Report: B2B Suffers From Cold Feet

Despite the benefits of business-to-business (B2B) online purchasing, corporate purchasing agents say that they plan to make only 20 percent of their purchases online in the next year, according to a report released Monday by Jupiter Media Metrix.

Sixty percent of the purchasing agents surveyed for the study, “Getting Procurement Agents To Buy Online,” said that the primary reason why online B2B spending is not growing faster is that their preferred suppliers do not currently sell online.

“Purchasing agents understand why they should be using the Internet for their B2B purchases, but they’re not quite ready to move online,” said Jupiter analyst Jean Gabriel Henry.

Henry added: “They will get there once suppliers that they currently purchase from move online and educate them on how to use their system.”

Existing Ties

Currently, 95 percent of offline B2B purchases are made between buyers and sellers who have done business together before. In coming years, Jupiter predicts that 85 percent of online B2B will be made within the confines of such an established relationship.

“The market for existing customers will be the bigger opportunity for sellers because they have already established trust with buyers — many of whom are waiting for their favored vendors to move online,” Henry said. “The market for new customers is smaller but will grow over time, largely because Internet search capabilities will assist buyers in finding vendors.”

The Jupiter report predicts that as B2B e-commerce evolves, two distinct markets will surface: one serving existing buyer-seller relationships and the other helping companies find new suppliers and build new relationships.

Jupiter said that due to the “dissimilar needs, values and requirements” of the two markets, sellers will need to thoroughly understand each market and target each separately.

Loyalty Counts

According to Jupiter, sellers who want to succeed in the online B2B market need to recognize that most buyers prefer to continue doing business with their current suppliers. Jupiter said that savvy online sellers would do their best to leverage existing relationships before seeking new ones.

Sellers have apparently already realized the benefits of transferring their offline relationships online. A study released in January by Harris Interactive and sponsored by Metiom found that the goal of increasing customer loyalty is inducing large companies to invest more in B2B e-commerce.

“Increasing customer loyalty is the leading reason for the increase in e-marketplace spending,” Metiom vice president Michael Collins told CRMDaily.com. “The No. 1 reason is not just to increase market streams. That’s just the result of creating more customer loyalty.”

Entry Barriers

The fact that preferred suppliers are not yet online is one of several barriers to the growth of B2B e-commerce, according to Jupiter.

Other barriers included a lack of knowledge about e-marketplaces (cited by 55 percent of purchasing agents) and a lack of trust in e-commerce (45 percent).

The good news is that even though purchasing agents are not yet sold on the concept of e-commerce, they do recognize the benefits of transacting online. Seventy-one percent of the agents surveyed said that transacting online would result in lower product costs and 56 percent expected to find products more quickly online.

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