Mid-Tier Company Squeeze Out: Will You Be Affected?

Established medium-sized B2B companies are facing challenges from both larger and smaller rivals, which could result in them losing business and effectively getting squeezed out of the marketplace.

Until recently, many B2B organisations haven’t needed to implement ecommerce systems, with customers preferring to order by telephone, email or in traditional face-to-face sales situations. Unlike their B2C counterparts, the majority of B2B sectors haven’t embraced the opportunities of ecommerce, but things are changing. Additionally, distributors have played a key role in many B2B supply chains, providing manufacturers with a proven route to market that, at first glance, could be threatened by manufacturers exploring ecommerce solutions.

However, as B2B companies begin to implement ecommerce solutions, it’s beginning to present a very real threat to established mid-tier B2B businesses, with many starting to get left behind by both their larger and smaller competitors.

The B2B Ecommerce Opportunity

Ecommerce practices and systems are now entering many B2B sectors and performing well for the companies that implement them, providing benefits that include:

• Saving time for internal sales teams
• Reducing ordering errors
• Speeding up repeat orders
• Bringing in international business
• Giving sales teams more time to focus on winning new clients
• Capturing new business from direct competitors
• Positioning the company as an innovator and a leader in its industry

The Small Company Advantage

Small B2B businesses, with typically 11 to 50 employees and (by their very nature) a leaner, more agile approach to doing business, tend to be able to implement ecommerce very easily, with less of an impact on business infrastructure. It’s also less likely that they’ll have deeply-embedded legacy systems, which will need replacing or re-engineering to connect to the ecommerce system. As smaller B2B businesses need to level the playing field and look for any additional leverage they can get, implementing ecommerce allows them to compete with the bigger, more established companies.

Large Companies Getting In On The Action

At the other end of the scale the large B2B companies, with more than 200 staff, have already established themselves in the marketplace. They usually have the structure and in-house expertise to undertake large-scale business transformation projects and have the finances available to invest into the business. For many large B2B companies, it’s not a matter of whether they’ll invest in ecommerce, it’s more a case of what they can do to maximise their returns on ecommerce investment. Indeed, there are few large B2B companies that don’t have some kind of ecommerce solution in place.

The Mid-Size Challenge

This brings us to mid-sized B2B companies. Many of them have made a success of their business, invested in systems and infrastructure and are now enjoying some economies of scale. For many, ecommerce was not a priority in the initial growth stages and focus was placed on information systems, inventory management, ordering and CRM. These systems, that were fully-equipped for the job of scaling up a business, may still be functioning within the larger company structure, but have reached a point where they are at capacity. It may also be apparent that a major system overhaul could be needed in order to add any new functionality, such as ecommerce.

There’s the dilemma for mid-sized B2B companies. Many B2B customers are now expecting to buy their supplies and equipment online. It’s a convenience that’s spilling over from B2C, and growing as more millennials step into management roles. In many B2B markets, companies at both ends of the scale are implementing ecommerce solutions, taking advantage of the new demand for online ordering.

B2B Ecommerce: The Time Is Now

For companies that act quickly, the opportunities are already there. B2B revenues from online are now double those of B2C, and by 2020 B2B ecommerce will be worth £5.3 trillion worldwide.

This represents a great opportunity, and there’s the prospect of winning a great deal of business from competitors. Across a wide range of B2B industries, current trends include:

• Exploring ways to cut costs and become more competitive
• Consolidating legacy B2B infrastructures onto one common platform
• Improving information management and collaboration to create supply chain efficiencies
• Focusing more on improved internal communications between locations, as well as externally to trading partners and customers
• Implementing sophisticated ecommerce platforms to boost sales and reduce costs

If mid-tier businesses fail to act, they could very easily find themselves squeezed out of the market altogether, as the demand for ecommerce in B2B sectors continues to increase.

Planning Your Ecommerce Future

If you’re looking into ways of strengthening your current sales performance by harnessing the power of online sales, or want to take your ecommerce website to the next level, then we can help.

As specialists in B2B ecommerce, we’ve developed a bespoke service designed around the unique needs of B2B companies. Taking into consideration your aspirations, business goals and sector, our ecommerce horizon plan is a low-cost service that provides you with a comprehensive report and actionable recommendations. Based on in-depth discussions with you and a wider analysis of your marketplace, our ecommerce horizon plan will provide you with actionable recommendations and guidance that will ensure your next steps into ecommerce are the right ones.