B2B E-Commerce: The Maturity Model.
Business Transformation in B2B E-commerce - Where Does Your Company Stand?
Determine the Maturity Level of Your B2B E-Commerce (And Why You Should Do It)
The entire economy is undergoing a profound process change - the business transformation driven by advancing digitization. Entire process landscapes are being digitized and innovative business models are being developed.
This also applies to retail and, somewhat surprisingly, already to online retail, e-commerce. While consumer-oriented B2C - trade is tapping into the potential of new opportunities quite quickly, B2B - trade is comparatively still at the beginning of the journey when it comes to e-commerce.
High growth rates in B2B online retailing
Yet B2B e-commerce is now achieving significantly higher growth rates than consumer-oriented commerce. From 2014-2019, sales in the B2C segment grew by 10 percent annually, but those in the B2B segment already grew by 15 percent. This was the result of a meta-study by the market research company Copenhagen Economics on the importance of e-commerce for the German economy. According to Statista, revenue generated via online stores and marketplaces in B2B online commerce in Germany was already 320 billion euros in 2018.
Key B2B E-Commerce Challenges
Online commerce with companies places significantly higher demands than e-commerce with consumers. One major difference is the buying behavior - while impulse purchases generally predominate in the consumer sector, purchasing decisions by companies are usually comprehensively prepared.
Particularly in the case of products with many variants, such as IT equipment, the preparation of a quotation alone is a very complex task. In order to prepare offers that are as reliable as possible, sales staff need all the latest product information. This is the only way they can tap into up- and cross-selling potential, for example. In addition, customer-specific agreements, for example on discounts, must be taken into account.
The demands on order fulfillment and logistics processes are also high - for example, in the case of partial call-off of large orders or delivery to several customer locations.
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„Consumerization“ of Business to Business E-Commerce
Companies as customers now expect the same convenient shopping experience that employees are used to in their private lives. The trend is being fueled by the fact that purchasing decision-makers and buyers in companies increasingly belong to the online-savvy millenial generation - young people born between 1985 and 1996.
According to Statista, 27 percent of purchasing employees would like to see a simpler and faster checkout process and the ability to easily reorder products. They also expect accessibility via social media channels and convenient use of the store on mobile devices.
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Business Transformation in B2B E-Commerce
Companies that sell products to other companies should therefore think about how they can meet the realities and challenges of B2B e-commerce - how they can transform their approach accordingly. It is a fallacy to think that this transformation process will be completed at some point - business transformation is an ongoing process. New strategic or technical trends are constantly emerging and should be mapped in a timely manner.
One example is the direct distribution of manufacturers' products past wholesalers to end users, also known as direct-to-customer, or D2C for short. In this form of distribution, higher margins are achieved by eliminating wholesalers, but manufacturers must first create the technical prerequisites for this - for example, in the CRM area or in order management.
This also applies to another trend: the ordering of consumables or spare parts by machines - keyword Internet-of-Things, or IoT for short. Machines in the manufacturing industry use sensors to recognize demand and automatically trigger the corresponding orders. Retailers and manufacturers should also prepare for this.
First Step in Strategy Development: Determining the Maturity Level
Retailers or manufacturers who are considering the development of a business transformation strategy for their B2B trade should first determine where they stand. Maturity models are a valuable aid in this process. The commerce experts at Arvato Systems have developed a special and comprehensive maturity model for B2B e-commerce.
The model clearly and concisely reflects the transformation path in B2B e-commerce. It allows companies to classify their own goals and activities in a matrix of four development stages (levels) and six dimensions.
Explanation of the Maturity Model
The model shows the parameters for determining the state of evolution in the individual dimensions in one's own company. For this purpose, the state of affairs in the dimensions is analyzed and classified in the matrix according to the levels.
Important: It may well be that different levels of development have been reached in the individual dimensions. For example, the analysis of the channels may reveal level 2 (online store for several countries), but in the PIM & DAM dimension the company may already be at level 3 - it supports sales with customer-specific product data, information on product use, and product-dependent services.
The levels describe the path of the business transformation:
- Level 1: Initial - an e-catalog with checkout function exists.
- Level 2: Managed - an online store has been established as an additional sales channel in the company's own organization
- Level 3: Integrated - the company operates a customer portal with history data, self-service functions and value-added services
- Level 4: Network - the highest expansion level - a vertical industry marketplace with integration of suppliers
The dimensions outline the transformation processes required to reach each next level. They shed light on the following areas:
- Target markets: What can be achieved with the respective development level - addressing existing customers in an existing market or tapping revenue potential in new markets?
- Channels: From the online store as the only channel to an omnichannel retail environment.
- PIM & DAM: How must the maintenance of product information and assets such as photos be organized at each level?
- Offering: What should the online store offer - product data and samples of a sub-range or innovative, data-driven business models such as subscription offers?
- Customer Experience: How will customers be interacted with? Should customers be presented with just an additional online channel or should fully automated services be connected?
- Order Management: Is it about the normal physical distribution of products or about an individualized or digital distribution of products or services?
The Maturity Model as a Roadmap
The classification of B2B e-commerce activities in the maturity model is now compared with the strategic goals of the company. This determines which level is to be reached in which dimension. The matrix of the maturity model thus becomes a roadmap for the further business transformation of the retail activities.
In accordance with the roadmap, the steps required to achieve the objectives can now be defined. They describe what is required for the change from the current level to the next higher level and what functions the systems used should have. Can the defined strategy be implemented with the existing solutions? Should applications be replaced to provide greater flexibility and scalability, if necessary, and to enable innovative business models?
The highest priority should be given to future-proofing the solutions - after all, as already noted, business transformation is an ongoing process.
Why Arvato Systems?
Arvato Systems has been supporting companies worldwide in their e-commerce strategy for over 20 years. We are one of the leading enablers when it comes to all-encompassing business transformation in retail and manufacturing based on SAP solutions. As IT and business experts, we always have our finger on the pulse of best practices, trends and innovations.
We listen carefully and translate business requirements into convenient, efficient and secure technological solutions. In doing so, we bring our experience from a multitude of business transformation projects in retail and manufacturing. Our ambition is to optimally position your e-commerce business for today and the future and to exceed your customers' expectations!
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