B2B Ecommerce in the construction market is in an interesting place; currently very few true online offerings exist – with client specific pricing, a good range of product, and a convincing logistics solution to back it up. The opportunities for a company which gets this right are huge, and the potential costs to a company which delays implementing eCommerce are correspondingly clear, as Forrester explained in their report, “Online and Mobile Are Transforming B2B Commerce”, available here
“Every day that B2B companies fail to offer a compelling B2B eCommerce experience, they fall farther behind more advanced competitors. Specifically, they risk losing market share to B2B rivals already executing an eCommerce strategy … For B2B distributors and wholesalers in particular that rely on adding value as middlemen, failing to exploit online and mobile as leading channels … represents an existential threat to their businesses.”
The digital transformation is changing the B2B landscape quickly. This blogpost aims to look at the factors affecting the UK construction market, and why eCommerce is destined to play a big part in the construction industry’s future.
Set against the pattern of sustained growth in the overall UK economy now totaling 10 consecutive quarters as the recovery from the recession of 2008/09 continues, construction output has been slowing recently, despite a continuing rise in houseprices sustained since late 2013.
|House price inflation England & Wales 2008 to May 2015, Source Land Registry|
|Value of total sales derived from e-commerce sales – source ONS|
The proportion of businesses undertaking eCommerce as a sales channel also rose to 22% in 2013, up from 17% in 2009, the earliest year where comparable records are available. The UK’s largest businesses, those employing more than 1000 people, continue to dominate eCommerce sales with just under half (46%) of all eCommerce sales in 2013.
Critically, the proportion of businesses making eCommerce purchases exceeded 50% for the first time in 2013, indicating that electronic purchasing either via website or EDI is now the business norm across all industries (ONS).
Given the general strength in the economy as a whole the trend towards eCommerce growth will have continued within the B2B marketplace; analysts Frost and Sullivan predict that globally by 2020, “27% of the $25 trillion trade by manufacturing and wholesale businesses is projected to move through online e-commerce platforms – a total of more than $6.7 trillion.”
Whilst that relates to the global market, the increasing rate of eCommerce spend in the UK B2B space is further illustrated by data from Statistica, showing that between 2012 and 2013 B2B website sales in the UK grew far faster than their B2C equivalents, albeit from a lower base, and Advansys stating that with the introduction of Amazon supply and Google shopping suggesting that the B2B market will be twice the size of B2C by the close of 2014.
|UK B2B & B2C ecommerce sales 2012 & 2013 (Statistica)|
The digital transformation is also changing the way that B2B companies sell and market to their customers and compete within a supply chain as well as with traditional rivals. Forrester surveyed 717 B2B companies across the globe. Key findings were:-
- 50% are currently selling direct to customers online
- 69% expect to stop producing paper catalogues in the next 5 years
- 41% sell against their own wholesalers, distributors and suppliers
|Spot the difference (1) – Amazon.com|
|Spot the difference (2) Grainger.com|