How b2b eCommerce can impact on cost and revenue

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Investing in b2b eCommerce software is an important strategic business decision, so here we examine why such an investment could make sense for your business, and the kind of benefits you can realistically expect in terms of both cost reduction and revenue growth.

From past experience, manufacturers, wholesalers and distributors that are assessing the merits of b2b eCommerce generally fall into two main categories:

#1. These companies are looking for ways to overcome a range of operational or strategic challenges they face in selling to customers. They are likely to be dealing with the inefficiencies of manual ordering processes and recognise that moving to eCommerce and automating these processes will reduce cost, cut out errors and free up staff time.

#2. These businesses understand the need for eCommerce; their customers are asking for it and they’re also seeing benefits accrue to competitors that have it. In essence the market is forcing these businesses to consider changing their approach to selling and encouraging them to open an online sales channel.

No matter which group your business falls into, all companies will need to run through a similar set of questions and considerations when determining the criteria and budget for a b2b eCommerce solution. Think about factors such as the cost and challenges associated with manual ordering systems, (including the cost of data entry, printing product catalogues, and staff time), and quantifying the increase in revenue and ROI that you require from moving to an eCommerce website. Having a clear view of what you expect from your technology investment will guide the kind of solution you choose, how you integrate it into your operations and the performance stats you track.

Cost reduction

With the right b2b eCommerce platform, costs should decrease or be eliminated in these areas:

  • Putting all product information online and automating ordering processes means that companies can cut out the recurring cost of designing, printing and distributing product catalogues and manual order forms.
  • Manual ordering processes usually include data entry procedures that are often repetitive and duplicated, for example re-entering order data into ERP and accounting systems, or taking orders by phone or from an email. Such processes waste valuable resources and time, which can be quantified as a financial loss. What’s more, without having to deal with manual processes, your staff could be concentrating on other tasks such as retaining customers, marketing initiatives, or personal visits to customers.
  • Unlike online orders that are checked by buyers before they click ’send’ and then immediately confirmed by automated email, manual order taking processes are prone to errors. Depending on the nature of the error, these mistakes can be expensive rectify and occur with alarming frequency.
  • Best-in-class eCommerce platforms integrate in real time with business and accounting systems (such as Sage and Pegasus) to display accurate inventory positions to potential buyers. This means that buyers are not placing orders for products that are out of stock – so your staff are not wasting their time managing and fulfilling back orders. The time your staff spend dealing with back orders can be quantified financially as a proportion of their salary.
  • If your company is already running a legacy b2b eCommerce system, maintenance and repair costs can quickly start to build. At the same time, old systems often operate in a silo, which can lead to inaccuracies and a doubling up on processes – all at a cost to the business.

Revenue growth

A best-of-breed b2b eCommerce platform can be expected to drive up revenue in these areas:

  • When companies switch to b2b eCommerce, we often see their customer base expand. New customers (and new revenue) can come from a number of different sources – from old inactive customers who are attracted to doing business online, to customers in geographical areas your sales team has been previously unable to reach.
  • Enabling your customers to easily access a detailed and comprehensive catalogue of products often results in them finding items they have never purchased before. For most, such an online catalogue is a big improvement on printed brochures, spread sheets or advice from time-pushed reps and leads to larger orders and greater product experimentation. In our experience, average online order values increase by up to 20% over previous manual systems.
  • A state-of-the-art b2b integrated eCommerce platform can open up a world of new marketing opportunities that help to build revenue and margin. For example, the ability to personalise offers, promotions, prices and payment terms can help to up-sell and cross-sell products, encourage product trial and increase basket size – which all adds up to more revenue.
  • Time is money, and when you move away from manual processes to an automated eCommerce system you can expect to generate more of both. Perhaps you’re losing business because your manual processes can’t keep up with demand, or may be your sales team is struggling to fit in enough customer visits each day – with an online ordering system there are no such restrictions. And the time your team save will allow them to focus on other revenue generating activities, such as new customer acquisition.