B2B eCommerce, also known as business-to-business eCommerce, is the practice of selling products or services between businesses online, rather than simply from business to consumer. It is a growing trend in the world of eCommerce also commonly known as online marketing, with North American B2B customers purchasing somewhere near $1 trillion online per year. According to Industrial Distribution, this year’s online sales account for somewhere between 12 to 15 percent of all B2B demand, and this number is growing at nearly 8 percent per year! If this growth rate continues, by 2025, nearly 25 percent of the demand will be online, and this will increase to a third by 2028.
Despite this growth in the B2B eCommerce sector, the benefits seem to favor the more “mature” pre-existing firms. And even though they account for only 20 percent of the companies currently in existence, they reap the benefits of nearly 80 percent of online sales. This small cross-section of all B2B firms is still at the top, while the other 80 percent are still struggling to catch up.
However, with the B2B eCommerce sector growing, trends point towards these firms that are currently making this 80 percent as slowly losing out on their revenue potential. While this change is slow, there are large implications for existing firms; if you don’t improve, you will lose out on this growth attributed to B2B. A new study shows that in 2025, 47 percent of the demand, valued at around $825 billion, will go to new online firms in the B2B eCommerce market, while 42 percent will go to those “mature” companies that make up the 20 percent (equivalent to $745 billion in sales), and just 11 percent of the revenue will go to 80%.
This change should turn on the warning lights for this 80 percent fighting in the B2B sector—they must improve and quickly, otherwise, they will lose out on this huge growth potential. The presence of this growth market for B2B can deliver major growth for manufacturers. While distributors have the majority of exposure in this field, manufacturers also have a significant amount of exposure. The growth of B2B means that manufacturers will have value added in product technology. Their product technology will undeniably see a period of improvement and innovation if their products become commodities. The current growth of B2B suggests that there will be a greater demand for manufactured goods, which means that these products will be more readily available and more commoditized. This will surely deliver greater revenue for manufacturing firms, allowing them to have the capital to expand to more locations across the country and around the world.
In addition, manufacturers would be able to secure new paths to market that are more suited for online technology. Online technology sees improvements every day, so firms need to improve their relationship with technology by migrating existing accounts online, weeding out redundant service capacity, and curbing the “analog culture” that is often applied to online success. Focusing on the technology at stake will help both distributors and manufacturers see greater returns on their investments.
eCommerce also mandates big changes to businesses and the business models for both distributors and manufacturers. According to the publication, Industrial Distribution, there needs to be changed to the number of sellers and type of sales roles, a reduction in physical locations, and new operating procedures, to ensure fast, accurate delivery. These changes also need to be “driven down” to the rest of the organization by managers, in order to ensure online success.
Both manufacturers and distributors will see new competitors, which will, in turn, grow the industry as a whole. In addition, they will need to adopt new positions, goals, and measures established throughout their companies. These changes will certainly affect their respective cultures, as they head towards embracing online technology.
Iffel International Inc. provides strategic marketing and online business development services for manufacturers and distributors who are committed to growing their facilities in the USA. We are able to review growth strategies using online marketing for domestic and international markets. Contact us and one of our Chief Marketing Officers (CMO) will be in touch with you to review your marketing strategy for 2019. For more information contact us HERE.
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