More ink has been spilled and more cyberspace filled writing about business-to-consumer (B2C) e-commerce than almost any trend on the planet. But there is a segment that’s nearly twice as large, yet gets a fraction of the attention – business-to-business (B2B) e-commerce.
B2B domestic e-commerce sales hit $1.134 trillion in 2018, according to Forrester Research. That amounted to 12 percent of the $9 trillion in total B2B U.S. spending, defined as employee-generated transactions on e-commerce sites. B2C e-commerce in 2018 was a $513.6 billion business, based on Forrester data. That was about 10.2 percent of total retail sales. Backing out sales of fuel, automobiles and food at restaurants, U.S. retail sales hit $3.4 trillion last year. Because those transactions can’t be digitized, e-commerce’s share of the addressable B2C market is actually higher than 10 percent.
The runway for continued B2C growth is longer, Forrester said. By the time it fully matures, B2C e-commerce could account for one-quarter of all U.S. retail sales, the firm said. B2B e-commerce could hit 17 percent of the projected $11 trillion in total domestic B2B sales by 2023.
In recent years, the conventional wisdom is that B2B has been pushed to the back of the e-commerce bus by the seeming obsession with consumer behavior. However, if the results of a survey of 900 businesses by DHL Supply Chain, the world’s largest contract logistics provider, are accurate, those responsible for B2B e-commerce have made as much, if not more headway than their B2C counterparts. Nearly 40 percent of respondents in charge of B2B e-commerce said they’ve fully implemented their e-commerce strategy. That compares to 30 percent of executives operating in the B2C space.
About 60 percent of B2B respondents said they are working towards full implementation of an e-commerce strategy, slightly less than those in B2C space, according to the survey. However, the path to progress varies. About 51 percent of B2B respondents said they have either partially implemented an e-commerce strategy or that they report “moderate” progress. About 55 percent of B2C respondents report similar progress, according to the survey.
It is not unusual for e-tailers normally associated with the B2C world to work the other side of the fence. For example, Amazon.com, Inc., the nation’s largest e-tailer with about 40 to 50 percent of the market (depending on the source) recently launched a beauty supply business to sell only to stores and salons, not to consumers outside of the trade.
Respondents from both segments expressed similar sentiments on a number of issues. About half of businesses in each area expect to make changes in their distribution strategies over the next three to five years. Both groups said their biggest challenge is in managing constantly shifting customer expectations. About the same ratio – 34 percent for B2C respondents and 36 percent for B2B – expect to fulfill online orders solely through in-house methods over the next three to five years. This reflects the increasing complexity of e-fulfillment that will compel all e-commerce firms to adopt hybrid fulfillment strategies and to rely on two or more methods of distribution to satisfy customer expectations, the survey found.
About 73 percent of B2B responds will adopt two or more approaches to distribute their product, while 65 percent of B2C respondents will do the same.