The gates are closing. It’s now or never for digital adoption in B2B markets.
The sharp increase in online engagement with customers in March and April 2020 was more than just a one-off blip due to COVID-19. More and more surveys are emerging that are reinforcing the idea that while COVID-19 spurred the shift to digital, neither businesses nor their customers in B2B see a full return to how things were done pre-COVID-19.
Key points from multiple surveys that provide evidence of a massive digital shift:
- We did our own survey early in the COVID-19 pandemic, and found that the majority of distributor respondents saw a major shift to online buying as a percentage of sales vs. other channels as a result of the COVID-19 moderate pandemic and resulting lockdowns
- That shift continues to accelerate. In a June survey from Forrester, half of decision-makers said digital commerce is driving their growth right now. The global coronavirus pandemic has driven half of shoppers to buy products they’ve never bought online before, and 70% are buying more than usual.A survey from McKinsey revealed that B2B companies believe their customers prefer digital engagement 2X more than traditional sales interactions, with self-serve, digital ordering methods as a priority. Mobile app ordering, for example, is up more than 250%.
- Sales models have quickly evolved to account for this – because they had to. We’ve seen the same with the companies we work with in the distribution industry. About 96% of B2B companies in the McKinsey survey shifted their go-to-market model during COVID-19, and, as of May 2020, a stunning 65% believed their new model is just as effective or more effective than pre-COVID-19.
- A third in that survey said they’re “very likely” to sustain those changes, and another half said they were “somewhat likely” to hold on.
Based on this research and what our distribution customers are experiencing, we believe that end-user adoption of digital technologies for shopping and buying has been accelerated by three to five years. Distributor e-commerce revenue has also been accelerated as a result.
What’s your plan?
2020: the tipping point for digital in B2B
In our 2018 State of Ecommerce in Distribution report, we forecast that 2020 was going to be the tipping point for B2B ecommerce, moving rapidly toward a winner-takes-most or even winner-takes-all scenario. We could not, of course, have predicted the COVID-19 pandemic, which has pushed the need for digital channels far beyond anything we could have imagined.
One of our clients, which already had ecommerce in place before COVID-19 hit, has doubled their ecommerce revenue over the past several months. Another distributor we work with, whose primary focus is PPE, has doubled their revenue, with ecommerce growing by about 50%.
These companies were simply able to better navigate COVID because they had better digital capabilities than their nearest competitors.
For those that may not have been positioned as perfectly, we’ve heard plenty of stories about how businesses are rushing to shift spend online, cutting investments in brick-and-mortar stores and increasing the number of digital channels, including web apps, social and third-party marketplaces. About two-thirds in the Bloomreach-Forrester survey said they were investing in ecommerce over the next 12 months.
For those distributors that aren’t in the game yet, your time is running low. The gates are closing. We’re moving faster than we ever could have guessed toward a winner. If your competition hasn’t already (and they probably have, even if you don’t realize it yet), they’re going to start to take share from you.
It’s no longer a question of if – or when
We are still talking to leading distributors in their segments who are debating whether they need to invest in digital.
Not how quickly they should. But whether.
The lack of urgency around digital, especially among segment market leaders, is shocking.
No matter the product category you serve, you’re not different. You need a digital platform that enables more efficient and effective shopping and buying for your customers.
This is a good time to define what digital means in distribution. It’s not just about online buying in a webstore, though more customers in B2B are demanding that now – strongly.
E-business involves a broader strategy that incorporates website ordering, EDI, punchout and email/fax order automation, along with an aligned team that is incentivized to drive revenue to these channels. Going digital makes the transaction more efficient and a distributor’s team more productive – both of which drive the bottom line.
You may not need to set up a webstore akin to Grainger’s or Amazon’s. In fact, you probably don’t. Conducting a Voice of the Customer survey to better understand what your customer wants will keep you from under- or overbuilding ecommerce and using the wrong media for the targeted generation.
Read more on why you need to understand how your customers shop and buy in The Cost of Not Knowing the Voice of Your Customer.
Provide tools for your customers to engage with you the way they want to shop and buy. Both customers and prospects also start with search more often than you probably realize, meaning you also have to make sure your website can be found by Google and other search engines.
The debate should no longer be about whether to invest in a robust digital platform. You can’t do business without an ERP, and that’s now the case with digital. Investing in digital in B2B is a cost of doing business. If you wait, you won’t be able to catch up.
There’s little excuse. The cost of doing this has never been lower, and the necessity has never been higher.
Ready to move forward? Contact us today to build the right digital strategy for your organization.