B2B ecommerce is growing fast – and will see its growth further accelerate at a 16.5% CAGR from 2022 to 2026. Gross Merchandise Value (GMV) through B2B ecommerce channels is expected to exceed USD 22 trillion in 2022. Keeping that same forecast and looking at the total 2020 GMV, the market will increase by 49% in just 2 years. There is no doubt the COVID-19 pandemic has pushed on-site procure-to-pay processes into digital and remote practices. Yet, it will not stop here, with forecasts expecting B2B ecommerce volumes to go beyond USD 40 trillion GMV for 2026. The drivers powering the direct (merchant proprietary websites) and indirect (marketplaces) B2B ecommerce ecosystems are key to assess the B2B ecommerce payment opportunities for the coming years.
The APAC region has led and will lead the digital volumes. The digitalisation of B2B purchases will not change the global B2B momentum. Asia will remain the world’s factory for its competitive pricing and its ability to keep up with global demand.
The COVID-19 pandemic should be seen as a catalyst that has fostered the procure to pay changes. The game changer is the consumerisation of B2C purchasing habits leaking into the B2B ecosystem. As time goes by, this paradigm will gain more weight in the next 5 years. Several forecasts estimate millennials and Gen Z cohorts to represent above 60% of the workforce in 2024. Both cohorts amount for the bulk of today’s B2C online purchases. Millennials and Gen Z purchase from ecommerce to buy faster, access the best prices and discount deals, see reviews from other customers, and benefit from fast shipping services. Mirakl estimated that 80% of B2B buyers are today looking for a similar purchasing experience as that of B2C websites. B2B purchase operations are not being altered by exogenous factors. The changing persona of the staff that is today managing sourcing and procurement processes can be considered the number one driver.
Is the growth simply initiated by the demand? Not really. Vendors are increasingly digitalising their points of sales in the B2B space. A Vaimo survey has demonstrated that 41% of B2B distributors plan to overhaul their digital presence in 2022. This is an appropriate strategy as today 74% of B2B buyers conduct research online before purchasing, according to Forrester Research. Buyers and vendors are being proactive on both sides of the B2B ecosystem to increase their digital presence. This will fuel the forecasted growth.
Several third-party providers servicing the B2B ecommerce ecosystem apply a simple set of best practices to nurture success. A number of these players are considered to have defined the foundations for the B2B ecommerce market to thrive. They follow guiding principles that should be on the agenda of all organisations willing to support buyers and vendors in the digital realm:
Address pain points existing in the ecosystem.
Develop balanced value propositions.
Partner with relevant players to develop comprehensive solutions.
Leverage indirect sales channels to increase reach and exposure.
Provide measurable ROI and clear Key Performance Indicators (KPIs) to track performance.
Edgar, Dunn & Company (EDC) has identified a set of service providers that are able to apply these guiding principles. Each has different levels of business maturity, but all understand how to best serve B2B ecommerce buyers and vendors. Today, the market is underdeveloped, and EDC anticipates new entrants to boost the current offerings.
B2B marketplaces provide enjoyable sourcing experiences to their users. The notion of consumerisation is here again at the heart of the success. B2B buyers can operate purchases via any device (PC, tablet, smartphone, etc.) and gain access to multiple suppliers in one place. In contrast to the legacy procurement systems, B2B marketplaces offer a variety of flexible payment options (cards, direct transfers, etc.) and are expected to embed short-term lending solutions (e.g., BNPL). The onboarding process is quick, and buyers do not need to conduct complex and time-consuming supplier due diligence processes when sourcing new goods or services. B2C payments on marketplaces are direct and simple. B2B payments are conducted on a deferred basis. To meet market standards, B2B marketplaces have successfully integrated the payment term dimension into their offering. SaaS solution providers such as Mirakl or Sana Commerce are market leaders that power B2B ecommerce platforms.
The B2B subscription model is also a growing trend shaping the way corporates procure goods and services digitally. Online merchants have understood the benefits of offering the recurring payment model at their digital point of sale, lowering the entry barriers for a significant portion of buyers. Recurly and Chargebee help merchants implement subscription models to their current offerings. Topi, a Berlin-based fintech, leverages the subscription model to provide hardware equipment on a subscription basis (Hardware-as-a-Service) so companies no longer must invest in hardware equipment – a good hedge against planned obsolescence.
The integration of payment products, such as virtual cards, within Accounts Payable solutions and the development of interactive e-catalogues embedded in procurement systems illustrate the ongoing digitalisation of various B2B payment practices. Furthermore, the integration of interactive invoicing systems enabling the development of payment acceptance layers in Accounts Receivable solutions is an innovative initiative reshaping the traditional quote-to-cash and procure-to-pay cycles. Without a doubt, these transforming initiatives will fit in the B2B ecommerce ecosystem in the coming years and will be further fuelling the B2B ecommerce growth.
In the next 3 to 5 years, greater automation and the use of new technologies such as artificial intelligence (AI) in payment reconciliation and transaction monitoring will drive even more change. At EDC, the B2B team is always looking at new and emerging technologies that will eventually replace legacy solutions that have traditionally served B2B payments. We anticipate that successful B2B solutions in near future will be the ones providing agility, flexibility, and the ability to serve many types of payments in a centralised platform.
This editorial piece was first published in The Paypers' Cross-Border Payments and Ecommerce Report 2022–2023, which taps into the fast-growing cross-border market and provides a comprehensive overview of trends and developments that are pivotal in this space, being the ultimate source of information for ecommerce businesses interested in expanding globally.
Louis is a Senior Consultant at the Edgar, Dunn & Company Paris office. He has joined the firm in March 2021 and has graduated with an MBA from ESCP Business School in 2020. Prior to joining EDC, Louis has combined 7 years of experience in the banking and aviation industries. Louis enjoys witnessing the modernisation of payments and payment-related processes in B2B ecosystems that drive the ongoing change of the financial institutions' landscape.
Edgar, Dunn & Company (EDC) is an independent global payment and fintech consultancy. The company is widely regarded as a trusted adviser, providing a full range of strategy consulting services, expertise, and market insights. EDC expertise includes M&A due diligence, legal and regulatory support across the payment ecosystem, fintech, mobile payments, digitalisation of retail and corporate payments, and financial services.
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