Consumerization of the B2B Buyer
Not all digital commerce is made the same
Hi everyone,
A lot of companies want to tout their digital commerce numbers as proof that they are an innovative, bleeding edge organization. In particular, this is a favored metric for public companies that have invested a lot of money in digital technology to show investors the impact of those dollars spent.
Fortunately or unfortunately, digital commerce can mean a lot of different things. There is no GAAP metric for digital commerce – so one distributor’s definition can be very different from another. Let’s unpack what “digital commerce” can mean.
Defining “Digital Commerce”
At the Innovators Summit, we talked about the “consumerization of the B2B buyer.” In B2C, digital commerce means the buyer goes through the bottom of the purchasing funnel – from consideration to conversion – all through digital interfaces, with no human dependencies.
Here are the last two steps in any classic purchasing funnel:
1) Consideration
2) Conversion
B2B Digital Commerce reporting is different than the B2C equivalent. B2B Digital Commerce reporting generally refers to only one of these two steps occurring digitally, rather than both.
In the most simple example, classic eCommerce has both the consideration and conversion parts of the funnel. A buyer can peruse the various items available for sale, their product descriptions, price and availability in the Consideration phase. And, the buyer can build a basket and purchase – all online.
However, B2B Distribution eCommerce penetration remains relatively low, which has led to most digital commerce reporting to adopt an expanded set of metrics from the B2C equivalent.
Let’s take a closer look at some examples.
The Convergence between Distributor and Customer Tech
We see a convergence between the two tech stacks: distributor and customer technologies.
Distributors have generally invested in technology focused on conversion. Whereas, customer technologies have focused on consideration and awareness – farther up the purchasing funnel. This makes sense for a variety of reasons:
a) From a technology standpoint, it’s been historically very difficult for customer technologies to integrate with distributor ERPs. (conversion)
b) From a product standpoint, customer technologies have been able to add more value by helping their customers consider multiple vendors with various pricing and availability. (consideration)
For these reasons, distributors have struggled to move up the purchasing funnel into consideration and so have customer technologies struggled to move down the funnel into conversion.