Predictions 2023: Three factors that will rev up B2B ecommerce payments
In 2022, B2B ecommerce went from prediction to necessity. In 2023, the stakes will only be higher. Statista predicts a 17% surge in B2B ecommerce sales—marking the largest growth predication up until now. Rather than fear a new and unknown digital front, merchants have more to look forward to than ever. In this article, we'll explore three major B2B ecommerce trends and their impact on a particularly relevant business opportunity: payments.
BigCommerce recently shared their top B2B ecommerce trends for 2023. They identified the following trends to be critical to master in order to see success with this business model:
- Leave behind legacy systems
- Invest in ecommerce platform technology
- Personalize the online shopping experience
- Sell across online marketplaces
- Fulfill orders even faster.
- Prioritize product discovery and information.
- Explore social media platforms.
Although B2B payments may seem unrelated to these trends, they are actually closely related to points 1-5. Traditional payment solutions have often been monolithic, offering a one-size-fits-all approach that lacks flexibility and customization options. As a result, businesses have been unable to choose the best payment solutions for their specific needs.
On the other hand, some payment apps and integrations may not fully support B2B ecommerce functionality, providing only a limited set of features or workarounds. However, this is all changing rapidly.
In the following sections, we will explore how B2B ecommerce payments are contributing to improvements in various aspects of the ecommerce landscape, from greater personalization to faster order fulfillment.
Development has never been easier: App integrations and technology providers
A 2019 TrustRadius study found that millennials are the largest B2B tech buyer group, making up 59% of B2B buyers and 30% of them are lead buyers for their B2B brand.
These digital natives want and depend on digital options for purchasing. But it’s not only digital natives that are making B2B commerce solutions increasingly urgent. 83% of B2B buyers want to order or pay through digital commerce—failing to meet that preference leaves a significant portion of buyer needs unmet. In this environment, the age where businesses could afford to put off digital transformation is over.
But starting now from scratch will mean building in-house expertise and products that can take years to effectively build. Especially in B2B payments—lending, risk, credit, invoicing processes are complex and extremely costly on their own. Enabling digital, automated, self-serve capabilities adds another layer of complexity.
Meanwhile, fintech solutions are in the era of hyper commoditization. Any payment software and solution that businesses could want—they are now faced with more options than ever. With this kind of expertise as a service, it couldn’t be easier or cheaper to outsource technology development in every aspect of your business.
In consumer-facing apps and services, partnering with technology providers is the standard; leveraging the power of integrations and embedded tools are the basis for everything we consume today. From reviews to payments, every B2C ecommerce storefront consists of a patchwork of technology powered by third parties. No one is expecting brands today to build it all themselves. B2B is not an exception.
With the help of digital B2B payment technology, brands can speed up time-to-value—enabling them to more easily and quickly monetize, boost margins, and see returns. In today’s economic climate and concerns about inflation, interest rates, and supply chain shortages, this could not be more important.
The business and commerce solution in one
B2B ecommerce cannot be looked at from only the commerce side. It is an important part but the level of orchestration that needs to go on behind the scenes is critical in B2B. And it will be essential for merchants to focus on this layer if they truly want to see their commerce channels succeed. Improving convenience and operational efficiency will be the baseline for technology adoption in B2B.
In B2C, the consumer experience takes center stage because the fintech and logistics layers are more straightforward: the friction so common in B2B selling and buying doesn’t exist. For B2B merchants, something as simple as a quote request can take days or weeks to prepare. Everything from product sourcing, re-ordering, quoting, and of course payments—are processes today that are largely handled and managed manually.
But these manual processes are no longer adequate. When B2B merchants can’t easily get notified of a purchase, quickly ship out goods, and get paid on time, the entire supply chain suffers. In the consumer world, a transaction ends at the point of purchase. In B2B, the payment or checkout is just the first touchpoint.
It makes sense then that merchants should first and foremost be concerned with the digital commerce elements that will most closely impact their business: extending credit to more customers, improving approval times and rates, accepting multiple forms of payment, speeding up DSO, etc.
That’s why payment options that are digital, instant, and accessible will not be overlooked but prioritized as a key element of any B2B commerce stack in 2023.
However, that doesn’t mean that the experience around online financing and invoicing can be ignored. The commerce experience should not have to come at the cost of technical functionality. This is why ecommerce platforms are investing and will continue to invest in integrations and capabilities that not only provide important functionality but simplify and improve the life of the end user. That’s what will truly make the impact for B2B ecommerce adoption—solutions that are easy and beneficial for businesses on both the buy and the sell side.
In the diagram below, McKinsey mapped the different inefficiencies that exist across the B2B purchasing journey and where the opportunities are for digital solutions. One way to understand this chart is to think about where payments come in. Balance in particular serves three main aspects of the customer journey: the onboarding phase, the purchase phase, and the postpurchase phase. Each phase is measured by an improved payments experience for both the merchant's back-office receivables, as well as the buyer's purchasing experience. In green, are the different Balance products that aim to do just that.
Trust will be the ultimate product
Going back to the point of functionality and usability—the adoption of online credit and payment options by buyers will have everything to do with trust. Everyone knows that B2B is built on hard-earned relationships and trust. Translating the trust built over years of offline relationships is a tricky thing to do.
Yet 33% of all buyers want a seller-free sales experience—a preference that climbs to 44% for millennials.
To sell to this powerful buying segment, businesses will need to create a sales experience that nurtures the seller-buyer relationship, online.
This is especially important for marketplaces. Digital Commerce 360 estimates that B2B marketplaces are growing 7.2 times faster than all B2B ecommerce.
Manufacturers are already making it happen. Take Aerospace manufacturer Honeywell. When they launched their marketplace, GoDirectTrade, it reached over $1 million in online revenue in their first 10 weeks of operation. General Manager, Lisa Butters, explained:
“About three months after we went live, a customer with a Gmail account dropped a $100,000 used jet engine into their cart and checked out.”
She went on to say, “If that’s not a signal that the shift to a digital experience is coming, I don’t know what is.”
How does a marketplace like this manage to not only bring steady demand and supply online but convince them to transact with each other? For buyers, that means purchasing from vendors they might have never heard of or bought from before. For a marketplace to make that happen, they have to build trust into the platform.
How do you do that? Building a brand that puts value and product quality first. And payments will play a big part of that. Why? An experience that caters to the buyers payment preferences and cash flow requirements, while making it as easy as possible to purchase—is rare in the B2B commerce space. Be the brand that does that and does it well and it will become a lot easier to build a marketplace associated with customer loyalty and trust.
Turning B2B ecommerce trends into action items for 2023
B2B ecommerce payments can be your key to staying competitive in 2023 and beyond. The best part: the new year is the perfect time to consider the right partners that can help you do all the heavy lifting, so you can keep your business thriving. To make it easy for you to roll out B2B payments for your ecommerce site this year, consider using Balance as your B2B payment solution.