Evgeny Grigul is the cofounder of Virto Commerce, a B2B-first e-commerce innovation platform for enterprises.
For a long time, the importance of customer experience for B2B clients was underestimated. Businesses believed that B2B buyers do not care about difficult-to-formalize things like the convenience of working with suppliers. Now, everything has changed.
By investing in digital sales channels, companies expect a significant increase in revenue. McKinsey states that 94% of B2B decision makers say that, compared to the sales model they used before the pandemic, the new omnichannel sales model is the same effective or even more effective.
Does this mean that investing in digital customer experience will guarantee continued market share growth? The reality is more complicated. In fact, the role of digital commerce is determined primarily by the strategy employed by a company to be competitive and keep or extend its market share.
In this article, I’d like to share some insights on how digital commerce relates to your overall business strategy and what aspects you should pay attention to. Let’s take a look at three different ways businesses can focus on improving their overall strategy.
1. Customer Experience Competition
For many companies operating in a competitive market where consumers always have available alternatives, competition boils down to the fight to provide the best customer experience. To avoid direct price competition, companies try to attract customers with convenience, simplicity, transparency and efficiency.
The market often underestimates the importance of these factors for B2B. However, a Deloitte study shows that 87% of companies agree that the difficulty of doing business with the supplier is a reason to choose another one. For such companies, digital commerce is one of the critical elements of competitive strategy.
A good B2B digital commerce solution may significantly simplify the client’s work, speed up information exchange and make the client’s life easier. All that improves customers’ loyalty.
It is also important to note that, today, smaller B2B companies can still beat bigger competitors due to their use of digital commerce and their ability to make faster and smarter decisions in this area. Technologies are improving constantly, and there is enough room for creativity.
On the other hand, these companies can’t ignore the B2B digital transformation challenge, since they are under threat of disruption by aggressive competitors who are also trying to win the market with their better digital customer experience.
These companies must be ready to constantly improve their digital channels and business models in order to maintain their place in the market or at least keep up with competitors. They must pay attention to the long-term cost of innovation (I mentioned this cost component in a previous article), and they must be willing to invest in e-commerce over the long term.
2. Price Competition
Other companies are focused on price competition. For example, many wholesalers who serve fragmented retailers state that their customers are cost-obsessed and are mainly ready to sacrifice the comfort of doing business to get better prices and better marginality. Such cost fighters often see digital commerce as an opportunity to reduce the cost of sales.
For example, a large European wholesaler that we work with sells beverages to restaurants and bars. The key purpose of their B2B digital commerce platform is to reduce spending on sales representatives who are busy collecting orders in a traditional offline format.
Of course, this company still thinks about better customer experience. At the same time, they restrict offline order placement for small customers, making ordering in the B2B portal obligatory. Customers stay with this supplier because the supplier gives better prices due to improved productivity.
For such companies, B2B digital commerce acts as a part of a global cost management strategy, which includes the comprehensive automation of business processes. That is why they pay a lot of attention to long-term total cost of ownership and the ability to seamlessly integrate e-commerce with internal business systems.
3. Unique Product Offerings
Companies that win by offering unique products act completely differently.
One example is a company that produces unique components for electronics and smartphones. They win due to innovative technologies and have no direct competitors in the most profitable areas of their business. The company sells its products in huge quantities under long-term contracts and does not expect any significant benefits from digitizing sales.
However, this company is actively investing in purchasing optimization, where the potential gains are significant. Therefore, the company invests in the e-procurement marketplace, which can allow it to increase procurement efficiency significantly.
An intelligent digital commerce strategy should be a part of any company’s overall business strategy. This allows you to form reasonable expectations and set priorities correctly.
Recommendations
When defining a digital commerce strategy, it is necessary to answer several important questions:
• What is the key competitive advantage of your business? Is it customer experience, low prices, unique product offerings or something else?
• What is the purpose of your digital sales channels: strengthening key competitive advantages, reducing costs or something else?
• What is your level of digital disruption risk? How likely is it that competitors will disrupt the market by offering superior digital customer experience or fundamentally new digital-based business models?
Answers to these questions can help you formulate your goals and determine the requirements you must outline for any technologies, competencies or partners you acquire.
Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
