A Practical Guide to Breaking Down B2B E-Commerce Barriers

By Ian McCue, commerce and retail reporter
7-minute read

Anyone working at a business-to-business (B2B) company today is aware of the recent rise of e-commerce in this sector.

While business-to-consumer (B2C) e-commerce continues to grow steadily, online B2B sales are on a steeper upward trajectory. In 2018, B2B e-commerce sales exceeded $1 trillion for the first time, Internet Retail estimates, and Forrester expects that number to climb to $1.8 trillion over the next four years. While launching a B2B e-commerce channel requires a lot of time and a substantial budget, opening this channel could more than make up for the investment.

At the same time, online-only retailers may want to start selling their products through large brick-and-mortar retailers -- after all, in-store purchases still account for close to 85% of all retail sales.* For e-commerce companies, making products available through third-party stores and other e-commerce sites can unlock a level of growth that's difficult to achieve selling only through one site. This type of wholesale distribution remains a critical, if overlooked, channel, especially for brands that came of age online.

As customer expectations continue to change in both the B2B and B2C worlds, selling through multiple channels is increasingly a requirement rather than an option. Businesses that ignore these forces, which shape buying behavior, face an increasing risk of losing customers and potentially their businesses.

To assist organizations embarking on either of these business journeys, we’ll walk through the timelines of two fictional organizations: one preparing to launch a B2B e-commerce site, and another that has exclusively sold online and is trying to break into retail distribution. Their project milestones span five fiscal years, though some companies may move faster or slower in real life. Check it out:

wooddistributors

Wally's Wood Distributors

Wally Smith started his wood distribution company 25 years ago, selling both standard and exotic woods from around the globe. The business primarily sells to furniture makers and artists via phone, email and fax.

For years, Wally saw no need for a website. Wally's oldest son, Will, recognizes the opportunity to provide information about the company online and sell products via e-commerce. Wally is initially skeptical, but starts to buy in as his son shows him statistics about the swift growth of B2B e-commerce and points out that several competitors already have an e-commerce site.

paulinespooltoys

Pauline's Pool Toys

For six years, Pauline Wilson has been manufacturing pool toys in a small factory and selling her products exclusively online to consumers. Pauline's Pool Toys’ large following on Facebook and Instagram drives much of its business.

Pauline thinks she can accelerate growth by getting products into big-box stores where a new group of shoppers will see them. A VP, Caroline, agrees it's smart to generate sales through a new channel and Pauline asks Caroline to take the lead on this project since she has a basic understanding of how this channel works.

Year One

Wally's Wood Distributors

Start a Marketplace, Select a Platform

Wally's Year one
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Will meets with each department to outline the plan for selling online and address concerns. He then finds a B2B e-commerce consultant, who suggests Wally’s Wood start by selling on Amazon Business. Late in year 1, the company finds an e-commerce platform that supports its functional requirements and integrations.

Pauline's Pool Toys

Tradeshows and Networking

paulinespooltoys

Pauline’s Pool Toys purchases booth space at six carefully selected industry trade shows and tries to build a connection with the purchasing departments at two retailers that seem like a fit, Savers Warehouse and Pool & Patio. They both eventually express interest in the business’s products.

Year Two

Wally's Wood Distributors

Find a Developer and Go Live

Find a developer
wooddistributors

The company finds an outside developer to build its e-commerce site while an employee creates product content for 650 select SKUs. Wally’s Wood maps out integrations to its e-commerce platform and uses a third party to ensure it’s secure before the site goes live near the end of year 2.

Pauline's Pool Toys

Prepare Operations for Distribution

paulinespooltoys

The pool toys business gains the attention of decision-makers at both retailers and they agree to a trial run. Pauline’s Pool Toys finds and sets up an EDI system – which it needs to automatically share product information with these bigger retailers – and reassigns an employee to manage this channel.

Year Three

Wally's Wood Distributors

Optimize the Customer Experience

wooddistributors

Will ensures his sales reps earn commission on online orders and asks them to spread the word about the new site. The company then gets to work on site improvements, adding more product images and faceted search while improving site search. Next up: SEO optimization for transactional keywords.

Pauline's Pool Toys

Expand Online

paulinespooltoys

The big-box stores start selling the company’s products online, with Pauline’s Pool Toys serving as the drop shipper. Sales gain traction on those third-party sites, and that makes up 50% of the business’s revenue by the end of year 3. Caroline also finds two Chinese manufacturers to help scale production.

Year Four

Wally's Wood Distributors

Expand the Catalog, Give Customers Options

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Wally’s Wood continues to enhance its site with improved navigation, recommended products and a “request for quote” feature. Eighteen months after going live, online sales have more than doubled. The company adds all remaining products that had not been available online to the site, along with informational pages for wood-finishing and cutting.

Pauline's Pool Toys

Retailers Stock Products, Increase Selection

paulinespooltoys

Both retailers want to keep thousands of the brand’s products in their own warehouse to keep up with growing demand, meaning Pauline’s Pool Toys must now follow each retailer’s compliance standards to avoid chargebacks. By year end, the company’s products have moved into Savers Warehouse and Pool & Patio stores.

Year Five

Wally's Wood Distributors

Explore New Opportunities

wooddistributors

The business eyes operational improvements to speed up fulfillment, shipping a majority of orders same-day. E-commerce now accounts for 20% of sales, and Wally’s Wood explores opportunities to sell through other online and offline third parties. Will and Wally even have early conversations about launching a direct-to-consumer channel.

Pauline's Pool Toys

Expand Distribution, Develop Exclusives

paulinespooltoys

Greater brand awareness gives Pauline’s Pool Toys has the opportunity to sell through additional physical and online stores. It also develops a few exclusive items for Savers Warehouse at the retailer’s request. Five years in, big-box retail is responsible for half of all revenue, and the exposure that also boosts direct-to-consumer sales.

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The tremendous promise of multi-channel retail

As demonstrated here, building a new sales channel from the ground up requires a true commitment of time, energy and support from across the organization. However, the potential payoff is great, whether it’s an old-school company moving into B2B e-commerce or a pure-play online retailer looking to sell through big-box stores.

While opening up a new channel is difficult, it should not be completely overwhelming, and companies must realize they can start by dipping their toes into online commerce or big-box retail, as Wally’s Wood Distributors and Pauline’s Pool Toys did, rather than diving in headfirst. Let the results of those first steps determine the future investment in and resources dedicated to that channel.

The only unacceptable reaction to this changing landscape is inaction. Start looking for ways to diversify revenue channels now, before it’s too late.

 

 

*This past fall, Digital Commerce 360 projected 2019 e-commerce would account for 16%+ of all retail sales. It’s still too early for final numbers on 2019. The U.S. Department of Commerce actually put the number at 10.5% in Q3 2019, and it’s lower because it includes sales for things like gas, cars and restaurants/bars that aren’t typically bought online.