The Guide to Managing B2B2X Ecommerce Programs
Infusing Ecommerce Technology to Scale and Expand Existing Channels
As businesses continually fight for market share against competitors there is always a new opportunity to be evaluated. For many businesses, the recent pandemic mandated that opportunity be the development of a digital commerce channel. The businesses that were constantly evolving found themselves prepared to handle the largest growth period of ecommerce transactions in history.
“Before COVID-19, 60% of B2B buyers relied on ecommerce to evaluate new suppliers. Now, 74% rely on ecommerce for this purpose.”
The enterprise businesses that have reaped the benefits of B2C and B2B ecommerce over the past two years have a new opportunity looming. That opportunity is enabling distribution channels with digital commerce, most often referred to as the B2B2X business model. B2B2X meaning:
“B2B2X is a business model that allows business 1 (B1) to use technology to sell its products through business 2 (B2) that has existing relationships with end-customers or businesses as end-users of the product(s). ”
7 Impacting Factors When Launching a B2B2X Business Model
While specific industry verticals, such as promotional products and uniforms, lend themselves to the application of a B2B2X business model, not all businesses have customer bases with similar target end-customers.
Adopting a B2B2X business model can be quite intricate for it to work for all parties. Typically, the most ideal scenario is when B1 wants to solve a problem for end-customers but does not want to enter the same business as B2.
This list of factors provides context on what to expect as a business begins to set requirements and processes for a B2B2X distribution channel program.
- Segmenting distribution partners by digital maturity and technology infrastructure will provide a target list for a B2B2X ecommerce program. Those dealers and distributors with a lower level of digital maturity often do not have the resources internally to support an ecommerce sales channel to end-customers. Being at a higher step in the supply chain provides manufacturers and master distributors with the opportunity to provide the technology benefit of ecommerce to distribution partners in this context.
- Often manufacturers and master distributors have either exclusive vs non-exclusive relationships with distribution partners. This can often create channel conflict issues when companies look to a direct-to-consumer (D2C) or end-customer model for ecommerce. Channel conflict issues resulting from disintermediation can be prevented by enabling distribution partners to provide greater value to end-customers with a B2B2X ecommerce model.
- Another consideration when proposing a B2B2X business model to distribution partners is the collection of gross sales and coordination of commissions on net revenue. There are several different scenarios for the allocation of net revenue but often the collection of gross sales is handled by B1. Commission can be based on distribution partners on a per order basis if distribution, often utilized if dealers are fulfilling from in-stock inventory, or paid on a set frequency (monthly, quarterly, etc.) in accordance with contract terms.
- A B2B2X ecommerce enabled model allows for both parties to have access to product information, customer records, pricing and promotions. Additional shared data types can include inventory and warehouses, loyalty programs, and more. Alignment between both businesses on data provided to end-customers and the source of that data is key to providing end-customers with an optimal experience.
- In B2B ecommerce manufacturers often see brands misrepresented, while the B2B2X business model solves this by providing control to B1, the need for B2 to retain its brand differentiation is often a mandate. Distribution partners will not and should not willingly negate existing brand differentiation.
- A B2B2X business model requires a higher digital maturity level from an organization than B2B ecommerce. Having API-accessible data sources is almost a minimum to pass pricing, inventory, and customer data back and forth between B1 and B2. Without this level of data accessibility, the only true way to achieve the data transparency between B1 and B2 would be an ecommerce platform that allows both parties control.
- Products can be a limitation to applying the B2B2X business model. There are some product lines so complex and that demand such high levels of technical support that selling them to the end-customer is not viable. Consider the chemical industry, which can be highly regulated and mandates certifications by product purchasers before sales are allowed. Evaluate the complexity of product lines and capabilities of distribution partner’s end-customers before diving in headfirst with a B2B2X business model.
The impact of these factors depends greatly on the technology utilized to enable the B2B2X model. An API-first ecommerce platform that has the extensibility to meet unforeseen business challenges will allow for long-term success.
Solving 6 B2B2X Challenges by Applying Ecommerce
Simply put, ecommerce is the jelly to the peanut butter of the B2B2X business model. With e-commerce, the major challenges present with a B2B2X channel program can be fully solved or mitigated. Discover how Znode, the multi-channel ecommerce platform, solves such B2B2X challenges:
Channel conflict arising from traditional ecommerce business models
As stated previously, channel conflict is a challenge that develops for businesses managing B2C, D2C, and B2B ecommerce programs. This is obvious with B2C and D2C ecommerce models as the target customer is the end-customer in both. However, in B2B ecommerce it can be overlooked that business accounts may actually be distribution partner’s customers.To avoid such challenges working with distribution partners to serve business end-customers on a B2B2X ecommerce model can keep all stakeholders happy. When B1 sets up an ecommerce website on behalf of B2, B1 gains access to customer data with B2 still being compensated for sales to the end-customer. Znode allows B1 to set up an unlimited number of websites including those for B2 businesses with multi-store management.
Technology Challenged Resellers
Manufacturers, wholesalers, and master distributors face a daunting challenge. Many distributors and dealers are technology challenged. Because of the variation in digital maturity and technology stacks of distribution tier partners, there is not a universal answer to the solution. Znode allows B1 businesses to easily apply B2 business’s branding to a preset web store theme. This reduces time to market for B2 businesses and simplifies execution for B1 businesses.Accessibility to End-Customer Data
As manufacturers, wholesalers, and master distributors are seeking to optimize business practices with data another challenge is presented. The accessibility to customer data is non-existent. The last reseller of the product holds customer data before it reaches the end-customer. Management of data in this manner becomes a major hindrance for manufacturers looking to improve not only the product but the associated customer experience as well. As manufacturers gain access to end-customer data for a B2B2X ecommerce model managed with Znode, user experience data can be gleaned and not only applied to the website it was captured upon but the manufacturer’s full breadth of ecommerce programs.Lack of Visibility to Supply-Chain
An additional effort in optimization allows B1 businesses the ability to provide held inventory of products to B2 businesses and end-customers while also providing on-hand inventory for B2 businesses. Znode’s warehouse management systems allow multiple warehouses to be accessible from a single ecommerce store so that end-customers have the highest likelihood of finding needed products in stock.- Universal Product Information Alignment
When distribution partners sell products outside of a B2B2X ecommerce model the product is represented in whatever fashion the B2 business chooses. This can lead to brand misrepresentation, product misinformation, warranty violations, and other issues. With Znode B1 businesses can curate digital catalogs utilizing the native ecommerce PIM system. Those catalogs can then be applied to the appropriate B2 branded ecommerce store. This level of product information control easily aligns both parties and ensures end-customers are seeing the most accurate product information. - End-Customer Support
While all parties involved in the B2B2X business model benefit greatly over traditional B2C and B2B ecommerce models, end-customers are able to take advantage of beneficial services supported by reputable sources. End-customers can easily engage manufacturers if warranty information is available from order history sections as well as contact distribution partners for local market-orientated questions.
Empower distribution partners and grow revenue. Znode has allowed manufacturers and suppliers to centralize commerce including B2B2C and B2B2B ecommerce programs.
Znode Customers Managing B2B2X Ecommerce Programs
Hyster-Yale Group’s B2B2B Ecommerce Program
Hyster-Yale Group (HYG), a leading, globally integrated, full-line lift truck manufacturer, wanted to digitally support customers and an expansive dealer network that serves both Hyster and Yale brands. With a combined catalog of over one million part SKUs, HYG sought an enterprise ecommerce platform that could scale globally. HYG desired to align brand selection, product identification, order placement, and dealer fulfillment in one platform for a unified shopping experience. This experience mandated B2B2X ecommerce capabilities and a change to its technology stack.
HYG was able to identify a single solution to meet its requirements, Znode. Upon implementation of Znode, the single shopping experience for SKU selection, purchasing and order routing to dealers was configured, addressing the B2B2X ecommerce model. Read the full HYG customer profile here.
Staples Promotional Products B2B2X Ecommerce Program
Staples Promotional Products required a way to merge its four legacy ecommerce systems into one unified, cohesive and flexible ecommerce environment. With a rapidly growing B2B2B ecommerce strategy, setting up web stores on behalf of customers for employees or end-customers to shop branded promotional products, Staples Promotional Products was looking to continue its digital transformation.
Znode was selected as Staples Promotional Products enterprise ecommerce platform to enable the set-up of web stores on behalf of customers. As the distributor continues to sunset legacy platforms and web stores, Znode’s multi-store functionality provides the foundation for its B2B2B ecommerce business model. Check out the full customer profile here.
Modernizing the Distribution Partner Relationship with B2B2X Ecommerce
The opportunity that B2B2X business models create can drastically increase market share for manufacturers and master distributors. As more and more of the sales process is managed digitally the need to differentiate all sales channels with ecommerce will grow. B2B2X ecommerce provides the best of traditional distribution channel relationships while benefiting all parties with the data and experience to sustainably grow.