• How to Ensure B2B E-Commerce Is Your Most Profitable Channel  

How to Ensure B2B E-Commerce Is Your Most Profitable Channel

When Martin Groß-Albenhausen contacted Traxpay and invited us to speak at the B2B Day of the bevh (German E-Commerce and Distance Selling Trade Association), I was very pleased – but at the same time, I wanted to be sure to present something of unique and relevant value to the audience – and not a sales pitch for Traxpay.

Since payments are the lifeblood of every commerce transaction, and are critical for B2B buyers and sellers alike, the topic was set: “Payments – The Necessary Evil!”

As I waited to speak, I had the opportunity to listen to all the other presenters, and was able to gain insights into the current state of German B2B commerce (more details can be found here), pricing strategies, distribution channels, process optimization, IT architectures, value propositions, and so on.

One topic that came up several times was the so-called “C-parts” (low-price parts with secondary importance for the end product; high procurement cost compared to the value).

When I think about C-parts in B2B e-commerce, things like catalogs and such, specialized e-commerce shops and very big players in the B2B market come to mind. But there is more to that story. Typical e-commerce C-part suppliers operate in a very competitive market. Big B2B networks like Ariba, Mercateo, or Amazon Supply – companies that facilitate commerce between buyers and suppliers – enable a high degree of transparency, especially when it comes to pricing and on-the-fly comparison shopping. So it is natural to conclude that – similar to its B2C sister – that B2B e-commerce would operate in a very price sensitive market as well.

But what I learned is that this is not the case. B2B e-commerce is not a very price sensitive market. There are still options to differentiate yourself, e.g. via higher service levels or better guarantee options.

But what about payments? Eventually, payments are part of EVERY transaction, so why not find a way to use payments as an additional revenue stream? In my talk, I raised the question, why e-commerce shops and commerce networks leave payments to the usual suspects like banks, credit card companies, Paypal, or other payment service providers, when they can quite easily offer a payments service capability that is better, faster, less costly, and one that works with their current customers or B2B networks needs?

In doing this, it would enable these companies to:

  • Differentiate themselves from other competitors, by offering a superior, convenient payment method to their customers
  • Participate in the value of the financial transaction; that is, the final settlement of a trade with their customers – ensuring a completely integrated, end-to-end transaction flow with full transparency at every stage
  • Generate new and significant additional revenue streams

If you look at one of the leading B2B commerce networks in the world today – Alibaba – they’ve implemented their own payment arm, “Alipay”, for obvious reasons. Others like Ariba and Basware are attempting to follow suit, with new capabilities like AribaPay and Basware Pay respectively. And they are not alone.

In my talk I outlined how payments for the B2B set – the last mile of the transaction – packs with it a massive potential and untapped revenue stream for B2B e-commerce providers that could easily make e-commerce the most profitable channel for any company – despite being a very price-sensitive market. In fact, product pricing could actually be lowered, since there is additional revenue available at the backside of the transaction that could more than make up for the difference.

Using Traxpay, e-commerce providers can easily offer new value-added services such as white-labeled payment methods, dynamic discounting, factoring, e-payables, supply chain financing, and more, to enable new ways for trading partners to do business.

The net-net? My message to B2B e-commerce merchants is this: Think about payments as a differentiator for your own business, for your customers, and also as a new revenue channel for your company.

Subscribe to RSS

Leave a reply

Your email address will not be published. Required fields are marked *