Why in this age of the ‘internet of things’ are some companies and sectors lagging in online order processing?
From a throughput and cost-2-serve perspective, eCommerce presents obvious benefits to B2B sellers. And on the surface, online ordering seems convenient for buyers as well.
But we’ve made an observation: whilst overall engagement increases with an eCommerce presence (think researching products, tracking orders, and checking product availability), the percentage of B2B orders that are actually placed online varies wildly. Analysts suggest a range of between 30% and 70%, depending on industry.
We were curious about the lower end of that spectrum, so we did some digging. We found that compared to customers who order stock for MRO purposes (maintenance, repair, operation), B2B customers who buy goods for further value-add activities (distribution, manufacture, retail) are much less likely to place their orders online.
So what’s the difference?
In contrast to the more ad-hoc nature of MRO ordering, purchasing items to replenish a warehouse of inventory generally follows a well-defined procurement process. Today, most ERP systems generate purchase orders based on a replenishment process. These ERPs are also capable of emailing the purchase orders directly to the supplier’s inbox. Entering that PO into the supplier’s online eCommerce system doesn’t add any obvious value to the buyer. In fact it adds another step (read cost) to their purchasing process.
Where’s the incentive? Maybe there isn’t one.
It potentially costs the buyer more. It’s simpler for their replenishment process to generate a PDF purchase order and email it straight to the supplier. In light of this, buyers aren't in a hurry to change their ordering behaviour.
As the supplier to these customers, you’ve traditionally had only a few options:
- Accept that it’s just the ways things are and continue to manually enter your customers’ POs into your ERP system.
- Wire all of your customers up with expensive EDI.
- Outsource the process offshore in an attempt to reduce costs.
Today you’re probably using one (or a combination of) the above, to work around your customers’ buying behaviour. But wouldn’t a solution be better?
We thought so, too. So we developed Lucy.
To meet Lucy, visit https://www.commercevision.com.au/lucy.