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Ecommerce in South Africa is enjoying explosive growth, with the total internet shopping spend in 2014 estimated to be near the R6-billion mark, increasing exponentially over the last decade from R688-million in 2006. However ecommerce in South Africa is still in its infancy compared to the rest of the world, especially when it comes to B2B ecommerce.
Everyone has heard of the large consumer sites where every day millions of people purchase everything from laptops to groceries. What most consumers don’t see is the $1.25-trillion business-to-business (B2B) industry, where companies sell to other businesses rather than directly to consumers. This massive industry has just recently awoken to the benefits of ecommerce as an incredibly powerful marketing, sales and business channel.
Currently, B2B ecommerce sales remain relatively small compared to business-to-consumer transactions, but this is set to change as companies become aware of the opportunities and benefits. In the US, over 42% of companies’ sales were conducted through B2B ecommerce in the past year, highlighting the massive potential for ecommerce in this sector. Leaders such as Amazon are already playing in this space. The traditional market comprises manufacturers selling to distributors, who in turn sell to end users. B2B operator Amazon Supply is linking the manufacturers to the end users directly at cheaper prices, upsetting the status quo, particularly for distributors.
However, examples like Amazon Supply are currently in the minority. The established B2B players are often stuck in their old ways and scared to embrace the change that is coming, and this has limited the uptake of B2B ecommerce. Despite this, B2B ecommerce is already happening and its uptake is inevitable. More and more buying decisions are being made on the internet, and for any business looking for future growth and ongoing relevance, an online presence is vital.
From a B2B perspective; there are four main drivers of B2B ecommerce:
Customers or reps ordering online are more efficient than those using traditional means. There are fewer phone calls and less paperwork, and orders can be processed straight into the ERP system. Client spend always follows the 80/20 rule and online is a great way to service the lower value customers without hiring a large rep or sales force.
Many of the traditional means of collecting orders are prone to errors. When customers have the ability to order exactly what they want, it leads to fewer inaccuracies and better customer satisfaction
3. Exposure to other products
It is our experience that reps and salespeople sell what they know. By analysing buyer behaviour through algorithms, ecommerce websites can expose buyers to products that are related to what they are buying, which they may never have been exposed to. We often find interesting correlations between seemingly unrelated products.
Ecommerce can handle an unlimited amount of orders at any time of the day or night. If your business is growing, it is often the most cost effective way to manage the sales’ order process.
Manufacturing and ecommerce
Now is the perfect time to roll out B2B ecommerce. All the infrastructure and technologies are in place and they offer the consumer unprecedented access to products. Whether it’s B2B or B2C, there’s never been a better time to start investing in ecommerce.
The most important decision to make is the level of investment. It should be related to the size of your potential market and the opportunity to move your customers online. If the investment is too large in the beginning, the returns will take a long time to materialise. If the investment is too small, then your competitors will get first mover advantage.
The best approach to adopting B2B ecommerce is to adopt a phased, three-fold approach,: ‘build’, ‘run’ and then, ‘constantly improve’. Many B2B companies that have implemented ecommerce solutions have found that there’s an initial uptake of between 30%-50% of their existing customer base onto B2B platforms within the first 6 months. During this time, enhancements to the ecommerce site can be made as you begin to understand your customers’ online habits and needs. It’s also wise to remember that ecommerce is an evolving channel that requires continuous updating as technologies and user behaviours changes.
Buyers of the world are also consumers and consumer behaviour is shifting rapidly towards comparing and buying products online. This behaviour heavily influences the B2B ecommerce world and will result in massive B2B sales in the coming years.