B2B PMI

June 25, 2015
By Andy Hoar with Carrie Johnson, Jacob Milender
1224 downloads



WHY READ THIS PLAYBOOK
Although some eBusiness and channel strategy professionals are very mature in their understanding and execution of business-to-business (B2B) eCommerce, most organizations are still in the early stages of building their B2B eCommerce operations. They're in their infancy with regard to effectively targeting B2B buyers online, developing an industrial-strength B2B eCommerce infrastructure, and achieving an acceptable B2C-like customer experience standard. In the B2B eCommerce playbook, we examine today's broader B2B eCommerce landscape, explain how companies must think about their relative progress and plans going forward, and outline what organizations can do to optimize their B2B eCommerce teams and processes for success. This report is an update to the report of the same name originally published on January 7, 2013.


B2B ECOMMERCE IS ON THE RISE
B2B eCommerce is finally beginning to fulfill its long-heralded promise. After over 10 years and a full generation of business-to-consumer (B2C) development, B2B eCommerce is no longer the mirage that many experts once saw off in the distance. Real opportunities for B2B buyers and sellers and the broader B2B eCommerce ecosystem are emerging because:

• Customer-facing B2B eCommerce has crossed some critical thresholds. Now more than twice the size of B2C eCommerce, B2B eCommerce is expected to reach $1.13 trillion in sales in the US by the end of 2020. (see endnote 1) In addition, Forrester has seen a shift in the B2B industry eCommerce maturity curve from 2012 to 2014. While the majority of B2B companies are still in the early stages of developing their digital businesses, more B2B companies have gotten serious about both establishing and scaling eCommerce. (see endnote 2)

• B2B buyers increasingly expect a B2C-like shopping experience. B2B buyers are also B2C customers, and they compare their experiences across sites. (see endnote 3) It's no longer good enough for B2B companies to compare favorably with just direct B2B competitors. B2B eBusiness and channel strategy professionals must equal the expectations set by B2C sites such as Amazon by incorporating B2C tenets of price transparency, immediacy, and convenience into their core buyer experiences. (see endnote 4) In addition, B2B companies must match B2C levels of customer experience maturity by weaving proven principles of interactivity, personalization, and network participation into their website experiences. (see endnote 5)

• B2B buyers are buying online via self-serve eCommerce portals. B2B eCommerce companies are increasingly "channel-shifting" customers from offline sales environments — where direct sales and customer service representatives sell to and service customers — to online sales environments. (see endnote 6) In doing so, companies are reducing their customer acquisition and retention costs for low-frequency and low-volume purchasers. In addition, B2B companies are offering self-serve websites where customers can complete transactions entirely on their own online, without the intervention of field sales representatives. (see endnote 7) They are also building these self-serve websites with the business side of technology in mind and leveraging innovative tools to recast their whole approach to engaging customers. (see endnote 8)
  

B2B eCommerce People And Processes Are Gaining Significant Ground
By leveraging key insights from B2C eCommerce, B2B eBusiness and channel strategy professionals have begun to catch up with their B2C peers. They have:

• Incorporated B2C staffing strategies into B2B eCommerce. B2B eBusiness and channel strategy professionals face unique hiring challenges. In general, they are too closely associated with the IT group and lack the broad internal support they need to get things done. In addition, due to a highly competitive global market for eCommerce talent, B2B companies have been forced to get creative with their hiring strategies. Incapable of either hiring from within their firm or finding talent in their respective industries, many leading B2B companies have started to poach talent from the ranks of successful B2C groups to staff their own operations — with the hope of grafting some of that valuable B2C thinking onto their own mental models.

• Adapted B2C-like technologies to B2B eCommerce. With smartphone and tablet use on the rise, B2B eCommerce faces new challenges in keeping up with customers' shopping habits. As customers increasingly demand buying experiences that mirror the best-of-breed B2C buying experiences delivered via digital touchpoints, B2B eCommerce professionals have resolved to invest in platforms that are both flexible and expandable. (see endnote 9) Fortunately, they can choose from a number of full-service vendors that offer purpose-built B2B technologies and platforms as well as repurposed B2C eCommerce systems and point solutions. (see endnote 10) In addition, a stable of global commerce service provider partners stand ready to aid and expedite the process of getting to market quickly with world-class solutions. (see endnote 11)

• Applied best practices from B2C to address key internal processes. Like all companies, B2B eCommerce organizations struggle with defining, prioritizing, and implementing their strategies and tactics. But an increasing number of eBusiness and channel strategy professionals are using B2C best practices to determine whether a particular feature is appropriate for their company and, if so, how to implement it successfully. (see endnote 12) Others are leveraging models that improve execution by converting merely directional strategies and tactics into actionable ones. (see endnote 13)
  

FORRESTER'S B2B ECOMMERCE PLAYBOOK TAKES A STEP-BY-STEP APPROACH

Forrester's approach enables eBusiness and channel strategy professionals to begin building a B2B eCommerce business; those who are more advanced can use it to hone their general strategy. Our approach prescribes a path that starts with identifying key trends and ends with optimizing your overall strategy. Our B2B eCommerce research is composed of four distinct phases, each consisting of three parts (see Figure 1):

• 1. Discover the opportunity inherent in B2B eCommerce. Forrester's B2B eCommerce playbook identifies the key trends to watch for and paints a picture of how B2B eCommerce professionals are successfully navigating the space. In addition, the playbook covers how B2B eCommerce companies are making the case both internally and externally for transitioning traditionally offline customers into an online environment.

• 2. Plan for a robust road map. Forrester offers guidance for companies that want to gain an honest assessment of their current B2B eCommerce maturity. From there, companies can use the playbook to develop an appropriate strategic plan and a two- to three-year road map based on best practices within the B2B eCommerce arena and across the broader eCommerce spectrum.

• 3. Act to align your people and processes with your key priorities. B2B eBusiness and channel strategy professionals currently face profound challenges with regard to hiring the right people, building best-in-class web experiences, and standardizing on stable and scalable technology platforms. The B2B eCommerce playbook offers deep insights into how to structure B2B eCommerce organizations, leverage best practices when implementing key features and functions, and evaluate leading technology platforms.

• 4. Optimize your strategy and performance. Once your systems are in place, you must tune them to sustain a competitive edge. The B2B eCommerce playbook helps companies develop and benchmark important metrics and key performance indicators (KPIs). In addition, the playbook educates B2B eCommerce professionals about the best practices available today for building the critical processes that maintain a self-optimizing assessment infrastructure.
  

ENDNOTES

1.Forrester estimates that B2B eCommerce will top $1.1 trillion and account for 12.1% of all B2B sales in the US by 2020. See the "US B2B eCommerce Forecast: 2015 To 2020" Forrester report. Forrester defines B2B eCommerce as customer-facing, digital, transactional commerce that takes place over the Internet (via websites or mobile devices) between wholesalers and distributors and their business customers (e.g., between W.W. Grainger and W.W. Grainger's business clients). Forrester's definition excludes electronic data interchange (EDI) transactions and business-to-business-to-consumer (B2B2C) transactions. As part of its forecast modeling, Forrester develops comprehensive historical and base-year market size estimates based on a variety of sources. The wholesale industry market sizing is based on an analysis of the US Census Bureau's historical annual and monthly wholesale industry data, socioeconomic analytics of the retail environment, and the B2B market relationship with consumer commerce. Assumptions about online commerce as a key lever: The majority of wholesale trade is conducted in the offline environment. Despite fluctuations from recession-related contractions, online commerce activity has experienced robust growth in past years. As the retail environment evolves, online commerce penetration will continue to gain share against the offline environment. Assumptions about EDI: EDI-based wholesale currently accounts for approximately 70% of total online wholesale activity. Parallel to the growth of online commerce, Forrester assumes that EDI-based sales will continue to decline as a percentage of overall online wholesale trade. EDI-based sales have declined steadily since 2003 as non-EDI options have become more popular. For more information, see the "Predictions 2015: US B2C And B2B eCommerce Players Will Struggle To Keep Up With Customers" Forrester report.

2.For more information on Forrester's B2B eCommerce maturity model, see the "Evaluate Your B2B eCommerce Maturity" Forrester report.

3.For more information on Forrester's discussion regarding how shoppers compare and contrast B2B and B2C customer experiences, see the "Thrive By Adopting Proven B2C Principles" Forrester report.

4."Until recently, most business-to-business (B2B) companies relied on thick print catalogs, armies of sales reps, and well-staffed call centers to drive and support customer purchases. But B2B customers have substantially shifted their research and transaction activities online — and onto their mobile devices." See the "The New And Emerging World Of B2B Commerce" Forrester report.

5.To excel at customer experience, organizations must routinely perform the practices required to design, implement, and manage customer experience in a disciplined way. See the "Customer Experience Maturity Defined" Forrester report.

6."Business-to-business (B2B) companies know they can generate revenue and save money by migrating their offline customers online. The question is, how much and under what circumstances?" See the "The Case For Channel-Shifting Customers Online" Forrester report.

7.Forrester forecasts that 1 million US B2B salespeople will lose their jobs to self-service eCommerce by the year 2020. While B2B buyers overwhelmingly prefer to research, and increasingly buy, products and services via a self-service website, B2B sellers still force buyers to interact with their salespeople as part of the purchase process. See the "Death Of A (B2B) Salesman" Forrester report.

8.Organizational design decisions must consider a complex array of culture, structure, and process issues. The best of today's tech management organizations have been designed to balance operational excellence and customer understanding and responsiveness. See the "Design The Tech Organization For The BT Agenda" Forrester report.

9.For more information about Forrester's take on technologies and platform solutions, see the "Evaluate Your B2B eCommerce Maturity" Forrester report.

10.In Forrester's 66-criteria evaluation of B2B commerce suite vendors, we identified the seven most significant providers in the category. See the "The Forrester Wave™: B2B Commerce Suites, Q4 2013" Forrester report.

11.The purpose of this report is to help eBusiness and channel strategy professionals choose the best-fit digital business partners to help them accelerate digital transformation and meet the rapidly changing expectations of customers. See the "The Forrester Wave™: B2C Global Commerce Service Providers, Q1 2015" Forrester report.

12.For more information about using best practices to implement key features and functions, see the "Use Best Practices To Determine Core Features: A B2B Ratings And Reviews Case Study" Forrester report.

13.For more information about using best practices to implement key features and functions, see the "Use ACTIVE Strategies To Optimize Execution" Forrester report.