Mind The Gap: The State of B2B eCommerce Digital Transformation

A new report from NuOrder by Lightspeed, a leading B2B ecommerce platform, found that many organizations implement advanced solutions to help drive wholesale but struggle to standardize and upgrade their processes operationally.

Ecommerce has undergone rapid transformation over the past few years. Before COVID-19, many enterprise brands were investing in innovative technology to enhance the B2C customer experience across multiple channels. Following the explosive ecommerce growth, more brands are focusing on B2B ecommerce, with many enterprise businesses looking for new ways to strengthen their wholesale channel online.

According to the 2022 report State of B2B Commerce, wholesale accounts for 60% of the total revenue of the enterprise brand respondents, brand's that make 50 million plus in annual revenue. Consistent with NuORDER's findings in 2020, the majority of respondents added that pre-orders account for two-thirds of their wholesale orders. Many enterprise brands are also reportedly aiming to sell more to their current retail partnerships rather than look outside for new potential business. However, this does not mean that enterprise brands are not attending in-person events. The report found that wholesale leaders continue to prioritize in-person events, with 2 in 3 brands landing new retail partnerships through trade shows as in-person meetings prove to be the best way to win new clients. Nevertheless, there has been a significant increase in B2B software adoption, which grew from 71% in 2020 to 92% in 2022. Enterprise brands note that new digital tools offer an easier and faster way of selling and a better overall customer experience for the retailers.

With wholesale being established as a vital revenue channel, the report also looked at some of the largest pain points in the wholesale distribution process. Many of the respondents highlighted operational challenges, such as lack of standardization, supply chain issues, and managing the flow of inventory. To help mitigate some of these challenges, brands are leaning towards implementing digital solutions. However, the report indicates that many still have not fully adopted B2B ecommerce technological solutions as a framework for managing operational processes. Rather, the research found that enterprise brands prioritize existing retail partnerships and continue to invest in wholesale as the main revenue channel, which means that the highlighted operational challenges are likely to persist. "If an enterprise brand does not currently have a customer-facing ecommerce platform that is surfacing accurate product and inventory data for reps and buyers, then they are likely suffering from lots of problems downstream," says Adam Schneider, CFO at NuORDER. "Inaccurate, untimely data will delay sales, cause orders to be canceled, and frustrate a brand's entire workstream, from inventory management to sales and fulfillment."

"High-quality implementation of a B2B ecommerce solution that integrates into a brand's system enables reps and buyers to see what is available now, inventory that is being produced, and products that can be booked for pre-order."

However, when looking at the size of the teams in charge of the wholesale accounts, the report found that wholesale department sizes remain comparatively small compared to direct-to-consumer sales and other departments. Even though wholesale teams increased in size from 2020 to 2022 overall, enterprise brands had relatively small wholesale groups in comparison, including more prominent brands with annual revenue of $250 million-plus. In addition, the report found that some enterprise brands are struggling to automate processes on the backend, with several relying on hand-written orders or Excel to manage their sales despite the visible increase in B2B technology adoption. And with the average sales representative being tasked with several roles within their function, the need and reliance on more innovative digital tools to assist with automation are pertinent for growth.

Findings from the report underline that technology will be the biggest asset for enterprise brands to scale their wholesale businesses in the future. But many small to enterprise brands rely on manual processes for backend operations for several reasons. "Smaller brands are more likely to lack confidence in their ability to implement cutting-edge technology. They may assume that a platform is too difficult to set up and use," explains Schnieder. "Once they get over the hurdle of implementing one system, they usually look at other areas of their business where they can leverage technology." At the same time, some brands look at the additional cost of new solutions as an added expense, not as a vital investment with a clear return on investment. In addition, not every brand is willing to change how they do business. "Instead of a brand's workflows dictating how software should work, new software is usually designed to guide a brand to change its workflows to optimize its business," Schnieder says. "If there isn't a willingness on the part of the brand to change the way they work, it is usually difficult to implement new technology effectively. Progress is not possible without change."

At the same time, brands shouldn't rush and implement all available B2B solutions in one go either, believes Schnieder. Brands looking to scale their businesses more effectively using B2B ecommerce solutions should educate themselves on the technology landscape relevant to their industry. Depending on what sector and area they wish to focus on, a range of software exists to help brands improve their results. Afterwards, brands should prioritize which solutions they should implement first. "There will almost certainly be one or two categories of solutions that will solve a pressing problem that a brand was simply not thinking about. Prioritize those first one to two investments so that you can learn for the future," adds Schnieder. "There will be surprises (good and bad) with respect to implementing a solution, training your employees, and measuring the business impact of adoption. Once a brand exercises these muscles, other opportunities to deploy technology solutions to solve problems will naturally surface."

Ultimately, is it evident that digital transformation still has a long way to go when it comes to implementing B2B ecommerce solutions effectively. However, it is clear from the report: brands leveraging the right technology that is fully integrative will have a major competitive advantage in the future.