Why is B2B Commerce so difficult?
Friday, September 29, 2017
Layer One - Chief Technical Officer
The B2B digital commerce pursuit – why is this so hard?
Manufacturers and Distributors are hearing the call from their customers – “lower costs and be easier to do business with!” For most, this means providing a streamlined digital commerce experience from relevant information to fulfillment and post-sales support. So what do I keep hearing from manufacturers as to why B2B digital commerce is so hard?
“You do not understand; our company is different”
If I had a quarter for every time I heard this, I would own a Polynesian island and be writing this blog from there. Their products are more complex, business processes different, everything they do provides competitive advantage. The fact of it is, Digital is increasing the speed of commoditization – period. Business processes, software, products, services, you name it. You would be surprised at how similar you are to the other guy. The hard part is determining what has become commoditized, aligning with it and then innovating from there. Do not avoid it, embrace that which has become commoditized as the baseline of what is expected, understood and easy. Then add value that differentiates you and makes you easier to do business with than your competitor.
“We do not sell on-line”
Why does every manufacturer that is not selling on-line, think that selling on-line is simple - just a shopping cart? Let's step back and look at the bigger picture. Let’s talk shopping carts for just a second. Just because you receive orders through XML, EDI, fax, phone or email does not mean your customers do not require robust on-line capabilities that make you easier to do business with that are considered commerce. Just because you have an order in your ERP system does not mean your customer would not like to know the status of that order without having to pick-up the phone or wait for shipment notices. What if the customer made a mistake and needs to adjust the order or cancel a line item preventing a return? What if they needed to perform a spot buy because they needed to get an order out the door and drop shipped the same day? Let's forget the order all together. Wouldn’t it be convenient to collaborate on an engineered to order project on-line? Share specs and design documents real-time, understand the status of project tasks and exchange questions and answers. Maybe even providing on-line personalized services or a support portal for your customer managing everything from their service subscriptions, install base of products and licenses, software patch downloads, dispatches and providing preventative maintenance alerts. The hard part is deciding what you should do, in the infinite list of what you could do, on-line to improve your services in a manner that makes you easier to do business with.
“We need an Amazon-like experience”
Amazon, Alibaba and other marketplaces all have h2 commerce engines and user experiences. But, you have the most complete information portfolio related to your products and services; better than any marketplace? Your customers love you for your knowledge and how you have serviced them, right? Then why would you swing the pendulum to the point where your on-line experience sacrifices those things customers love you for in exchange for just another Amazon-commerce oriented experience. The hard part is bringing these all together with a B2C-like experience. Sorry to tell you this, if you have not already started heading down this path you will likely go through several iterations before you even right the ship in the correct direction.
“Is there a way we can just avoid IT”
Psst… [looks around furtively] “OK, just between us – there has got to be a way we can do this without the IT group.” Come on now, you all know you say this! The truth is, as B2B companies embark on commerce initiatives, they need to understand this is not just a Marketing or Sales driven effort. To succeed it really involves participation from operations, IT, customer care, finance, HR, Sales and Marketing. Each of these groups need to participate in driving out the commerce strategy. This is where it gets hard in B2B companies due to their historical “we have always done it this way” culture and organizational structures. Well-defined operating principles and governance processes may be required to further define the targeted culture and how organizational models will function within the company.
“How hard can this be, the kid down the street built a website”
Would you trust that kid with your credit card? No matter how talented you and others in your company are, using third party solutions and consultants will allow you to leverage a broader knowledge base of experience and different business scenarios. No third-party software solution is perfect, but the advances provided by such solutions typically surpass what can be provided by a homegrown solution, over time. Turning the tables, one should not assume a technology solution is going to magically provide you with defined & disciplined business processes as part of the out-of-the-box capabilities in a purchased solution. The hard part is making sure you develop a business & go-to market strategy and then enable it with solutions.
“We cannot go live without all the functionality”
Many companies’ commerce implementations fail. Why? In my 20+ years of experience, it's because they want everything that could possibly be specified into the solution, all at once. Often, this is more than can absorbed culturally and financially. Instead, companies embarking on a commerce project should develop a strategy and execution plan that starts with commodity business processes and products. Then as you mature, add more complex or bespoke capabilities. Evaluate starting with a subset of products and/or customers, then expand overtime. This subset may be a specific product line or segment of customers. Starting simple will allow you to learn and react quickly, while reducing internal and external risk. Then go wider over time to include additional product lines, longer tail products and configured product offerings.
“We will just have Bob in Marketing and Jill in Accounting maintain this thing”
A bet there is a bunch of you out there that wanted to sell on-line and jumped in all excited and giggly, only to find that you did not have content and data in-place that could be put in-front of an end customer. That’s a sobering discovery, right? Unbelievably, Manufacturers are famous for poor product data quality. Whether it be due to configured products with unlimited variations, complex specifications, or the lack of formal industry standards, this is an on-going struggle. Data quality used to be an Information Technology discipline in a lot of organizations, however small to mid-market organizations are creating business data stewards to manage customer, product and pricing data. Large organizations are creating centralized Information Management groups within the business to drive standards and control processes that IT could not. If you participate in an industry that has created a standards group with a data exchange such as the Electrical industry, you are fortunate. This has allowed Distributors to obtain data from one source vs. each of their multiple suppliers. Data standards groups should be leveraged where possible. The hard part is digitally focused companies need to constantly review, govern and update their Digital data, media assets and content.
In summary, why is B2B commerce so hard? Unlike B2C, there are additional factors that need to be considered due to manufacturers typically having been buffered by channel partners that touch the end customer. They have engineered, fulfilled, inventoried, shipped, invoiced, priced and negotiated in much different patterns than those of B2C. However, are now being disrupted by new models that are throwing them quickly into a new world where they need to learn to swim, or be faced with the reality that they will be left behind. They need only to watch the B2C space as an example of the freight train that is approaching them. My recommendation, start now and be the B2B train.