After hearing a lot about the digital revolution in the B2C market, with the use of omnichannels and e-commerce, it’s time for B2B trade to benefit from modern tools. But what is B2B to start with?
B2B (or business-to-business) focuses on buy-and-sell processes between companies – which play a decisive role in the competitive edge of involved buyers and suppliers. In contrast to the B2C model, B2B offers raw materials, parts or services that different industries, such as food, manufacturing or retail, need to make their products.
An example of a B2B market is car manufacturing. Tires, hoses, batteries and electronics that are essential to assemble the end product – the vehicle – are usually manufactured by other companies and then sold directly to the car manufacturer.
That is, when buying a car, a computer and even an apartment, you are also buying parts that were manufactured by several businesses.
Trade between businesses in the future
Regardless of the activity sector, B2B has reaped the advantages of being part of an on-line sales environment. A survey by the Brazilian Association of Electronic Trade indicated that 20% of national e-commerce revenues in 2015, equivalent to R$ 48.2 billion, came from purchases made in marketplaces.
Another survey, conducted by pymnts.com, showed that 64% of users across the world have been looking for products in marketplaces. This makes us believe that, in the near future, trade will mostly occur through electronic platforms.
For businesses, this reality couldn’t be different. Just like end consumers who now cannot imagine themselves without a computer to support their buying decisions, companies are searching for new procurement and sales channels, rendered feasible by the on-line universe – where they can access a multitude of opportunities and suppliers.
Gartner predicts that, by 2018, 40% of B2B digital commerce sites will benefit from price optimization algorithms, along with configuration, pricing and quotation tools to dynamically calculate and deliver product prices. So, as the survey points out, you cannot postpone the insertion of your company into the digital universe.
What are the benefits of B2B e-commerce?
When doing business through a digital platform, like a marketplace, companies have specific functions – which are tools created to meet the needs of this transaction type.
Both the buyer and the supplier are then able to conceive a low price negotiation strategy that won’t jeopardize the business partner. In other words, B2B e-commerce is a smart trade that increases revenue while reducing costs.
See below some of its benefits:
1. Greater convenience
Buying through e-commerce is much more convenient. If the company knows what wants and needs already, searched the products and has enough conditions to compare prices and place an order, just a few clicks will suffice to make a deal, with security and reliability. Additionally, there is the advantage that all actions can be carried out within the company itself.
2. Improved internal management of procurement
Internally, there are also managerial advantages when buying through e-commerce. Fully digitized procedures can be conducted by the same sector, according to their own stock turnover planning. Delivery dates can be scheduled, to follow the just-in-time logic.
It isn’t necessary to wait for the visit of a commercial representative, contact the supplier company, or even organize external diligences. In other words, you can gain efficiency and better control over the procurement processes, as they become more predictable.
3. Round-the-clock operation
Are you working late to update the company’s procurement area? Had you to postpone this task for the weekend? This isn’t a problem for e-commerce, as there are no business hours of service. Considering that all buying and selling procedures are automated, they can be carried out anytime, via an on-line channel.
It causes a positive impact on companies that don’t work at regular times or are early in their daily activities and need to accumulate tasks throughout the day. Thus, there is no need to waste every single working hour.
4. Lower costs
As on-line shops require less investments (physical stores, marketing, employees, resellers), their prices are lower than those offered by conventional markets. Additionally, it’s possible to buy directly from the manufacturer or even from local distributors, without the need to deal with sales representatives.
That is, a sales commission less to be added to final price. In practical terms, this means that the sellers can offer their products and services at the most competitive prices.
5. Ease-to-compare prices
Whether through on-line price comparison sites, or via the classic site-by-site search, it’s easier to compare prices and select suppliers in a marketplace. You can stay in your own office. The search is a quick process and you have even access to information such as product quality and seller reputation, among other data that increase your decision-making power.
Some marketplaces offer also an alert registration service. It warns the company about reductions in the prices of products, below their stipulated values. With the information in your e-mail box, you have just to do the transaction through your computer – or even by your smartphone.
6. Purchasing experience focused on the consumer company
In general, promotions – as well as marketing strategies and service modes – should apply to all consumers, without distinction. This isn’t the case in conventional sales modes, such as physical stores or with commercial representatives. Usually, this buying experience follows supplier procedures and offers little adaptability to customer service.
User experience can be enhanced to give more attention to the consumer company – and no longer, as before, to the supplier of products or services only. Such individualized sales processes are possible due to the segmentation of consumer profile – as well as to the existence of exclusive service channels and a more direct relationship between both companies.
7. Increased price predictability
Predicting prices, especially when buying regularly, is another benefit of B2B e-commerce. Now the procurement area won’t have to face surprises, like discovering an increase in product value upon arriving at the physical store. With a quick search and a comparative on-line chart, you can solve this problem from company headquarters directly.
Managing this kind of information by computer makes the process easier. In a digital platform, predicting the average price of each item and checking its price increase / decrease history becomes part of any procurement strategy.
8. Lower costs for the consumer
If your company operates in competitive markets, it’s crucial to distinguish yourself from the competition and win consumers in a variety of ways. Even with lower prices. By buying through e-commerce, with reduced production costs, you will transfer part of those savings to the consumer.
Obviously, you can also increase your revenue with such savings. However, the commercial strategy is often to sell larger quantities, with lower profit margin. Thus, you can keep the competitiveness of your company, assure the loyalty of consumers and stand out in the market you operate.
9. Increased efficiency in sales cycles
Sales cycles can become increasingly shorter and more efficient. This is because such business model automated several processes and tasks that were previously carried out by intermediates – thus reducing production costs and preserving sales levels.
You can sell as much as before, or even more. However, for this to happen you must have a leaner team and fewer physical stores, in addition to outsourced services – such as marketing and IT, among others. For the B2B consumer, this means higher delivery efficiency, and also better customer service, reduction of end prices and savings for the future.
Interested in the topic? Then read the post 7 strategies to reduce procurement cost in B2B purchases and discover how to further optimize your company’s purchases.