Business-to-business is the next e-commerce wave.
While Amazon.com, CDNow and Gap.com are staking out territory in consumer e-commerce, a growing number of sites are targeting the burgeoning business-to-business online market instead. If this category is less sexy, and more low-profile, it nevertheless has all the makings of a high-profile success story.
The numbers are certainly fodder for those who want to see business-to-business as the next online gold rush: Annual business-to-business e-commerce is expected to soar from $43 billion last year to $1.3 trillion by 2003, accounting for 9.4 percent of business sales, according to Cambridge, Mass.-based Forrester Research.
Business-to-consumer commerce, by contrast, will grow from $20 billion in 1999 to a mere $184 billion by 2004, accounting for only 7 percent of total retail spending.
The category is a broad one, encompassing everything from truck leasing to paper clips. While technology companies and IT professionals may be used to ordering computer software and hardware online, the market is broadening way beyond that. Companies and employees of all kinds are becoming more comfortable with ordering goods online.
Office managers are being weaned off their catalogs and are instead becoming accustomed to ordering office supplies online. Jobs from accounting and printing can be outsourced with just a click of a mouse. And marketing and advertising professionals are finding some of their responsibilities can be handled via the Net.
The boom has also spawned new online business-to-business services, such as Campbell, Calif.-based Portera.com, which helps companies that sell to businesses to get wired. The site, which calls itself “the new online headquarters for the professional services industry,” offers services ranging from a business trip travel center to a subscription to a “ServicePort,” which provides tools designed to help businesses enhance productivity.
“Before launching [the site],” remembers CEO Gary Steele, “we needed to get close to our customers to find out exactly what they wanted. We held 75 fact-finding meetings with execs at large and mid-sized companies … they wanted hosted services, where the software vendor runs and maintains all the complicated server applications.”
One of the reasons pundits predict that companies will increasingly do business with one another online is simple convenience.
Business-to-business customers “want more efficient ways to procure essential office and business products and services,” says J. Weston Rose, president and CEO of MadeToOrder.com, a Redwood City, Calif.-based firm which offers such items as corporate logo apparel, promotional items and business gifts online.
Of course, the Internet’s stupendous reach has not been lost on this sector, either. “This is the biggest distribution channel of the century,” says Rosanne Esposito, co-founder, president and COO of San Francisco-based busybox.com, which builds and manages sites for digital imagery clients. Its services include recently launched Reelstock, a site offering high-quality film and video stock footage for immediate download.
She adds, however, that business-to-business e-commerce was not always such a clear-cut solution. She says it’s only been “the past one and a half to two years, that companies have increasingly modified their business models to provide an environment, a community and a buying opportunity to their business customers for both hard goods and soft goods.”
The added advantage of business-to-business e-com is the basic fact that most businesses are wired internally. Desktop Internet access is almost universal, and that’s all employees need to restock the paper supply, or order a bronze plaque for the staffer of the week.
“We are targeting business prospects for business gift buying from their place of work, for work,” explains Al Campa, executive vice president of marketing and business development for San Francisco-based Bravogifts.com, a site offering gifts “for every business occasion.”
“Our customers have the Internet at their fingertips and are using it everyday as part of doing business,” he says. “Buying business-related gifts on the Internet should be as natural as checking a stock quote. And unlike many consumer categories, busy business professionals value convenience over other factors, like being able to touch and feel the items.”
Online business-to-business-ers are also discovering what their consumer comrades have discovered in their still-young lifetimes: Online transactions aren’t just a convenience–they’re a way for businesses to enhance client satisfaction with creative customer service solutions.
“Personalized transactions that put a human touch on purchases will become more and more important,” with business-to-business sites automatically reminding clients when they need to restock or suggest alternative products or services, suggests Richard Steedman, president of The Stock Market, a Manhattan-based stock art supplier that now can conduct any and all transactions online at its site, stockmarketphoto.com.
Esposito agrees, arguing that the trend is moving toward more elaborate customer interaction. “More attention [is being] paid to the experience,” she says. “Companies wanting to offer multimedia e-commerce-based services via the Web are still trying to simplify and personalize the process so that the experience is better and more focused for the buyer.”
According to Esposito, busybox.com tried to build its online venture with these tenets in mind. “Understanding what the user or buyer really needs may sound trite, but it has driven the features of Reelstock.” Included in the site: attention to user control and personalization; simple pricing models; licensing deals that are pre-negotiated and transparent to the user; secure easy-to-understand account management and buying and check-out procedures; and an option for buyers to preview footage.
These kinds of online amenities take their cue from more established sites, especially those that have pioneered online commerce. For example, the Dell Computer site does a full-frontal customer-service attack that seeks to help clients in a variety of areas. It offers its “E-Value,” program which takes customers to an online configurator where hardware can be purchased as is, or customized. It also gives specific information on each system, including the specs on the monitor, say, or the latest price. Another example is Dell’s “Product Evaluation Center,” which offers product information, product awards and reviews, and technical white papers.
Another trend spurring business-to-business e-commerce is outsourcing. “The Web is allowing organizations to out-source all their administrative needs from photocopying to scheduling meetings,” explains Steele.
Still, despite the fertile ground for business-to-business growth, targeting businesses takes effort and investment, even if companies have traditionally been mired in complicated dirt-world systems involving extended games of phone tag and lengthy paper trails. Even if it’s a pain to do business this way, it’s familiar.
“It takes money to educate and build awareness,” explains MadeToOrder.com’s Rose. He notes that sites must be prepared when clients come calling with “great user experiences and a brand approach for B2B using a mix of Web-based and traditional customer-acquisition tactics. The best opportunities are in the large, fragmented markets, those that have dynamic or complex products, with inefficiencies in the supply chain, and inefficiencies in the information chain.”
Stamford, Conn.-based efdex is targeting one such market: the food and beverage industry. Chefs who used to stock their kitchens by calling myriad vendors and conducting lengthy verbal price-comparisons (or worse, buying whoever they called first to save time) can use efdex’s Web-based system to order their products from an online global market, getting the most up-to-date prices and access to more choices, with easy click convenience.
The presence of more and more smaller players targeting companies and divisions outside the IT market will undoubtedly spur online business-to-business sales, as will technological advances that make online buying even more convenient.
“Ubiquitous access and wider bandwidth availability will cause this market to explode for both B2B e-commerce and consumer e-commerce,” predicts Esposito. Still, much like in the consumer e-commerce realm, “the bottom line is, the buyer has to be convinced that he or she is getting greater value. That means better selection, easier access, better pricing, using corporate discounts across multi-product and service sites, and a guaranteed high level of service anytime, day or night.”
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