If you’ve ever been confused about B2B E-Commerce, you’re not alone. In fact, it’s one of the fastest changing industries in the world. While it’s true that a growing number of B2B buyers are expecting a B2C-level purchasing experience, for example, it’s also true that 75% of purchases are still offline. But what does that mean? Do B2B buyers simply not want to purchase online?
No, quite the contrary!
This article aims to debunk some of the biggest myths in B2B E-Commerce today. Continue reading to learn more!
Myth 1: B2B Customers Don’t Want to Buy Online
Due to the traditional nature of B2B transactions, you'd be forgiven for thinking that B2B customers don't want to buy online. However, this couldn't be further from the truth. In fact, a growing number of B2B buyers prefer the convenience and efficiency of online purchasing. In reality, a significant portion of B2B customers prefer online purchasing. McKinsey's analysis shows that over 30% of B2B customers already use digital self-serve channels, and 77% are willing to spend up to $50K online. Additionally, a DemandSage report indicates that 89% of B2B researchers gather information about potential purchases from the internet.
Digital platforms offer a streamlined process, from product discovery to order placement, making it easier for businesses to meet their procurement needs. The digital marketplace is not exclusive; it's inclusive, offering tools and opportunities for businesses of all sizes to thrive.
Myth 2: B2B E-Commerce Eliminates the Need for Sales Reps
The misconception that E-Commerce could replace sales reps stems from the success of B2C E-Commerce, where the role of traditional sales personnel has diminished. That success essentially leads to the assumption that the same would apply to B2B E-Commerce. But while it's true that digital platforms can automate many aspects of the sales process, the role of sales representatives remains crucial. If fact, in a recent study, 44% of respondents ranked phone calls as the most effective way to close deals, emphasising the importance of sales reps in the sales process. They provide valuable insights, build relationships, and offer personalised solutions that a digital platform alone cannot. The key is to integrate E-Commerce with your sales team to enhance overall customer experience and drive growth.
Myth 3: Offering Net Terms for B2B E-Commerce is Complex
As it currently stands, this is actually true! A huge caveat here though is that it doesn’t need to be. Let’s look at the traditional way of offering net terms in B2B E-Commerce to understand why it’s so complex:
When you sell on net terms to your B2B buyers, you allow them to purchase goods on credit and settle the payment at a later date. The specific steps involved in setting up trade credit can vary, but typically include:
- Credit approval: Before extending credit to a customer, it's important to verify their ability to repay the invoice. This may involve assessing their credit history and performing other due diligence. Often, a 3rd party is involved here.
- Setting credit limit: After a customer is approved for credit, you'll need to determine how much credit to extend based on the information gathered during the credit assessment.
- Setting payment terms: The terms of the trade credit, including the credit limit and the length of time before payment is due, are usually negotiated between you and the customer. Payment terms of 30, 60, or 90 days are most common.
- Collecting payment: At the end of the payment term, you need to collect payment from the buyer. The ways in which you can do this vary but generally it’s either managed in-house or with the help of a 3rd party.
Unfortunately, selling this way is fraught with issues for you. The most immediate impact is that it creates cash flow issues, sometimes on a drastic scale. You’re also forced to take on the credit and fraud risk making selling on net terms incredibly risky if your buyer doesn’t pay on time.
Then of course, you need to manage all the admin. Invoicing, statements, paperwork for credit applications and approvals…the list goes on and on. This endless stream of paperwork creates severe operational bottlenecks that slow you down and make growing your business difficult.
So what can you do about it?
Utilising BNPL in B2B E-Commerce
B2B Buy Now Pay Later (BNPL) is a payment method that utilises newer technology like embedded finance and automatic payment reconciliation, helping to solve the pain points of traditional net term selling. Buyers can defer payment or divide purchase costs over a certain period while you get paid straight away.
Since B2B BNPL is digital, merchants can offer it on e-commerce websites, marketplaces and various online platforms. Nevertheless, the realm of B2B BNPL extends beyond the virtual domain, with tailored products designed for telesales and omni-channel sales gaining prominence in the market.
Increased conversion rates
Buyers who don’t use credit cards have to float their working capital by fronting their expenses to make purchases. And the companies who do use credit cards often run into card limits that prevent them from buying what they need.
But BNPL B2B makes purchases seamless. Buyers no longer need to chase down that one employee with a corporate card or expense business purchases on their own account. This ultimately allows buyers to place larger orders without running into cash flow problems.
Merchants like Glamit, for example, have experienced a +20% uplift in conversion rate after offering BNPL B2B with Two.
Reduced administrative time
Many merchants are simply unable to tap into the demand of purchases by invoice because it requires too much manual work. Managing an invoice payment solution in-house requires specialist staff to organise invoices and stay on top of payments.
But with BNPL B2B, merchants can simplify operations across multiple departments and save time, making it super easy to stay organised and save multiple hours a week in manual work.
Offset credit and fraud risk
Working with third parties to run credit and ID checks is a necessity if you manage invoice purchases in-house. However, once a buyer is approved, there’s still risk involved. What happens if the buyer doesn’t pay? And how do you know if the ID verification or credit checking process was comprehensive enough?
Merchants operating with little fraud knowledge are often left exposed, sometimes with dire consequences. BNPL B2B removes that risk. B2B payment providers perform comprehensive credit and fraud checks (or work with financial partners who perform the assessment themselves) for an uninterrupted buying experience.
For the seller, that means being able to offer net terms without the stress of fraudulent orders.
Improved cash flow
One of the drawbacks of traditional trade credit is that the seller is forced to wait until the end of the invoice term until they receive payment. This can lead to a whole host of cash flow problems for the seller that prevents them from growing their business and expanding.
To mitigate this, it’s common to resort to invoice factoring, invoice discounting, or bank loans - none of which are an optimal way of growing. But the nature of BNPL B2B means that merchants are paid upfront for their invoices, often with help from financial institutes the B2B payment platforms work with.
Any B2B payment platform worth its salt will also reconcile payments. That means saying goodbye to chasing late payments on a daily basis.
Myth 4: B2B E-Commerce is Only for Large Enterprises
Many believe that B2B E-Commerce is only for large enterprises thanks to the fact that it's these larger companies who were the early adopters. In reality, small and medium-sized businesses (SMBs) are increasingly leveraging e-commerce platforms to streamline their operations and reach a broader audience. Modern solutions are designed to be user-friendly and scalable, making it easier than ever for businesses of all sizes to transition to digital sales channels. The digital marketplace is not exclusive; it's inclusive, offering tools and opportunities for businesses of all sizes to thrive. For example, Forrester projects the B2B E-Commerce market in the U.S. to reach $3 trillion by 2027, indicating broad adoption across businesses of various sizes.
Myth 5: B2B Buyers Don't Care That Much About Personalisation
There's also a misconception that B2B buyers don't care that much about personalisation. B2B transactions are often viewed as rational and driven by objective criteria like price, product specifications, and service levels, unlike B2C transactions that are seen as more emotional and brand-driven. The emphasis on technical and operational factors in B2B transactions can overshadow the importance of personalisation.
However, digital platforms can enhance personalisation through data analytics and customer insights. By understanding your clients' purchasing behaviours and preferences, you can tailor your offerings and communications to meet their specific needs, fostering stronger relationships and loyalty. Personalisation is not just a B2C trend; it's equally important in the B2B space.
Business Wire reports that 80% of B2B buyers are more likely to engage with a brand that offers a personalised experience. LinkedIn also highlights that 52% of B2B customers may switch brands if a company does not personalize communication.
To learn how you can get the most out of B2B E-Commerce and set your business up for success, book a demo with Two today!
