B2B e-Procurement Is Arriving On the Big Stage
There is something afoot in the B2B e-procurement space. Late last year, Forrester Research sized the market at an eye-popping $559 billion – close to twice the size of the B2C e-commerce market. Also, much of that activity is yet unrealized. A separate study found that only 25 percent of B2B companies have an online presence.
Tompkins International also predicts a momentum is building in this still-nascent industry. It notes that online business will be worth $1.4 trillion worldwide by 2015. That, coupled with the growth in e-commerce and evolving customer expectations in general, is poised to set a new pace in the industrial distribution market, Tompkins said in a paper titled “Industrial Distribution at a Crossroads.”
“This has led distributors to consider more online options and how to expand their channels to create an ‘endless aisle’ for customers,” says Vince Esposito, principal at Tompkins International and co-author of the paper.
So, What Has Changed?
Ok, fair enough. But frankly we have been-there, done-that with B2B e-commerce. and for some reason activity in this space has never made the splash – or created significant shifts in business operations – that occurred in the B2C space.
The last piece of the puzzle, though, may have fallen into place. Last year, Amazon moved into the maintenance, repair, and operations (MRO) market with AmazonSupply. Then, at the start of this year, Google launched Shopping for Suppliers. It is still in beta and offers only products from selected categories, but Google has a history of building out storefronts rapidly and with ease.
With such highly visible providers now moving to establish a presence in B2B e-commerce, the thinking goes, the market is finally ready for a more formal approach.
The Road to B2B E-Commerce
To be sure, there have been many fits and starts in the push to realizing a robust B2B e-commerce community. Ten to 15 years ago, fledgling e-commerce initiatives among the global auto supplier providers promised to remake the sector. While some progress was made, it hardly represented the sea change that the initial buzz suggested.
But while some of these endeavors flamed out, there have been other initiatives that became quietly successful, paving the way for such initiatives as Shopping for Suppliers.
E-procurement, for instance, has become more sophisticated, especially as enterprise vendors moved into this best-of-breed niche. In related areas, meanwhile, such as marketing, companies have been taking careful note of B2B trends. One company, Demndbase, specializes in B2B online marketing and recently created a filter that allows companies to display ads online to other companies that have similar technology in house. The reason? Apparently the company has noted that it is easier to cross-sell and up-sell to companies if they both use, for example, Oracle and Salesforce.com. In fact, it goes so far as to say that the type of technology a company uses is an important defining attribute in a B2B sale.
Another reason behind the push toward B2B e-commerce is the ubiquity of mobile devices and the range of functionality they offer consumers. Consumers can pay their mortgages, book a flight and even buy a car or expensive piece of jewelry using their mobile devices — so why can't they shop for and purchase a supply of electronic components online, let alone with a mobile device? Why not indeed.
There is even talk that as mobile CRM makes greater and greater traction, it will expand to the B2B community. But that is another topic altogether.