While the coronavirus crisis certainly accelerated the drive toward digital, the mid-market's commerce digitization push was well underway before the pandemic hit.
Corporate buyers are quickly shifting their purchasing habits online, and seeking more efficient experiences from product sourcing through to checkout. With B2B eCommerce proliferating, the market is rapidly evolving to make way for new business and payment models in response to customer demand.
According to Suchit Bachalli, CEO of Unilog, thanks to the market's acceleration as a result of COVID-19, the industry is on the cusp of some major innovation.
"We're in the golden age of B2B eCommerce," he told PYMNTS in a recent interview.
There are significant opportunities for mid-market B2B firms to not only digitize their sales operations, but to also emerge into more agile corporations that scale to meet their buyers' needs. As Bachalli discussed, payments will be at the center of much of these market shifts that drive modernization and tighter customer relationships.
Emerging Business Models
While B2B eCommerce was expanding at a "frantic pace" even before COVID, said Bachalli, the pandemic has intensified the speed at which the middle market is migrating sales operations onto the digital sphere.
But this migration wasn't merely about digitizing what had previously been analog and manual sales and purchasing tactics for distributors, manufacturers and other B2B companies. Along with the adoption of B2B eCommerce came the proliferation of different kinds of buying models.
"A great example would be buy online, pick up in-store," noted Bachalli.
He pointed to distribution companies and hardware retailers that, before the pandemic, had been servicing contractors and construction firms at in-person storefronts. With social distancing requirements, these essential businesses had to pivot to a new sales model to ensure that business buyers could still purchase the products they needed to continue operating.
As B2B eCommerce continues to gain steam, other business models are rising to the forefront as well.
Subscription-based and pay-as-you-go models are increasingly popular, while players in the office equipment, as well as the maintenance, repairs and operations (MRO) arenas, are today among the frontrunners of adopting B2B eCommerce models that support consumption-based pricing, said Bachalli.
Tying Payments With Loyalty
The ability to extend credit to customers is key for middle-market firms exploring potential new paradigms in the way they sell and price their products and services, and payments are indeed at the heart of these emerging B2B eCommerce models.
Offering payment flexibility, whether it's support for purchase orders and payment terms, ACH, card payments or even PayPal, is critical to providing a positive customer experience. As such, said Bachalli, payments are also at the heart of another key emerging trend in the B2B eCommerce space: loyalty.
"'Flexibility' is the keyword, as businesses want to be able to meet their customers where they want to be met," he explained. "A lot of our clients do a terrific job of tying payment with loyalty."
As new B2B eCommerce models gain traction, providing payment flexibility, as well as integrating loyalty programs like discounts or points systems, is becoming an important way to promote customer retention. In this way, B2B eCommerce continues to look toward its B2C cousin, which has long been an experienced market in terms of loyalty initiatives.
"B2B is realizing the benefits of connecting payments, purchases and spend with loyalty," Bachalli added.
An Emerging Necessity
In addition to supporting cash flow through new business models and loyalty initiatives that drive repeat purchases, these trends also aid B2B firms in offering the kind of online buying experience their customers now require — and, indeed, expect — from their vendors.
B2B eCommerce is no longer simply a "nice-to-have," but is a necessity for the industry, said Bachalli. As such, organizations will increasingly rely on their eCommerce solution providers to support functionality like subscription- or consumption-based payments, payment flexibility or loyalty programs.
They will also expect these solution providers to arm them with data analytics and insights on customer buying and payment behavior in order to continually fine-tune their B2B eCommerce strategies and future-proof their organizations. Not only is this key for eCommerce-as-a-Service providers and platforms to acquire their own customers, but also to secure funding. Unilog, for instance, recently announced an investment from Investcorp in the form of growth capital and the acquisition of a majority stake in the company.
Now that so many B2B organizations in the middle market have finally planted roots in the eCommerce space, it is now time for the arena to focus on innovation and growth for the long term.
"There is a lot of investment happening, and a lot of growth. IT has the right ingredients for it to be a long-term focus area within the economy," Bachalli said. "As the B2B mid-market industry makes the pivot to digital, it will be a continuing theme for the next several years."
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