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The less talked about Ecommerce Business Model


The word Ecommerce in India is now synonymous with the unicorns in this industry; the likes of Flipkart, Amazon, SnapDeal and others, which represents a B2C market worth US $38 bn as per the latest Assocham report published on 1st Jan 2016.

These companies sure do make an impressive story of the market size they represent, but this pales in comparison to another Ecommerce model which is estimated to have a market size of US $300 bn. This is the opportunity B2B Ecommerce presents as per a report by Wal-Mart. B2B Ecommerce market is a substantially larger market then B2C and is expected to see a phenomenal growth in next couple of years.

Representing the Ecommerce industry and talking about these numbers and other online commerce enablers to a group of manufacturers and traditional business was an amazing experience. Last week I got a privilege to drive an interactive session about Ecommerce in India with Bangalore Chamber of Industry and Commerce (BCIC) members.

The session was around some of the critical aspects of B2B Ecommerce. In a nutshell we covered:-

Evolving consumers’ expectations

The traditional B2B business model required the procurement team to contact 50 different vendors to negotiate to buy each product. This resulted in huge costs and a larger lead-time to procure any product.

Today consumer expectations have evolved and they are more tech savvy.

  • 89% of B2B researchers use the Internet during the B2B research process.

  • 57% of the buying process is done prior to engaging with sales.

  • 80% of companies implementing B2B e-commerce believe that their customer expectations have changed due to B2C practices.

B2B companies have to evolve to deliver B2C like convenience and ease of shopping. The sites should be used as sales tool assisting the buying process.

Conducive Ecommerce business landscape for manufacturers

Ecommerce is a complex business and requires a lot of external factors to work in favor for a company to create a success story.

The critical external factors revolve around the Government regulations and the entire ecosystem to work in tandem to deliver a sustainable business. With the Government of India notification, dated 10th Nov 2015, manufacturers can now sell directly through Ecommerce. This is great news for manufacturers, which demands an immediate attention and a long term planning to capitalize this huge opportunity.

The evolution of Electronic Data Interchange (EDI), Advanced Inventory Management, Logistics and payment solutions especially to meet B2B requirements also supports quicker adaption.

Transformation with technology support

B2B ecommerce has more sophisticated requirements of not only uploading multiple catalogues per vendor/distributor/region but also managing multiple user hierarchies and setting up the seamless workflow connecting a buyer and seller or principal and reseller.

Another critical aspect is to have a technology partner who offers comprehensive enterprise grade solution with an advance order processing, Electronic Data Interchange (EDI) & taxation.

EDI supports manufacturers with receiving/sending invoices, orders, delivery notes suppliers and dealers automatically from System to System.

Benefits of B2B Ecommerce

Know your customer better: Managing all dealers, suppliers and vendors from a single system to know and engage better to grow business and reach.

It will also help in building knowledge bank for different segments of buyers/suppliers/dealers.

Access to more information about the end customer through an added B2C module with a single sign on from B2B systems, will help in better matching the preferences of the buyer and extract a premium price.

Cost-effective efforts: Web-based procurement processing lowers the cycle time, errors and the processing cost. Also enables Just in Time Inventory by leveraging Ecommerce ecosystem

B2B system will enable faster and accurate processing, real-time and rich-media information support, and low communication and coordination costs.

Increase business opportunities and product launch: Launching new products or limited launch through online is a cost effective way, as well as helps you in getting immediate feedback from the market to quickly evolve your products and offerings.

Highlights which resonated with Manufacturers and Traditional industries at Bangalore Chamber of Commerce on 7th Jan 2016

  • Small vendors/suppliers/resellers are now becoming aware about the new way of on-line business through media, sessions by industry bodies like BCIC.

  • Benchmarks and ecosystems set up by B2C Industry leaders are putting pressure on manufacturers and traditional business in India to stay relevant.

  • The changing industry trends are observed with the initiatives taken by large companies like Mahindra and Mahindra and Reliance mandating on EDI /Portal based online interaction with all their suppliers/vendors.

  • Government of India notification dated 10th Nov 2015 allowing manufacturers to sell directly to customers to be explored.

  • Huge opportunity of B2B Ecommerce is being realized and creating an excitement on different ways to tap the market.

  • Availability of dedicated team with relevant skills to drive online commerce, current IT set up/preparedness and acceptance by smaller vendors/suppliers/resellers are some of the challenges mentioned by Indian manufacturers and traditional businesses.

  • Availability of highly sophisticated and quickly deployable Electronic Data Interchange (EDI) systems to bring efficiency in dealing with vendors/suppliers/resellers.

  • Ecommerce is considered as an opportunity to expand business by leveraging Analytics, Advanced order processing and Inventory management systems and Business insights with a strong social media engagement platform.

  • Technology partner with a comprehensive enterprise grade solution with a single sign-on for B2B&B2C is critical for B2B success.

  • The advanced modules for implementing B2B commerce include order processing with Electronic Data Interchange (EDI) and Inventory Management.

  • Leveraging best practices of B2C ecosystem including a social media engagement platform has become the need of the hour for Manufacturers and Traditional businesses.