B2B trade

How to adapt to B2B eCommerce trends? The real challenge is payment management

antoniabalogh

May 15, 2024

The rapid shift to digital platforms is reshaping B2B eCommerce, presenting unique challenges in payment management. Explore how innovative fintech solutions, such as ‘Buy Now, Pay Later’ (BNPL), address these challenges and revolutionize payment methods in the B2B landscape.

Content

  • B2B in the digital age
  • Challenges within B2B eCommerce
  • Meeting the new demands of B2B eCommerce: what customers expect
  • The real challenges: the payment management
  • Strategies to adapt to changing B2B eCommerce trends
  • The future of B2B eCommerce payments: the new trend, buy now pay later
  • Buy now pay later bridges the gap

Introduction

Often operating quietly behind the scenes, B2B transactions are the lifeblood of modern economies, driving innovation and growth on a global scale. In the rapidly changing world of commerce, staying ahead of the curve is not just a strategy; it’s a necessity. 

Unlike its B2C (business-to-consumer) counterpart, the B2B (business-to-business) market caters to the unique needs of businesses, serving as a conduit for exchanging goods, services, and expertise between companies.

This article will explore the evolving landscape of B2B eCommerce and its trends. 

Key takeaways:

  1. Increasing need for a B2C-like experience: B2B buyers seek flexible payment options, like buy now pay later and personalized shopping experiences similar to what B2C provides. 
  2. Emerging unique challenges: B2B transactions have different and specific challenges for buyers and sellers. Understanding and managing these differences is crucial for success. So, what do these challenges entail?
    • Ease of switching suppliers: business-to-business transactions are typically regular and involve large orders. Yet, as more B2B purchases move online, it’s becoming increasingly easier to switch suppliers if their expectations are not met, often leading businesses to opt for competitors for a more satisfying experience. 
    • Complex decision-making processes: In B2B transactions, the involvement of multiple decision-makers extends the purchase process. It leads to prolonged negotiations and challenges cash flow, including late payments and liquidity issues. 

B2B in the digital age:

In recent years, there has been a remarkable transformation in the B2B eCommerce landscape. The rapid rise of digital technologies and online platforms has revolutionized B2B transactions. This shift has not only changed the way businesses operate but has also opened up new paths for growth and innovation.

In recent years, B2B businesses have successfully navigated through digital transformation, so now the focus is on improving customer experience as it impacts revenues and retention positively.

Over the last 5 years, the number of digital customers has increased by 40%. This dramatic growth not only signifies a thriving market but also catalyzes increased competition in the online space. 

Additionally, B2B eCommerce ushered in a new era where 65% of corporate procurements are made through webshops. There are 2 main reasons for this change:

  • B2B merchants prefer to offer online rather than in person, as eCommerce drives higher sales volume and lower associated expenses.
  • corporate buyers seek a more convenient, faster and smoother purchasing process.

However, 52% of corporate buyers are frustrated with online procurement. They often encounter issues related to complex interfaces, inadequate product information, or cumbersome checkout procedures. 

Providing a smooth checkout flow plays a key role in customer experience. This is especially true for corporate buyers due to their specific needs. Therefore, seamless and easy payment methods become a critical factor in meeting these expectations, as business-to-business transactions are more complex and require more precise payment solutions. 

In the B2B market, cash flow and liquidity are the cornerstones of operational stability and growth. Efficient management of payments, timely invoicing, and the ability to adapt to evolving payment preferences are crucial components of sustaining financial health.

Due to the digital revolution, companies must embrace new financial and payment tools and solutions to keep their business on the path of stable financial growth.

Challenges within B2B eCommerce

The unique nature of business-to-business transactions introduces different factors influencing the purchasing process. It presents both buyers and sellers with distinct challenges and expectations. Understanding and addressing these specific dynamics is essential for success.

Maintaining long-term partnerships is essential, as eCommerce makes it easier to switch suppliers.

  1. B2B purchases are often characterized by regular buying patterns and larger order quantities. It results in significant transactions and long-term partnerships. However, an increasing number of B2B purchases are now shifting online, allowing buyers to switch suppliers more easily if their expectations aren’t met. Therefore, B2B merchants must introduce solutions that enable them to retain their customers and build a loyal customer base.

Extended decision and purchasing processes can lead to delayed payments and liquidity issues.

  1. More people are involved in decision-making processes in B2B transactions, leading to more extended and complex purchase procedures. This results in longer negotiations and challenges businesses to manage their cash flow effectively.  To have a financially stable B2B business, it’s worth introducing innovative solutions that can help prevent late payments and liquidity issues.

B2B customers expect a smooth online experience, similar to what they find in B2C.

  1. Millennials are the ones who are significantly shaping the landscape of B2B. They make 73% of corporate buying decisions. This generation exhibits a real openness to digital solutions and innovative technologies and expects a smooth online experience, similar to what they find in B2C. This shift underscores the importance for businesses to adapt and cater to the evolving preferences of millennials. Millennials seek quality products and services and a user-friendly and digitally enhanced B2B journey.

Meeting the new demands of B2B eCommerce: what customers expect

In B2B eCommerce, consumer expectations are rising, mirroring the levels seen in B2C transactions. Corporate buyers now seek greater flexibility, smoother experiences, and simplified processes, similar to what they experience during their B2C purchases.

The key concern is that B2C expectations have transferred to the B2B market. Therefore, corporate customers want:

  • detailed and easily accessible product information 
  • personalized product offers 
  • discounts and other buying incentives
  • flexibility in purchasing
  • self-service options
  • to decide about the delivery option according to their preferences
  • control over payment terms
  • to select the preferred payment method

Overall, B2B clients seek more streamlined purchasing procedures.

The real challenges: the payment management

A well-managed payment system ensures the company receives the funds it needs to cover expenses, invest in growth, and generate profits. However, more than 60% of SMEs are grappling with the challenge of late payments, as highlighted by PYMNTS.

Timely customer payments and effective management of outgoing payments to suppliers are crucial for maintaining liquidity and stability.  Financial health, in turn, is the foundation for business growth and resilience in times of economic uncertainty.

In addition, B2B commerce has been influenced by the impact of the COVID-19 pandemic. 

Due to the rise in online commerce and the widespread adoption of contactless delivery methods, electronic payments have become more commonly used.  As a result, 60% of SMEs significantly reduced cash usage. And businesses are transitioning from cash-based transactions to electronic payments. 

These changes are indicative of the growing importance of digital payment options.

As a solution, providing a smooth and secure payment experience is essential for customer satisfaction. Easy and convenient payment options can enhance the customer experience, leading to repeat business, brand loyalty, and positive word-of-mouth recommendations.

Strategies to adapt to changing B2B eCommerce trends

The B2B eCommerce trends mentioned above underscore the growing importance of user-centric approaches, where seamless interactions and adaptable terms are becoming key drivers of success.

Furthermore, financial stability is a critical factor that directly influences a company’s operations and growth.

Indeed, it’s worth exploring the key financial touchpoints. They not only define the foundations of successful transactions but also significantly impact crucial elements of ongoing B2B eCommerce trends: a company’s liquidity and cash flow.

Transforming challenges into fintech solutions

Fintech emerges as a hopeful solution to address these challenges and bring greater ease to business-to-business transactions. It provides customized answers to tackle problems directly. 

Offering only a few or less flexible payment choices may result in customer drop-offs. A noteworthy 56% of buyers now expect to find multiple payment options available during the checkout process, as demonstrated by insights from Bigcommerce.

Innovative fintech solutions, such as B2B-focused ‘Buy Now, Pay Later’ options, provide businesses with essential tools. These tools help them find the balance between financial stability and flexibility. These solutions also simplify the payment process, introducing user-friendly interfaces and transparency. Consequently, they alleviate the common frustrations linked to online procurement.

The future of B2B eCommerce payments: the new trend, buy now pay later

First things first, let’s demystify this game-changing concept. 

The Buy Now Pay Later expression may already be familiar to the B2C world. In B2B this payment method is a digital invoice financing option, an advanced, digital version of the well-known invoice factoring format.

Buy now pay later allows consumers to make immediate purchases without any upfront payment. Instead, they can extend the payment deadline to a later date. On the other hand, merchants receive their revenues instantly, upon fulfilment.

This payment method offers corporate buyers the flexibility they crave, similar to what B2C provides to end customers while streamlining the payment process. 

Moreover, they can make purchases swiftly and defer payments, aligning with their cash flow needs. This approach enhances the buying experience and reduces the risk of late payments and liquidity issues, benefiting both sides of the transaction. 

The B2B BNPL payment method offers numerous advantages for merchants as well: it enhances the conversion rate, increases the average cart value, reduces non-payment risk, eliminates administrative burdens and provides a competitive advantage.

Let’s see how BNPL can provide solutions to these eCommerce challenges. Can support these metrics / create these advantages for merchants

1. Providing flexibility in payment terms without risk

Among B2B businesses, negotiating payment terms is a complex process. Furthermore, sellers don’t always have the opportunity to provide the most favourable payment terms for their clients, as they also need to consider the risk factors.

However, with BNPL, merchants can empower their customers to set their payment terms according to their preferences, meanwhile, they receive their money right after the fulfillment of a purchase order. This flexibility not only keeps both parties liquid but also enhances the overall customer experience, aligning it more closely with the B2C model.

2. Shortening payment negotiations

One of the notable challenges in B2B transactions is the prolonged negotiations surrounding payment terms. The buy now pay later payment method can significantly expedite the payment process, eliminating the need for protracted discussions. Businesses can finalize transactions swiftly, selecting the payment terms at checkout, reducing the administrative burden and saving valuable time for both buyers and sellers.  Moreover, BNPL reduces non-payment risk by providing a secure and standardized payment solution.

This enhances efficiency and contributes to a more streamlined and frictionless B2B eCommerce experience.

3. Enhancing customer loyalty with B2C-like experience

Customers increasingly expect a B2C-like experience. BNPL does just that by providing a quick and user-friendly payment option: it allows them to pay for the purchases at a later time, therefore customers can pay according to their terms. This experience fosters customer loyalty and gives businesses a competitive edge in a crowded marketplace. 

Moreover, the B2B landscape has seen a notable shift towards user-centric approaches. BNPL aligns perfectly with this emerging trend. It offers a seamless and adaptable payment solution that allows merchants to meet and exceed customer expectations. This, in turn, helps businesses stand out and reinforces their positions as trendsetters in the eCommerce space.

4. Unlocking liquidity

Maintaining liquidity is essential for both sellers and buyers.

Buy now pay later is a smart solution that financially stabilizes both sides. For sellers, it ensures a steady income without delays, while buyers can make purchases and choose when to pay, avoiding financial stress. This straightforward approach helps everyone in B2B transactions stay liquid and ensures smoother deals.

Buy now pay later bridges the gap

Buy now pay later is not just a payment method. It’s a bridge between the expectations of B2B and the seamless experiences of B2C. Embracing this trend can give businesses a competitive edge and keep their customers returning for more.

In conclusion, the world of business-to-business eCommerce is undergoing a transformative journey. Meeting and exceeding customer expectations, addressing unique challenges, and embracing innovative solutions like fintech are key to thriving in this dynamic landscape. As B2B eCommerce trends evolve, businesses that adapt and stay ahead of the curve will emerge as leaders in the digital age of commerce.

AUTHOR

antoniabalogh

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