There’s an interesting shift occurring in the e-commerce world: The convergence of three important digital selling channels – B2C e-commerce, B2B e-commerce, and marketplaces. Forward-looking companies can take advantage of this trend to capture significant revenue growth and cost savings opportunities, and do so in a more capital-efficient way than ever before.
There are three legs of the e-commerce channel stool:
1. B2C selling, which entails selling directly to consumers on e-commerce websites
2. B2B selling, which involves selling directly to businesses on e-commerce websites (traditionally called ‘portals’ by many manufacturers and distributors)
B2C e-commerce has been around since the mid-1990s, when pioneers like Amazon, eBay, Dell, Footlocker, and others first launched online storefronts and began selling online. Since this time, consumer-focused e-commerce has become the driver of retail growth in the United States, with Amazon accounting for over 40% of all online commerce growth in recent years. The B2C sector is mature, and highly competitive, with well-established best practices and technology platforms available to support the sector.
B2B e-commerce is a fast growing and still-maturing sector of e-commerce, and, in absolute sales numbers, more than twice the size of B2C e-commerce. Large manufacturers and distributors have deployed e-commerce through web portals and direct integrations to their customers systems for many years. These systems were typically built using expensive custom technology, which has limited the number and type of B2B companies engaging in e-commerce.
When executed correctly, the benefits are tremendous, with incremental revenues from existing customers, new customers, and cost savings being realized. Many of Guidance’s B2B clients see above 30% of revenues coming from e-commerce. In the past three years, as this market heats up, additional technology solutions are becoming available that reduce the cost and complexity of deploying e-commerce for these organizations.
The third leg of the e-commerce stool is online marketplaces. This sector is largely driven by Amazon, which accounted for 43% of all online sales in the United States in 2016. Other channels like Walmart’s Jet are making inroads, too. Niche marketplaces also exist that cater to specific interests or product categories. Examples include Lyst,ShopStyle, Tradesy, BuildDirect, 5Miles, and Farfetch, among others. Both retailers and B2B companies (manufacturers, distributors, brands) can take advantage of marketplaces as a growth channel for their business.
The influence of marketplaces is increasing. According to a recent survey by Amazon.com and Pymnts.com, 64% of shoppers begin their online searches on marketplaces. More customers begin their journeys at Amazon and similar platforms than perform Google searches, social media searches, and searches on their favorite retailer’s website. We can expect this trend to continue, as online marketplaces are growing at a pace of 22% per year. This is a clear signal to merchants – if organizations want their e-commerce game to reach its full potential, it is critical that they implement an online marketplace strategy.
There is good news for merchants in all of this, and it starts with a story about convergence.
What convergence means for sellers
Thanks to new-world solutions, it’s easier than ever for sellers to dramatically grow their businesses in new sales channels. The convergence of the capabilities of technology solutions around each of the ‘legs of the stool’ is enabling retailers, brands, manufacturers, and distributors to easily and more cost effectively expand into new sales channels. From Amazon to Jet to the niche marketplaces listed above, there are more options available than ever for e-commerce operators wishing to expand.
The merging of distinct technologies, industries, or devices into a unified whole
(Source: Merriam-Webster Dictionary)
Evolving e-commerce solutions today are enabling merchants to drive sales through any channel. This is exciting for merchants, as it gives companies a single place to service multiple channels. Companies can manage their retail, direct-to-consumer, B2B e-commerce, and online marketplace presences with products and product feeds that customers can access wherever they are shopping.
Quite simply, convergence allows sellers to widen their reach tremendously without having to manage broadly distributed and inconsistent data, order information, customer profiles, and inventory held in multiple, disparate systems that don’t talk with each other. Fewer resources are required to manage product data, marketing, merchandising, and selling operations—which helps strengthen the company’s bottom line.
The emergence of the all-channel platform
We see convergence happening on several fronts. B2C e-commerce platforms are moving to support B2B features and marketplaces. At the same time, B2B e-commerce platforms are enabling sellers to launch B2C e-commerce and marketplace capabilities.
B2C platforms have traditionally served retailers who are targeting consumers. Now, these solutions are evolving to support B2B e-commerce as well. Businesses can leverage these solutions to begin selling to business customers (such as resellers and traditional wholesale customers) on platforms mainly designed for retailers to sell to consumers.
Some examples of these emerging all-channel platforms with a B2C e-commerce heritage include Magento Commerce and Salesforce Commerce Cloud. These platforms are building on a long history of creating very strong connections with consumers through superior digital user experiences. E-commerce solutions with this B2C DNA are built and optimized for fast and easy shopping transactions, and incorporate best practice features that shoppers of all types (consumers, business buyers, marketplace shoppers) have come to expect.
Features like great navigation, category merchandising, on-site search, easy and clear checkout processes, multiple payment and shipping methods, etc. are completely built into these platforms. By adding important B2B features such as workflows and permissions, custom contract-level pricing, custom catalogs, punch out support, and payment on purchase orders, these solutions are enabling merchants to sell not only directly to consumers, but to drive efficiencies in traditional selling channels and reach new business customers.
Similarly, these solutions have added capabilities to provide product feeds to marketplaces, enabling syndication of product information to marketplaces. With additional capabilities to ingest order information back into the system, the merchant has a single point of management across all sales channels, driving efficiencies and enabling more rapid and effective response to market trends.
The trend towards convergence is happening on the B2B side as well. B2B Ecommerce platforms that have generally served manufacturers and distributors are moving into the B2C Ecommerce space, enabling manufacturers to sell directly to consumers, as well as on marketplaces. Some examples of these platforms include Insite Software, SAP hybris, and EpiServer.
Traditional B2B platforms are adopting best practices and features from the B2C Ecommerce world, and empowering merchants along the way. A great example is one of our clients that has traditionally sold measurement tools to companies like Boeing. Leveraging their converging e-commerce platform, they recently started selling their products directly to consumers. Along the way, they discovered an entirely new market of do-it-yourselfers that they didn’t know existed – and have added millions of dollars in revenue as a result. Without easy to deploy B2C capabilities that were added to their e-commerce platform, it is unlikely they would have discovered this new market segment.
The evolution of technology has made it easier than ever for e-commerce sellers to reach out to their customers across a variety of mediums. If you’re stuck with a platform that doesn’t evolve, it’s time to consider switching to one that can support your online revenue growth.
If you would like to learn more about how you can leverage these trends for your business and capture the enormous revenue and efficiency benefits available you, reach out to me! I’m a quick email away at firstname.lastname@example.org.