When most people think of opening up an online store, they oftentimes automatically assume that the best route is to open up the store using the traditional B2C route (Business to Consumer).
When I launched my first online store, I definitely did as I was most familiar with this type of transaction. In the US, Forrester Research projected that E-commerce sales were at $252 billion in the B2C industry. With numbers like that it is easy to see that there is a huge amount of potential there. However, when looking at the big picture B2C sales are almost double for B2B E-commerce coming in at a whopping $559 billion. Ding, Ding I smell opportunity here do you?
Even with these surprising numbers most small to medium size distributors and manufactures do not have an e-commerce presence online, which means they are losing out on potential sales that they might not otherwise receive.
One company that has done an excellent job of capitalizing on this shortage of competition is Grainger (http://www.grainger.com/) this company is heavily investing in their E-commerce channels and the return has been tremendous. The company ranks 15 in Internet Retailer’s 2013 Top 500 Guide with more than $3.11 billion in online revenue. It has also been reported that E-commerce is their most popular revenue channel.
Now, as with every opportunity there are also potential downsides and there are pitfalls to consider when jumping into the B2B model such as:
1. Complex Shipping and orders which require more attention.
2. Payment is not immediate for most businesses as many use “net 30″ instead of standard credit cards.
3. Complicated Pricing structure
4. Product restrictions (think hazardous products, etc.)
5. Inventory/Availability- Orders are usually time sensitive, and customer must know immediately if an item is in stock.
6. System Integration-It is imperative the e-commerce system incorporate all data as most companies have separate systems to manage products, pricing, and orders, customers, and product information.
With that being said B2B e-commerce provides a huge opportunity, and those that are willing to take on the challenge will find themselves in a very lucrative position. By doing further research you might find a niche that allows you to cash in on this growth.