Consumer spending online is quickly gaining a significant share of total retail sales. E-commerce grew from 15% to 21% year-on-year in 2020; according to Digital Commerce 360, “Consumers spent $861.12 billion online with U.S. merchants in 2020...That’s the highest annual U.S. e-commerce growth in at least two decades.” The easy answer is, the Pandemic-that-shall-not-be-named drove everyone online. But there’s another factor that has to do with how easy it’s become to buy anything online as a consumer.
While the pandemic sent consumer e-commerce spending soaring, it was able to do so because the right conditions were in place for this unprecedented growth. Logistics and shipping, for example, are so advanced these days, that getting an order to your doorstep is easier and faster than ever before. The B2C online payment experience is incredible, too. But it wasn’t always!
Does anyone even remember how many form fields had to be filled out before one-click checkout, swipe-to-pay and Face ID?
The self-serve checkout craze began in 1999, when Amazon patented '1-click' checkout technology (and trademarked it). When the patent expired in 2017, it became possible for other companies to follow suit. Amazon benefitted from their innovation; according to Insider magazine, “Removing this friction in the checkout process is often highlighted by experts as one of Amazon’s biggest advantages in the online retail space.” Would Amazon have become what it is without this competitive edge?
B2C e-commerce is huge, and implementing a streamlined checkout experience played a large part in enabling it to grow so well. Now, let’s consider B2B e-commerce. If you stop to think about it, all of B2C e-commerce is made possible by a chain of businesses paying each other all the way down the supply chain to the hands of the retail consumer. What about those transactions?
As Danny Crichton wrote in TechCrunch, “You head over to B2B payments … and you recoil in horror as you migrate away from a utopian future of promise to the ruins of an antiquated past.” There hasn’t been anything even close to self-serve checkout experiences for business transactions. Why not?
B2B e-commerce was worth $21 trillion globally in 2018. That’s according to the UN’s trade and development body, UNCTAD. Here’s the crazy part. All those online transactions are only 10% of all B2B transactions ($218 trillion globally in 2018), so a lot of businesses have a lot to gain by moving payments online. Can a streamlined B2B checkout experience be the difference between companies who seize this opportunity and those who miss out?
In recent years, there have been many companies nudging B2B payments online - using credit cards. And credit cards provide a good solution for part of B2B transactions, apparently, for up to 10% of them. As much as we love cards for their self-serve, smooth experience…. they’re super expensive, and it’s not how businesses are used to paying. We can’t rely on credit cards to usher in the golden era of 100% business payments being fully online.
As we wrote recently, many of today’s payment solutions used in B2B were really created for a B2C context, while few have been purpose-built for business buyers’ nuanced needs. And that just isn’t good enough.
Here are the two main reasons why B2C checkout can’t just be copy-and-pasted into a B2B context.
We’ve got some fresh insights into the pain of B2B transactions, courtesy of the hundreds of customer conversations our team has had in the last few months.
Reducing friction in B2B transactions will remove the huge bottleneck for merchants, marketplaces, service providers, SaaS companies, and pretty much any other business. The gold standard for friction-less interactions is self-serve, and it’s already happening. According to a McKinsey report, most B2B seller interactions have moved to remote or digital in the last year.
Up to 80% of surveyed B2B decision makers prefer remote human interaction or digital self-service, and it’s one more jump to complete the ‘digital transformation’ circle started in the late 90’s.
At Balance, we’ve created the first B2B Checkout built for businesses. It’s the first solution that started from scratch to address the entire spectrum of problems and pains faced by businesses accepting B2B payments.
For B2B payment methods, we’ve gone beyond the self-serve credit card offering that’s so common today and made it possible for buyers to breeze through self-serve checkout using all of their favorite old-school payment methods. For B2B payment mechanisms, we’ve taken away the downsides of offering transaction financing and flexible options to pay later, as we approve buyers for terms directly from the checkout, and pay the sellers right away. Best of all, we’ve made it all extremely easy to start using. Companies with their own website or marketplaces can use our code snippet to get a hosted checkout, completely white labelled to their online property.
By digitizing B2B payments, we hope to speed up the consumerization of business transactions. As soon as business sellers can be offered the right payment methods and mechanisms, along with a smooth user experience, B2B e-commerce will take off, just like its B2C counterpart.
After spending 2+ years searching for an adequate payment solution for B2B marketplaces, Bryzos was able to finally rest easy after discovering Balance's B2B marketplace checkout.
A major Federal Reserve outage made us wonder, how worried should businesses be about their B2B payments when the Fed is down, and how often does it happen?