Groupon says its focus is on the bottom line, rather than top-line growth.
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Beautyjungle.com’s eZ-tote organization process packs items in such a way that the person unpacking can place them in the store without having to sort and organize the items prior to arranging them on the shelf. What could take a store clerk hours can be done in 20 minutes, she explains, noting that testing shows a 40-60% time saving for stores. Beauty Jungle.com says the time saved can amount to $5 million to $10 million in saved labor costs for a large drug store chain. With the average 5% margin, the savings is equivalent to a sales increase of $100 million, the company claims. “Supply-chain economics that improve store logistics are very powerful,” says Goslin.
Listening and measuring
Communicating with the business customer is essential for companies moving from b2c into b2b, says Shoback. Having a customer service system that allows the online retailer to keep in touch with the business customer will help determine which part of serving b2b needs improvement.
Shoback says having Biz Rate surveys at the end of the order process to chart b2b customers’ shopping experience, as well as maintaining contact points with customers via email comments, is invaluable. “In addition to listening to your business customers, it’s important to have a really good infrastructure that allows you to measure what you are doing to provide for b2b,” says Shoback. Staples.com uses its survey and email feedback to develop new web services. Shoback says business customers’ suggestions are tested in an in-house lab on a continuing basis.
Tested features that are on the site include email reminders for recurring orders, saved shopping lists of items that are ordered on a regular basis and a group profile feature, in which an electronic order form is routed around an office for supplies. This allows multiple people from a company to order office supplies from Staples.com from their desktop. Then the orders are sent to a central designated person who is in charge of approving those orders before sending them on to Staples.com. The company, which touts the feature as helping small businesses control costs, says it is the virtual version of passing around the office supplies catalog.
Apparel retailer LandsEnd.com, which added b2b earlier this year to provide companies with business logo merchandise online, has a customer service call-back and online chat options for its b2b site. Unlike b2c, b2b customers have separate computer and phone lines, which makes the telephone call option important. Providing that customer service link is a big deal for businesses with timely, extensive and complex orders.
Building the repeats
Even with all these factors in place-along with online retailers’ good intentions-analysts remain skeptical. “Not all these companies will be able to make that transition and get the word out to a new client base before they run out of money,” says Robert Labatt, research director for Internet retail business models, marketing and strategies at the Gartner Group in San Jose, Calif.
Attacking the b2b segment the right way can pay off in the long term. “The nice thing about b2b is that if you do a good job with business customers, they will be repeat customers,” Labatt says. He says business are better customers because they are more loyal to good suppliers and spend more than consumers-an average ticket of $80 for consumers versus $150 for businesses who order from an online grocer.
But with all the hype about b2b, the only thing investors care about is if a company makes money. “At the end of the day, what the [financial] market really cares about is that the b2b drives more revenue,” says Labatt.