Investing in an e-Commerce Supply Chain Strategy Pays Off for More B2B Companies
For B2B companies that have hesitated to add an online store as a sales channel, it may be time to reconsider. Sure, the time and financial investment can seem daunting, but the boost in sales can be tremendous.
According to a Forrester Research study of 100 B2B companies who added online stores over a seven-year period:
- Nearly 90% of respondents said e-commerce increased their annual revenues by 55% on average.
- Profitability per order rose by 30% for 81% of respondents.
- Cost per order decreased by 28% for 84% of respondents.
- Average order value increased by 31% on average for 81% of respondents.¹
Such impressive revenue gains should encourage any B2B company to take a hard look at online sales as a strategy to fuel growth. Additionally, e-commerce technology solution prices have evolved considerably over the past 10 years, making it more affordable for companies of all sizes to make the leap to online sales.
Plan for e-Commerce Success
The most successful companies take the time to do their research and develop a realistic plan. Some points to consider:
- Are your customers good candidates for online buying? If you’re not sure, find out before you invest. Survey your customers and check out what your competition is doing.
- Are some or all of your products suitable for selling via an online store? Is it necessary to offer them all at once or can you take a phased in approach?
- What impact will e-commerce have on your operations? It’s important to get input from every department affected by adding online sales to your workflow.
- Do you have the resources to launch an online store? It can be difficult to assess this if you’re new to e-commerce, so you may need to seek outside resources to help size up your requirements.
- As you go live, consider testing your e-commerce site with a select group of customers. Let them know in advance that they’re part of a test group and be super-responsive in fixing issues.
- Set goals before you begin. Define, in tangible numbers, what success will look like and track your performance.
- Be willing to invest in a resource who can help you enhance your online sales – whether you designate an internal staff member or a third party resource to keep you ahead of the curve.
Pay Attention to Buyer Preferences
You can build the most beautiful online store in the world but if it doesn’t address buyer preferences, your sales will suffer. Not surprisingly, shipping costs are a top consideration that will sway a buyer’s decision to purchase or abandon their shopping cart.
Business Insider’s chart below² shows just how prevalent shipping costs are. Aside from buyers citing that they weren’t ready to purchase, shipping costs factor into the top six reasons that shoppers abandon shopping carts.
Source: Business Insider, July, 2014.
Some companies have found that the offer of free shipping can have an incredible impact on increasing online order volume. Introducing order thresholds, such as “free shipping on orders over $X” are effective. One company who produced anti-aging skin products found that when its customers were given the free shipping incentive, orders increased by 90% with a 96% confidence level.³ To learn more about this example, click here.
Choose the Right Technology To Drive Profit
The underlying requirement, once you’ve decided that an e-commerce sales strategy is right for your business, is to choose flexible software that allows you to be agile, whether you’re testing new sales campaigns, adding products to your store or offering different shipping programs.
As you’re considering your options, partner with vendors who can offer you in-depth expertise, whether it’s about e-commerce platforms or fulfillment solutions. You may need to adapt your order picking and packing tools to accommodate different order profiles.
The same holds true for evaluating your shipping system. Chances are good that you’ll need to adapt your shipping programs, carrier options and business rules to accommodate your traditional and online delivery requirements. Your existing system may or may not be the right tool for your new business model.
You may, for example, find that your small parcel shipping volume increases dramatically once your online store takes off. Or you may find that your store is attracting a significant number of international buyers. If you develop geographical clusters of customers, it may be wise to consider adding regional carriers who can meet delivery requirements for a lower price.
As buyer preferences continue to evolve, you may need to switch between carriers relatively easily to respond to changes in delivery costs, service options, etc. Can your existing systems accommodate these kinds of changes? Ideally, your shipping system should enable dynamic carrier selection based on your business rules and customer order details.
If you’re using carrier-dedicated shipping software, it’s wise to take a look at a multi-carrier shipping system that is carrier agnostic. While reviewing your options, choose a vendor who brings real-world expertise to your project. You want to make sure you’re working with a provider whose software is proven and working well in both traditional and online retail shipping requirements.
Finally, make sure your technology choices are scalable. As many companies have learned, online sales can explode overnight. Seasonal shopping habits can also cause huge increases at various times of the year. You want to be sure your fulfillment operations can be easily scaled to absorb peaks in order volume.
If you have questions or ideas about making the transition to online sales and omnichannel shipping, we’d love to chat. Please contact us any time and we’ll arrange for our logistics specialists to chat.
¹ Forrester Research, “B2B eCommerce Produces Results — Get On Board Now ,” July, 2015.
² Cooper Smith, “Shipping Costs Are A Top Reason People Abandon Their Shopping Cart,” businessinsider.com, July 2014.
³ Sonakshi Babbar, “Adding Free Shipping Threshold Increases eCommerce AOV by 7.32%,” www.vwo.com
Logistyx Technologies is a provider of carrier-agnostic e-commerce fulfillment software and shipping software solutions that enable shippers to manage all their small parcel, LTL postal, regional, national and international carriers on one platform. We also help companies automate their reverse logistics process for greater efficiency and lower cost. Contact us today.
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