Predicting The Future Of B2B E-Commerce

Predicting The Future Of B2B E-Commerce

September 2016


  • 2015 worldwide spending on digital commerce platform software reached approximately $4.7B, attaining 15% year-over-year increase according to Gartner.
  • Gartner estimates that the digital commerce platform market will grow at a Compound Annual Growth Rate (CAGR) of over 15% from 2015 through 2020, including revenue from SaaS, licenses, and maintenance.
  • Gartner predicts that by 2018, 40% of B2B digital commerce sites will use price optimization algorithms and configure, price, quote (CPQ) tools to calculate and deliver product pricing dynamically.
  • Forrester estimates that B2B e-Commerce will top $1.1 trillion and account for 12.1% of all B2B sales in the US by 2020.

E-Commerce Is At An Inflection Point

The inflection point e-Commerce is going through today has many parallels to previous technology shifts that revolutionized web-based apps and services.  Just as AltaVista, Netscape, Yahoo and others first delivered search and low-end web apps that revolutionized how the Internet was used, Google and Facebook took the revolution a step further and created born-in-the-Internet apps, platforms, and services.

Born-in-the-Internet companies also learned how to translate innovation into apps and platforms that immediately deliver results at a faster pace than their predecessors.  Over time, the pace and depth of apps delivered from born-in-the-Internet companies made previous-generation ones obsolete.  Companies who led the initial revolution are no longer dominant today. The same inflection was driven by NetFlix, who began mailing CDs and then shifted to cloud-based streaming, eventually driving Blockbuster and others out of business.

And the same revolution is happening right now in e-Commerce. Born-in-the-cloud e-Commerce systems are innovating at a pace that outdistances legacy, on-premise systems. The inflection point is most visible in how quickly user experiences, support for multitier distribution selling, advanced pricing and order workflows are improving. The factors leading to Gartner’s prediction of the digital commerce platform market growing at a Compound Annual Growth Rate (CAGR) of over 15% from 2015 through 2020 are visible today as this market goes through an inflection point.

B2B E-Commerce 2 Times The Size Of B2C  

Spending on B2B e-Commerce platform technologies, systems and services continue at a pace over 2X the B2C e-Commerce market. Forrester predicts that by 2019, the B2B e-Commerce market will be worth $1.1T compared to the B2C market at $480B.

Forrester found that manufacturers and wholesalers are the two industries that are generating the majority of market growth and it’s clear why. Many manufacturers are relying on existing homegrown systems that support outdated processes, limited sales channels and are not delivering the experience B2B buyers expect.

Rapidly changing distribution channel dynamics are redefining wholesaler’s business models across a broad spectrum of product and service areas. Like manufacturers, wholesalers need to get beyond competing on price & availability and deliver excellent omnichannel customer experiences. These market factors and more are driving B2B e-Commerce platforms to double-digit growth through 2020.  The following graphic from a
Forrester keynote illustrates these trends:

Mfg and wholesaling driving growth

Another factor contributing to rapid B2B E-Commerce growth are the costly and time-consuming customizations to support evolving business models on-premise, and single-tenant hosted e-Commerce systems require. These systems aren’t designed to support multiple geographies or channels either, and quickly become roadblocks to companies generating greater revenue. Based on the manufacturers I’ve spoken with born-in-the-cloud platforms are proving to be more adaptive and quick to support entirely new business models and the channels they rely on for revenue.

Born-In-The-Cloud Platforms Are Increasing Selling Speed, Scale & Simplicity

74% of B2B buyers research half or more of their work purchases online before buying according to a recent Forrester study. The same study found that 30% make half or more of their work purchases online today, and 56% expect to make half or more of their work purchases online in 3 years. These findings and much more like them highlight how B2B buyers are quickly redefining the omnichannel e-Commerce landscape. Leading B2B born-in-the-cloud e-Commerce providers include Apttus, Digital River, NetSuite, and Unilog. The following graphic from a Forrester keynote compares B2B buyer’s expectations that are driving the inflection point:

B2B Buyers

I’ve seen manufacturers struggle to deliver multichannel and omnichannel customer experiences that meet buyer’s expectations. The most successful so far are relying on born-in-the-cloud B2B e-Commerce platforms that scale to support entirely new e-Commerce strategies. By definition, born-in-the-cloud platforms are designed to capitalize on rapid elasticity, multitenancy, on-demand availability, and continual updates to core components native to cloud platforms.

Factors Defining The Future Of B2B E-Commerce

The innovations born-in-the-cloud platforms enable are defining the future of e-Commerce today. Instead of requiring intensive levels of customization, these cloud platforms are configurable, support multi-tenancy and can scale to support innovative new business models including CPQ and pricing.  Born-in-the-cloud e-Commerce platforms also support more complex selling workflows including order orchestration, fulfillment through multiple channels and the ability to manage multiple fulfillment systems concurrently. The following six factors are defining the future of B2B e-Commerce.

  1. B2B buyers expect a consistently high-quality customer experience across all channels and are loyal to companies who deliver excellence daily. There’s a lot to be learned from Alibaba and Amazon when it comes to delivering an excellent customer experience. Both have set the bar very high, and today the same is expected from B2B vendors. This is especially the case for manufacturers who rely on multiple e-Commerce legacy systems that weren’t designed to be integrated. B2B buyers expect an experience comparable to shopping on Alibaba or Amazon. Cloud-based B2B e-Commerce platforms have the potential to deliver omnichannel performance and online experiences close to Amazon across every device and channel, yet few are investing enough in personnel and expertise to get to this level of performance. This factor is so significant that Gartner predicts that by 2018, 70% of e-Commerce will move from B2C and B2B models to models that focus on the individual customer experience.
  1. The number of capabilities in e-Commerce technology stacks is increasing Total Cost of Ownership (TCO), making companies consider a unified cloud platform more than before. Driven by the need to add improved catalog management, storefronts, partner portals, CPQ and payment gateways, organizations have created e-Commerce technology stacks that are expensive to maintain and have a high TCO. Many are now moving to born-in-the-cloud e-Commerce platforms that provide a unified, global view of all channel selling activity and replace the functionality of previous-generation legacy systems while reducing costs. The result is lower TCO and a more streamlined e-Commerce technology stack easier to modify in response to changing customer demands.
  1. The need for greater price optimization and Configure-Price-Quote (CPQ) flexibility across every selling channel. These factors are primarily the reason traditional B2C vendors can’t make the transition to selling B2B. SAP Hybris is a case in point, which is largely B2C focused. Despite this limitation, SAP Hybris is known for its ability to support unique localization requirements at the currency and language level, complex product lines, multisite requirements, and globally-based business models. Selling decisions made at the beginning of a given quarter are going to be different than those made at the end, as sales managers often choose to accelerate deals into the closing quarter with special pricing options. Today many selling teams do this for just their direct channel or at most three different channels at once. Enabling dynamic pricing and approvals – even when selling through multi-tiered channels dramatically increases the deal velocity without losing control. Many manufacturers are also adding in CPQ to provide customers with a personalized experience and the opportunity to get solutions configured for their unique needs. Catalog-based solutions can be commoditized on the Internet very easily by search crawlers – and then vendors are left to compete on price. CPQ-based selling across all channels are enabling enterprises to sell based on unique differentiators and value.
  1. Order management integrated at the platform level to enable greater synchronized order processing across every channel. Often e-Commerce systems are developed completely independent of existing, and often legacy order management systems. The disconnect between these two systems leads to order errors and gets in the way of delivering an excellent customer experience. Born-in-the-cloud B2B e-Commerce platforms have order management designed in from the very beginning, making it possible to synchronize order processing across all channels. Order management systems designed in at the platform level are also capable of scaling to support Just-in-Time (JIT) availability with automated replenishment, customized and complex purchasing workflows, and JIT with automatic replenishment. It is common to see wholesalers specify partial delivery, multi-warehouse shipping, and returns management for their e-Commerce cloud platforms as well.
  1. Increasing interest on the part of manufacturers for their e-Commerce platform to support complex configuration and pricing workflows. From unique, negotiated price lists with major accounts to supporting complex product configurations, manufacturers are looking to their e-Commerce platforms to bring greater speed and simplicity to these complex processes. It’s not enough to just add in a price management or CPQ module; these workflows need to be systemic to the platform itself and contribute to a true 360-degree view of omnichannel selling results.
  1. Being able to deliver unique e-Commerce buying experiences for multi-tier distribution channels including partners, distributors, dealers, resellers, service providers and OEMs is in high demand today and is driving the future of B2B e-Commerce. Multitier distribution networks thrive on partner commerce apps and the functionality and information they provide. Given the complexity of these distribution networks’ requirements, it’s unlikely that general or B2C platforms including Alibaba or Amazon will be able to expand their scope to support multi-tier distribution networks’ needs. However, Alibaba or Amazon are more likely to provide a base set of capabilities for B2B use cases that businesses would be limited to – and not able to leverage their unique differentiation and innovation now. Getting a partner commerce app to scale across a multi-tier distribution network and provide a unique buying experience is a challenge. Cloud-based B2B e-Commerce platforms are making progress in this area. Manufacturers I’ve spoken with are looking for a cloud-based B2B e-Commerce platform capable of managing incentives, promotions, rebates and across all channels so they can better motivate channel partners to sell their most profitable products.

Bottom line:  An inflection point is happening in e-Commerce today. Rapid advances in user experience, support for multitier distribution selling, advanced pricing and order workflows enabled with born-in-the-cloud B2B e-Commerce systems are leading the revolution. Look for this inflection point to drive double-digit growth in digital commerce platforms through 2020.
Building The B2B Omni-Channel Commerce Platform Of The Future B2B Buyer Expectations Are Driving Sellers To Deliver Fully Functional Omni-Channel Experiences. (free, no opt-in) Forrester Consulting. Courtesy of Accenture.

Critical Capabilities for Digital Commerce. Gartner. (client access reqd.) Published: 20 June 2016; written by Penny Gillespie, Chris Fletcher, Jason Daigler, Sandy Sheen, Yanna Dharmasthira, Mike Lowndes

Hype Cycle for Digital Commerce, 2016. (client access reqd.) Gartner. Published: 7 July 2016 Analyst(s): Jason Daigler, Mike Lowndes

Latest Trends in B2B E-Commerce Strategies and Tech Investment. Forrester. Published June 2, 2015. Andy Hoar & Peter Sheldon

Mastering Omni-Channel B2B Customer Engagement. (free, no opt-in) Forrester Consulting. Courtesy of Accenture.

The Gartner Digital Commerce Vendor Guide, 2016 (client access reqd.) Published: 25 May 2016 Analyst(s): Chris Fletcher, Penny Gillespie, Jason Daigler, Mike Lowndes, Yanna Dharmasthira, Sandy Shen

US B2B e-Commerce Forecast: 2015 To 2020. Forrester. Published April 2, 2015. By Andy Hoar  with Carrie Johnson,  Patti Freeman Evans, Susan Wu and Jacob Milender


This article was written by Louis Columbus from Forbes and was legally licensed through the NewsCred publisher network.

BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may be used as a generic term to reference the corporation as a whole and/or its various subsidiaries generally.  This material does not constitute a recommendation by BNY Mellon of any kind.  The information herein is not intended to provide tax, legal, investment, accounting, financial or other professional advice on any matter, and should not be used or relied upon as such.  The views expressed within this material are those of the contributors and not necessarily those of BNY Mellon.  BNY Mellon has not independently verified the information contained in this material and makes no representation as to the accuracy, completeness, timeliness, merchantability or fitness for a specific purpose of the information provided in this material.  BNY Mellon assumes no direct or consequential liability for any errors in or reliance upon this material.