Digitization is no longer an option but a necessity, and firms who remain ahead of this transition – and seize this global B2B eCommerce opportunity – will be the next generation of market leaders.
Many companies throughout the country were forced to discover new methods of working as the pandemic and stay-at-home orders took hold at the start of 2020. Small and medium-sized business-to-business (B2B) firms, who are not historically recognized for being early adopters of technology, had to act swiftly to take their enterprises online, and for many, it meant delivering their products and services through an eCommerce storefront.
Digitization was no longer an option, but rather a necessity.
While this trend is visible across industries, the latest Alibaba.com US B2B Small and Medium Business (SMB) Survey of 5,000 US-based B2B companies, conducted in late 2019 and again in September 2020, reveals how dramatic this transformation has been, with 93% of B2B SMBs now doing some part of their business online, up from 90% in December, and 43% using eCommerce platforms, an 8% point increase over the same period.
Promoting Online Growth
Manufacturing, which has been hesitant to adopt online sourcing and selling tools, demonstrates how much change occurred this year: before the pandemic, manufacturing businesses were behind practically all other industries in terms of online trading. By September, when virtually all industries were developing digital commerce, manufacturers had digitized at double the rate of other industries and had exceeded many of those they had previously trailed.
Indeed, businesses across industries are hiring to support their online expansion: Since the start of the pandemic, 56% have employed new personnel to assist their eCommerce operations, and 79% expect to add people over the coming year to support their growing online business.
What is less well known is that while B2B enterprises quickly digitized, many of them were also globalizing and interacting with trading partners all over the world. According to the Alibaba.com poll, cross-border commerce is becoming increasingly crucial to small B2B enterprises, accounting for an average of 25% of their revenue — a considerable increase from 17% in December of 2019 before the pandemic.
Although cross-border commerce has increased over the previous two decades, it has recently faced obstacles in the form of trade policy interruptions as well as supply chain weaknesses highlighted by the pandemic, such as human resource constraints and a lack of transportation capacity. However, in the face of the vast global possibility, these logistical challenges are proving insignificant.
How Big Is The Global Opportunity?
There is little doubt that we have all seen the rise of B2C eCommerce, having bought household supplies, food, or other personal products while being forced due to the pandemic. On the B2B front, firms who shifted online and into eCommerce at the onset of the pandemic saw potential in the $23.9 trillion worldwide B2B eCommerce market, which is six times greater than B2C eCommerce, according to the US International Trade Administration. B2B eCommerce has seen amazing upheaval, with outdated supply chains and distribution systems being replaced, and this trend is only accelerating, allowing even more enterprises of all sizes to join the global marketplace.
Businesses all across the globe are making the transition to digital and global operations. When face-to-face sales ceased in the spring, a firm that had previously only sold within the 100 miles that their trucks could sell and repair in a single day realized that becoming digital also meant being able to go worldwide and access foreign markets — not tomorrow, not next year, but now.
B2B businesses that go digital have the opportunity to not only reach new markets and distribution channels but also to extend their services and bring those offers to market more rapidly, preparing them for future growth, due to the intrinsic nature of eCommerce, which recognizes no boundaries.
As a result, the stage is set for even greater access to the massive global B2B eCommerce market. As the economy recovers from the pandemic's economic upheaval, more and more B2B enterprises will digitize and globalize. Because these are not trends that you pick up only to put down, the B2B environment as we know it has already altered permanently — for the better. Both generate efficiency, profitability, and, most importantly, resilience, and as such, they will not only continue but will become an even stronger source of growth for the global economy.
The next generation of market leaders will be agile organizations that stay ahead of transformation and recognize and capitalize on this global B2B eCommerce potential.