B2B sales are headed for a digital future

Do you own or work at a company that is doing B2B sales? Then you need to read this! Because we got some important ecommerce news for you!

As is the case in many other sectors, the B2B and wholesale industries are facing major changes due to technological development. Here’s a few of the changes that are under way: 

• Online marketplaces
• Increased customer expectations
• Increased international competition

On the other hand technology is also offering companies new possibilities such as increased sales and improved effectivity. 

In this blog post we are going to cover the following topics:

• What is B2B
• Technological development and B2B
• The future of B2B sales
• Why B2B and wholesale companies should digitize their sales
• Skepticism concerning digital B2B sales

After you’ve read this blog post we are convinced that you will share our belief that B2B sales and B2B marketing is headed for a digital future

What are B2B sales

Just as in many of our other blog posts, we are gonna start by giving a brief introduction to B2B and B2B sales.

B2B is a contraction of Business-to-Business. So B2B sales describe the process of one company selling goods or services to another company. Some examples of B2B sales are:

• Suppliers of commodities selling wood to carpenters
• Manufacturers of interior selling their products to retailers/resellers
• Tech companies selling their software to other companies

In addition to B2B, B2C and B2G are two other common concepts. B2C is Business-to-Consumer, which is sales from a company to a consumer. B2G is Business-to-Government, which is sales from a company to the government.

Technological development and B2B

As in many other sectors, the B2B and wholesale sectors have experienced radical changes in the last couple of years due to technological development. As mentioned in the introduction some of these changes are new online marketplaces, increased customer expectations, and increased competition.

In this section, we are gonna go through each of these three topics.

Online marketplaces

Online marketplaces – or just marketplaces – are digital platforms that bring together sellers and buyers to sell and purchase goods. Among the most well-known B2B marketplaces are Alibaba and Amazon Business.

At first glance, the evolution of the online marketplaces appears to be positive. They help sellers find new customers and open up new sales channels. For customers, they improve price transparency.

What is B2B sales?

We are going to start by giving a brief introduction to B2B and B2B sales.

B2B is a contraction of Business-to-Business. So B2B sales describe the process of one company selling goods or services to another company. Some examples of B2B sales are:

• Suppliers of commodities selling wood to carpenters
• Manufacturers of interior selling their products to retailers/resellers
• Tech companies selling their software to other companies

In addition to B2B, B2C and B2G are two other common concepts. 

• B2C is Business-to-Consumer, which is sales from a company to a consumer. 
• B2G is Business-to-Government, which is sales from a company to the government.

Technological development and B2B

As in many other sectors, the B2B and wholesale sectors have experienced radical changes in the last couple of years due to technological development. 

As mentioned in the introduction some of these changes are new online marketplaces, increased customer expectations, and increased competition.

In this section, we are gonna go through each of these three topics.

Online marketplaces

Online marketplaces – or just marketplaces – are digital platforms that bring together sellers and buyers to sell and purchase goods. Among the most well-known B2B marketplaces are Alibaba and Amazon Business.

At first glance, the evolution of the online marketplaces appears to be positive – for both companies and customers: 

• They help companies find new customers and open up new sales channels. 
• For customers they improve price transparency. 

And if that wasn’t enough, there are other benefits of investing in a B2B eCommerce.

But online marketplaces can be a double-edged sword for sellers; on one side, it is easier to find new customers and sell more. On the other side, companies selling their products on online marketplaces will experience fierce competition.

On an online marketplace, you compete internationally and it is most often a question of price when the customer decides on a supplier. 

This means that especially smaller businesses will have a difficult time. They are simply too small to scale their production and produce at a cheap enough price per unit, therefore getting their product in-store can be challenging.

Increased customer expectations

As online shopping is becoming more and more popular for consumers (B2C), B2B sellers are also experiencing increased expectations from their customers. 

When B2B customers are not at work, they are B2C customers. This means that they have experienced the convenience of shopping digitally as a consumer, and now expect the same convenience when they are purchasing professionally.

B2B customers are demanding user-friendly and fast transactions when they are purchasing from a B2B supplier. Something that in most cases is only possible, if the supplier offers the possibility to order digitally.

The increased demand from B2B customers to purchase digitally is confirmed in this analysis from the Confederation of Danish Industry. In a panel of 750 companies purchasing B2B and wholesale, 98% answered that they expected that their digital purchases would either increase or at least stay at the same level in the future. 16% of the companies that had not yet purchased digitally expected that to begin in 2020.

Increased international competition

Technological development goes hand in hand with internationalization. This is obvious from the previously mentioned online marketplaces. 

But technological development and internationalization are challenging the traditional B2B sales in other ways as well.

New technology is making it easier for companies to get in touch and trade all across the globe. This also means increased international competition – not only in the form of online marketplaces – but also in general. 

Additionally, more and more products convert from physical to digital. Music, books, and movies that had to be purchased in a physical store not too many years ago is now downloaded and streamed from the cheapest supplier. 

And it is not only products that are converting to digital. Services such as education can now also be done online.

This development means that all companies are now competing with the entire world, instead of just their closest neighbours.

The future of B2B sales

Traditionally, there’s been some scepticism from B2B and wholesale companies about digitizing their B2B sales. 

As a result, the implementation of online sales in B2B is years behind the implementation of online sales in B2C. 

Now, however, it seems that companies are slowly realizing that there is no way around it. And even though the pace is slow, we see that more and more B2B and wholesale companies are starting to embrace the digital transformation.

Internationally, it is expected that the share of B2B sales that are conducted digitally will increase from 14.1% in 2019 to 22% in 2023. A trend that is expected to continue after 2023 as well.

We see somewhat of the same prediction in this article from Forrester. Here they look solely at the American market and expect the digital share of B2B sales to increase from 12% in 2018 to 17% in 2023.

5 good reasons to digitize your sales as a  B2B company 

There are good reasons for the increase in companies offering online B2B sales. Selling B2B online is linked with many benefits such as increased revenue and improved efficiency.

In this section, we will cover 5 of the positive effects, that should convince you that companies should digitize their B2B sales. All of these effects are backed by multiple analyses.

The 5 effects are:

• Strengthened brand
• Improved efficiency
• New customer- and distribution channels
• Increased revenue
• Request from B2B customers

Strengthened brand, improved efficiency, and new customer- and distribution channels.

The first three positive effects are documented in this analysis from the Confederation of Danish Industry. In the analysis, they have examined the effect of B2B online sales in more than 1,250 Danish B2B companies.

Here are three key takeaways from the analysis:

• 72% of the companies that sold B2B online experienced improved efficiency.
• 82% of the companies felt that their brand had strengthened. 
• 83% had attained new customer- and distribution channels after going digital.

Increased revenue of 216%

In yet another analysis from the Confederation of Danish Industry, they found that increased digitalization, eCommerce, and export combined, could increase revenue by 216%. 

The analysis was conducted with data from companies in the manufacturing, wholesale, and retail sector, and shows the potential of tripling revenues for such companies.

The analysis further concludes that the potential is especially large for small- and medium-sized companies, as they often have a relatively low level of digitalization, to begin with.

B2B customers are requesting the possibility to purchase digitally

Last but not least, you should go digital to please your customers. 

As previously mentioned, retailers are increasingly getting used to the convenience of shopping online in their private life, and therefore request the same experience in their professional life. 

This request from B2B customers is confirmed in multiple analyses.

In 2019 Deloitte made an analysis called “Wholesale 2025“. In the analysis, they describe that, as B2B customers get acquainted with online B2C sales, they increasingly expect the same level of service in B2B. This observation is also backed by the Vicepresident at Mirakl, Robert Mahr.

in 2017 McKinsey asked more than 1,000 B2B customers in four different countries, how they felt about purchasing B2B online. 

85% stated that they would prefer not to have to talk to a salesperson when they were purchasing from a regular supplier. Instead, they would prefer the possibility to order digitally online.

The last evidence comes from Denmark. Here, 27% of the companies that actually do sell B2B online, explained that they do so due to requests from their customers. The main reason for this request was that ordering B2B online eased the ordering process for the customer.

Scepticism about digitizing B2B sales

Despite the many benefits described above, a lot of companies are still reluctant when it comes to selling B2B online. 

At Turis we find that this reluctance is usually caused by at least one of these four things:

• Business-as-usual
• Lack of knowledge and IT-skills
• Complexity in B2B sales
• Price of a digital solution

# 1 – Business-as-usual

One of the most common reasons for companies to not take their B2B sales online is that they want to stick with what they know. They prefer to do business as usual. 

Most of all, they fear that a switch from more traditional methods of sales to online and digital will cause their customers to find other suppliers. That their customers would prefer the traditional ways of purchasing.

As you’ve just seen, however, this is far from the case. 

In reality, most customers would prefer the possibility to order online. Even if a few customers would like to stick to the old ways of doing things, they are still able to do so. 

If you are offering multiple channels for purchase (both traditional and modern), your customers will see this as a high level of service.

# 2 – Lack of knowledge

A lot of B2B companies feel that they lack the necessary knowledge to get started with online B2B sales. They think they need a bachelor’s degree in IT before they can even consider going digital.

Luckily, this couldn’t be further from the truth. In recent years several SaaS (Software-as-a-Service) platforms and services have been created to digitize B2B sales. 

Most of them are designed to be very intuitive and easy to get started with. And if they aren’t intuitive enough, you can often find very pedagogical videos and step-by-step guides to get you started.

# 3 – Complexity in B2B sales

Many of the B2B companies that we talk to think that their sales process is way to complicated to be automated.

While we do agree that B2B sales can be very complicated – especially compared to B2C sales – we rarely experience that they are too complicated. 

Today, most digital solutions for B2B sales can handle very complex and unique processes. Differentiated pricing, multiple currencies, and product exclusivity. All things that a modern B2B webshop can handle with ease.

# 4 – Price

The price is the excuse we most often get when companies explain why they have not yet digitized their B2B sales. Traditionally, solutions for handling B2B sales online have been priced very high. The reason is mainly a mix of the high level of complexity and the low level of competition.

But luckily, these high prices are a thing of the past. Within the last couple of years, several very reasonable-priced solutions for online B2B sales have emerged. You can even get your own very functional B2B platform and webshop for free.

Related Posts