Will Big Box Retailers Always Use an EDI to Complete Transactions?
EDI (electronic data interchange) is the most commonly used method to exchange business documents, such as purchase orders and invoices, between business partners. However, becoming EDI ready and compliant is a pain. Even after you spend time and money getting set up, you still have to transmit and receive invoices, advance shipping notices, and purchase orders according to the EDI standards. Meanwhile, building a B2B ecommerce site is expensive and so is the overhead of competent support staff. If your biggest customers will continue to leverage older technology, then why invest in ecommerce?
As part of the B2B survey we sent out earlier this year, we asked our respondents about EDIs. When we looked at our survey respondents whose customers use an EDI, 35 percent said their customers would still use an EDI even if they built an ecommerce site. Perhaps hopefully, 41 percent said yes but they would eventually discontinue use. Only 23 percent said that use would discontinue. When we looked at those who were already selling online, that number shrank to 12 percent but didn’t disappear.
So why invest hundreds of thousands of dollars in something that will not be used by big customers to place orders? Because transactions are a difficult and important problem for you, but a small part of the buying process for your customers.
Numbers first. Consider that 71% of B2B researchers start their research with a generic search, not a brand. They’re looking for a product first, not for you, and that number is likely to go up. Unless you think that every buyer at a big box retailer falls in the other 29%, then you need to evaluate B2B for what it adds, not what it replaces. EDI only offers a means to complete accept orders from existing customers; it doesn’t provide a complete front-end shopping experience to drive customers through the research, consideration, and purchase stages.
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Let’s talk about the exception. You might not need to worry about B2B researchers and buyers looking for new products. Maybe you’re a contract supplier who sells a limited number of products that hasn’t changed in 20 years. Maybe you sell a commodity. A family member of mine has sold frozen broccoli for 25 years to about 15 clients. They sell four products and they’re all green. He doesn’t understand the intricacies of B2B ecommerce and he doesn’t need to. A buyer from Walmart isn’t going to hear about a new broccoli strand that turns blue when you cook it, type “blue broccoli” into the search bar, find informative content on a competitor’s B2B site, and order ten million pounds. If a new product appeared, and the brokerage began selling it, it would take one afternoon of phone calls to let every customer know about the product. In this scenario, it wouldn’t make sense to invest in an ecommerce platform and integration as well as investing time in updating business processes.
Now let’s say you’re in an industry where a new product line doesn’t require genetic tampering. When you release new products, a B2B site is how you get your product in front of customers when they’re looking. If you add a new product or line, an email blast or two with a link to the site can educate most of your customers. In those email blasts, you have the chance to cross-sell and upsell products to existing customers based on their buying behaviors. By tracking your customers’ behavior with an ecommerce platform, you can align your supply chain to respond to growing demands and consumer trends. Once the customer buys the product, an ecommerce site enables B2B buyers to check product pricing, order status, account information, etc. through a self-service portal.
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On the other hand, can you really count on your sales staff to get in front of every customer exactly when they are interested in a product type? How much time does it take to book an appointment with every customer? Wouldn’t it be easier to only call those that don’t respond to your email blast?
A B2B site provides buyers with the information they need to become decision-makers, and that is what they want to be. Plenty might want to check off the task, but plenty see an opportunity to find a better price or product. Whether they’re looking out for the company or kudos from their boss, they want to walk away with something besides a successful transaction.
I’ll cite again what is probably the most relevant statistic on B2B ecommerce: 62% of B2B buyers say they can develop selection criteria or finalize a vendor list based solely on digital content. If they finalize their vendor list, and you haven’t provided digital content, do you think you made the list?
Big box retailers may continue to use EDI solutions to make purchases, although, as ecommerce platforms add B2B features that make ordering easier for business and trading partners, such as order approvals and quote requests, you may find that your big customers start using your site to submit orders. Whatever the deal is with ordering, buyers of every kind will begin to use B2B sites to make better decisions about what and how much to buy. If they can find a complementary product that sells well or a lower-priced alternative that saves money, they will buy something they would not have before. So it isn’t about whether EDI will be relevant. It’s whether your products will be.
If you’d like to talk with a member of the Blue Acorn iCi team about your B2B site, reach out to us here.
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