Skip to main content
Research

Setting the Foundation for an Effective B2B E-Commerce Strategy

For some time now, a subset of B2B companies have enjoyed comfortable seats on the e-commerce sidelines. While B2C and a few B2B early adopters embraced the new digital opportunity, many B2B organizations felt the playing field was limited purely to sales transacted online. The rules of play have changed, thanks to Amazon and others, as B2C buying habits and experiences influence B2B customers. E-commerce now includes just what the name infers, all stages of commerce performed electronically or online. This includes the strategic applications for driving top and bottom line growth in this channel.  

Manufacturers Alliance collaborated with Blue Canyon Partners to understand how manufacturers are adapting to this new definition of e-commerce. Realizing the modern buyer’s journey can be complex, non-linear, and mired in stakeholder protocols, suppliers need to determine a path forward.  Even at the highest levels, three critical objectives appeared necessary regardless of the tactical approach.  

  1. What is the goal(s)?
  2. What elements digitally enable the buying journey?
  3. Who will take the lead?

This study explores these questions, follows their impact throughout the buying journey, highlights various current approaches taken by several manufacturers, and provides the decision criteria necessary for you to determine your best strategic response.

Topic at a Glance

E-commerce is a disruptive force for business-to-business (B2B) suppliers. In previous white papers, we have shown that formerly “e-commerce insulated” B2B markets are proving to be not so insulated, that B2B customers are moving a significant portion of the buying journey online, and that these buyers are increasingly expecting a similar e-commerce experience as consumers.

While some B2B companies have embraced e-commerce, their strategies tend to be reactive at best, and non-existent at worst. Many suppliers—if they’re not actively resisting e-commerce altogether—have gotten pulled into selling online, and their strategy primarily consists of ensuring e-commerce does not upset their traditional channels to market. Often, it’s difficult for B2B business leaders to articulate their company’s e-commerce strategy beyond “we sell online” or “we don’t sell online.”

It’s time for B2B companies to change their mindset. First, it’s critical to stop thinking about e-commerce narrowly, as simply “sales transacted online.” E-commerce has evolved into digital commerce, which facilitates an online experience that spans the entire buying journey, from discovery to evaluation through purchase, delivery, and support. This means that sales are enabled or driven digitally—even if the transaction itself is not ultimately conducted online. Secondly, the expectations for an e-commerce strategy need to be raised; it’s not just about managing the online sales channel, but rather using digital commerce to drive top- and/or bottom-line growth.

Where to start? There are a lot of detailed considerations that go into determining how to play in e-commerce, but at the highest level, a supplier needs to define three critical objectives.

  1. What is the goal? – How will e-commerce drive top- and/or bottom-line growth?
  2. What elements digitally enable the buying journey? – Not all elements of the buying journey will be enabled digitally or enabled to the same degree.
  3. Who will take the lead? – Which e-commerce elements of the buying journey will the supplier take the lead on versus relying on, or enabling, channel partners to deliver?

WHAT IS THE GOAL?

Capturing existing sales that are migrating online (transaction replacement) is no longer a sufficient goal for a B2B company’s e-commerce strategy. Modern strategies address how a company leverages digital capabilities to drive growth. E-commerce is best leveraged to:
 

  1. Reach new customer segments.  E-commerce is a great vehicle to open up markets and reach new customer segments—those that may have been difficult to access, too costly to serve, or not valuable enough to pursue within a firm’s existing business model. A provider of building products to the construction market was able to leverage e-commerce to successfully reach into the small professional market, which was difficult to serve due to its high cost, high-touch, traditional 2-step distribution channel. By launching a new brand offering with limited support and warranty—yet sold exclusively online—the supplier effectively reached those customers and met their needs.
  2. Take costs out of serving customers.  For certain elements of the buying journey, such as discovery, evaluation, and support, e-commerce can be more cost-effective and deliver better results than traditional delivery mechanisms. A diversified supplier of industrial equipment significantly reduced its cost to serve by providing customers 24/7 access to online support tools, enabling them to self-diagnose common issues and view video tutorials demonstrating how to resolve such issues. This provided a better customer experience and allowed the firm to optimize the number of live support resources needed, and freed those resources to address only the most complicated customer issues.
  3. Create a differentiated customer experience to capture market share.  In today’s digital world, a customer’s buying experience greatly influences purchase decisions. The right e-commerce functionality—that which delivers a superior experience—can lead to greater success across the purchasing funnel, from awareness and consideration to evaluation and purchase. With e-commerce, there’s always a lot of discussion around search engine optimization (SEO), making sure potential customers can find (and visit) your website, social profiles, customer service platforms, etc. However, the value of SEO is wasted if customers don’t stay connected for long or, even more importantly, return to engage continually. In B2B, a differentiated customer experience typically revolves around three elements: 
  • How quickly and easily can the customer find the best solution for their needs?
  • How quickly and easily they can make a purchase?
  • How quickly and easily can they get information/answers to their questions?

A supplier of industrial consumables built an intuitive search function into its website to allow customers to find the exact consumable—among hundreds—to meet their needs based on a variety of different criteria pathways. It also proactively presented alternatives and how they differed from the recommended offering. In addition, it allowed the customer to save their previous search activity, and easily access it without going through the discovery and evaluation process again. This capability consistently drew customers to the supplier’s website and generated significant loyalty, with the experience often cited as a reason for purchasing from the supplier.

Figure 1: Establishing goals for an e-commerce strategy to drive growth

A supplier may have multiple goals for its e-commerce strategy or have different goals for the different offerings it provides. What’s most important is that leaders clearly identify their growth opportunities and set goals. Once the opportunities and goals are defined, a supplier can start to make key decisions on the other two key foundations of its strategy:

  • What elements of the buying journey to enable digitally?
  • Who—the supplier or channel partners—will take the lead on delivering these elements?

WHAT ELEMENTS DIGITALLY ENABLE THE BUYING JOURNEY?

E-commerce is not on or off, or in other words, it’s not a single model. Many people have a narrow definition of e-commerce, primarily shaped by their experience with the Amazon or Alibabas of the world. But there are many ways to deploy e-commerce based on what elements of the customer buying journey are enabled digitally, and to what degree they are enabled.

Figure 2: The B2B buying journey: What elements will be enabled digitally?

Blue Canyon defines the buying journey as consisting of five main elements: discovery, evaluation, purchase, delivery, and support. While the actual buying journey in B2B can be a lot more complex, involving multiple stakeholders and multiple decision points, this streamlined model is a good starting point to explore which elements to enable digitally. The three examples described in the previous section further showcase how different e-commerce models can be deployed and how they play across the different elements of the buying journey.

Building Products Provider Example: The provider of building products, utilizing eCommerce to reach new customer segments, illustrates a model where all elements across the buying journey are heavily digitally enabled. Dedicated web pages, SEO, and AdWords are the primary means for discovery and evaluation. The products are exclusively purchased through online marketplaces. Delivery is handled by the online marketplaces’ fulfillment operations and support is primarily web-based through online manuals, FAQs, and tutorials.
 
Industrial Equipment Supplier Example: The supplier of industrial equipment, utilizing eCommerce to take costs out of serving customers, is on the opposite end of the spectrum, primarily focusing on digitally enabling just one element of the buying journey, support. There are markets where certain elements of the buying journey are less eCommerce-friendly or where eCommerce does not provide significant added value. For equipment that is complex, where it’s necessary to have a detailed understanding of the customer’s needs, or where there’s traditionally significant customization, eCommerce is less of a fit. In these cases, elements such as evaluation, purchase, and delivery are not strong candidates for digital enablement.
 
Industrial Consumables Supplier Example: The supplier of industrial consumables, using eCommerce to create a differentiated customer experience, focuses primarily on the first two steps in the buying journey: discovery and evaluation. These are the elements where eCommerce enablement provides the most value and drives a differentiated customer experience. Support requirements for these types of products are minimal so there’s little opportunity to differentiate on this element, and while it is possible to offer online purchasing and delivery, it is more important for the customer to know where they can purchase nearby as opposed to directly online, since these products are often needed immediately.

Figure 3: Examples of different e-commerce models

Deploying an e-commerce strategy can, but will not necessarily, mean that all elements of the buying journey are enabled digitally. In determining what elements to enable digitally, and to what extent, a supplier needs to consider multiple factors including the goal of its e-commerce strategy, how e-commerce friendly the element of the buying journey is, the impact of digitally enabling the element, and finally, customer and channel partner expectations.
 
The goal for an e-commerce strategy will determine which elements of the buying journey should be targeted for digital enablement. A strategy built around reducing costs to serve will focus on elements of the buying journey that are costly and low value-add. A strategy with the goal of differentiating the customer experience will target elements of the buying journey that have the biggest influence on the experience or are the source of the biggest customer pain points.
 
However, just because an element of the buying journey can be enabled digitally doesn’t mean it should be. How large of an impact enabling the element will have should be weighed against the cost of doing so. Ultimately, customer expectations always should be a core consideration. Even though enabling an e-commerce element may not provide many benefits, a customer may still expect it based on their experience with competitors or with other products/markets. E-commerce customers in the B2C world didn’t know they needed next day delivery until they experienced it. Now, it’s the expectation, and it’s becoming an expectation in the B2B e-commerce world as well.

WHO WILL TAKE THE LEAD?

Once it’s determined which elements of the buying journey will be enabled digitally, the question shifts to who should take the lead on delivering these elements, the supplier can deliver them themselves or utilize channel partners. The following key questions, depending on the goals for the e-commerce strategy, need to be answered:

  • Content: Do we want to develop our website with content that enables full discovery and evaluation of our offering? Or do we leave that to channel partners?
  • Sales: Do we want to sell our offering directly through our website? Use e-commerce to enable our channel partners to sell more of our offering? Or both?
  • Fulfillment: Can or should we create the fulfillment capabilities required and expected for fast, timely, and “last mile” delivery? Or should we expect channel partners to provide this?
  • Post-Sale Support: Can post-sales support be provided through our website? Or, must we rely on our channel partners to provide it?

To make these decisions, a supplier needs to consider several factors: the value of controlling the e-commerce experience, their capabilities versus those of their channel partners, the extra value-add channel partners provide, and investment and costs.

Case-in-Point

By analyzing the example of the building products provider that used e-commerce to reach the small professional market segment, we can show how these factors come into play on who will take the lead in delivering e-commerce elements. 

Content: The building products supplier felt strongly that for the success of its new brand it needed to control the discovery and evaluation components of the e-commerce experience, and thus invested heavily in content for its website. The company also invested heavily in directing customers to their website. Concurrently, they developed content for their channel partners’ websites to mimic the experience on their website, including detailed photos, 360-degree views, infographics, simulations, and videos. 
 
Sales: The supplier decided to have channel partners take the lead for purchase, selling through online marketplaces as opposed to the supplier selling directly online. Customers visiting the supplier’s website are directed to channel partners to purchase and complete the transaction. This decision was primarily based on capabilities, investment, and cost considerations. Online channel partners’ transaction execution capabilities were very strong, and they provided a benefit as high traffic websites to purchase these types of products. This provided increased brand awareness and consideration, as well as ease of transaction. 
 
Fulfillment: The supplier’s fulfillment capabilities were not configured for small, one-time orders; whereas their online channel partners already had best-in-class capabilities in this area. If the supplier built a similar capability, it would require a significant investment and deliver little additional benefit to the customer or the supplier.
 
Post-sale support: For post-sale support, the supplier took the lead. The company wanted to control the experience for several reasons. First, it wanted to make sure support is delivered in an easily accessible and highly usable fashion—and the online channel partners have little incentive to deliver a high-quality support experience. Basic support content was provided to online channel partners, but detailed support was only available on the supplier’s website. Secondly, the supplier wanted to be able to directly gather information from customers on the most frequent issues they were facing in installing, using, or maintaining the product. They also saw value in building a direct relationship with the customer. They did this effectively by driving customers to their website for support.

Figure 4: Who takes the lead? Example of the building products provider using e-commerce to reach new customer segments

This is just one example of how a B2B supplier can deploy e-commerce, with the supplier digitally enabling marketing and support and primarily acting as a lead generator for online channel partners to complete the sale. Another version of this model is to act as a lead generator but with the final transaction occurring offline, through a supplier’s traditional, brick and mortar channel partners. We shared this example in the industrial consumables supplier using e-commerce to create a differentiated customer experience.
 
There are many other variations as well. Other models we have seen include suppliers taking the lead on all elements of the e-commerce buying journey, from discovery to support. They set up their websites for online ordering and build fulfillment capabilities to allow for fast shipping and handling of returns on small orders. In these cases, the suppliers concluded that their channel partners did not have the capabilities to enable e-commerce and provided little value beyond the transaction that the supplier could not replicate digitally.
 
We have seen suppliers build e-commerce capabilities that are embedded within and branded to look like they belong to their channel partners. In these situations, the channel partners didn’t have the capabilities to enable e-commerce, but they provide significant value pre- and post-sale, in areas such as relationship development, in-person support, parts availability, etc. Here, the suppliers want to provide digital capabilities to differentiate the customer experience, but do not want to disintermediate their channel partners because they are a critical component of their value proposition. 
 
And of course, suppliers don’t have to choose just one model; they can deploy multiple models, selling online directly, through online sellers, and enabling their existing brick and mortar channel partners to do so as well.

WHAT ABOUT THE POTENTIAL FOR CHANNEL CONFLICT?

Most B2B suppliers have existing brick and mortar channels and e-commerce can disrupt these relationships. Channel partners are wary of being disintermediated and/or of new online channels competing for their customers. There are multiple mechanisms that can be used to drive growth through e-commerce while still supporting traditional channel partners, such as offering product exclusivity, minimum advertised pricing, partial sales credit, and additional revenue streams. But it’s also possible that e-commerce is making the value and services provided by your traditional channel partners obsolete, signaling the need to disintermediate them. The potential conflicts need to be identified, the risks assessed, and plans to manage them put in place. Each partner relationship—online, brick and mortar, or both—and scenario requires careful assessment before action is taken one way or another.

PUTTING IT ALL TOGETHER

Combining decisions on what elements of the buying journey will be enabled digitally and who will take the lead sets the foundation for the model a B2B supplier will deploy as its e-commerce strategy. At its highest level there are four models, but with many variations within them:

  1. Extensive e-commerce enablement, primarily led by the supplier
  2. Extensive e-commerce enablement, primarily led by channel partners
  3. Limited e-commerce enablement, primarily led by the supplier
  4. Limited e-commerce enablement, primarily led by channel partners
Figure 5: Blue Canyon’s 4 models for addressing and responding to digital/E-Commerce disruption

Which of these models is a better fit for a supplier’s e-commerce strategy will depend on the goals for the strategy, the specific characteristics of the product, and dynamics of the market, as described in the previous sections.
The provider of building products reaching new customer segments is an example of extensive e-commerce enablement, primarily led by the supplier.

  • The supplier of industrial equipment taking costs out of serving the customer is an example of limited e-commerce enablement, primarily led by the supplier.
  • The supplier of industrial consumables creating a differentiated customer experience is also an example of limited e-commerce enablement, primarily led by the supplier, but with a focus on different elements of the buying process.

To determine which model is a better fit, start by answering some key questions: 

  • What is my strategic goal(s)?
  • How e-commerce friendly is my offering?
  • Can e-commerce create value across the buying journey, or only in select elements?
  • What are my customer/channel partners’ e-commerce expectations?
  • Is there value in having more direct control over the e-commerce customer experience?
  • Am I capability and cost-advantaged in providing e-commerce enablement or is my channel partner?
  • Do channel partners provide significant added value that’s important to my value proposition?
Figure 6: Characteristics for best fit e-commerce model

The answers will begin to point you in the right direction. While these models are different, all are successful ways to leverage e-commerce to drive growth.

THE PATH FORWARD

It’s time for B2B suppliers to move from reactive to proactive when it comes to e-commerce. E-commerce should not only be viewed as a disruption to deal with but as a lever to drive growth, with many different models to deploy to create and capture value beyond just transacting online. By setting clear goals, deciding which elements of the buying journey will be enabled digitally, and determining who will take the lead, a B2B supplier will have the foundation for an effective e-commerce strategy.


AUTHOR

Axel J. Leichum is a Partner at Blue Canyon Partners and serves on the firm’s Executive Council. He has been turning insights into actionable strategies for clients for nearly 15 years. His clients span myriad industries and markets, ranging from IT, healthcare, distribution, process control, and beyond. Axel has written and presented on numerous topics, including adjacencies, pricing, customer experience, and segmentation.

Blue Canyon Partners, Inc. is a management consulting firm that provides business-to-business executives strategic direction on how to drive profitable growth. For decades, Blue Canyon has been positioning our clients for success by helping them discover and take advantage of new growth opportunities and identifying how to create and capture more value from their existing businesses. Visit bluecanyonpartners.com for more of our latest insights.