The Paypers interviewed Jordan Graison, Head of Sales at Limonetik, to learn more about the emerging trends in B2B ecommerce
What is the size of the B2B ecommerce market and what new buying trends have you noticed?
The B2B ecommerce market is still difficult for analysts to fully comprehend, due to the fact that it is correlated to the late adoption of digital transformation in the B2B segments, and the volumes announced differ from source to source. Surprisingly, many statistics are actually on B2B2C ecommerce (retail), whereas B2B2B figures (wholesale) are conflicting and not well estimated. Our investigation estimates it will account for some multi-trillion USD before the end of the next decade.
The APAC region is the main driver as it has the highest concentration of manufacturers in the world. According to Asian Development Bank, the APAC region accounted for 42% of global GDP in 2017.
There are two trends currently emerging:
- Dedicated marketplaces, with Alibaba as a pioneer. Since 2010, Alibaba has served as the intermediate between buyers and sellers, facilitating the business flow and helping secure a competitive price. We have seen this trend in Europe as well. Mirakl, a marketplace solution, announced the launch of Conrad.biz, the first electronic marketplace in Germany for B2B. Selling on a direct marketplace provides manufacturers with opportunities to upsell new services in addition to the product itself. For example, a maintenance package or installation from a reseller can be easily included in the order, without affecting the customer experience.
- Invoice digitalisation: Companies have seen a positive correlation between having a global value chain and business growth. However, this expansion multiplies the coordination needed to manage orders and payments via their accounting ER. These considerations are not readily adapted to digital transactions, which means that heavy manual processes are still a reality for financial departments.
Forrester predicts that the US B2B ecommerce market will reach USD 1.8 trillion and account for 17% of all B2B sales in the US by 2023. What are the trends driving this growth?
Liquidity management for a company is key. With the number of online customers on the rise, going online can bring substantial new sources of liquidity. Moreover, it implies several key factors of success:
- mastering the digital customer experience. Users do not expect to start ordering online and then check out offline, but to have the possibility to choose their delivery solution online. However, not all offline processes can be easily replicated online;
- consumer habits. Offering a global solution, selling online implies selling worldwide. For example, while Germany is not expected to give terms of payment, India is much more flexible, but the debts collection is much more important.
In ecommerce, what B2C features are equally important for B2B?
B2B purchasing is different from B2C. While B2C buyers are occasional, more impulsive, less likely to pay on terms at a fixed price and with a small basket, B2B buyers are regular, part of a procurement process, often paying within terms (30 days, 60 days etc), and getting different pricing options entering in the framework of a contract.
However, B2B and B2C buyers will expect to have a similar approach when it comes to user experience, such as a one-stop shop platform that allows an end to end experience online without disruption (front office); a single interface to interact with the seller (back office), or an option to pay online at the checkout page.
What are the demands of the B2B market when it comes to payment?
Often, B2B companies are expecting their payment service provider to offer:
- cheap acquiring cost or at least the best value for money. It is difficult for a company to pay 3% on a EUR 300, 000 basket, especially as the numbers of transactions are lower than B2C segments;
- reconciliation of invoices. While an accounting ERP can match transaction with orders, the reconciliation of all transaction is still a manual process for the treasury to handle. Going online implies that the PSP offers a reconciliation service as the numbers of transactions will increase, and perhaps be invoiced by a third party (marketplace cases). Accounting ERP can only match the total amount of received money with existing orders. Still, reconciliation of invoices is not a precise science as the issuer of remittance is not a machine, and can easily make mistakes (incorrect amount sent, double etc);
- highly secured payment method. B2B players are searching for payment methods that are not subject to chargeback or dispute (large volumes expose the business to higher credit risk). The ideal payment methods would be instant payments and those that allow recurrence;
- additional services linked to the context of transaction. B2B actors will not offer payment terms or options to customers that are late paying. They will even ask for an insurance or a factor transaction if they see this transaction as risky.
In 2018, Limonetik has announced a collaboration with B2B ecommerce platform OroCommerce. What are the benefits of this partnership?
OroCommerce is a front-end platform dedicated to B2B, targeting companies that are interested in offering online B2B experience. Oro can offer contextual pricing catalogue, procurement decision process, multiple types of user roles, and access to the platform. Limonetik is bringing to OroCommerce all the payment part by connecting the right payment methods at the checkout page, while also being able to handle complex scenarios of reconciliation as well as international reach of acquirers and payment methods. The Plugin was published two weeks ago after a beta test, and we expect to industrialise the process of merchant onboarding, even if each merchant is different and this is even more true for B2B ecommerce.
This interview was first published in the B2B Payments and Fintech Guide 2019, which offers insights and analyses from thought leaders on key industry topics such as cross-border payments, instant payments, B2B commerce, payments infrastructure, and many more.