As much as consumers are buying online, businesses are buying more. In fact, U.S. companies and government agencies will purchase $559 billion via the web in 2013, Forrester Research Inc. predicts in its first estimate of the b2b e-commerce market released today.
If Forrester is right, b2b e-commerce sales next year likely will more than double the online purchases by consumers. E-retail sales totaled $194 billion in 2011, according to the U.S. Department of Commerce, and 15% growth in 2012 and 2013 would put b2c online sales at about $260 billion next year.
While Forrester does not yet have enough data to estimate the growth rate of b2b e-commerce, there’s no question that it’s growing significantly, says Andy Hoar, author of the report released today, “Key Trends in B2B eCommerce for 2013.” “I’ve heard no company say they’re selling less,” Hoar says.
Convenience and cost savings are driving the growth. Purchasing agents can shop online any time they want, and the manufacturers and distributors they’re buying from save money because they need fewer employees to take orders on the phone, Hoar says.
Hoar notes many b2b companies are encountering resistance from their direct sales organizations as they beef up their e-commerce sites. Nonetheless, he says, the lower cost of doing business online makes it imperative for these companies to transition lower-value customers to the web. “The economics are key,” he says. “There are certain customers you cannot afford to service with human beings.” He’s heard some companies that sell to other businesses say they have cut their cost of servicing customers in half by moving into e-commerce.
But as they move more of their business, manufacturers and distributors face significant challenges.
One is building web sites as appealing to the purchasing agents as the consumer-facing web sites that those buyers shop themselves. “The b2c customer experience has put pressure on b2b e-commerce sites to up their game,” Hoar writes in the report.
Business-facing companies are also finding it tough to recruit qualified e-commerce personnel, and their scarcity means e-commerce executives command high salaries, Hoar says. That’s leading some b2b companies to try to train staffers in e-commerce, which Hoar says often ends badly. “The smart companies grab someone from the b2c world and train him on their business,” he says. “That’s easier to do than to take someone who knows the business and train him on e-commerce.”
What’s more, b2b companies are starting to run into a competitor familiar to e-retailers that sell to consumers: Amazon.com Inc., which unveiled this year its Amazon Supply site that sells such products as tools, sheet metal and cleaning supplies. Amazon will be a significant competitor, Hoar says, in areas like office supplies that require little configuration or product knowledge. For more complex products, such as backhoes, companies likely will rely on suppliers who have gained their trust and have specialized expertise.
Nonetheless, Hoar says, “If Amazon can outcompete these guys on price and deliver an Amazon-type customer service experience, then that’s going to be a real threat to these companies, no matter how long they’ve had these customer relationships.”
Amazon.com is No. 1 in the Internet Retailer Top 500 Guide.