What is E-Commerce?
Before going into details about B2B E-Commerce, it is important to understand what E-Commerce itself is. In its’ most basic definition E-Commerce is “any commercial transaction conducted online” (ECommerce Guide, 2018). This means whenever you buy or sell anything online you are involved in E-Commerce. Business to Consumer (B2) E-Commerce, where a private customer buys a good online form a commercial business, is something that most likely everyone in this group has already engaged in, for example by buying something from Amazon. B2B E-Commerce (Business to Business), is the processes of businesses selling goods online to other businesses, either via marketplaces such as Alibaba.com or directly, such as Salesforce.com.
The Awakening Giant
When most people talk about E-Commerce they automatically think about companies like Amazon or Best Buy. However, today the B2B E-Commerce market (7.7 Trillion USD). is more than three times the size of the B2C market (2.3 Tn USD) according to statista.com. This discrepancy is predicted to increase even further with the B2B E-Commerce market predicted to grow to 12 trillion USD by 2020 and the B2C market “only” growing to 2.5 trillion USD, making the B2B market almost four times the size of the B2C market (Frost & Sullivan, 2018). More and more business-customers are willing to engage in online business, largely enabled by many tech savvy millennials now coming into positions that are responsible for purchasing. Growing markets include especially China, that is today already the largest country in terms of E-Commerce revenue (Business.com, 2018).
Source: https://www.shopify.com/enterprise/global-ecommerce-statistics
Manyfold advantages for the companies with some challenges
By switching to E-Commerce from traditional body based selling, companies can drastically decrease their overhead costs, since the E-Commerce platforms require less personell and are easily and very cheap to scale and of high flexibility (eSalesTrack, 2018). This can be of high importance in industries with seasonal or irregular demand patterns. Further, E-Commerce allows for sales 24/7, which might be interesting for smaller companies with global customers, that do not have to rely on sales personnel in different time zones any more. Challenges by the new sales channel include the high upfront installation costs, timely implementation and higher costs of potential server down-time due to lost sales.
The business potential varies by industry, but overall, the growing B2B market offers a huge opportunity for many established companies, that are just now moving into this new way of engaging with their customer.
References:
eSalesTrack, 2018; http://www.esalestrack.com/blog/2008/09/advantages-and-disadvantages-of.html
eCommerce Guid, 2018, https://ecommerceguide.com/guides/what-is-ecommerce/
Business.com, 2018, https://www.business.com/articles/10-of-the-largest-ecommerce-markets-in-the-world-b/
Frost & Sullivan, 2018, https://ww2.frost.com/news/press-releases/southeast-asia-b2c-e-commerce-market-expands-285-q4-2017-gross-merchandise-value-over-us6-billion-finds-frost-sullivan/
