Typically, companies that are about to evaluate B2B e-commerce fall into two camps. The first camp is made up of manufacturers and distributors who face strategic or operational challenges and intuitively know that there has to be a “better way” to sell to their wholesale customers. They are fed up with manual B2B ordering processes that are slowing down their business, as their customers usually send orders by phone and email. They are often scaling businesses that know that automating basic B2B ordering functionality will cut costs, free up wasted time for your customer service team, and free up potential new revenue for your business.
The second group of businesses are those that are familiar with B2B e-commerce because their customers are asking for it and their competitors already have it in place. These companies are starting to see B2B ecommerce software because the market is demanding it, and while their search initially has nothing to do with ROI, they ultimately face the same impact questions when it comes to determining their budget for a solution. of B2B e-commerce.
Since you have reached this post, you will likely fall into one or both fields. In any case, it is important to think about your “why” for B2B ecommerce.
What are the costs associated with the current B2B ordering challenges your business is facing, and how should you think about increasing your revenue? Why is it worth investing in B2B eCommerce and what is its potential ROI?
It is important to note that the impact of B2B e-commerce is multiple, affecting both costs (reduction) and revenue (growth) of the elements of your company’s profit equation. It is critical that you understand your business-specific opportunities related to these two elements before investing in a B2B e-commerce solution.
Knowing what you expect to get out of your B2B ecommerce investment will affect the type of solution you choose, the way you launch your initiative, and the metrics you track (we’ll cover these in the future).
As you read this, think critically about what applies to your business. Ask yourself: Is your business spending tens of thousands of dollars on unnecessary data entry? How much do you spend on printing and distributing paper catalogs per year? What could your staff be doing if they weren’t answering order questions over the phone or email?
Costs You Will Reduce Using B2B Ecommerce
B2B eCommerce solves a number of operational challenges related to B2B orders. The best first step when thinking about your business goals related to the B2B eCommerce platform is to consider the current costs you are facing with your B2B ordering process, and what would disappear or drastically decrease if you were to implement a B2B eCommerce solution.
You can expect the following costs to be reduced (or gone) once you implement a B2B eCommerce solution:
Costs related to the printing and distribution of paper forms and catalogs. Let’s say you spend $ 20K printing and distributing paper catalogs and order forms per year. Most companies that implement B2B eCommerce almost completely eliminate this line item or reduce this number to a fraction of the original total (assuming they still believe it is necessary to serve a segment of their customer base manually).
Costs related to data entry. For vendors who have not yet implemented B2B ecommerce software, it is common for their B2B ordering process to include unnecessary or redundant steps, such as re-entering orders into their account system or ERP after they have been received by the office. administrative, or transcribe an order from a phone call or email. We have worked with companies that accumulate over $ 30K / year in data entry costs alone.
Whether it is calculating the percentage of your staff’s time that is wasted on this task based on their salary or the possible option of reducing the number of employees related to data entry, the cost reduction here is very real. Instead, you can spend your resources on a training template for employees or invest in their development in other ways. Mentoring programs are great when it comes to nurturing employees’ professional growth and skill development.
Costs related to the management of backorders. If you are not giving your customers inventory availability information at the time they order, it is very likely that they are ordering items that are out of stock. If you have an idea of the amount of time each member of your staff spends handling order issues related to backorders, you can quantify the amount of time your staff is wasting on this task as a percentage of their total salary.
Costs related to errors and order returns. If you know the percentage of orders that include errors and require resubmissions, you can calculate the costs that you are incurring. On average, order errors cost approximately $ 50 / repair order (this number could be higher or lower depending on your specific business operations). Orders that arrive through B2B eCommerce are much less prone to errors, because your customers actively place and view items in their cart and get an order confirmation immediately after the transaction. For this reason, suppliers with B2B e-commerce end up drastically reducing their costs related to order errors.
The cost of a legacy B2B e-commerce solution. If you are currently using a legacy B2B ecommerce solution that is expensive to maintain and upgrade (or worse, not working well enough to be worth the investment), it is probably time to get started. to see what else there is. Software-as-a-Service B2B e-commerce software has come a long way in the last 5 years and is a much more affordable option compared to the local or custom solutions of yesteryear. And of course, this is a very simple way to cut costs – just buy a cheaper solution.
Any discussion of the ROI impact of B2B ecommerce would be incomplete if the very real concept of opportunity cost was omitted. While we’ve included it in the cost section of this post, it’s also about revenue (until next time).
Opportunities for your business that your staff – that is, your sales reps and B2B customer service team – are missing out because the outdated, manual B2B ordering process is likely to hamper your business.
To try and quantify your opportunity cost, think about what your staff might be doing if you weren’t tied to data entry or had to email or call your customers for order details. They could have a more specific focus on retaining clients, running marketing campaigns to generate additional income, or making up for more time in the day to visit their clients in person.
On that note, let’s transition to talking about the powerful income opportunities that come from B2B eCommerce.
The opportunity to increase profits in B2B e-commerce
In addition to the revenue associated with your opportunity costs, here are other ways you can expect to make additional profit from your B2B ecommerce solution:
Income or Earnings from more time in the day. One of the big impacts of B2B e-commerce is taking back a lot of time that was previously wasted on manual ordering tasks. Whether your business is losing customers because you can’t keep up with your order volume during busy hours like trade shows, or your sales reps can’t visit enough accounts in one day, a slow process can keep you from more orders and cash and faster can give you extra orders to those reached last year.
Think of it this way: What income-generating activities could your team do more of if they had more time? For example, the more customers can order, the more time your team has to focus on acquiring new customers. Using a conservative estimate of new leads, multiply this number by your average customer value to reveal the upside.
Income from new customers. There are many reasons why manufacturers and distributors launching B2B e-commerce end up expanding their customer base. Whether inactive customers haven’t placed orders in years but are finally coming back when you’re online (we see it all the time!), Or the simple fact that you can finally serve customers in the new regions and territories that You wish could not be reached in person, new customer revenue is an important part of the B2B ecommerce equation.
When you give your customers convenient access to your entire product catalog, they discover and order products that they have never owned before. For some companies, their paper catalog or Excel order form was not easy enough to use to encourage complete navigation. For others, sales reps only have time to present just a fraction of their product line in person. A “self-provided” browsing experience enables your shoppers to find the products they want, and we constantly take customer service feedback that this leads to larger orders and experimentation with new products. On average, orders placed online are 10-20% larger than manual orders.
The result of new marketing opportunities. B2B eCommerce opens up a host of marketing opportunities that were previously unavailable to vendors selling B2B manually. These include email marketing campaigns, online marketing initiatives to entice new customers to subscribe to your B2B ecommerce software, and even your ability to market free samples of your products through your B2B ecommerce solution. . These marketing opportunities contribute to new customer acquisition, upselling, and customers ordering new products, and this, of course, contributes to more revenue.
A quick note: if your company has not done a great deal of marketing to its B2B customers, or if you are unfamiliar with the digital marketing initiatives that B2B ecommerce software offers, you may not have enough historical data to approximate the upside revenue from Your future B2B e-commerce initiative. If that’s the case, you can be more cautious in calculating your ROI and relying more on cost reduction calculations to understand your potential savings.
Once you have a good handle on this number, you need to make sure that the software you are checking has the user experience and features that will make the above revenue opportunities possible. We’ll talk more about this when we get to evaluating B2B ecommerce providers, later on.
These revenue opportunities should help guide your launch and ongoing maintenance of your B2B ecommerce software, as it will have a dramatic impact on your return on investment.
Once you’ve fully considered the cost savings and revenue benefit of B2B ecommerce for your specific business, it’s time to grab that number and start looking at the options that go into your new budget. If your calculation shows additional savings and income that add up to more than the software license, that will be clear.
As you can see from this post, B2B eCommerce has several different impacts on your business. It is important for you to consider what you think are your greatest opportunities, a process that looks very different for each business.
For example, if you are losing money related to data entry, your goal should be to find a solution that can reduce this cost to next to nothing. If you know that offloading orders to your customers via B2B eCommerce would allow your sales reps to see 2 more customers every day, then your goals should be to find a solution that focuses on order shipping, the speed and ease of ordering.
Companies such as eWorldTrade have completely changed the paradigm. They have heralded a new means of trade, allowing businesses to buy supplies online and connect with each other. This allows for a much greater level of digital branding and makes it easy for parties to connect with each other purely on a digital level.
If you were thinking of moving into the B2B landscape, using the services of a company like eWorldTrade could help you gain a better foothold and help you choose from a greater list of suppliers. It could help mitigate losses and allow you to grow your business dramatically in a very short span of time.
For a growing company in a competitive landscape, getting access to a larger group of buyers and sellers could help you grow very quickly.
