A discussion draft of the Online Sales Tax Simplification Act of 2016 is expected to be introduced in Congress soon.
Just when you thought the dot-com market was down and out, in comes new industry reports touting the latest money-making trend-business-to-business electronic commerce.
And not a moment too soon. Dot-coms have taken a beating in the stock market as investors lose faith in retailers’ ability to turn a profit. Months of expensive site launches, brand campaigning and incentive propositions to get consumers to shop online have burned much of the web retailers’ start-up and IPO money. Market observers and retailers say the b2b vein may be just what online companies need to inject new life into their businesses and regain interest from investors.
Several retailers, including Beyond.com, BeautyJungle.com, Fogdog.com, Buy.com and LandsEnd.com are navigating the b2b world, sometimes changing their way of operating and selling online, sometimes extending their sites to accommodate businesses. Either way, analysts say the b2b market has enormous profit potential. New York-based eMarketer predicts that U.S. b2b market will generate $747 billion in revenue by 2003.
Easier said than done
But it is not as easy as applying b2c web smarts to the b2b business model. Catering to businesses requires a different set of tools and infrastructure from selling online to consumers. “It’s not a simple transition,” says Beyond.com interim CEO Rick Neely. Beyond.com moved from b2c to b2b in January. “It’s not just a matter of making a sale and delivery to a business instead of to a consumer and saying, ‘Hey that’s b2b.’ It takes a whole different program to take care of companies.”
Ordering, payment, fulfillment, delivery, customer service and the sales process all must be modified to make the move from b2c to b2b. B2B retailers must use direct sales forces to bring business to their sites instead of using mass media. They must upgrade web sites to accept purchase orders and more complex product orders. And they must develop packaging, fulfillment and delivery plans that meet the demands of businesses.
Industry participants warn that companies that don’t know how to sell to businesses will not last long. “Business customers expect you to have great prices and have a good selection of products in stock that are deliverable,” says Jackie Shoback, vice president of operations at Staples.com, which has served businesses online since 1998.
A new sales force
One change an online retailer has to make to add or move to b2b is the way it lures customers to a site. Instead of herding users to the site via mass marketing, b2b relies on direct sales to drum up business. Beyond.com got rid of its marketing staff and hired an internal sales force.
The company looked for people experienced in high-level consultative selling to companies of at least $100 million in annual revenue. “The sales process for eStores and other b2b service offerings takes three to six months, and you need people with experience in starting and managing this process,” Neely says. Sales groups must contact businesses directly and tailor their sales pitches to what that company needs and how the retailer can provide it. That’s a clear departure from the mass marketing approach in which Beyond.com had advertising contracts with America Online and Yahoo.
Once a b2b hopeful gets businesses to its web site, it must be able to support that traffic. Fogdog.com launched an institutional store in June to sells sports equipment to schools and other organizations. It had to upgrade its system to accept a higher volume of purchase orders, says Jon Denney, director of group sales. LandsEnd.com had to change its online order forms to accept orders of multiple items in multiple colors and sizes. “Through usability testing, we found that using a buying grid [instead of the b2c order form] makes ordering faster and easier for business customers,” says Mike Grasee, director of corporate e commerce. Aliso Viejo, Calif.-based Buy.com, which launched a business superstore in late July, enhanced its web site by adding alphabetized search functions and multiple ship-to address capabilities, among others features.
Where the edge comes from
The next step after enhancing the web site for b2b is order fulfillment and delivery. Imagine the worst-case scenario: A company does not receive the set of logo shirts for a special conference or a school-ordered soccer goal is backordered through post-season. To avoid this, most b2b sites have features and functions to ensure businesses get what they want when they want it.
Staples.com has its own fleet of delivery trucks, warehouses and distribution centers, a major perk of being part of a large offline corporation. Staples.com also features real-time inventory so customers know when an item is out of stock, when it will be available and what substitute items can be shipped immediately. Fogdog.com has a search feature for its institutional customers to find products that are available to ship within two days. (Most sports and equipment products that organizations order in volume usually take four to six weeks to deliver.)
With merchandising and distribution experts who have backgrounds at Proctor & Gamble and major pharmaceutical companies, BeautyJungle.com set out to build expertise in bringing beauty products online first to the consumer and now to other businesses, including drugstores that order products from them. The online beauty giant, which began its b2b endeavors in January, has its own distribution centers and has applied for a patent on a process for packaging merchandise that makes it easier for stores to unpack and stock retail shelves. Deborah Goslin, executive vice president of sales and marketing, explains that the packing process for products is important to end retailers because of the time it takes to get products on the shelves.