Everyone has something to say, and every place you look there’s another self-ordained expert in B2B. But expect the leaders and lessons of B2B to have lots to teach B2C in the future.

There is an incredible amount focus on B2B, and you can find mountains of information online about the evolution of the “B2B ecommerce market.”

Let’s get one thing straight. B2B is only a “market” in the eyes of service and software providers that want to solve a specific set of problems for brand manufacturers and distributors. But, organizations don’t tend to classify themselves as “B2B.” Have you ever worked for a software or service provider and sat through meetings listening to your colleagues debate how they should classify Coca-cola, Lincoln Electric, Reebok or L’Oréal? “Are they B2B or B2C?” Have you ever attempted to subdivide your sales territories by B2B versus B2C? That was a frustrating experience, wasn’t it? This article is for you.

Software and service providers that assign B2B or B2C as binary values in a CRM have already missed the point. Pepsico isn’t strictly a B2B or B2C manufacturer, and they don’t think of themselves that way. Pepsico sells directly to consumers like you and me that intend to eat their products. They sell to businesses that intend to resell their products like Walgreens, The Home Depot, Costco and Dollar General. And, they sell to restaurants that incorporate their product into a broader offering like Arby’s, Golden Corral and Buffalo Wild Wings.

Yes, there are businesses that choose to go to market in strictly one channel or another. For example, Webasto Roof & Components manufactures sliding sunroofs that are pretty uninspiring until they are incorporated into a Ford or Fiat vehicle. It’s hard to imagine a B2C strategy winning the day at Webasto. But even in this context, B2B is a strategy, not a market.

In a nutshell, B2B refers to a go-to-market strategy wherein both parties are businesses. Those business relationships bring with them expectations, complexity and a variety of problems to solve. And when Al Gore first gave birth to the Internet, ecommerce platforms were woefully ill-equipped to solve for these B2B problems. Why does any of this matter? Because back when I used a pager and installed AOL Online off a CDRom, niche technology platforms found a comfortable home in B2B. These platforms were created (and many stood the test of time) because they understood how ecommerce would fail to take root in their industry unless it could solve for a host of complex B2B use cases.

It’s a new day for B2B

Fast-forward 21 years, 4 cats, 8 homes, 9 cars, 3 cities, 1 dog and a daughter later. If you Google “B2B ecommerce,” Shopify, BigCommerce and Magento all appear on page 1: all B2C platforms by pedigree. It seems that everybody wants to get into B2B’s pants. Why? Two fundamental reasons.

First, the fundamentals of ecommerce don’t change. It’s still an exchange of goods or services for money. But, if these platforms can solve for a subset of complex, B2B use cases, the prize is staggering. The global B2B ecommerce market size is estimated to exceed USD 20 trillion by 2027. B2B sales outweigh B2C sales by $5.4 trillion. So little by little, ecommerce giants have chipped away at the complexities of B2B. And bit by bit they’re getting smarter and more flexible.

What types of use cases are they solving for? Here are just a few examples:

• Multiple and customizable catalogs (contract catalogs)
• Multiple and customizable price lists (contract cost, contract pricing)
• Multiple product views
• Dynamic promotion
• Punchout from business and accounting systems
• Syndication of digital product information including inventory, pricing, marketing
• Approval processes and the hierarchy of a general ledger
• Order frequency
• Complex delivery methods and timing
• Balancing basket size, lifetime customer value and line item profitability
• Payment terms and invoicing
• Interfacing with a physical logistics and fulfillment team in the field
• Licensing and resale terms

The second reason B2C platforms started to make moves on B2B is that consumer expectations with regards to the B2B ecommerce experience have long been influenced by their interactions in the B2C world – especially amongst the Oregon Trail generation and the Millennials that followed. In other words, when buyers purchase floor cleaner or white board markers, they want the experience to be just as easy, informed and intuitive as buying a pair of TOMS from Zappos.com. This is an arena in which the B2C platforms have fought and won for some time. So in essence, you might think of these platforms as B2BC (business to business consumer) platforms because they understand that expectations around usability and service proposition are set by individuals – individuals who punch out at 5 o’clock and become individual consumers in the B2C sense of the word.

Yet even as these leviathan ecommerce platforms join the fight, B2B ecommerce trails years behind B2C and decades behind pornography. B2B leaders have been paralyzed. They have struggled to figure out where to begin. And, they have been slow to test strategies, fail fast and adapt. That’s not because B2B digital leaders are any less innovative or ambitious. No – the primary force at work here is complexity.

Drowning in complexity

Organizations with an established B2B go-to-market strategy have developed agreements and service propositions with other businesses over time. These agreements range from fully bespoke contracts to tiered pricing, payment terms and fulfillment plans. As companies with a strong B2B strategy shift to digital, their ecommerce platforms need to be flexible enough to accommodate extensive customization of their business relationships (and still be usable).

At the same time, digital brings with it a certain level of transparency that’s difficult to avoid. Often B2B agreements are based on a multitude of inputs: prepaid discounts, supplier funding, business size, market reach, market presence (on both sides), exclusivity, service level terms, tenure, credit, payment terms and more. Some of those inputs are subjective, such as the probability that a customer will grow and sell more in the coming year. The sheer number of inputs make it difficult to codify these programs with an objective formula. And that makes it hard to bring any more transparency to the process.

“Why did Acme Inc. receive these pricing and terms of service, while Tango Corporation – which looks and operates similarly – received different pricing and terms?” Not only is that a mercilessly complicated question to answer, but B2B has benefited from an era wherein it was acceptable for these agreements to be shrouded in mystery.

In addition to all of this, the potential for channel conflict exists. Channel conflict is a situation where one channel inadvertently competes with another from the same business. For example, supplier X is selling a product to retailer Y. Retailer Y is selling online at cost plus 10% to make some margin on their sales. Supplier X then introduces a direct-to-consumer strategy wherein their cost direct to consumer may not be lower than the cost to Retailer Y, but it is low enough to erode retailer Y’s margins such that it’s not worth the retailer’s time to sell the product any more.

Situations like this can be difficult, but at least in this example most of the variables are still within the supplier’s control. In other situations, the supplier struggles to manage this conflict because they don’t have control over all the variables. Consider the previous scenario where supplier X sells to retailer Y. Another customer of supplier X – retailer Z – goes bankrupt, liquidating its inventory. Opportunists swarm, scooping up products for pennies on the dollar. Days later those products appear on a marketplace or at a different discount retailer for a fraction of what supplier X can afford to sell directly to consumers and still break even.

This hurts both supplier X and retailer Y. But furthermore, it’s difficult for retailer Y to understand how the product wound up on the market at these low prices to begin with. It looks like there are special, back room deals happening when in reality supplier X has little to no control over the situation. Therefore, digital shines a light on the pricing discrepancy. Digital consumers flock to the bad actor because of its low prices. But, digital offers no explanations as to how this situation materialized in the first place.

All of these situations (which are all too common when businesses sell to other businesses) make for an uneasy relationship with digital. Andy Hoar’s Death of a B2B Salesman, originally released by Forrester in 2015 predicted that a million B2B sales representatives would lose their jobs by 2020. McKinsey also published research predicting that by 2020, 85% of all sales activities could be automated. Both pieces were a clarion call for B2B merchants to make a hard break towards self-service digital consumer experiences. And it’s true that by 2019, 60% of business buyers get their information from a source other than a sales representative before making a purchase. Almost as many would prefer not to talk with a sales person at all. The fallout (in terms of B2B sales jobs) was even more stark than what Hoar originally predicted. While organizations understood the need to pivot, they stood transfixed in the face of complexity and paralyzed by a complicated relationship with digital.

For more than a decade this inability to act opened the door for traditional B2C businesses to outmaneuver B2B and peel away huge percentages of business. This is the story of Amazon.com launching Amazon Business.

Relationships and the Mechanics of B2B Businesses

While complexity has been the primary force holding B2B back, it’s worth mentioning that many B2B businesses are sales-led organizations. That is, the relationships that they have with their customers are cultivated by a team of sales representatives. The sales team traditionally tended to the needs of the customer, helped to ensure the customer is successful (read: profitable), and maintained a healthy relationship for the business.

The onset of digital presented a difficult circle to square for B2B organizations. When polled, customers would say that they preferred the tried-and-true ways of doing business. They liked the white-glove, high-touch, relationship-based interactions with their supplier. But Seth Stephens-Davidowitz nailed it: Everybody Lies. What customers said and what customers did were wildly different from each other. Individuals with the power to make buying decisions were used to data being at their fingertips. They didn’t need to talk to a sales representative – they could find information about practically anything at any time of the day or night. And it would be delivered to their door in 2 days.

Not only did personal buying behavior shift, but organizations began to behave differently as well. Despite suppliers’ attempts to engender brand loyalty or exclusivity, businesses learned to take what was offered up front, but ultimately shop suppliers on price and convenience alone. Sales representatives rarely heard the word no. The phone just stopped ringing.

Sales organizations have also had a complicated relationship with digital. If they had an ecommerce strategy at all, most businesses treated the shift to digital as the birth of ecommerce rather than holistic digital transformation. Digital became a channel rather than being woven into the fabric of the organization. Not only was its potential to serve both sales and the customer misunderstood, but often it competed directly against the sales organization and their ability to feed their families. When it wasn’t competing with sales directly, it just created a layer of bureaucracy that turned customers off.

The Swing of the BCB Pendulum

The arrival of the world’s largest ecommerce platforms – Shopify, BigCommerce, Magento, Salesforce – to B2B has signaled a new dawn. These commerce platforms have brought two decades of consumer experience to a business buyer – experiences these business buyers have been craving. They have the money behind them to invest seriously in B2B. And, day by day they become more sophisticated in their ability to address the complexities of these B2B purchases.

In the context of market focus, a pendulum has swung from B2C to B2B. And, everything we’ve learned about digital customer experience has come with it.

But bear in mind that the consumer’s B2C experience is far from perfect as well – both from the consumer’s standpoint (“I don’t understand why they say this item is out of stock when I know I could drive up the street and pick it off the shelf.”) and the business standpoint (“I don’t know how to crack this conversion plateau,” and “How do I ensure that I don’t keep going upside-down on free shipping?”)

In this respect, we expect to see the pendulum linger in B2B, and then swing back towards B2C. The lessons of B2B are exactly what B2C has been hungry for:

• personalized catalogs and recommendations,
• individualized pricing,
• dynamic promotion,
• complex delivery methods and timing,
• punchout to IoT and other consumer experiences (experiences that intercept the consumer in their natural habitat)

The industry has known for years that these represent the frontier for ecommerce. But they’ve lacked an adequate business case to invest in them – the dollars simply weren’t there. Until now. These are the complex problems that must be solved in order for ecommerce platforms to accommodate B2B. Ironically, when applied to B2C we should see a step change in “masses of markets” as we know it.