Author: Mike Glover
Nowadays, it is becoming increasingly common for individual consumers to buy on-line - replacing the need to physically visit a store to purchase something, and avoiding all the hassle that goes with a typical shopping experience
Surely everyone would agree that it is much more convenient to buy on-line? You can do it from your own armchair for a start; there is plenty of choice; an almost limitless range of goods; you can do it at any time that suits you; and you normally get a good deal (often better than you would get if you went to the store itself even when there is a "Sale" on).
It is difficult to see too many downsides with on-line transactions - if you are not happy with your purchase, it is usually pretty easy to return it or replace it.
Of course, there are many who actually enjoy the physical experience of shopping at a mall - though from a personal point of view, I am not quite sure why!!
But, it is easy to comprehend how efficient the on-line experience is, compared with the traditional purchase experience.
From a Supplier point of view, an on-line transaction eliminates the cost of a "shop" altogether - imagine the cost savings if all transactions were done on line (saving the cost of real estate, maintenance, electricity, shop assistants, etc.)! The on-line shopping experience can also be 24/7 for the both the Supplier and the Buyer. And buyers save the cost and time of travelling to the store to actually make the purchase (and if they don't find what they are looking for - this time and cost is completely wasted).
Surely the same principles could and should apply to business transactions? Yet, business buying on line doesn't actually happen to any real extent at all. But, if Suppliers were to systematically offer their goods and services through an on-line B2B market place, they would not have to waste so much time and resource on sales and marketing, bombarding potential customers with approaches which are often completely ineffectual.
It is a well recognised fact that the success rate of new sales and marketing approaches yields a greater than 90% failure rate - not because there is anything wrong with the product or service, but because suppliers just do not have a relationship with the buyers they target, or their timing is completely wrong.
If 10% of a supplier's revenue is spent on trying to acquire new business (not at all un-typical) , and 90% of that is actually wasted - imagine how many millions of dollars go down the drain in the cost of sales resource and unnecessary marketing in the combined spend of a buying company across all the companies it buys from. Just as for the individual consumer experience where the cost of a store has to be paid for through the pricing of the products in that store - in business, the cost of a supplier's unsuccessful approaches is ultimately paid for by other buyers that actually do buy from that supplier.
The annual value of trade between businesses globally is estimated at more than $40 trillion. You do not need to do the math to understand that the waste that could be eliminated in highly inefficient sales & marketing runs into the thousands of billions of $!! Somehow, indirectly - this 'waste' has become a totally "acceptable" cost to business. How come??!!
Procurement functions are under increasing pressure to deliver something new and substantive. Sales functions are becoming extremely frustrated by how difficult it is to reach new customers.
Effectively, inefficient sales & marketing is a shared issue which effects both suppliers and buyers - with a huge amount at stake!! As a buyer, why should you pay for the wasted costs of all your suppliers - especially if you can show them how to eliminate these costs?! As a supplier, wouldn't it be great if all your discussions with buyers were actually prompted by the buyer when he/she is ready to buy?!
The on-line B2B market place has to be the next big score for procurement, and it doesn't have to be at the cost of squeezing supplier margins if the right collaboration network is in place. There is enough value that can be unlocked here to make this a win-win.
Have a look at INNOVO - the New Global Commerce. It is free for both Buyers and Suppliers and relevant to all goods & services. It shows you how to share the value of unlocked potential between both sides of a commercial transaction. It also contributes significantly to good causes.
Image courtesy of Stuart Miles at FreeDigitalPhotos.net