B2B ecommerce trends
B2B Ecommerce

From B2B ecommerce trends to opportunities

July 27, 2023
Table of contents

In 2019, about 13% of total B2B sales in the US happened online for physical goods, while B2C products made up 18%. Now, the latest data suggests that B2B holds a 17% share in ecommerce, challenging the idea that B2B is behind in the online shopping game. Even though the tools and technology for online sales seem ready, many brands face a tricky part—the actual transaction is often seen as easy until they try to bring their offline relationships and trust into the online world.

Understanding this challenge means looking at why it's often ignored. While McKinsey says 65% of B2B companies are doing transactions online, there are issues with growth, conversions, acquisition, and new revenue that technology alone can't fix. Unlike the big headlines about DTC (direct-to-consumer) companies in the early 2010s, B2B hasn't had that moment yet.

So, this blog will uncover what B2B needs to do to be as smooth and convenient as DTC and B2C, bringing growth, efficiency, and improvements across the supply chain.

2023 B2B Ecommerce Trends

To look forward, it’s helpful first to analyze the commerce trends that defined 2023. In 2023, Product Information Management (PIM), and advancements in headless commerce technology were big topics. PIM plays a big role in making sure product data is consistent and well-managed across different channels.

By connecting with core business systems, PIM helps things flow better, makes product launches smoother, and gives customers a more personalized experience. In regards to headless technology, the trend we picked up on was the focus on embracing technology that enables businesses to scale quickly, rather than depend on rigid, monolithic architecture. 

Machine learning, AI, and ChatGPT also got a lot of attention this year. There was a debate about whether ChatGPT can replace the traditional site search in B2B ecommerce. But for now, it seems ChatGPT lacks the history and context to bring back really relevant results, unlike site search. B2B ecommerce search is all about details, where small differences in part numbers can cause big problems. ChatGPT didn’t prove it could handle these details yet. 

Another notable trend that emerged was the integration of additional B2B features by several B2B ecommerce platforms. BigCommerce introduced its B2B portal, and Shopify invested in Faire, with others following suit.

In addition to increased investment from technology leaders in B2B ecommerce, platforms also became more committed in offering an expanded range of ecommerce solutions for merchants. This includes enhanced order management tools, improved user experiences, and additional resources for B2B brands to enhance their ecommerce strategies.

The increasing technological capabilities made available by these platforms made it clear that the absence of advanced technology could no longer be labeled as a hindrance to the growth of B2B ecommerce in 2023.

Lastly, self-serve portals as a way to transition buyers from face-to-face meetings to online shopping, garnered attention as well. This one-stop platform gives clients access to services, info, and resources they need. But these portals aren’t truly ecommerce channels. B2B portals act as connectivity platforms.

On the other hand, ecommerce platforms are transaction-oriented and product-centric, simplifying the buying process.

Yet, inconsistencies arise when it comes to discussing terms like digital commerce, B2B ecommerce, online sales, etc. Are they interchangeable, or do they convey distinct concepts? That’s what we’ll explore in the next section.

Unmasking the True Numbers: What is (and Isn't) Ecommerce?

Not all that glitters online is ecommerce gold. Electronic Data Interchange (EDI) may represent a significant 76.5% share of B2B sales, but can it be categorically considered ecommerce? Answering this question requires a clear definition of ecommerce.

At Balance, we define ecommerce as a self-serve channel where transactions can be completed online, mirroring the consumer experience. By this definition, EDI falls short of being truly self-service. EDI operates more like automated fax machines on steroids – undeniably efficient, but lacking the interactive, customer-centric experience we’re talking about. 

Nevertheless, electronic data interchange (EDI) maintains its prominence as the primary 'digital' sales channel in B2B, eclipsing sales conducted through ecommerce sites, login portals, and marketplaces.

So, when Digital Commerce 360 evaluates the size of the B2B ecommerce market, and estimates B2B sales across "electronic channels" reaching $9.14 trillion, remember that a large chunk involves EDI, not your flashy ecommerce website. 

This leads to a fundamental question: How much of B2B sales genuinely embody the self-serve aspect—a defining feature of ecommerce in the B2C realm? To answer this question, you have to analyze the payment aspect. In essence, if a payment cannot be completed online, the nature of the transaction ceases to be self-serve.

According to McKinsey, nearly two-thirds of B2B companies across various industry sectors now offer ecommerce capabilities, defined as fully executing a sales transaction online. However, the definition of ecommerce varies among organizations such as Statista and OECD.

In their definition, transactions conducted through channels like email still fall under the ecommerce umbrella. This variance makes it challenging to accurately represent the number of sales initiated and completed via ecommerce.

Despite this ambiguity, what is clear is that B2B buyers use ecommerce for plenty of things, depending on where they are in their purchasing journey and what online tools they even have available to them.

Taking a Closer Look

B2B buyers often navigate between fully digital transactions and traditional purchasing methods, such as in-person or by phone. For instance, a buyer might initiate a face-to-face meeting to establish a relationship with a vendor but later shift to entirely digital transactions for reorder purposes.

According to McKinsey, 94% of B2B decision-makers perceive today’s B2B omnichannel reality—where customers buy face-to-face, remotely, and online—as being as effective or even more so than before COVID-19. B2B customers now regularly use ten or more channels to interact with suppliers, a significant increase from just five in 2016.

The choice of channel depends on what buyers aim to achieve. McKinsey highlights that B2B buyers are most likely to embrace 'digital self-service'—utilizing company websites, ecommerce platforms, chatbots, internet searches, mobile apps, etc.—when reordering goods.

B2B Marketplaces are somewhat an exception to this trend. According to a Digital B2B Buyer Survey, 60% of buyers conduct more than a quarter of their purchasing on Amazon Business, with 28% doing more than half. However, 12% reveal they “don’t buy anything” on Amazon Business, and 29% make purchases on other marketplaces.

So, what's Amazon doing right? They optimize for the B2B customer experience. Amazon offers B2B-specific features like corporate credit accounts, purchase approvals, and detailed purchasing analytics. They don't just sell products, they build trust and transparency, creating a seamless journey for the B2B buyer.

Think dedicated account managers, real-time order tracking, and extensive product catalogs catered to specific industries. Regarding pricing, Amazon offers business pricing, retail pricing, and negotiated pricing.

Analyzing Amazon's approach sheds light on why this channel boasts 6 million customers and $35 billion in annualized gross merchandise sales. Understanding how ecommerce and digital channels are utilized provides valuable insights into their industry impact.

While it's encouraging that buyers use ecommerce for reordering or conduct 51% of their purchase research online before making an offline purchase, the critical question is why they might avoid using it for the actual purchase.

From our perspective, and the reason Fortune 1000 companies turn to us as they build out their ecommerce channels, it has to do with the problem of payments.

The Overlooked Factor: Payments

While B2C and DTC transactions commonly rely on debit or credit cards, the same cannot be said for B2B. PYMNTS research indicates that 81% of businesses prefer paper checks, and 64% opt for ACH as their payment method. Moreover, extended payment terms are prevalent, with Atradius reporting that nearly 60% of the total value of B2B sales in the UK involves trade credit, slightly surpassing the 55% average for Western Europe.

Trade credit, a widespread B2B payment method, entails a predominantly offline and manual process, with few providers offering an online alternative. According to our latest report, a mere 16% of B2B sellers have an easily accessible online system for offering payment terms.

All these factors highlight that online B2B transactions are far from being fully addressed—both from a technical perspective and in terms of the overall buying experience. A comprehensive approach is needed to facilitate new customer onboarding, work seamlessly in an omnichannel environment, and leverage automation, among other factors.

In the upcoming section, we will explore why this poses a critical challenge for the proliferation and growth of B2B ecommerce—a market valued at $17.9 trillion in 2021, standing over five times larger than the B2C market.

Analyzing the Challenges in Supporting B2B Digital Trade

According to the Brookings Institution’s 2022 USMCA Forward report, outlining strategies for building a more competitive, inclusive, and sustainable North American economy, three priorities have been identified to intensify cooperation on digital trade opportunities.

The report explains that paying for digitally ordered goods and services—both in B2B and B2C contexts—across North America—tends to be generally expensive. Whether involving credit cards, wire transfers, or payment platforms like PayPal, there is a significant cost per transaction, typically borne by both sides of the transaction (McKinsey & Company, 2018).

Reducing transaction costs related to payments, as emphasized in the report, could substantially enhance digital trade across North America, particularly benefiting small and medium-sized enterprises (SMEs). Therefore, fostering cooperation to make payments easier and more cost-effective is not just about providing a service or product; it's a means to enhance accessibility to digital trade.

Beyond costs, one of the most crucial factors to address in terms of accessibility is trade credit. With 99% of businesses in the U.S. being SMBs, contributing 44% to the GDP, these entities represent a significant segment of the economy. However, traditional underwriting tools often neglect them, exacerbating a challenging credit environment. Presently, 80% of SMBs lack access to low-cost formal credit due to limited data resources and the inability to vet or approve smaller buyers without sufficient publicly available data.

In the following section, we will delve into how processing costs, trade credit, and other payment-related challenges can be effectively addressed to accelerate and improve online trade, including payment processes, for B2B.

Addressing the Entire Transaction Lifecycle

In today's business landscape, merchants face a pivotal decision when it comes to offering trade credit: either establish an in-house credit system, expand their accounts receivable department, or opt for the efficiency of outsourcing to third parties. The latter choice involves automated credit decisions, invoicing, receivables, and streamlined assistance in collections.

Enter the crucial technological layer. At Balance, this means seamlessly integrating the credit experience into the point of purchase. We provide payment links that can be sent to multiple buyers simultaneously, ensuring instant payments across various devices and preferred channels, and much more.

But it’s also about automating the entire process. From the moment an order is received to triggering an API call for the buyer to access a payment portal, evaluating their credit limit in real-time — taking a comprehensive approach is essential to solving the full scope of challenges that merchants face when selling online.

Last week, Balance announced our new suite of products, which includes:

Digital Trade Credit:

  • Facilitating swift buyer approval for terms.
  • Featuring an integrated checkout application for a seamless buyer experience.
  • Streamlining easy invoice payments and more.

B2B Payments:

  • Offering a variety of payment methods supporting omnichannel and global transactions.
  • Enabling merchants to offset expensive credit processing with ACH, wire, and check built into the checkout.

Accounts Receivable Management:

  • Providing dedicated products, including Accounts Payable tools for buyers.
  • Automated reconciliation and dashboard reporting enhance financial management.

Marketplace OS:

  • Equipping marketplaces with comprehensive tools for seamless transactions.
  • Covering everything from payouts to financing, ensuring a robust and efficient marketplace operation.

Each one of these products plays a crucial rule in our ability to address every facet of the payment process in a modern and agile way. And while features are nice, what about costs? From expensive cards with instantly reconciled ACH payments to reducing late payments through reminders and alerts, Balance customers are already seeing tangible results. 

Let's look at the numbers:

  • Balance customers using our checkout experience a 24% reduction in cart abandonment.
  • Utilizing the Balance Buyer Portal, customers see a 50% decrease in DSO (days sales outstanding).
  • In our B2B checkout, customers achieve an average 87% reduction in processing costs when using Bank Payments.
  • Thanks to Balance's dunning suite, 30% of buyers who would have delayed payment proceed to pay right away.
  • Offering terms through the Balance checkout leads to a 106% increase in AOV for our customers.

Beyond these metrics, merchants also see improved cash flow resulting from our credit facility, reduced payment failures with automated re-capture, and overall revenue growth by enabling more B2B buyers to transact online. 

Collaboration is Key: Building a B2B Ecommerce Ecosystem

Major research firms are racing to understand the vast opportunities presented by digital trade. B2B digital trade is no longer a side concern; it's a central focus for leading researchers. Even the November 2021 North American Leaders Summit recognized its crucial role, highlighting the need for collaboration among the U.S., Mexico, and Canada to ensure a secure and resilient digital ecosystem.

At Balance, we've seen firsthand how facilitating B2B transactions for our customers sparks a transformative shift – one that turns inefficiency into remarkable growth. This digital transformation isn't just about improving the experience for procurement teams in sectors like wholesale, healthcare, and office supplies; it's also about bringing substantial improvements in revenue and efficiency for B2B sellers and brands. 

To learn more about how Balance can help you on this journey, reach out to one of our experts. 

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