by Calvin Cheng -- June 18, 2015
Earlier this month, I attended the 2015 Internet Retailer Conference and Expo (IRCE) in Chicago. Three exciting themes associated with omnichannel and digital retail stood out for me:
1. B2B disruption is already upon us.
2. Order fulfillment is the last mile for customer engagement.
3. First thing’s first, and that’s “Mobile First”.
B2B disruption is already upon us
In the US, B2B eCommerce ($740B) is more than twice the size of B2C eCommerce ($334B). Despite all the attention spent on maximizing and optimizing B2C eCommerce, it pales by comparison to the size, frequency and scale of B2B eCommerce orders. Forrester predicts that by 2019, B2B eCommerce will grow to $1.1T (as compared to $480B for B2C). It is safe to say that B2B eCommerce presents a sizeable opportunity for B2B brands to develop and deliver innovative ways to surprise and delight both their customers and consumers.
Expectations from both B2B customers and consumers continue to evolve rapidly with growth in the adoption of web and mobile technologies; however, both technologies still face a need to reduce impediments to completed orders. Historically, B2B retailers were limited to a network of dedicated sales reps, customer-specific catalogs and order forms submitted via email, fax or phone. Improved and easier B2C ordering practices are influencing expectations in B2B purchasing. Forrester research shows that 74% of buyers find buying from a website more convenient than a sales rep; 93% of B2B buyers prefer to buy online once they have decided what to buy. In addition to buyers using digital channels to research products, they are also going through digital channels to complete orders.
B2B retailers are preparing themselves for an expected increase of web orders by investing in their digital and ecommerce platforms. According to Forrester, 75% of B2B firms have already upgraded their ecommerce platforms, or plan to do so, within the next 3 years. Interestingly, as 2019 approaches, the manufacturing and wholesale segments are likely to lead the push towards greater investment in digital commerce technology.
Just as digital disruption redefined B2C retail over the past 15 years, so too will digital disruption shape B2B retail in the years to come. The complexity and order volumes of B2B present an exciting opportunity for B2B brands to creatively differentiate themselves for their customers. B2B companies who are innovative in how they invest, while at the same time providing customers with meaningful interactions across channels, will distinguish their brand from their competitors.
Order fulfillment is the last mile for customer engagement
In the early days of omnichannel commerce, Circuit City offered in-store-pick-up for web and phone orders starting in 1999, and in 2005 offered a 24-minute guarantee for in-store pickup. At that time, the concept of using store locations (and their inventory) as a fulfillment option for online orders was groundbreaking. Customers who elected to pick up their merchandise in a Circuit City store were rewarded with a quicker, more convenient service that delivered a sense of immediate gratification. The service also reduced wasteful and inefficient supply chain dependencies and delays from distribution centers (enhancing the customer experience), and perhaps most importantly, brought customers into the store where they might make additional purchases. More recently, retailers like The Home Depot have found that 54% of their online customers have items shipped to the store at some point, and 43% of those customers make additional purchases while in-store.
These days BOPUS (“Buy Online Pick Up at the Store”) is considered table-stakes for most retailers, and customers expect it to be available. Retailers are now exploring a variety of other order fulfillment options that might optimize the last mile of the customer experience. Some retailers are even beginning to view their physical store locations as potential omnichannel assets unavailable to their online only competition.
For Home Depot, improving the customer experience through order fulfillment (and returns) through their 2000+ stores also led a chance to further optimize their supply chain. An added benefit to customers has also led to enterprise cost reductions and operational efficiency gains attained by leveraging their network of physical stores, direct fulfillment centers, regional distribution centers (for store replenishment), vendors and transportation assets. The Home Depot is a great example of physical stores being a critical part of the omnichannel experience, both for order fulfillment and the delivery of operational benefit to the enterprise.
First thing’s first, and that’s “Mobile First”
We’ve been hearing this mantra for years now, “Mobile First.” This means different things to each company, and IRCE presented examples of what Mobile First means to companies like Rue La La, Aeropostale and HD Supply, among many others.
One of newer retailers, Rue La La started as a web-only, member-only daily flash deal site. They found that mobile was their fastest growing channel for sales, and now Rue has over 50% of their sales coming from mobile (both tablet and phone). Optimizing the mobile experience for Rue shoppers means having native tablet and phone apps, in addition to their desktop site. For Rue La La and other retailers, understanding and designing for the “multi-screen mayhem” -- their customers’ journeys and expectations across screens and devices -- was critical to their success.
According to Michael Aki, Director of Digital Marketing for Aeropostale: “Mobile is the bridge from online to offline. We want to deliver the messages which are most relevant to a person at a specific time and place.” Located in shopping malls and targeting young teen shoppers, Aeropostale focused their mobile initiatives on personalized offers and promotions while using location as an important input. Aeropostale partnered with RetailMeNot, and together they delivered relevant in-store promotions via mobile that led to higher customer engagement and Average Order Value (AOV).
Bringing my thoughts back to B2B, HD Supply had interesting insights about mobile adoption for their construction B2B business. For HD Supply, their customer base of construction contractors are a highly mobile workforce, often times responsible for multiple work locations at a time. In the past, placing orders required finding a desktop or workstation with phone, fax, or web access. However, with mobile phones, mobile web and apps, and fast network connections, these mobile construction workers are increasingly using mobile devices as their preferred channel for orders. HD Supply designed and developed a native app that reduces the friction associated with taking orders, enables order delivery directly to job sites and offers relevant and helpful features like “SpeedBuild” for repeat orders, which are common for B2B retailers, customers and consumers.
Closing Thoughts on IRCE 2015
As expected, my thoughts from IRCE 2015 were influenced by the sessions I attended and the people I met throughout the week. There were many other sessions and tracks that I wanted to attend, but could not. Whether or not you attended IRCE this year, I invite you to share your thoughts and insights.
B2B Statistics taken from:
Forrester Research US Online Retail Forecast, 2011 To 2016, Key Trends in B2B eCommerce for 2013
Q1 2015 Forrester/Internet Retailer B2B Buyer Channel Preferences Survey (n=219)
Forrester/Internet Retailer Q4 2013 Global B2B Commerce Online Survey