By Andrew Atkinson, Director of Product Marketing, GrandCanals
The internet disrupted everything from education to government to personal communications. E-Commerce turned brick-and-mortar retail, transportation, entertainment, and logistics upside down. Now, in the business-to-business (B2B) space, a convergence of maturing technologies is set to disrupt supply chains, distribution networks, and inventory management — just for starters.
Lora Cecere, a noted supply chain expert, points out less than 28 percent of orders and shipments are currently processed hands-free. As the complexity of global supply chains intensifies and the pace of business accelerates, manual processes won’t be able to keep up.
B2B is ripe for digital transformation, but integrating and scaling e-commerce systems across distribution networks presents many challenges. The U.S. B2B e-commerce market is already twice the size of B2C and growing. In fact, a Forbes round-up of market statistics predicts rapid growth for B2B e-commerce transactions over the next few years, accompanied by significant growth and innovation for supporting technologies (SaaS platforms, cloud analytics, pricing tools, IoT, and much more.)
On a global scale, Frost & Sullivan puts the 2020 B2B e-commerce market size at $6.7 trillion in sales, representing 27 percent of worldwide manufacturing trade. Forrester Research predicts by 2020 B2B e-commerce sales in the U.S. will pass $1.1 trillion, comprising 12 percent of total B2B sales. According to Forrester experts, in the U.S. manufacturers and wholesalers are the primary drivers investing in e-commerce platform solutions. Gartner estimates the digital commerce platform market will grow at 15 percent CAGR through 2020.
There are three main ways in which manufacturing companies can expect e-commerce to affect the way they do business: taking friction out of the ordering process; increasing the importance of the direct-to-customer sales channel; changes in customer expectations about the speed, simplicity, and reliability of doing business.
These three points are linked. Whatever else our role in the economy, we are all consumers and take our B2C experiences into the office with us. Amazon has set a high bar for expectations: streamlined access to products, clearly-presented information about delivery options (i.e., timing and cost) at the time of order, reliable fulfillment, a straightforward return process, and the ability to see — and contribute — feedback on both product and process.
So why shouldn’t every purchasing interaction be this easy? We all know there are lots of reasons why not, especially for complex products. However, consumer B2C sites like Amazon are the de facto baseline experience that drives our customers’ expectations for all transactions. The further you are from meeting these new standards, the more tenuous your grip on your customers’ business.
Using the technologies and techniques of e-commerce, you can make it easier for your customers to do business with you. In many cases, taking out friction from the ordering process can increase the volume of business going through your direct-to-customer distribution channel. But now, in order to meet those Amazon-driven expectations, you need to substantially transform your distribution/fulfillment game. Easier said than done — Amazon has spent billions creating the technology infrastructure underpinning their cutting-edge capabilities. What can you do? And how can you do it in a way that preserves or enhances your margins?
What Are The Building Blocks Of Success?
Good, timely data is the foundation of mastering the e-commerce challenge. It’s a truism you can’t manage what you don’t measure. In practice, this means you must gather data from across your distribution/fulfillment chain — from your own internal order management and inventory control systems, as well as from external partners such as carriers and 3PLs.
Just getting the data isn’t enough; in order for it to be actually useful for enhancing the customer experience the data from all of these disparate systems must be normalized, that is, translated into a common standard. With that normalized data, you can form a single, comprehensive, end-to-end picture of the customer transaction and do the analysis needed to make recommendations across different potential fulfillment or distribution options possible (and to make those options visible to the customer at the time of the order, to duplicate Amazon’s “known cost, known delivery date” experience).
Feeding that data into advanced predictive and prescriptive analytics designed to optimize the cost/service tradeoff will enable you to provide customers with the best possible combination of cost and customer service. Backward-looking descriptive analytics may show you where you have been (and help to diagnose past problems), but won’t give you the timely guidance you and your customers need to move forward. Finally, the ability to normalize data enables a dialog between analytics and the execution systems they inform, allowing you to feed intelligence back and create a closed loop, end-to-end distribution or fulfillment process.
What Does All That Buy You?
The ability to gather, normalize, and analyze data from across your distribution or fulfillment process provides you with four critical benefits.
Where Does That Leave Us?
E-Commerce is fundamentally changing the B2B world, just as it is on the consumer side. E-Commerce transactions still represent a minority of the volume of B2B business, but across all channels, this is where growth is happening and where customer expectations are being shaped.
Turn disruption to your advantage by getting in front of change and taking lessons from leading-edge B2C eCommerce companies. Strategic application of comprehensive data and advanced analytics will enable you to clearly understand what is going on right now, how to improve your customers’ experience, and to create the means for continuous improvement so you can keep pace with a constantly-changing world.
Your customers are enamored with the Amazon shopping experience. Many can’t imagine how they ever managed their lives without reliable reviews, one-click purchasing, and free two-day shipping. Imagine the possibilities for growth and transformation if your customers felt the same way about your e-commerce services.
About The Author
Andrew Atkinson is the Director of Product Marketing at GrandCanals. Previously, he was the Director of Product Marketing at Cloud Cruiser. Formerly at E2open, Andrew has more than two decades of startup, international, and IPO experience with various high technology companies. Andrew started his career in Boston, MA after he completed his bachelor’s degree at Harvard University and then went on to complete his Masters in Applied Economics and Finance at the University of California, Santa Cruz.