GD Topic - B2B Commerce from a Global Perspective
Six People having discussion on the topic: Ashley, Ben, Cindy, Dwayne, Eric & Fabian.
Category: Business
Group Discussion Starts
Ashley: Hello all! B2B Commerce, the process of business directly selling to another business, was once on a slow pace compared to B2C. But considering the present scenario of B2B e-commerce, with the mass appeal to B2B through online orders, this segment has a significant growth potential.
Ben: As rightly said by you, B2B ecommerce is growing at a faster rate of 19% year-over-year, reaching $3.2 trillion in the global market in 2015 and is expected to reach $6.7 trillion by 2020 which is twice its counterpart B2C’s growth of $3.2 trillion.
Cindy: One of the major reasons for B2B e-commerce to be higher than that of B2C’s is the unique process of ordering B2B products. In B2C ordering, which usually consists of ample of different products, B2B orders can be large quantities of the same product which can be single time order by a business.
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Dwayne: There are many reasons for more businesses going for it. Many retailers are opting for B2B e-commerce because it saves money. According to Forrester research, 90% on sales and operational costs are reduced off because of online orders. The other advantages include ordering in large quantities, high conversion and also the customers are more “brand loyal” compared to B2C segment.
Eric: Adding to your point, Global expansion for B2B through e-commerce is easier and reach can be easily done with the increasing penetration of mobiles. That means, it brings flexibility of selling in local region and as well far beyond. Also, as companies tend to buy large amounts of goods, so it increases transactional value and thereby, revenue. Nobody in B2B sells below cost.
Fabian: Apart from many add-ons, this segment is facing certain challenges like no product reviews which customers often look for, less advertising through social advertising and finding key manpower for B2B products sale is difficult.
Ben: Also, limited market could another problem. As it has a few buyers, even if one of them shuts their business, it leads to tremendous decrease in revenue. Long purchase decision making is other problem. And also, in this segment, buyers wield more powers than the sellers.
Cindy: The differences aren’t unfolded there. The B2B segment is attracting a different breed of entrepreneurs too. Unlike its counterpart B2C space, which is swarming with college dropouts or people with very little work experience, B2B entrepreneurs are experienced expertise, indeed with a deep understanding of offline B2B industry.
Ashley: Online selling of business products is not so easy for the start-up community. Some of the road blocks could be building trust among the consumers, usage of technology and difficulty in attaining forward logistics network for business products and supplies, which restricts reach, quick and error-free deliveries.
Cindy: If companies implementing B2C e-commerce also implements B2B segment, it benefits them in many ways like penetration into new channel, capturing more buyers and thereby can increase revenues.
Dwayne: B2B e-commerce overlaps with B2C. Recent study on Customer behaviour shows that 93% of B2B buyers go for online option when they have decided what to buy and out of 74% who search online, 30% of customers actually make orders. Even though 30% of conversion rate may seem to be low, but it is expected to increase to 56% in 2017 which is a significant number.
Ben: Looking into the future of B2B e-commerce in India, according to a report given by Walmart, India’s B2B e-commerce market reached to $300 billion and by 2020, it is expected reach $700 billion. The market opens doors to tremendous opportunities for B2B focused businesses with this estimated growth of $400 billion in next five years.
Eric: Also, implementation of GST in coming year would make India one market which can help B2B e-commerce flourish. Realizing this huge potential of this segment, Prime Minister Narendra Modi even had discussions with Alibaba's founder Jack Ma about the possibility of using B2B platforms.
Fabian: According some sources, Jack Ma was too in favour of the model as he considers it as the growth tool for SMEs. This move may benefit on to the export oriented businesses. Also, the segment is now expected to have exponential growth with Amazon launching its B2B portal in India.
Conclusion
Even though B2B e-Commerce more than holds its own in the fight against B2C e-Commerce on the balance sheet, more organizations are looking to maximize their revenue in both areas of the online retail business in the coming years. With the growth of B2B e-Commerce projected to reach unseen levels over the next five years, some retailers are taking the initiative to improve their B2B offering in conjunction with this growth to keep up with the increasing needs and expectations of B2B shoppers living in a B2C world.
Facts related to the topic
• B2B ecommerce is growing at a faster rate of 19% year-over-year, reaching $3.2 trillion in the global market in 2015.
• It is expected to reach $6.7 trillion by 2020 which is twice its counterpart B2C’s growth of $3.2 trillion.
• According to Forrester research, 90% on sales and operational costs are reduced off because of online orders.
• According to a report given by Walmart, India’s B2B e-commerce market reached to $300 billion and by 2020, it is expected reach $700 billion.
• Current conversion rate is 30% and it expected to increase to 56% in 2017 which is a significant number.
This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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