19 Jul Episode 3: What is the Difference Between B2B and B2C? | B2B eCommerce Secrets Podcast
For a while, people have been talking about the “consumerization of B2B” or the “Amazon effect” on B2B. In this worldview, the B2C experiences and expectations are translated to B2B. However, it is a bit of an oversimplification. In this episode of the B2B eCommerce Secrets Podcast, I go into the difference between B2B and B2C eCommerce.
Is There Really a Difference Between B2B and B2C?
B2B eCommerce is complex – complex products, complex orders, complex organizations, complex workflows. B2B eCommerce customers aren’t shopping – they are buying because it is their jobs. These customers aren’t simply individuals, they are committees: more than one person buying for their company. These purchasers are part of a complex organization, and these organizations have created complex contracts between themselves and the buyers.
This makes B2B eCommerce uniquely challenging – with its own set of tools, best practices, and opportunities. While we can draw learnings and insights from B2C, B2B requires a different business strategy.
- B2B is different from B2C
- B2B is complex
- Don’t expect B2C best practices to translate 1:1 to B2B businesses
- Leverage the unique attributes of B2B to optimize our business strategies and customer experience
There are a multitude of attributes that allow us to distinguish between B2B and B2C, and we cannot ignore them if we want to be successful. We also can’t rely on the best practices of B2C to be effective within B2B organizations because B2B is too complex for old methods. Therefore, in order to accommodate to its complexity and differences, we must chart our own path. This way, we can adopt the most effective B2B eCommerce strategies.
What’s going on, everyone? This is Justin King, and today we’re going to talk about why we differentiate between B2B and B2C eCommerce. I’ve spent the last ten years working with some of the largest distributors and manufacturers in the world. But, I missed working with actual owners and decision makers, so I struck out on my own and created my own eCommerce agency. Now I get the opportunity to work with actual owners of distributors and manufacturers, and we are doing amazing things together. Join me and follow along as I share eCommerce strategies to grow your business.
My name is Justin King, and welcome to B2B eCommerce Secrets. So, before I get into the episode, I just wanted you to know that as I listened back to this, I annoyed myself with how many times I used the words B2B and B2C eCommerce together. So, hopefully, I don’t annoy you too much, but the content in this episode is great. Let’s get started.
So, one of the big problems in B2B eCommerce is that people actually say, “What’s the deal about B2B versus B2C? Why do we differentiate between B2B eCommerce and B2C eCommerce?” A bunch of B2C guys came up with this idea of consumerization of B2B, which means that people are using mobile devices and social media, and people are buying at home in their daily lives. They shop online, they bank online, and they bring those B2C expectations into the B2B world. I do agree with that; I think the consumerization of B2B is real.
Consumerization of B2B, though, kind of feels like a bunch of retail guys – a bunch of retail eCommerce people – they gathered in a conference room to discuss this new B2B eCommerce thing, and the conversation went something like this: “Hey, we have to start talking about B2B. I mean, B2B is where it’s at; it’s where this is headed. Like, what do we do about that?” and literally the room is crickets, right? Then, finally, someone says, “Listen, there is no difference [between] B2B and B2C, right? So, let’s just talk about everything from a retail experience that can apply to B2B.” I mean, the reality is, that’s what’s happening a lot inside of retail eCommerce agencies.
But, there is a big difference between B2B eCommerce and B2C eCommerce. They have to be differentiated. They have to be separated. The reality is, there are significant differences between B2B and B2C eCommerce. And, believe me, I think we can learn a ton from B2C eCommerce, and we should. But, our differences require us to set our own best practices.
So, here’s a rundown of a few of the major differences that exist between B2B eCommerce and B2C eCommerce:
First of all – foremost – the people that are coming to your website, manufacturers and distributors, people that are coming to your website, they’re not there because they want to be there. They’re there because they have to be there. It’s their job to be there. They’re not casually shopping for shoes and find your website – no – they’re doing their job. They have a problem, they need a solution, so they landed on your website to have them solve that [problem]. It’s their job to be there. And, how we define someone’s job and how we meet their job, and meet the expectations of their job, and help them do their job easier is a critical and important part.
The [second] difference is that in B2B, the purchasers typically purchase not as individuals, but as a company, and often by committee. 70 percent of B2B purchase decisions include at least two decision makers, and, almost 30 percent include more than five decision makers. Purchased by committee. There are multiple people involved. It’s just not about one single person, it’s about a group of people, and that group of people can have different roles and be looking for different things.
Number three is that your customers – the organizations that are buying from you, right? – not people, although there are people involved, but the organization that’s buying from you is complex. These organizations can be distributed or have central contracts. They have multiple departments, business units, locations, jobs, build-tos, ship-tos, and users. These are complex organizations.
Number four, the relationship between you and the buying organization – or the customer – is typically dictated by a contract. The relationship is defined by a contract between you and that organization. The contract has terms and conditions, it has pricing, it has products customers are allowed to buy or not allowed to buy from. The contract is the central document that defines the relationship between you and your customer. As part of that contract, you have contract pricing, you have custom catalogs, meaning that sometimes, customers can only buy these items from you. They can’t buy your whole catalog; they can only buy these hundred items that have been contracted with you to buy. That creates lots and lots of complexity.
Number five (I think we’re on number five) number five is that customers – or – consumers and buyers are different. People are not shopping; they are buying. Whenever I work with a software platform, and we talk about how to talk to distributors and manufacturers? The first thing we tell them is, “Stop talking about shoppers. Talk about buyers.” We don’t have shoppers; we have buyers. We don’t have a shopping cart; we have an order. Buyers can be different too because of that first one, which is, purchased by committee. So, different users are doing different things and responsible for different parts of the purchasing process. One may do research, the next may purchase, the next may approve the purchase. There are multiple users, and the consumers and buyers are different from each other.
The next big difference is the complexity of the systems involved. B2B customers average more than three ERP (Enterprise Resource Planning) systems. I have some customers that have over 20 ERP systems. The complexity of just their systems is complex. Then we have PIM (Product Information Management) and CRM (Customer Relationship Management). The ERP is the lifeblood of our organization. We’ve got to address integration with our ERP as the core attribute of a B2B eCommerce site. That’s where pricing, terms and conditions, and contracts are set.
Lastly, one of the big differences is that some of the communication, some of the purchasing is not done over the phone, and can’t be done online; but, it’s done through EDI (Electronic Data Interchange). So, punch-out and system-to-system integration can be just as important. These are complex system-to-system integrations.
Look, B2B is different than B2C. It just is. The complexity of our customers, products, systems, and users themselves make it so we can’t just steal from B2C. We’ve got to have our own best practices. B2B is different from B2C, period.
The differences create a number of challenges that I think will be important for you to think through. For example, you can say, “My ERP is the lifeblood of my company. How should we think about the role that my ERP and the other back-end systems play in the customer experience?” Right? What role should that play? Another challenge to think through is, all my customers are direct-procure. They’re engineered to order, and most of them purchase through EDI. What can eCommerce offer me and my customers?
The final challenge to think through is, my customers purchase through quote and configuration, not search and shopping cart. So does eCommerce have a place in my business? These are the challenges that we deal with in the B2B world that those in the B2C world just don’t have to deal with.