5 Guiding Principles to Optimize Modern B-to-B Commerce
The market for business-to-business (B-to-B) digital commerce has exploded in recent years. In North America it’s predicted to grow at a CAGR of nearly 19 percent between 2022 and 2030 after reaching almost $584 billion last year. Globally, the market reached a value of $6.9 trillion in 2021. However, rising demand from more tech-savvy buyers has certainly not created an open goal for B-to-B players.
In fact, the sector is far more complex than B-to-C digital commerce. Verticals like manufacturing, pharma, life sciences, and medtech can be incredibly complex. Sellers are forced to confront very different challenges in trying to deliver the experiences B-to-B buyers crave. Whatever your organization is selling, to stand the best chance of success it pays to focus on these five guiding principles when building a B-to-B commerce strategy.
1. Use the right technology.
Back in B-to-B digital commerce 1.0, the industry was characterized by rigid ERP solutions, disconnected systems of record, and homegrown legacy tech held together by manual processes. Over time, businesses began to realize that packaged business capabilities (PBCs) were a better way to achieve their goals. Supported by a mediation tier for consistent integration with back-end systems, and an API orchestration layer to deliver experiences to any front-end touchpoint, PBCs are the key to unlocking value from composable commerce.
The idea here is to replace the monolithic, inflexible systems of old with best-of-breed third-party services. From search to payments, all of these modules slot together neatly to create something more than the sum of their parts. It’s about building a B-to-B platform customized for each business and which delivers the agility to add more capabilities according to changing customer demand.
2. Focus on methodology.
Sourcing the right technology is a great start, but it needs to be applied in the right way. For too many organizations the default setting for projects is a waterfall methodology: write the requirements, test, implement, and roll out. A 12- to 18-month cycle like this is simply not rapid or agile enough to meet the demands of today’s B-to-B commerce customers.
Instead, organizations should follow digital best practices. First: build, measure and learn. No business can predict what their customers will want to buy, or what new touchpoints will be around 12 months to 18 months from now. That’s why the focus should be on being dynamic, flexible and open to change. Second, when executing digital strategy, remember this isn't a project with definitive start and end. It’s a continuous process of innovation and change. Third, prioritize via customer needs, not the IT department’s agenda. Always work backwards from the customer. And fourth, consider balancing short-term, high impact initiatives that can be rolled out fast. The bigger innovation projects may take longer to achieve.
Perhaps most important is the final best practice for methodology: time should be the most important key performance indicator. Nothing will be cheaper if it’s done tomorrow. Hiring great digital talent to execute strategy won’t be cheaper. Acquiring competitors and IP companies to strengthen an offering won’t be cheaper. Nothing is more important than time. Get that MVP out to customers as fast as possible rather than trying to attain perfection pre-launch.
3. Adopt a new mindset.
The more revenue shifted from traditional to digital channels, the more important it is to shift the corporate mindset. Traditionally, projects were primarily IT-driven and focused on efficiency and cost. The default setting was “no.” Digital is different. It’s about innovation, collaboration and agility, and the default should be “yes” — let’s get that MVP out and adjust to changing conditions and customer demands when necessary.
What does “fast” mean in this context? Don’t think transitioning to horizontal teams, scrum methodologies and biweekly releases is enough to compete in today’s B-to-B digital commerce environment. The digital-native competition is building vertical teams that can deploy and deliver potentially 10 times each day.
4. Choose the right KPIs.
Let’s not forget the importance of KPIs. Yesterday’s KPIs and B-to-B strategies were about optimizing delivery times, reducing IT spend, reducing sales and logistics costs, and finding the best location for a new factory. Today there’s more focus on market share, innovation, speed and UX, as well as retention of digital talent.
There’s also a balance here between safe and experimental bets. Organizations require some bets that are safe releases based on concrete customer demand. However, there’s also a need for experimental bets — offerings that will excite and help to differentiate the brand. Merely executing according to what customers are already saying won't move the company forward.
5. A strategy of selective innovation.
Finally, understand that markets are unpredictable and change is inevitable. Therefore, find what won’t change and focus on that. Like Jeff Bezos once said, it’s impossible to imagine a future where customers will want higher prices or slower delivery times. The “how” might change — think delivery by drone, for example — but the “what” will remain the same. Organizations should therefore find the constant in their business model and not try to innovate where they can’t.
Building Lasting B-to-B Commerce Success
The B-to-B digital commerce market is constantly evolving, and what's exciting today doesn’t stay that way for long. Customer expectations are already sky high. By using the right technology in the right way, with a focused methodology, smart KPIs and a strategy of selective innovation, it’s possible to drive lasting success in B-to-B commerce.
Over the last 18 years, Boris has been responsible for shaping the international commerce tech industry through his unique vision and approach to strategy across product development, sales, channel & operations. Prior to Spryker, he founded two successful commerce tech companies, both respectively sold to one of Europe’s largest electronic retailers and to CGI Inc. He is a frequent keynote speaker at several prestigious events and a guest on the Innovate or Die podcast.