Virtual panel discussion: E-commerce – the pros and cons for B2B

Despite the rapid growth in the use of E-commerce by both consumers and businesses, not all e-commerce developments are a success. The reasons for this vary and are often dependent upon a particular set of circumstances or issues. We invited a number of industry experts to share their views with us around issues that surround E-commerce, in a virtual panel discussion.

Are you currently offering an online e-commerce service to your business customers? If you are, how successful has your company been?  If you are not already offering an e-commerce service to your business customers are you considering introducing such a service? What is holding you back?

Brian Andrew, GM RS Components speaks from experience.”RS Components launched its first online trading website in 1998.  “Our first platform allowed customers to place orders online whilst being able to access related product information. It continually evolved with our first fully integrated site launching in 2009, which allowed, amongst other things, up to date pricing and livestock availability. Since providing full integration, which substantially improved the use of the ecommerce channel, it has grown to be our largest order channel. It continues to outperform the other traditional channels of fax, email and telephone, and as testimony of the success thereof we now deliver over 50% of our sales online. Within our ecommerce channel offer, we also provide ‘purchasing manager’ and ‘punch out’. Purchasing manager is a free procurement work flow approval system hosted on our website that provides an online procurement solution for medium sized businesses. For the large business that uses ERP (enterprise resource planning) systems such as SAP, we offer full integration with our website through our ‘punch-out’ system. This allows these customers to pull their shopping basket from our website into their order systems.”

Paul Swartz, head, strategic consulting and implementation, Argility joined the discussion from a different perspective.  “We  provide a range of solutions and services that enable large and medium size organisations to transact with their customers (both B2B, and B2C) across any channel of engagement (multi-channel and omni-channel), including e-commerce. The most common obstacles we see when engaging with the market both here in South Africa  and in Europe are concerns around perceived technology and logistical complexity, cost and ultimately ROI. While there are many organisations that have reaped the benefits of B2B and even B2B2C, there are many that have failed, and for multiple reasons. These range from organisational alignment and strategy, to poor or incorrect technology implementation, right up to ineffectual business process. The reality is that e-commerce is no longer just a B2C ploy.

“Our focus is on assisting customers to establish and enhance the channels with which they engage and transact with their customers, partners and suppliers. In today’s day and age, it is becoming increasingly important to move beyond even a multi-channel engagement model and to embrace omni-channel. In order for an organisation to truly reap the benefits of B2B, it is essential that it form part of an integrated engagement strategy that leverages the opportunities that the evolution of technology has made possible – a tall order but quite possible when working with the right partner.”

Many B2B companies believe that e-commerce could create channel conflicts between sales personnel, suppliers, and other channels. What is your view? How would you integrate e-commerce with your other sales channels?

Brain Andrew: “A small amount of channel conflict does occur but this is outweighed by advantages that e-commerce offers.  We prefer to not see e-commerce as a competing channel, but rather as an important complementary channel that makes it easier for our customers to do business with us. Sales personnel are still an integral part of our business.  They are needed to manage relationships, engage in educational consultative selling and to grow our important customers. In saying all of this integrating ecommerce into your business does require a shift in traditional mind-set and how resource is utilised as well as careful co-ordination of messaging.  The channel is dynamic and this requires the business to be agile and quickly adaptable to change.”

Paul Swartz: “This is where effective multi- and omni-channel strategies should be implemented, whereby all sales channels in the organisation are managed and governed through effective business processes and a comprehensive single view of the customer, and where the B2B e-commerce channel is seen as an extension of the organisation and an additional mechanism of achieving organisational growth. Technology and business process play a pivotal role. Enterprise service integration and business process automation are hugely beneficial to any Ecommerce strategy, as are detailed analytics and a single view of the customer. Organisations that are integrating B2B as a channel in a holistic e-commerce strategy are achieving far better results than those who haven’t.

“The introduction of multiple engagement channels has the potential to create conflict and confusion if they are implemented in isolation. Where they form part of a well-considered omni-channel engagement strategy, they can enhance the experience of all concerned due to the transparency and consistency they introduce.”

Lindsay Britz, marketing manager, Magic Software SA says that  buyers tend to have different needs. “This is obviously dependent on the specific industry and product. Some prefer face to face interaction; some prefer the efficiency of just doing it themselves. If providing an e-commerce option enables these efficiencies and streamlines the value chain, why not offer it? Online, self-service e-commerce should not negatively affect your sales channel. It simply provides a supplemental engagement tool – similar to the concept of customer’s window shopping in the physical brick and mortar store and purchasing later via the online store.”

Beyond channel conflicts, are there, in your opinion, other obstacles in offering a successful B2B e-commerce?

Paul Swartz” One aspect that organisations constantly battle with is the alignment within the different functional areas of their business. Sales and marketing, operations, finance and IT stakeholders all have differing objectives, concerns and challenges when it comes to an e-commerce strategy. Furthermore, the relentless pace at which technology develops results,  means that new engagement channels are constantly evolving, making is difficult for business to keep up.

“Integration of traditional business processes and channels in the Ecommerce world also causes major obstacles for a lot of organisations, and ultimately the decision to change, adapt or completely redefine a business model, while remaining responsive to customers and ever changing market dynamics, is no easy decision to make or take. A comprehensive strategy, well considered design and effective implementation of the underlying systems and business processes is the only way to ensure that organisations are able to keep up with the demands that a changing society is placing on business.”

Brian Andrew: “We find a real challenge in that many corporates restrict access to the internet, instead of rather putting controls in place, to monitor errant usage. It is inevitable that for commodity type products that companies would want to reduce their overall cost and leverage the efficiencies the web can offer.  We believe that this will eventually open up internet access to all staff.”

Lindsay Britz: ”Most e-commerce systems require a big investment and you need to make sure that you chose the right components as well as the right integration tool to connect all of them. The integration component is often not given the weight of the other components, which can be a costly mistake as it is critically important that each system have up-to-date information to provide customers with correct information about product availability, and to keep the whole system operating efficiently regardless of the traffic load.

It is common knowledge that South Africa lacks sufficient access to broadband. Do you believe it to be an issue or just an excuse for not moving into the e-commerce space?

Brian Andrew: “Broadband costs are still excessive and the speeds still too slow in relation the rest of EMEA. Unfortunately the Telkom monopoly and control over the last mile is causing us too fall behind.  That is however still not a reason to stay out of the ecommerce space and if you are not in this space already, it is going to be hard to catch up.”

Lindsay Britz: ”The number of internet users on the African continent grew at seven times the global average, clocking more than 3600% growth between 2000 and 2012, to 167-million users, according to data from Internet World Statistics. In fact, the African region is also witnessing one of the strongest increases in mobile data usage in the world, predicted to double between 2014 and 2015, and with a 20-fold increase by the end of the decade. We can no longer use lack of connectivity as an excuse. If companies don’t start implementing e-commerce systems soon, they take the risk of falling behind”

Paul Swartz: “There are still obvious shortcomings in certain vertical sectors (agriculture, education, mining) when it comes to adequate broadband coverage, and in these verticals, multi-channel B2B e-commerce is a solution that can bridge those shortcomings. In fact, the shortcomings in adequate broadband coverage enhance the need for an omni-channel engagement model. In a multi-channel model, customers can transact via the web, call centre, mobile apps, in-store or traditional road warrior sales. For the most part, the proliferation of B2C e-commerce is going to continue crossing in to B2B models, providing access to new markets and opportunities for many organisations.”

What are the biggest obstacles to set up a B2B e-commerce channel? What advice can you give new entrants? Should they it be done in-house or outsourced?

Brian Andrew” I believe the biggest obstacle is  deciding which technologies to use as well as the associated set up and maintenance costs .  I would suggest that the development is outsourced to the experts as the technologies, and the work associated to setting up these platforms, requires specific skills that are constantly evolving. To ensure that customers return to your site, you need to provide a user friendly experience and value adding service.”

Paul Swartz: “There are many possible pitfalls and obstacles on an e-commerce journey: choosing the right strategy, the right partners, driving effective change – all of these factors have their role to play. Finding the most effective entry point into a B2B e-commerce strategy could involve outsourcing certain components (reverse logistics, business process automation, data cleansing/integrity management, order to cash cycle automation), sourcing new technology, engaging in a BPaaS offering, or developing an integrated platform. There is no one size fits all, or proverbial silver bullet.”

Lindsay Britz“E-commerce is closely coupled with sales, marketing, support and logistics. As a result, decisions should come from within and be highly integrated with all these departments and backend systems. There are a wide and growing variety of local and global e-commerce platforms that enable enterprises to develop and manage online stores with relatively low maintenance.

“The biggest obstacle I believe is the ability to simply blueprint the shopping and payment experience. Make the process simple and convenient. A paint by numbers approach is always best – if your granny can get through the checkout, anyone can. The same can be said about your backend systems.

“By enabling the automation of business processes and the synchronisation of data between the company’s online storefront and its backend systems, including CRM, ERP, and warehouse management as well as across vendor, partner and supplier systems, no matter where they physically reside (on premise or in the cloud), orders can be fulfilled more quickly, accurately and securely.”

Do you believe that the B2B e-commerce should be extended to include end-customers?

Brian Andrew: “This could very well be different,depending on one’s business model, but the web gives you direct access to the end user. Our main customer is the end user in business; however anyone who wants to can buy online from us.”

Paul Swartz: “While it may seem to be wishful thinking due to the inherent complexity, and some of the issues raised in previous questions, it certainly is possible, there are organisations out there that are doing it successfully. More importantly, there are organisations out there that are experiencing great results. If it fits the business model, and can be achieved off the same platform, why not? Beware of the pitfalls of inadequate business processes, and poor data quality in terms of customer data (B2B customers and end-customers). Put solid building blocks in place, and factor this into your strategy.

“There is no reason why a B2B e-commerce offering cannot be extended to include a B2C engagement, provided that this forms part of a considered engagement strategy that takes into account the various stakeholders and creates rather than destroys value for the entire chain. Leveraging a single integrated platform removes complexity, eliminates duplication and can provide a single version of the truth across multiple channels.”

Lindsay Britz: “Incorporating the end-customer does change the game substantially. By doing so, how do the resellers add their value to your product or service? How do they add their margins? Do they become redundant within the value chain? This being said, some companies have successfully offered skinning options for their online platforms (such as Baron Clothing), offering their resellers the ability to add their logo and embed the platform within the reseller’s website.”

Are the delivery mechanisms (e.g. courier companies) efficient and cost-effective enough to make a B2B e-commerce profitable or do you use your own delivery vehicles? Have you considered outsourcing delivery?

Brian Andrew: “For the main centres across the country, the use of outsourced delivery mechanisms is efficient and cost effective. The challenge lies with the outlying areas where most courier companies subcontract to smaller local providers, which can impact service and cost.  Our delivery is outsourced, or the goods can still be collected at our premises if requested when placing the order online.”

Paul Swartz: “Recently we have seen a number of innovations in the market that move beyond in-house vs outsourced delivery mechanisms, some of which are about to launch locally (locker based pick-ups, depo drive-ins, affiliate driver services, etc.) The jury may be out on whether or not these will be cost-effective for the B2B e-commerce market, but there is certainly a tendency to rely on external logistics companies, who already have the capability, as opposed to building the logistics capability in-house. In our opinion, it’s an area of the value chain that is desperate need of further innovation to make Ecommerce more and more effective and profitable in the face of the logistical complexity that is introduced by offering customers more engagement channels.”

Lindsay Britz: “Businesses can also integrate their e-commerce and m-commerce (mobile commerce) systems with third-party fulfilment services to streamline the purchase process. Real-time system integration enables customers to have online access to real-time inventories, pricing, and be able to track their own order status including delivery dates, translating into better customer service. Real-time information flows with suppliers and shipping companies enables immediate shipping from the closest warehouse to optimise delivery time.”

Thank you to our panellists for their views on e-ecommerce. Perhaps we have not adopted ordering online as much as elsewhere in the world. Is it the lack of a delivery service like UPS in the USA? It can take five to seven days for delivery if one uses the free service companies offer. Just a knock on your door and you know your parcel is on your front porch. Something the Post Office should look at if they want to become relevant and stay in business. Your letters and comments are invited.

 

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