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Podcast Recording: Andy Didyk discusses B2B e-commerce

by Andy Didyk

Ntara's Andy Didyk and B2B Growth Show podcast host Jonathan Green discuss the ins and outs of B2B e-commerce and how it is different from B2C.

Watch the video or read the transcript below, follow this link to the podcast, this link to subscribe to the B2B Growth Show on iTunes, or search for it on your favorite podcast app.

Jonathan Green: Welcome back to the B2B Growth Show. Today we are joined by Andy Didyk. Andy is a subject matter expert in all things e-commerce and digital strategy for leading Fortune 500-branded manufacturing and tech companies. He is also the Vice President of Account Services at Ntara. Andy, welcome to the show.

Andy Didyk: Thank you, Jonathan. It's great to be here. 

Jonathan: It's great to have you. We've actually been talking to Ntara and trying to coordinate an episode and have you on the show for months now, so we really do appreciate you carving some time out of your busy schedule to join us. But before we get into today's topic, why don't you tell us a little about what you and your team at Ntara are up to these days? 

Andy: Sure thing. Well, first of all, thank you for the opportunity. We're big fans of the podcast, several of us here in the accounts team and in our marketing department, so it is a real pleasure when you extended the invitation for us to join you. 

At Ntara, we're an independent interactive agency. We've been around since 1999. We're about 50 people, and we're located in the mountains of East Tennessee. It used to be that we needed to overcome the status of our location in dealing with the Fortune 500 companies that we work with, but it's become really a moot point as time has gone on and workforces have become more geographically distributed. 

So it's really a great place. It's a great group of people, and we manage everything from front-end management consulting and strategy, new product launches, helping companies to get from a B2B environment to go direct-to-consumer for the very first time-- key brands like Hunter Fan and Simmons Beautyrest-- as well as actually designing, building, and deploying e-commerce websites and then running those on the back-end and helping companies to see an increased ROI and all of those things that people, marketers, love to buy. That's why they have agencies. So that's, in a nutshell, what we do. 

Jonathan: Great. And I mean, so you had mentioned it's a B2C. And we don't talk about B2C very much on the B2B Growth Show, but we definitely are going to be touching upon that today. But in the context of deploying a B2B e-commerce strategy, let's just start there, Andy. Let's talk about what it looks like to deploy a B2B e-commerce strategy. 

Andy: Well, it's a great question, and it's an enormous topic that may fill your timeline if we focused on just it alone. But one of the things that's most often overlooked in that process, especially for a company that's looking to deploy B2B for the first time, in terms of e-commerce, is just understanding some basic definitions and what's involved in that deployment. For example, if you are looking to help your field sales develop a channel that allows your biggest consumers, maybe your second largest customers, sort of that third or fourth tier, to do routine transactions online via e-commerce in the way that they're used to, more in an Amazon-like environment, it requires a different technology stack and a different attention to detail than it does the more typical approach where you're using an EDI connection or something, where two big companies are using a specific format of data to talk to each other. It's very important to approach any type of program like this from a lot of different angles. 

So you have to look at it, yes, from a technology stack, but you also have to look at the fact that if the majority of your transactions are occurring through sales people and those relationships are owned by really great expert B2B salespeople, those people can often see e-commerce as a threat to their livelihood. Because they don't want their customer to go through a website to place an order; they want to go through them and keep that relationship going. But really, if you look at the statistics and how these things are deployed, Forrester is saying that over 60% of B2B buyers made over 1/2 of their purchases online for work in 2015. And they, by and large, absolutely prefer to order online rather than through a salesperson for most routine orders. 

So you've got to look at a deployment for, again, within that technology layer. You also have to look at it from a change management and personnel layer with your field sales force. And then, of course, you have to look at it from a customer experience perspective and ensuring that it's a seamless process for them, that it's easy to use whether it's in their own environment through PunchOut or other technologies, or it's on a dedicated B2B website that you create just for them. 

Jonathan: You had sort of mentioned that there is maybe going to be this changing or complicated relationship with field sales. I mean, do you have any advice for maybe the people that are in field sales, running that field sales team? 

Andy: Absolutely. Well, my background is in business development, and you know the saying is, once you're a sales guy you're always a sales guy. So first of all, I empathize with them. Secondly, it's very common to be concerned because you want to maintain that relationship with the customer. But here's the great news. As long as you're working out with sales management the fact that you would still be compensated appropriately for orders that are made online within that customer base or within that territory, the good news is it's a net positive for you and for your company overall. 

Forrester and Gartner both have cited that customers who are omnichannel-- so in B2B that's defined as customers that are shopping, they're buying through a field sales rep, as well as through an online channel or through EDI-- are more loyal than single-channel customers who just have a sales rep. Also, there is 19% average sales growth year over year for companies that deploy an e-commerce channel, versus those that do not. And they typically are lowering their order costs, or their cost to serve, by over 52%. Both of those statistics are from a Forrester study. 

So there are tremendous gains to be had as a field sales rep and not the least among them being-- if you look at that 52% lower order cost, the net to the salesperson is that you don't have to spend time fielding routine orders and replenishments where you're really not adding any value to the equation. At that point, you're an order taker, and as all B2B sales folks know, that's a terrible place to be. The place to be is as a trusted adviser where you're offering something in a consultative role and helping your customer to really solve their business challenges. 

So if you can both get those routine transactions out of the way, handle via a website in a way that's sort of set-it-and-forget-it via subscription or automated replenishment, which can happen through-- we talk about B2B, but there is an emerging field called M2M, which is machine-to-machine transactions. And that's where machines are automatically asking for a replenishment order via an e-commerce site, and that's being ordered and delivered automatically without a salesperson being involved. So if the salesperson can get those routine things out of the way, they can really focus on what matters most, which are those value-added relationships with their customers. 

Jonathan: Yeah. So I think that you are freeing up the field sales to do what it is that they do best. And also the client, you're providing them with an opportunity to enhance their own experience. If it's easier for them to just hop online, click a couple of buttons, or set up some sort of automated program instead of having to call a field sales agent every time they need to do something, I think that also speaks to enhancing that existing relationship you have. You're absolutely right. 

Andy: And what's more, as an additional benefit for B2B marketers-- and this is scary if you don't have a great alignment between B2B marketing and B2B sales-- is that if it's done correctly, the more things like that you can automate and take care of via a website or some sort of digital experience, the more that marketing is able to get a 360 degree view of the customer. Because all of a sudden, not just orders but customer complaints, warranty issues, restocking and resupply-- that's all coming through a channel that is now measurable and is something that you can take a look at using big data analytics or other tools to start reducing churn and retaining customer loyalty and things like that, in a way that you could never do if it was simply in the hands of one or two salespeople alone. 

Jonathan: Right. And you're just kind of asking them, like, “hey, so what are your thoughts on x, y, z?” They don't necessarily have those very concrete, trackable metrics, those resources you can use to really put some numbers to some of those problems you mentioned. 

Andy: That's absolutely right. 

Jonathan: And I think Andy started to get into this, but you had this idea that we were going to be talking about, relates to the B2B buyer versus a B2C buyer and some of the false assumptions that people might be bringing to the table as you are deploying this B2B e-commerce strategy. 

Andy: That's another great question and a very deep topic because there are a lot of differences between the two. I often hear competing agencies or even misinformed people on the buying side in my world compare it to, “hey, it's just like Amazon.” Everybody wants an Amazon-like experience. In fact, I think I committed that sin and did that earlier on the podcast, but that's only true in one regard. And that is having a web experience where you can go through, click through an assortment of orders, add them to your cart, and checkout. 

That's really where the similarities end. Things are very, very different. If you look at the B2C world-- and let's just pick on Amazon, because we've already brought them up-- everybody gets the same product offering. Nearly everyone gets the same pricing. They get the same terms. 

If you want to buy the latest Harry Potter or Game of Thrones book on Amazon, you're probably going to get close to the same price as I am. You've got Prime shipping as an option, and that's about it. But in the B2B world, every client is part of a series of tiers that typically is going to have its own product assortment based on what part of your portfolio they're buying into. They're going to have their own pricing levels that need to be set. And they're also going to have a more complicated interaction, because there is a field sales person involved. 

And remember earlier when I talked about, hey, there's a situation in which most buyers do want to buy online, they prefer to buy through that channel. Well, the flip side of that is transactions that are quite complex, are larger in volume, or are something where you want to negotiate a discount-- they do want to talk to a sales rep, and they do want to have that relationship. So then you've got to figure out with that B2B e-commerce deployment, how do you allow someone to go through and browse at their leisure but then raise their hand at the right time and get a knowledgeable salesperson involved in that configuration or that pricing or that quoting process. 

Jonathan: And so, Andy, you had mentioned earlier that you have 10 differences, a list that you've put together. I think we have time. I'd love to at least get into it and see how much we can cover during this episode, if it's all right with you. 

Andy: Sure thing, yeah. I'd love to do a rundown of those and give you an overview of the differences, because I think the reason that someone would be interested on this podcast of going through that list is because if they aren't in a situation where they're either deploying for the first time or they're part of a deployment that's expanding, knowing where these pitfalls are can help alleviate a lot of pain and suffering that I've seen with other clients who didn't necessarily know these assumptions. So I think by beginning with the obvious difference between B2B and B2C e-commerce buyers, in the B2C world, you're buying directly, usually from whomever is selling the product. And in the B2B world, the end-user, be that a consumer or a B2B buyer, is buying through another channel, typically. 

A lot of people are surprised to know that B2B e-commerce is actually twice the size currently in terms of pure dollars being spent online as B2C e-commerce is, because B2C gets all the play. But Forrester predicts that by 2020, $6.7 trillion will be the size of the B2B market, whereas it will be $3.2 trillion for B2C. So these are massive numbers. These are more than the GDP of small countries and even mid-sized countries that will be transacted globally online. But B2B is twice the size as B2C because of the volume of transactions, and the average deal size is so much larger. 

So that's the obvious difference upfront. But to run through the 10 items, I'll do it is as efficiently as I can, and you just interrupt me if you have any other questions. 

  1. The End User: The key difference, number one, is just the end-user. So typically, in B2C, the buyer is the consumer. You're going to go and buy the book, and you're going to read it yourself. Whereas in B2B, you've got to take into account another party, like procurement or a purchasing agent-- someone whose professional training and job is based around making a buying decision. So they can have very different criteria other than just the user experience on the page as to whether or not they're going to pull the trigger. 
  2. Business Goal: The second thing is why your organization in the B2B world is doing e-commerce to begin with. With B2C, it's typically acquiring new customers and selling as high a volume as you can. Whereas on the B2B side, because this channel is so much preferred by B2B buyers over working through a sales representative for routine buys and replenishments, you're doing it to enable your sales team to retain those customers. And that is a really key difference, because your approach is all about making that channel as easy to use and as seamless as possible within that buyer's ecosystem, rather than making a really cool, flashy, and catchy website. And in talking about that ecosystem, on the B2B side, it's typically locked down. I can't get into Jonathan's Amazon business experience any more than Jonathan can get into Andy's Amazon business experience. It's going to be locked down with my terms, my pricing, and that sort of thing behind a password. So you have to take that into consideration. 
  3. Ecosystem Environment: And also, many procurement departments won't even let you purchase through a website at all, especially in large fortune 500 companies. Your best bet is something called PunchOut technology, which basically allows you as a procurement buyer to buy from Andy's B2B website via your procurement system. So that gets kind of complicated and it can be difficult to understand. But it's important to note that, unlike in the B2C side where you can impact every part of that purchasing process via a great user experience, on the B2B side you can't necessarily do that because it could be locked down through a procurement system.  Jonathan: That's very interesting. Yeah, I had never even considered that. Andy: Yeah, it makes a big difference. You go from being able to do your cross sells and up sells and "you may also like this if you bought that" to being stuck inside whatever confines of a green screen terminal. I mean, we've seen some crazy stuff that people are forced to procure through, so you've got to think about that. 
  4. Sale Type: The fourth way is the type of sale, which is pretty simple. In the B2C world, you're typically selling one, two, maybe three devices or products or services to a huge audience. Whereas on the B2B side, you're selling pallet loads of a product to a single entity, buyer, retailer, distributor. Or that buyer's buying them for an end-user within their company. So that can be quite different. You've got different logistics and shipping to deal with, with those sorts of things, and fulfillment considerations. 
  5. Product Assortment: Number five is product assortment. We already talked about that a little bit earlier. Whereas everybody gets the same product assortment on the B2C side, but in B2B you may have proprietary kits or bundles that you've put together or simply tiers of products that you make available to different sized retailers or distributors, based on the type of relationship that you already have with them. So when you think about that from a management standpoint as a B2B professional, you typically already have business logic that dictates who gets to buy what from whom at what time, but you've got to put that into a technology system that enables that to happen, without having a salesperson involved who knows all of the ins and outs. 
  6. Pricing & Terms: The sixth difference is pricing and terms. So on the B2C side, we mentioned this with Amazon Prime. Jonathan, you and I both have the same terms of being able to buy, and they're going to take my credit card. They're going to take my money right away, just like they will with you. Whereas with B2B e-commerce, you may want to support a credit card transaction via Amex, but you also may need to support credit checks and house account status and those sorts of things and be able to manage that level of the relationship via that system, too.  Jonathan: That makes sense. 
  7. Payment Options: The seventh difference is you can negotiate in B2B versus B2C. B2C, Amazon doesn't care if I'd like to pay now--  Jonathan: Andy, is that what I've been doing wrong? I keep going back and trying to negotiate with Amazon and getting nowhere with those guys.  Andy: You could probably hit up Jeff Bezos on Twitter and see what he'd do for you, but I think he's going to make you pay the same amount for the latest Game of Thrones book as he's going to make me.  Jonathan: Yeah, you're probably right about that.  Andy: Yeah. But on the B2B side, of course, we all know if you're ordering higher volume or you're doing something custom or you've been a customer for a while, you can negotiate. And so as a B2B professional, understanding that that's part of the process is really key. 
  8. Approval Process: And then the eighth difference-- we're almost done with our rundown here-- is the approval process. In B2C, I do need approval from my wife for any purchase over $20, because she watches the budget sheet like a hawk. I'm OK with that. I'll admit it. She does a great job.  Jonathan: It's good to have that kind of oversight. I think it's great. Andy: It is for me, yeah, because I've got expensive taste at times. So she keeps me grounded. But on the B2B side, you have serious approval process that's involved. So you may have 10 different roles that are a part of that process in buying through a website or PunchOut or whatever it is. You may have a professional procurement person. You may have the originator of the request.  So hey, I need this new cloud service for my business to be successful. I've got to take that to my boss, who then has to maybe take it to her boss, who's got to take it to the CFO. And all of those folks need to have some level of involvement. And there's an audit trail that needs to be managed via software as well. So the B2C deployment, you don't have to worry about any of that stuff, and that's also why it's so important that when you are choosing a technology for B2B e-commerce you're choosing one that's really built around that specific need. Because B2C, when you say, “hey, we'll just use a B2C platform and we'll make it work because it's just like Amazon”-- well, I hope by now I've explained that that's simply not the case. 
  9. Organization Ownership: The ninth and final-- I guess I might have misspoke when I said 10-- but the ninth and final key difference is the ownership within the organization. If you're running a company and selling directly to a consumer or going B2C in general, that's typically owned by marketing, with a little bit of involvement from IT and from operations. Whereas on the B2B side, now that we've talked through all of these differences between the two, operations and IT are the main owners, typically, of B2B e-commerce, with a little bit of help from marketing in terms of setting pricing or getting campaigns together and that sort of thing. But it becomes much more about the whole relationship that your company has with another B2B buyer than it is simply about building a cool site and getting as many downloads or clicks as possible. 

Jonathan: Absolutely. Andy, the nine differences-- anyone who is listening in the audience, I mean, obviously, this is a tremendous amount of information. Of course, we're talking about a little bit B2C, but really deploying a successful B2B e-commerce strategy, tackling some of those false assumptions that people might have and even companies out there that are moving into a B2B world, supplementing any B2C activities that they're also doing. 

Andy, thank you again so much for your time today. I got a lot out of this. There was definitely a handful of those, in terms of those differences, that I hadn't even considered. I know people in our audience are also going to be getting a lot out of this episode. Thank you again. If anyone is interested in following up, either with you, finding out more about this-- how to deploy a successful B2B e-commerce strategy, finding out more about what you and your team at Ntara are up to-- what's the best way for them to go about reaching out? 

Andy: Sure. Well, anyone is welcome to hit our website at ntara.com. That's n-t-a-r-a dot com. Or you can certainly find me on LinkedIn. 

Jonathan: Perfect. Andy, thanks again so much for being with us here on the show today. Really appreciate your time. 

Andy: My pleasure.  

Jonathan: If you're a B2B marketer, we want to feature you on sites like The Huffington Post, Social Media Examiner, and Chief Marketer. Every week, we send out a question related to B2B marketing. We use the responses to those questions to fuel the content we write for really popular websites. So head over to sweetfishmedia.com/questions and sign up today. 

Thank you so much for listening. Until next time.

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