B2B Sales Channel Disruption - OPI · B2B eCommerce is on a constant growth trajectory with minor...

Speech at OPI European Forum

June 6th, 2019

B2B Sales Channel Disruption

220190606_OPI_Channel_Disruption_Speech_v02.pptx

B2B eCommerce is on a constant growth trajectory with minor local differences in growth rates

Source: Statista; Roland Berger

Global B2B eCommerce GMV1) in USD bn

1) GMV = Gross Merchandise Value2) CAGR = Compound Annual Growth Rate / average growth rate per year3) Software as a Service4) Gross Merchandise Value

Global B2B eCommerce4) [USD bn] B2B eCommerce GMV1) [USD bn]

20162013 2014 2015 2017 2018

5,8266,499

6,906

8,129

9,185

10,606+12.7%2)

255 260 264 268 272 311

2013 20162014 2015 2017 20183)

+4.1%2)

20162013 20152014 2017 20183)

4,674 5,123 5,5006,595 7,437

8,495+12.7%2)

Asia Pacific Europe

North America Rest of the World

291 325 345 406 464 530

201620142013 2015 2017 20183)

+12.7%2)

606 701 797 860

2015 20183)2013 20172014 2016

1,111 1,270

+15.9%2)


This also applies for office products – Even in Germany a compound annual growth of 33 can be observed in the e-commerce segment

e-Commerce wholesale revenue share in "PBS" in Germany

Source: Statista; Statistisches Bundesam; Roland Bergert

2005 20112006 20102007

4.8%

2008 2009

7.4%

2012 2013 2014

12.6%

2015

2.8%

2016

0.7%

2.7%

6.2%5.3%

8.2%

11.6%

15.1%

16.6%

+33.4%


This development is not driven by the "Amazons" of this world – It's driven by the customer needs

Customer need examples

1

"I need a time to concentrate on my

spend and don't want to waste a time on office

supplies"

Corporate buyer

AB C

2

"I need a churn-free buying experience for

office supplies, like buying on Amazon"

SME purchaser

Source: Roland Berger


Marketplaces do have a good fit to the customer needs – Other channels will have problems to sustain their business

The "new" channel mix

Producers

A

B

C

Customers

Direct sale1

Wholesale / system house2

Store3

Market place / platform4


Fit

High-level evaluation


B2B e-commerce business models – Overview

In a direct model, the buyer and the supplier interact directly - In a marketplace, more buyers and sellers are affiliated via a marketplace

Source: Statista; Roland Berger

Marketplace modelDirect model

BuyerSupplier B2B

platform

Supplier

Logistics

Payment

Order

Supplier A

Supplier B

Supplier C

Market-place

Buyer A

Buyer B

Buyer C

Order

Payment

Logistics


There are several differences between the two models that drive the adoption of buyers in large and small organizations

B2B e-commerce business models - characteristics

Procurement platformse-Procurement tools

> Orchestrate networks to create value for end buyers

> Leverage economies of scale to reduce supply costs

Procurement department

> Meet buyers' needs, creating a self-regulated supplier ecosystem

> Reduce supply costs through standardization and economies of scale

Procurement strategy

> No> YesContract mgmt.

> Natural and fair competitiveness betweensuppliers

> Volumes and contract negotiation led by procurement

Pricing

> Sell to end buyers> Sell to procurementSuppliers

> Authorized by procurement but selected by end buyers when buying on the platform

> Suppliers selected by procurement and imposed on end buyers

Supplier selection process

> Each supplier is responsible for its own catalog and inventory on the platform

> Procurement team distributes supplier catalogs and inventory internally

Supplier catalog publication

> Constantly updated by suppliers in order to stay competitive on the platform

> Discounts based on annual committed volumesPrice

> Need to provide rich product information to increase conversion rate on product pages

> No need for suppliers to provide rich product information

Product information

> Scalable, suppliers have self-service tools for onboarding

> Complex, requiring involvement of procurement team

Onboarding

> Possible to choose between different products and suppliers

> Choice dictated by procurementBuyers

> Similar to B2C e-commerce, strong acceptance by buyers

> Old-fashioned, weak acceptance by buyersBuying experience



The most relevant marketplaces are Amazon and Alibaba – In Europe also Mercateo is of relevance

Comparison of leading companies

Company Region B2B B2C C2C GMV1 [USD bn] Revenue [USD bn]

1) Gross Merchandise Value2) Converted from CNY to USD; exchange rate: CNY-USD 0.15916 as of 03/31/2018 (Oanda)3) Converted from JPY to USD; exchange rate: JPY-USD 0.00906 as of 03/31/2018 (Oanda)4) Converted from EUR to USD; exchange rate: EUR-USD 1.19789 as of 12/31/2017 (Oanda)5) Converted from INR to USD; exchange rate: INR-USD 0.01471 as of 03/31/2016 (Oanda)

Source: Company information; Statista, Roland Berger

Global

Global

Global

Europe

China

India

155.0 (2017)

767.2 (2018)2

31.1 (2018)3

–

–

4.5 (2015)

178.0 (2017)

39.9 (2018)

10.0 (2018)3

0.304 (2017)4

0.158 (2016)

0.044 (2016)5


ERP-integration of marketplaces

But not only the marketplace providers play a role – ERP system providers also start their own marketplaces integrated in the software

Source: Jaggaer, Coupa, SAP Ariba; Roland Berger

> ERP providers offer a "built-in" marketplace that comes with the installation

> As all larger firms need an ERP system anyway, they could act as both a gatekeeper and an enabler at the same time

> Most ERP systems also offer a possibility to add additional catalogs via "punch out" function


It's important not to "miss the boat" in the emerging categories – A mix of different strategies applies for the segments

Channel matrix & TO DO's

1

2

4

3Selectively invest & prepare for growth

1

Strategies

Be on board & invest in early phase

2

Invest in defend market share

3

Extract maximum value4

Channel share

Cha

nnel

gro

wth

Platforms

Traditional multi-channel

Direct sale

System house

Brick & mortar

ERP platforms



We propose a systematic approach for selecting the right channel and to execute the channel strategy – Two way door principle applies

Possible approach

Screen market Evaluate & decide Execute

> Screen channel landscape

– Target audience

– Network effects

– Prices

– Strategic fit

> Create short-list

> Evaluate according criteria

> Build business case

> Decide for implementation

> Pilot with selected market-places / assortments

> Test & learn

> Roll-out

Decision is a two-way door, so you can stop again



Market places do have some specifics when it comes to the marketing mix – capabilities to be built up

Marketing mix specifics

Product

> Normal retail packaging possibly not suitable

> Packaging not so important – no selling function

Place

> Selection of right market place

> Competing models (seller vs retailer)

Price

> Price mechanism very competitive

> Algorithm pricing

Promotion

> Retail promotions cannot be copied easily

> High price focus

> Chance for bargain (a bit still)


Selection


There needs to be an invest in people and technology, but the system can then scale significantly

Scaling principle

E-Com Manager

> Tech know-how

> Online selling know-how(SEO, SEA, …)

> Product information owher

Marketplace 1

Marketplace 2

Marketplace 3

Comments

> "Selling" can be automated

> Sales manager is a "system admin" that assures smooth functioning of the selling system

> Traditional skills are only partly required



Please also refer to our paper "Platformization of Procurement" to understand your customers better


Online this week on www.rolandberger.com

http://www.rolandberger.com/


There might also be another solutions – The Office Products industry could forward integrate into it's own platform…

…to be discussed in the roundtables in the afternoon

Manufacturer

1

Manufacturer

3

Manufacturer

2

Buyer

1

Buyer

2

Buyer

3

European Office Products Platform


Date post:	19-Mar-2020
Category:	Documents
Upload:	others
View:	1 times
Download:	0 times

B2B Sales Channel Disruption - OPI · B2B eCommerce is on a constant growth trajectory with minor...

Documents