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Cape Town – Initial global data suggests that while business to business (B2B) e-commerce may not attract headlines, it is a fast growing sector in the online trade space.
“B2B e-commerce may be the ugly sister to the more glamorous B2C [business to consumer] market, but in the US its receipts are twice that of B2C’s according to Forrester and sales will top $1.13 trillion by 2020,” Charlie Stewart, chief executive of Rogerwilco and author of Business to Business Marketing: A Step-by-Step Guide told Fin24.
He said that once consumers adopt the ease of e-commerce, they move businesses to online platforms.
“The typical growth path for B2B e-commerce sales starts with people transacting at a personal level on a B2C site, seeing how easy it is and then spotting the opportunity to simplify many of the processes involved with procuring products or services for their business.”
Connected devices
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While South African information on B2B is difficult to analyse, international data from Frost & Sullivan shows that B2B e-commerce will hit $6.7bn by 2020.
Stewart warned that as businesses migrate toward online trading, a few companies may dominate the local market.
“While it’s inevitable that a few giant platforms (like AmazonSupply and Alibaba) will dominate the B2B space in much the same way as a handful of B2C sites like Takealot and Woolworths have the lion’s share of the local B2C market, we’ll also see the emergence of a new breed of specialist B2B suppliers.”
He added that online trading could save companies money by removing the need for overheads like lush offices and expensive rentals in central business districts.
Technologies such as connected devices could also boost B2B e-commerce which heralds a change in the way firms do business with each other.
“While some of the growth will come from channel shifting (using the internet to replace phone or faxed orders), further growth will be driven by new technologies enabled by the internet of things (IoT) - imagine a scenario in which a server starts to fail and automatically orders a replacement for itself, effectively bypassing human intervention,” said Stewart.
But the fear of online crime and managing online presence are challenges to businesses to adopting e-commerce.
“We’re still coming to grips with buying online with approximately 22% of local internet users having yet made an electronic purchase,” Stewart said.
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