B2B eCommerce: The future of B2B eCommerce

8 Mins read
B2B eCommerce

Download DHL’s “Ultimate B2B E-commerce Guide: Tradition is out. Digital is in” to uncover the factors driving the growth of the global B2B E-commerce market: https://shipping.dhl.com.my/B2B_Whitepaper_MY

It was not only B2C eCommerce that was growing due to ongoing digitalisation and changed shopping behaviour of consumers. In 2019, before the pandemic, global sales on B2B eCommerce sites and marketplaces had already increased by 18.2% to reach USD 12.2 trillion, outpacing the market size of the B2C sector. Through Covid-19 and the resulting acceleration of digitalisation, this global B2B eCommerce volume is estimated to reach USD 20.9 trillion by 2027.

DHL Express Malaysia, Sidec – Selangor Information Technology and Digital Economy Corporation and Vlan Asia have jointly organized a webinar on 3rd June to learn about the future for B2B e-commerce and how to adapt to new business norms during the Covid-19 pandemic. The speakers were Julian Neo, Managing Director of DHL Express Malaysia, Lance Cheang, Managing Director aka Chief Geek of VLAN Asia, and Kai Ping Yong, Chief Executive Officer of Selangor Information Technology & Digital Economy Corporation (Sidec).

The future for B2B eCommerce and the current B2B eCommerce in Malaysia

Adrian Seet: Good Morning everyone! I’m Adrian and I’ll be your moderator in today’s session. DHL has recently released a white paper predicting that online B2B will increase by more than 70 percent in 2027, which is six years ahead. This prediction drive DHL to come up with this whitepaper entitled “Ultimate B2B E-commerce Guide: Tradition is out. Digital is in”.

Julian Neo: Yes, thanks Adrian for the warm introduction. Good Morning everyone and welcome to this webinar. You’re absolutely right Adrian that was definitely a major drive for the launch of this Ultimate Guide. First and foremost I would like to share what is B2B e-Commerce is all about. A definition from my side would be, a business buying from another business where the full interaction including payments and shipping is facilitated online via a transactional website without the need to become a customer first, login into a gated portal or speak to a sales person which is the traditional part of how we do or buy things today.

Julian Neo: In my opinion, I think that the B2B ecommerce is definitely undergoing a period of intense transformation. We are on this side of the logistics industry are experiencing that change. We’re seeing so much changes in supply chain, buying behaviors as well as customer experience. So traditional methods of B2B operations from sales to customer interactions and from fulfillment to order delivery are changing rapidly. While the B2B world is already moving online, the Covid-19 pandemic accelerated the whole process meaning that B2B transactions are even becoming more data-driven and less dependent on traditional one-to-one sales activity.

Julian Neo: In 2019 alone global sales on B2B e-Commerce sites and marketplaces jumped at 18.2 percent to reach a huge amount of US dollar of 12.2 trillion and that is even outpacing the B2C sector. We’ve constantly looked at all B2C which is growing rapidly but B2B e-Commerce is growing at even a faster rate. And to what you have mentioned Adrian, this amount will reach 20.9 trillion US dollar by 2027. So Forester alone predicts the United States B2B e-Commerce market would alone will reach 1.8 trillion dollars US dollar and this will account for close to 17 percent of the B2B sales in the United States and these numbers were predicted pre-Covid.

Adrian Seet: So we’re moving from figures of an increase from million to billion and now trillion. With that said, going into the next three to six months, how would you explain the adoption or evolution of the current B2B e-Commerce scene in Malaysia, Lance?

Lance Cheang: Thanks for hosting us Adrian! In the past, three to six months which seemed like a lifetime but VLAN Asia has actually seen company’s digitalization efforts that normally takes three years ramped into three months just to survive during the pandemic. Although many companies have already started some form of transformation but it’s not nearly enough. Thus, it’s going to be a very interesting six months to see how companies evolve further. Last year we saw a lot of companies venture into online selling, social media and digital marketing on a large scale. Even for us at VLAN Asia, we’ve been very traditional up until last year’s MCO. We struggled at first just like everyone else but

Lance Cheang: I think we’re getting better at it. So our mantra in VLAN Asia is like we eat our own dog food. So if we don’t try out what we sell and if we can’t use it, we don’t know how to sell it. Digitalization is ever evolving and I don’t think there’s anyone who can say that they’re fully ready and digitalized now. It’s an ongoing process of constant renewal and improvement. There’s always going to be something to improve on so and I believe that it’s going to be very interesting six months.

Adrian Seet: Thanks Lance! The fact that are you speak of improvements you speak of what I would paraphrase as pivoting from last year to this year. You yourself as you say you’re consuming your own your own diet. Julian, if I could get you to give us a perspective of the changes that you see, the evolution that you see, the adoption of B2B ecommerce from a Southeast Asia perspective or even from Asia Pacific because DHL is operating under essential services.

Julian Neo: Yes you’re right Adrian, we operate under essential services during the pandemic. I think B2B e-Commerce will continue to grow exponentially in Asia undoubtedly. The pandemic has accelerated the situation. Gartner’s studies estimates that within the next five years 75 percent of B2B procurement spending will be done online. In Asia alone, Forester is forecasting a 12 percent per annum growth in B2B e-Commerce and with B2B online marketplaces being the prevalent mode of businesses. For instance, DHL is a sizable company, we employ close to 8 000 people in Malaysia and we order our pantry supplies from vendors and all that. We have just embarked on an online marketplace where each DHL facility will then go through our central procurement. For example if I want to order 10 bags of coffee 15 rims of A4 paper, we can now do it online via a portal.

Julian Neo: So B2B e-commerce has flourished in Asia backed by the factors of government support as you can see in Malaysia, rising mobile penetration, the growth of B2B marketplaces as well as customers enabling transactional websites on Brand.com alone will be prevalent. In Malaysia alone changing market dynamics and buying behavior has accelerated this need to embrace e-Commerce. The need to redefine the supply chains and fulfillment operation is even much stronger today. B2B e-Commerce have allowed many buyers to access a larger pool of suppliers. For example, we’ve been using our A4 paper vendor for the last 10 years but today when we open up the marketplaces there are so many people who could participate. So B2B businesses today are better informed and have support from both the government and private players to better flourish in this segment.

Adrian Seet: Julian, having said that I think the other thing that comes up very clear in DHL’s Ultimate B2B E-commerce Guide tagline frighteningly enough says tradition is out digital is in. The study predicts strong growth for the B2B e-Commerce market in the coming years and by 2025, 80 percent of all B2B sales interactions between suppliers and professional buyers will take place using digital channels. So how can B2Bs benefit from DHL’s Ultimate B2B E-commerce Guide?

Julian Neo: Great question indeed, Adrian. The guide states that there are four key benefits. First and foremost, I think which is very important and all companies regardless of its size are looking for is an increase in profit and price control. Hence, sellers or manufacturers will get the manufacturer’s suggested retail price (MSRP) rather than the wholesale price for their products when selling through its distribution channels. So you can sell directly as what Michael Dell has always taught us many years ago which is to cut down the middle man. The second benefit would be faster time to market. Manufacturers or sellers can now get their products to market very quickly instead of contending with a lengthy traditional sales cycle. They can now go straight to the market and that’s faster time to market. Third one would be brand control. Manufacturers can now own their own brand. I spoke a little bit about Brand.com earlier and this won’t be diluted or misrepresented by third parties which is typically your middlemen or distributors. Last but not least you get to own your customer data as data is oxygen. Therefore, selling directly online allows you to own those data, collect the data and ultimately results in better product positioning, stronger relationship and increase in sales.  

Adrian Seet: Great benefits! I totally agree with you on that, Julian. Data is the new superpower and avenger. Lance, I’m going to ask you the question in relation to what Julian has just said. As the digitalization specialist in helping brick and mortar businesses become digital, how do you stack up in this guide and what do you think of the companies in Malaysia that are lacking?

Lance Cheang: So one of the reasons why we felt this white paper resonate so well is that because out of the five areas that they predicted that will drive digital evolution, VLAN Asia actually covers four of them. The five areas like digital infrastructure, customer experience, personalization Omni channel and synchronized logistics. So the first four I mentioned is actually bread and butter. We do this every day. We’ve been a Microsoft house for the longest of time and digital infrastructure is something that we do naturally through our Microsoft 365 productivity tools and some usual infrastructure as a service offerings. Customer experience, personalization and Omni channel are both covered by two of our products that we carry, Zendesk and HubSpot. Both of which we actively advocate to businesses. I mentioned earlier that businesses started to go online selling, social media and digital marketing last year. This year is the year of consolidation because how do companies do better with these new channels that they started using. Yes, you could have three or four new employees to pick up the phone to answer your customers, handle WhatsApp, Facebook and Twitter and so on, but all those are very disjointed. Thus, wouldn’t it be more efficient to be able to manage all of those in one single platform. On top of that, there’s metrics to monitor the effectiveness of data, every channel the agent serving those customers especially if you’re a company looking to grow your channel and not rely on information based on one person. So tools like Microsoft 365 and Zendesk allow that. Azure being the solid backbone in front and ties the whole business together.

Lance Cheang: To give an example, one of our customers do batteries or car batteries on demand. So during MCO many people got stuck at home and their batteries died. I know mine did so I called them and they came in about 45 minutes. They used to run a very traditional on-site call center with a few agents managing their customers. During MCO, nobody can go to the office to manage the call center. With Zendesk that they are using, they can now work remotely very seamlessly and they can employ gig workers anytime to man their contact center. This is because it’s cloud-based and the agents are able to accept customer calls or messages just with a flick of the on switch. In theory, it allows Grab drivers to be contact center agents when they’re sitting and waiting for the next pickup. Of course the majority of contact center agents are home based so then they are not grab drivers. They are not actually picking up calls when they are driving the car. The company also grew their contact center two or three times last year and they are still growing. Their business grew so big because everybody never start their engines and everybody’s batteries were dying. All the contact center agents need is just a laptop and headset, they are able to manage interactions with their customers either through Facebook, WhatsApp and phone calls in just that one app integrated back to their CRM as well. Also, if you’re stranded, you can’t start your car and you’re already very flustered. You need to be attended quickly. Thus, systems enable speed. They also do roadside assistance now so they’re expanding very rapidly.