “simple,” there tends to be more decision-makers and a lengthier process that follows a specific chain of command. What’s more, multiple people often make purchases for the same company, so understanding buyer behavior—and delivering a personalized experience, generating special offers, etc.—is difficult.

Procurement professionals and their partners are left with numerous questions: What about customer-specific pricing? Does transacting online adhere to contractual obligations with suppliers? Are the payment options in sync with the customers’ preferences?

Supplier Relationships Believed Central to B2B Customer Engagement provides insights into engaging suppliers with next-generation procurement solutions.

Process-Led Operations

The work of the procurement department is traditionally—and in practice—transactional and paper-based, with all eyes on compliance. It’s critical for people on both the selling and buying side to ensure that their processes and systems have adequate controls, no matter how business is transacted.

In their Global Chief Procurement Officer Survey 2016, Deloitte analysts point out that due to their process-and-systems environment, procurement has “poured resources into the technology equivalent of bricks and mortar,” creating a “bottleneck to value delivery.” To be sure, paper invoices and paper purchase orders make it more difficult to streamline the procure-to-pay process. It takes time and a great deal of collaboration between departments and other stakeholders to move into a digital operational environment, let alone an eCommerce one.

That’s why The 3 Components of a Successful Tech-Fueled Procurement Transformation calls out strong executive leadership, adequate staffing and training, and rehabbed vendor management as necessary for progress. Read more in B2B Procurement Goes Digital.

Competing Priorities

Deloitte’s Global Chief Procurement Officer Survey 2016 revealed that while most CPOs (60%) lack a clearly defined technology implementation strategy, they are investing in technology (including eSourcing) to support a rather wide variety of initiatives. The top 5 include:

• Spend analysis (38%)
• Contract management (37%)
• eSourcing (30%)
• Supplier relationship management (29%)
• Requisition to pay (24%)

Developing organizational eCommerce capabilities isn’t necessarily a key goal—or the only goal—for all procurement professionals. It is a piece of the large puzzle, though, that they’re piecing together to create a more tech-driven operation.

Where There’s Challenge, there’s Opportunity

In a future post, we’ll take a look at how procurement professionals are overcoming these challenges and where they’re finding opportunities to pursue B2B eCommerce.