We may all be aware that eCommerce boomed during COVID. Even if you didn’t order anything online (WHO are you?), you know business shifted. Some brick-and-mortar businesses closed. Online companies overall grew and many remain strong. Although some forecasts don’t support continued rapid and expansive growth in eCommerce, financial services company Morgan Stanley is bullish, writing investors that “Over the long term, the eCommerce market has plenty of room to grow and could increase from $3.3 trillion today to $5.4 trillion in 2026.”
Others, such as MarketWatch (a subsidiary of Dow Jones & Company, a property of News Corp, which owns The Wall Street Journal and Barron’s) and market data research specialist Statista, are more generous in their growth predictions for the U.S and worldwide.
Financial analysts at Market Watch also predict global growth for eCommerce and the International Trade Administration within the U.S. Department of Commerce speaks to the (probably) unyielding “paradigm shift that COVID disruptions have brought to business.”
OK, we get it. People buy stuff on the internet. A lot of stuff. So, for the seats in the back, eCommerce is buying and selling (almost any kind of) goods or services online using digital technology, such as computers, laptops and mobile phones, to establish a larger market presence.
eCommerce can be a substitute for brick-and-mortar stores, although some businesses choose to remain both (Target, anyone?), and it operates, according to Investopedia, in market segments that include business-to-business, business-to-consumer, consumer-to-consumer, and consumer-to-business. eCommerce is part of the larger industry of electronic business (ebusiness), which involves all the processes required to run a company or business online.
That’s a lot of business. But because we’re interested in business-to-business (B2B) eCommerce, let’s go deep there.
B2B eCommerce has followed the business path of business-to-consumer (B2C), probably because what we do in our personal lives and our learned digital preferences follow us to our professional lives. And because our personal consumer adaptation to eCommerce may have seemed necessary, according to the U.S. Department of Commerce, it’s now preferred and “the online interface in business purchases” has boomed.
The basics of B2B eCommerce
Business-to-business eCommerce offers online buyers the same advantages B2C eCommerce offers, such as:
- an expanded sales region (yay, global)
- greater choice and selection
- lower start-up costs than a traditional business
- easy retargeting (particularly important for B2B)
eCommerce can occur 24/7 and although eCommerce takes time and attention, businesses can make sales at any time without face-to-face interaction. Businesses may be able to carry little in a physical space and still offer a wide selection (more on that when we talk drop shipping), or offer inventory that can’t be found anywhere else.
If you don’t need a physical storefront, you can skip all the money invested in a brick-and-mortar store—rent, property tax, facilities upkeep and insurance— even though B2B eCommerce companies may require a manufacturing site or warehouse. Any eCommerce site does require digital investment, which we’ll talk about later.
And the real advantage for B2B eCommerce is the ease of retargeting customers. Read more about retargeting in our blog: B2B Retargeting: If You Don’t Do It, You Miss.
The drawbacks that come with B2B eCommerce sites should be no surprise, as they mirror what people don’t like about B2C eCommerce, which include the inability to feel and see what you’re getting before you buy it, the wait associated with shipping time (no instant gratification here) and the loss of human customer care. (Although AI, chat bots and online chat with humans have come far.) You can’t just test it, or ask a sale representative to show you how it works.
Two of the most-formidable drawbacks are technology and competition. Because your competitors don’t need a storefront either, they may challenge you in the market in ways you didn’t expect. B2B eCommerce companies must have excellent SEO optimization to keep their digital presence top-of-mind. (Call or email us about this one.) The tech part is simple to explain. Your site crashes, or needs to be inactive for any reason, you’re closed for business.
How to start a B2B eCommerce business
Make sure to research before you start your business. (Remember the answer to almost every first-step question is research.) Identify the products (or services) you plan to sell. Make sure you’ve gone deep with your investigation of the market, target audience, competition, and expected costs.
Some people recommend doing a SWOT analysis (strengths, weaknesses, opportunities and threats), but because SWOTs are so often done poorly – so as to be almost ineffective—you might try looking at the Cs. Yes, like ABCs.
Start with culture
What’s going on that might indicate that now is the time for your B2B ecommerce business? We can think of a big one recently and it started with a C, too. Culture is complex, though, and not just what’s in the forefront. Look at all the levels of culture to see where your idea fits.
Customers – your target audience
An analysis of customers s is perhaps the most important aspect. Who are your target customers, and what influences their buying decisions? In B2B, this can be complex, as purchasing decisions aren’t often made by individuals. Lots of people get a say in the process.
Find out what factors impact their choices. Where are they in their buyer’s journey or customer lifecycle? A buyer’s journey is an entire experience a customer has while communicating with a brand, even a B2B brand. The focus isn’t on transactions, but rather how the customer feels after interactions with the brand (which is why it’s often called customer journey). Also, where are they with your brand, products, website, store? Which phase are they in?
Here’s where we need to speak directly to the building materials industry. Consider Selco Builders Warehouse, a British brand that connects building contractors and tradespeople with building materials products. According to a case study done by Adobe Experience, Selco embraced a specific tool for its online sales—an app— and boosted its website visits and sales.
“As a B2B sales company that values digital expansion and creative advertising, Selco utilized the Magento platform to connect with entrepreneurs and businesses online. However, they recognized that contractors are busy people, so they wanted to eliminate the headaches of searching for materials and tools in a vast catalog. To help their audience find what they need faster, they created the Project Tool App. This app assists tradespeople with project management, finding products online, and communicating with their team, no matter where they are.
Selco was able to see a gap in the market for something that would connect their customer base with what they needed, faster. By discovering new ways to invest in digital technologies, they were able to generate 600,000+ more website visits, sell more products online, and create an all-in-one solution for their customers.”
This is straightforward. It’s where you investigate the relevant trends affecting the industry, category and market.
Your competitor analysis has two primary activities, 1) obtaining information about competitors, and 2) using that information to predict competitor behavior. Also, if you’re a B2B ecommerce site, approach competition from the aspects of direct, indirect and lateral competition. If you sell a product online that someone can get online in another ecommerce site, that’s direct competition. If your customer can buy the product in a brick-and-mortar store from another competitor, but not online, that’s indirect. Assess all the competitive avenues.
What communication do you plan to use to promote your ecommerce? How will you measure if it works? Where does social media fit? Organic search? Paid search? How will you drive traffic and leads to your store? How do others do it? Don’t guess on these factors. Have a flexible plan. (Or call us.)
Company or (organization)—that’s you and all your people
Who do you have on-board to help your ecommerce endeavor? Who are the leaders, team members, support services? What do they add to the company? What are their prior accomplishments? What are their skills and areas of expertise? How do they differ?
If you run an evaluation of the six Cs, you’ll probably have a more thorough picture of where you are than if you just SWOT some things.
Next comes (some of) the fun stuff. Decide on a name for your ecommerce business, choose a business structure (more on that soon), and get the necessary documentation, such as taxpayer numbers, licenses, and permits if needed. Before you start selling, decide on a platform and design your website (or have someone like us do it for you).
How the money is made in B2B eCommerce
Because of the nature of eCommerce, you have options on how you want to process orders, carry inventory, and ship products, including dropshipping, wholesaling, private labeling, white labeling and subscription.
Dropshipping is for companies who want to create a digital storefront, generate sales, but rely on suppliers to provide the products.
When making the sale, the ecommerce company gets paid via credit card, PayPal, or digital currency and the eCommerce store passes the order to the dropship supplier. The supplier manages inventory, oversees the warehouse of products, packages the products, and delivers products to the buyers.
Shopify, one of our favorite ecommerce platforms, explains dropshipping here.
If you’re using a wholesaling approach to eCommerce, you maintain inventory quantities, track customer orders and keep customer shipping information—and you probably have a big warehouse to store products.
Wholesaling model is designed to connect to large-quantity buyers or many smaller buyers of a similar, standardized product.
According to Investopedia, “Private labeling is a more appropriate ecommerce approach for companies that may not have large upfront capital or do not have their own factory space to manufacture goods. Private label eCommerce companies send plans to a contracted manufacturer who makes the product. The manufacturer may also can ship directly to a customer or ship directly to the company receiving the order.”
Not on-board for a huge capital expenditure? Private labeling eCommerce is probably best for you.
B2B companies can use the subscription model of ecommerce, but its more popular for B2C eCommerce (meal prep service is a big one) than B2B. If you’re interested, HubSpot explains them well here.
White label eCommerce companies use already successful products sold by another company and resell them under their label. The white labelers (let’s call them that) design the packaging and label and sell the product. White labeling is commonly used in the beauty industry, but it’s less successful elsewhere.
Remember to keep everything simple at the beginning of your B2B eCommerce effort and make sure you use as many channels as you can to support your business. For more on what’s what with B2B, consider the following resources:
Shopify: How to start a B2B eCommerce store
And while we’re talking Shopify, its B2B info site contains a short, but smart, B2B case study on MAC Tools. Read it here, or visit Shopify.
“Mac Tools is a global provider of automotive hand tools, power tools, toolboxes, and electronics. It was founded in 1938 and serves more than 1,200 wholesale distributors—professional technicians at dealerships and garages—as well as individual consumers. Mac Tools’ product category pages are made for easy filtering, product selection, and checkout. Customers can use the filters on the left to find the right solution for their needs and add products to cart. For products that aren’t available, the call-to-action button says “Call 800-MACTOOLS” text instead of the usual Add to Cart. Customers can take action even without opening individual product pages.
Dealerships and garages that want to become a franchise can easily do so through Mac Tools’ franchisee portal. Here, they can learn about the application process, preparation, mentorship, and training, and fill out the form to get started.
Mac Tools is one of the most modern DTC and B2B businesses in its industry. It was Shopify Plus that enabled it to add features like advanced search functionality, a franchisee finder, and a customization tool to deliver the highest level of customer satisfaction.”
If you’re doing more research for building materials eCommerce, in addition to Shopify, bookmark HupSpot. It’s an easy in-and-out site to get excellent B2B eCommerce tips: Hubspot’s Complete Guide to B2B eCommerce