As 2017 is wrapping up, I’d love to know your thoughts about the your eCommerce business and your world of digital commerce. I have a quick, 10-question survey. To sweeten the deal, we’ll randomly pick a participant to win a $1000 thank-you gift.
I had a chance to talk to tED Magazine about the challenges Amazon poses to independent distributors with their new Amazon Business Prime Shipping (launched November 2017).
Here’s an excerpt:
This is the biggest and scariest announcement we’ve seen from Amazon in the last several years and distributors should be terrified. Amazon has now extended a core pillar of its company to business customers and we can be assured that it will have Amazon leadership’s full attention and backing. Amazon has the scale, fulfillment, and procurement capabilities to not care whether they make money on the products they’re selling because they make so much money on Prime. This announcement is a big swing at small businesses like distributors and contractors—now, a small electrical contractor can give 10 people access to Business Prime for $499 (just $50 per person, half of the $99 Prime cost to consumers), save costs on shipping (which can definitely add up), and receive any product in under two days, enabling small companies to have great service at their fingertips. Amazon’s reach today is extensive—recent studies show that 55% of all online product searches today take place on Amazon first instead of Google, where customers would find their local distributor or retailer, so this announcement is definitely a major threat to distributors.
I had the pleasure to be interviewed by tED Magazine to respond to their recent article Amazon Business Vs. Large Distributors—What’s the Threat?. In this article, I talk about how distributors can compete with behemoths like Amazon Business.
Along with my colleague Jason Hein at B2X Partners, we talk through the challenges Amazon faces in acquiring new businesses:
For example, Hein says it may be harder for Amazon to simply ‘acquire companies’ to enter a market, particularly for targets that are service providers…[Hein continues,] ‘Amazon’s strategy of always ‘raising the bar’ when it comes to hiring makes it hard to envision an acquisition in which all (or even most) of the company employees would meet Amazon’s standards….Amazon isn’t looking to buy a company, only to lay off most of the staff because of culture fit,’ Hein says. ‘This applies even more so for service firms, where the people are the company’s biggest asset. Therefore, the hypothesis that Amazon could buy up a few small distributors and cobble them together into an Amazon-style ‘mega-distributor’ is unlikely at best.’
Seeing this challenge for Amazon/opportunity for others, I used one of my favorite metaphors for creating an agile and customer-focused team: building a SWAT team. This case study comes from an unlikely company – Kellogg:
‘Kellogg realized that it needed to build a different culture, and that doing that as part of the larger brand would take too long. They needed to move faster, and they wanted to do that online through testing,’ says [Justin] King. ‘To do that, Kellogg created an internal innovation team that reported directly to the CEO. By taking this step, the manufacturer was able to do things like offer “customize your granola” options online without having to work through the typical bureaucracy and red tape of a large corporation.
King says distributors can borrow a page from Kellogg’s playbook and explore different ways to get e-commerce, digital, and/or mobile strategies up and running quickly, but without disrupting the current business model….Acknowledging that there’s no “one size fits all” approach to the culture issue[,] in some cases, the answer may be to follow in Kellogg’s footsteps by “spinning up” a new department or organization that can serve as an innovation arm for the broader distributorship. Create a SWAT team that has the autonomy to act on your customers’ behalves, says King, and that attracts the new talent while also staying accountable to the firm’s executive team ‘while operating outside the purview of all the processes and restrictions that a distributorship itself is under.’
I am writing one of the most exciting articles that I have written. Within B2B E-Commerce, innovation has been a struggle as most organizations are working hard to cover the basics.
The key to E-Commerce in B2B is making a buyer or customer’s job easier. If their job is easier done on your site, then they will come back. Most B2B companies focus on the findability of their products, rich product information, and the shopping cart. And that is an excellent place to start. However, B2B buyers want to get in and get out, with the assurance that they are purchasing the right products.
As Sam Bayer recently articulated, “I wish I had a buck for every time I heard a user say ‘I hope you have a “quick order” feature on that new website of yours because that fancy catalog, while pretty…it’s just going to slow me down.’. In fact, taking another page out of that aforementioned Accenture project, after 2 years of development effort, the majority of the website’s users still phone in their orders but love to go to the web to track them. Why spend [thousands of hours] delivering functionality that your regular users don’t want? I’ll tell you why, because the Marketing organization thinks that the web channel is primarily going to be used to market to their customers. Attract new business. [However], the web channel is first and foremost a vehicle to become easier to do business with (ETDBW). Focus on that first and good things will happen.”
JJ Food Service uses Machine Learning in B2B E-Commerce
CIO.com recently published an article on JJ Food Service and their use of Machine Learning in their E-Commerce program. JJ Food Service is an independent food delivery company in the U.K. with over 60,000 business customers.
About six years ago, JJ Food Service built a B2B E-Commerce Portal, and it now takes 60 percent of its 5,000 orders online.
But E-Commerce Created a Challenge
Mushtaque Ahmed, COO of JJ Food Service explains, “Before we had the opportunity to talk to customers and do some upselling, cross-selling, soliciting of new products and telling them about the market segment they were in,” he says. “When we moved to the e-commerce portal, we lost that capability of talking to the customer. There was nobody to tell them about anything new that we were doing or to suggest some of the products they weren’t buying. We were missing out on those opportunities.”
That’s why they decided to do something about it
Knowing What Customer Want Before They Do
In his book, The Amazon Way, John Rossman talks about Amazon’s view of Customer Service.
the best experience happens when the customer never has to ask for help.
JJ Food Service took this to heart. They implemented a Machine Learning engine that uses its analysis of past purchases to automatically pre-fill customer shopping carts with the items they intended to buy. Ahmed says nearly 80 percent of the items customers plan to order are already pre-filled in carts when customers call or log in.
From the article, about five percent of items recommended this way get added to customer carts. The important thing, Ahmed says, is that many of the products added in this way are products that customers didn’t know JJ Food Service carried.
“The wow factor is huge,” he says. “Customers are amazed that we can predict so accurately what they need.”
First, what JJ Food Service is doing is way cool. I want to hear more.
For you, take a deep look at your customers. How can you improve their job? The Holy Grail is being able to duplicate how your people (sales reps, customer service, inside sales) interact with your customers. Or even improve it. You probably have a lot of data on your customers, industry segments, buying patterns and behavior. Use it to improve the experience, even by giving tools that are outside of the purchase funnel.
Innovation in E-Commerce is common, but in B2B E-Commerce, not so much. However, across the globe we are starting to see some new technologies, software, and new approaches. Apruve is solving a new problem within B2B E-Commerce payments, and it is a privelege to introduce them as a company. Apruve takes an existing idea in B2C (think PayPal) adapted to the multiple challenges with B2B payments. Here is an excerpt from an interview I did with founder Michael Noble.
Justin: What are some of the challenge B2B companies face with Payments?
Michael: The biggest issue in B2B is that the online shopper and the authorized purchaser are often not the same person. This “purchasing gap” is what creates the headaches of expense reports, requisition forms, personal card use, reimbursement and credit card abuse practices like passing a card around the office or emailing it to someone. A recent B2B survey found that 70% of all B2B online transactions involved 2+ decision makers. Having multiple decision makers means that abandoned carts are frequent as a result of the pain of getting their transaction paid for. This is the inefficiency we believe our company, Apruve, can solve.
Justin: How did you get started?
Michael: We got started with a simple idea of wanting to buy something online, but having someone else pay for it. It’s a simple idea, but it has significant ramifications within the ways business users buy things. There’s so much inefficiency and pain there today. Every interview we’ve done included some kind of horror story involving a ton of paperwork, wasted time or spending abuse. Our goal is to solve these issues to make it easier for people to buy the things they need for their job.
Justin: How does Apruve help businesses?
Michael: Apruve is a checkout option that could be compared to the user experience of PayPal. Once you click the “Apruve” button at checkout and log in, you can choose which “team” you want to charge your purchase to. Your company? Your client? As long as there is a payment method attached to a team on Apruve and you are spending within your team rules, the transaction is run. You and your boss or client all know it was a “safe” transaction and there is no paperwork to file before or after the transaction. We’ll be launching some new features soon just for one-off type purchase requests as well.
Justin: How does Apruve help online Merchants?
Michael: Across all market segments, cart abandonment averages around 68%. For B2B shopping, this is almost always attributed to the fact that the person shopping isn’t allowed to buy what they are shopping for. Instead, they will take a screenshot of the product or jot down an item number into a requisition form. The cart gets abandoned and the merchant has a greater potential of losing that sale and adding a new customer to its ranks.
Merchants also see Apruve as a way to set up virtual corporate accounts (without the hassles of a credit check and monthly invoicing) and as a new marketing tool geared directly to the needs of the business shopper.
Justin: What’s next for Apruve?
Michael: We’ve just gone public with the platform and our short term goal is to bring on a few key online merchants to jump start our growth. Feel free to contact us with any questions, comments or opportunities.
IMAGE SOURCE: http://www.redthreadmagazine.com/economy/round-up/economics-in-brief-4/attachment/welfare-payments/