In the past, many believed that B2B products were too complicated to be sold online and buyers would not trust making high-value purchases through the internet. Physical sales relationships were seen as the only way to establish the trust required for B2B transactions. However, the digital age has significantly influenced the B2B research and buying cycle, and Amazon Business has been a prime example of this transformation, particularly regarding payments.
Amazon Business’s introduction of net terms for B2B buyers through their interface marked a turning point in the evolution of B2B ecommerce payments and buyer expectations. Credit has long been a differentiator for businesses, but it’s now becoming more common for buyers to choose companies that offer the best credit terms.
The shift towards digital ecommerce and the growing demand for it has made it possible for higher-priced products to move online. But with many B2B transactions ranging from $50,000 to $500,000, a robust payment stack is critical to transition to a digital channel.
The new standard
In 2022, 2/3 of business buyers opted for remote human interactions or digital self-service at the ordering and reordering stage. And they are willing to spend a lot. A recent McKinsey survey of more than 3,000 B2B executives across 13 countries has revealed a new standard in B2B ecommerce transactions.
The study found that 70% of decision makers are willing to spend up to $500,000 in a single ecommerce transaction, and the number of decision-makers willing to spend $10 million or more has increased by 83%. This trend is particularly noticeable in China, India, and the United States, as well as in the global energy and materials, telecommunications, media, and technology, and advanced industries sectors.
To capitalize on this growing demand, businesses need to deploy advanced sales technology and achieve ecommerce excellence. However, even with these factors in place, capturing high-value goods at the point of checkout is critical. While businesses have no problem accepting high transaction values offline, the process of evaluating buyers through cumbersome PDF forms and credit risk evaluations is not digitized and therefore not suitable for an ecommerce interface.
Despite this, some businesses may believe that traditional credit methods and facilities are important for maintaining a strong relationship with buyers. They may worry that adding alternative payment methods could lead to resistance or friction and ultimately harm the relationship with the buyer, or even force them to change their business processes.
However, it is important to remember that the evolution of digital and the changing demands of buyers mean that businesses must adapt and offer the most convenient payment methods to stay competitive. Especially when considering that 90% of buyers would buy from competitors if a supplier didn’t meet their ecommerce needs.
Online net terms: The critical link
To effectively move high-value transactions online, businesses must recognize that credit card payments are not enough. Instead, offering the convenience of online and instant credit lines is a powerful way to streamline the payment process and build trust with buyers. This approach eliminates the need for lengthy credit evaluations and approval processes, while enabling buyers to receive credit decisions with credit card-like convenience.
Traditionally, credit teams have been burdened by manual processes, such as reviewing and approving credit applications, verifying customer information, and reconciling payments. These processes are not only time-consuming, but they can also be prone to errors and fraud.
By introducing ecommerce payments, businesses can help credit teams transition from manual processes to more strategic roles. Moreover, integrating technology at the payment level enables businesses to offload transactional tasks and focus on building relationships with customers. This is a crucial step in digital transformation. Distributors and manufacturers can leverage their domain expertise and customer data, while leaving the payment process to be handled by technology partners and providers.
Despite the immense benefits of ecommerce payments in the B2B industry, many businesses have been slow to adopt this technology. At the end of the day, any kind of digital transformation project requires change and that can create a lot of fear and pushback. That’s why companies often cling to established habits and traditional processes, even if they are outdated and inefficient. But perhaps the greatest risk right now facing companies is inaction. As the gap between businesses that invest in digital technologies and those that don’t widens, companies that refuse to embrace ecommerce will ultimately lose customers to more agile competitors.
A Deloitte study found that buyers are 34% more likely to make a purchase and 32% more likely to renew a contract with B2B suppliers that provide an exceptional customer experience. Merchants should therefore focus on creating the investments and initiatives that will provide the experience value they’re after. By offering a 24/7 sales channel and payment experience that match the purchasing habits and preferences of B2B buyers, companies can effectively meet the demands of their customers before it’s too late.
The Amazon food for thought
The shift towards B2B ecommerce and digital payments is inevitable. However, the challenge for traditional distributors and manufacturers will be keeping up with the B2B standard set by Amazon.
As young procurement managers increasingly look to Amazon as their starting point, businesses that fail to create an Amazon-like experience may struggle to compete in the long run. But by embracing payment technology and doubling down on the checkout and payment process, businesses can position themselves for success in the digital age.