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Fix Your Eyes on the (B2B eCommerce) Prize

Benjamin Conwell • 7/24/2019
To some, shopping in-store may seem as outdated as spending Friday night scouring the shelves of a video store.

By Ben Conwell

To some, shopping in-store may seem as outdated as spending Friday night scouring the shelves of a video store. And while many luddites still see a benefit in hand-picking their groceries or physically trying on a pair of new sneakers, it’s impossible to ignore or deny the explosion of eCommerce in recent years.

Almost all the focus has been on Direct to Consumer (DTC) eCommerce—and that story is remarkable. Having grown steadily at approximately 15% per year External Link in the United States, DTC online sales are now approaching the mid-teens in share of total retail sales. However, the under-told and larger story is the Business to Business (B2B) world of eCommerce.

While DTC may get the headlines, B2B gets the dollars. But with less focus on its growth and impact through the years, many are unaware of this booming market and the massive impact it’s having on stakeholders, including those in logistics real estate.

Whither the commercial sales rep?

We’re not yet talking about the death of all salespeople, but a recent Forrester survey External Link of commercial procurement professionals found that 67% of respondents prefer self-service eCommerce over dealing with sales representatives. 70% say that buying and selling online is more convenient than dealing with humans.

Smart wholesale, manufacturer, and distributor (WMD) players are listening and responding by bulking up their online presence. In fact, 72% have some eCom presence, and 80% say their B2B eCom business is growing, according to a recent survey by Unilog External Link.

This surge allowed B2B eCommerce sales through websites and online marketplaces to grow 11% last year—their fastest pace yet—and allowed the market to surpass $1 trillion for the first time ever in the U.S., according to data in the 2019 U.S. B2B Ecommerce Market Report External Link. Meanwhile, non-electronic B2B grew at only 5.8% year over year from 2016 to 2018. Look for that gap to widen.

The resemblance is striking

Though B2B eCommerce has largely flown under the radar, its similarities to the DTC world, especially in terms of customer preferences, are clear. Sure, the complexity of the research, discovery, and purchase path for a $100,000 piece of specialized equipment is different than for a pair of running shoes, but many of the same basics apply.

DTC and B2B eCommerce customers both demand a seamless experience, from initial research and discovery through to purchase and payment, delivery, and, if needed, returns. Both customers also need to experience real or perceived value for their dollar, and in both markets, we’ve grown to expect fast, free, reliable, and transparent delivery.

Finally, personalization, including tailored suggestions based on buying history, also goes a long way in both worlds. The “you may also like…” page may have put a hole in your pocket when shopping on your favorite retailer’s website, but it drives further customer engagement, whether DTC or B2B.

The physical footprint

The takeaway here for logistics real estate space? It’s dramatic. Cushman & Wakefield tracks more than 20% of our industrial absorption to be driven by eCommerce users, and as we know, B2B takes up a significant share of that market.

As with the common demands by procurement professionals doing business online and DTC consumers, the drivers for logistics real estate to support the booming B2B sector are similar as well. Among key strategies, success will increasingly depend on building an optimized distribution network, likely with multiple distribution centers and locations in significant population densities to shorten delivery time and reduce shipping costs. It’s just as important to have the right inventory in the right place at the right time for B2B operations as it is for DTC, and in many cases, speed of availability is even more critical.

Inside warehouses and distribution centers, we’re continuing to see rapid advances in technology and material handling innovation, not the least of which includes leveraging booming innovation in robotics and automation. And ample truck, trailer, and outbound delivery vehicle parking and maneuverability room are just as important in the B2B space.

Despite these technological advances, machines aren’t replacing humans just yet—labor availability is a key consideration when it comes to warehouse site selection for B2B eCommerce. Depending on the product type, each individual order still needs to be fulfilled, and that still takes workers.

Hop on the B2B eCommerce bandwagon

It’s clear that significant similarities exist between the needs, challenges, and strategies in the online DTC and B2B markets. And with its massive size and tremendous un-tapped share of potential growth in the near-term, B2B eCommerce is a story we should all keep an eye on.

Will the commercial sales representative go the way of the Maytag repairman or The Office’s Dwight Shrute? Not for some time, but we can be sure the disruption in the online B2B space is far from over.

Ben Conwell

Ben Conwell is a Managing Director and Leader of Cushman & Wakefield’s eCommerce Advisory Group. He is an expert in newCommerce, a Cushman & Wakefield initiative that provides seamless, full-service solutions for today’s ever-evolving retail landscape.


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