Home Latest Business News Choosing the right B2B ecommerce model

Choosing the right B2B ecommerce model

by Justin
46 views

By Bluegrass Digital CEO, Nick Durrant

Customer behaviour has changed significantly since the introduction of global restrictions and lockdowns. B2B sales organisations have quickly embarked on a digital transformation journey to meet customer demands and to sell goods and services online.

Gartner says 80% of B2B sales interactions between suppliers and buyers will occur in digital channels by 2025. According to a study conducted by Grand View Research, the global B2B ecommerce market size is estimated to reach US$25-trillion by 2028.

In a B2B ecommerce model, businesses sell products or services to other businesses online. The sales cycles normally take longer but they do have higher order values with more recurring purchases. The main reasons why B2B customers prefer ecommerce is the ease of buying online, convenience, access to an online catalogue with available inventory and delivery times.

Ecommerce domain is rapidly improving through digital transformation

The ecommerce domain is rapidly improving through digital transformation, making it more efficient for vendors, manufacturers, wholesalers and distributors. For example, ecommerce innovators have replaced traditional catalogues and order forms with ecommerce storefronts. However, trying to get them online could be a real challenge.

Although digital advertising, content marketing and SEO are effective methods to drive traffic, increase revenues and ensure a good ROI, they are not nearly as effective without understanding B2b ecommerce needs.

Businesses have quickly realised that they need to choose the right model if they want to compete with established B2B ecommerce players in the market. According to McKinsey, 83% of B2B leaders believe that omnichannel selling is a more successful way to prospect and secure new business than traditional ‘face-to-face only’ sales approaches. It says this is a notable sign of confidence, given the higher cost and hurdle of acquiring new customers.

Furthermore, the study states that two-thirds of buyers made clear they prefer a cross-channel mix, choosing in-person, remote, and digital self-serve interactions in equal measure. It is estimated that B2B ecommerce revenues are six times those of B2C.

B2B ecommerce companies that want to succeed need a solid business plan, intuition, knowledge of their market and thorough understanding of their products and business models.

Various ecommerce business models

One of the biggest challenges for newcomers is understanding the various ecommerce business models and how they are set up. Here are a few examples:

Wholesaling: Wholesale ecommerce is a model where businesses sell their products to buyers in bulk at a discounted rate through online platforms. Online ecommerce platforms such as Amazon Business and Shopify allow B2B businesses to automate their manual selling processes which improve the buying experience through its efficiency and speed.

Dropshipping: Dropshipping is a model where businesses use ecommerce to sell products without ever actually stocking the items themselves. Instead, the catalogue items are purchased from a third-party supplier, usually a wholesaler or manufacturer, and shipped directly to the customer. This means the business doesn’t have to stock or own inventory.

This model provides a lower-risk approach for businesses to trial new products without having to purchase them upfront.

White-labelling: White-labelling is an ecommerce model that allows a B2B company to sell their products under another online company platform. White labelled companies allow your business to place your brand on the ecommerce platform and have the operation and management of the platform handled by the second company.

This ecommerce model allows your company to expand your client base, increase the distribution of your products, and reduce time and resources spent on marketing initiatives.

Subscription model: This is the perfect model for businesses that sell products or service on a recurring subscription revenue. The subscription model ensures a steady, recurring revenue stream. It also allows businesses to enhance their products and services to suit their customer’s needs.

Making the right choice

Ecommerce isn’t just about digitising old sales processes; it’s more about reinventing it for future growth. To choose the right B2B ecommerce model, one needs to put the customer at the heart of every decision. The digital experience must reflect the brand and satisfy all the customer’s needs.

Digital transformation for SMMEs

SMMEs typically face two of many challenges in getting their business off the ground – gaining access into markets and a lack of physical infrastructure (transport, communicative channels, point of sale entry, etc). Going digital would help greatly in addressing their challenges by allowing SMMEs to grow their consumer base, access their desired target market and largely eliminate the need for their physical logistics channels.

Digital transformation can help SMMEs to efficiently organise their business processes and improve the rate of productivity. With South African business leaders stating that they’ve witnessed a 78% increase in online traffic to their business since digitisation, combined with 88% of SME business leaders stating  that software purchases has allowed their businesses to survive and thrive after the Covid-19 pandemic, proves that digital transformation leads

The South African situation

A PWC report states that whilst South African business leaders are open to the idea of digital transformation and have begun incorporating it into their business strategy, it has fallen behind in comparison to digital transformation globally.

PWC partner Pieter Theron explains that: “Digital champions are noteworthy because they view digitisation in ways that are far-reaching and aggressively innovative, well beyond automation and networking. It is disappointing to note that none of the manufacturing companies we surveyed in South Africa are digital champions and most fall into the digital novice category (the least digitally mature companies in the report).”

This report further states that where 32% of Asian companies are expected to increase their digital offering to consumers in the next five years, only 15% of African business reported on doing the same.

Evidently where Asian companies can expect a growth in digital revenue of 16.6%, African

Bluegrass Digital is a leading provider of digital solutions for business. We simplify tech. We help you architect and build digital products and services, ensuring you transform and succeed in a digital world. With over 20 years of engineering experience and proven track record, Bluegrass Digital offers expert knowledge and its unique offering that is centred on service delivery excellence.

www.bluegrassdigital.com

You may also like