April 7, 2021
By Tricia Kemp, Oak HC/FT
This article is the third article of a three-part series on e-commerce addressing the merchant experience, improving consumer experience, and the next generation of technology.
While it has shackled the American economy, the Covid-19 pandemic has unleashed tremendous innovation in retail e-commerce technology. The first two installments in our series "E-Commerce in the Age of Covid-19" spotlighted how new technology platforms that have been introduced since the pandemic have made it simpler, faster and safer for consumers and merchants to buy and sell everyday goods online.
While buying and delivering shoes, books or headphones is one thing, there are many complexities for other areas of commerce and how it moves online, whether it’s B2B supply chains, processing and handling the purchase of anything from restaurant supplies to industrial goods, or financial services like obtaining a mortgage or small-business loan. Some technology platforms are unable to navigate these complexities online, but that’s rapidly changing.
This third, and final, article in our series will look at ground-breaking technology platforms that are addressing the areas of commerce that were left behind by the first wave of innovation in e-commerce.
Business-to-business (B2B) e-commerce, which is still at an early stage, represents a vast field of opportunity. Globally, trade in business goods surpasses $120 trillion a year, and less than 10% of it is carried out online. This is expected to reach 30% over the next 3 years. B2B buyers have high expectations and more complex needs, although the lagging shift to online isn’t solely based on the lack of technology. Historically tepid demand from older and smaller businesses has been another key factor when it comes to system evolution.
This is all changing, with many forces at work. Many businesses led by an older generation of entrepreneurs are falling behind the digital curve. As younger family members and owners who are digitally adept take the reins, we expect the demand for online B2B technology to soar. This change is already happening as currently 44% of millennials are making B2B purchasing decisions. The savings these companies would see in terms of time, money and effort are too great to ignore.
Technology is also accelerating this change by bringing advanced functionality to these B2B buyers and sellers. Examples of functionality needed include custom orders, customer quoting, invoicing, automated purchasing, managing full truck load shipments and complex logistics, and embedded financial services like warranty, insurance, and invoice factoring. There are many companies that are working to build this functionality to streamline the process for buyers and suppliers. Inxeption is one example bridging this gap, building a Shopify like platform for industrial commerce and logistics.
Other software upstarts have lasered in on specific industries or sets of services.
Enter Slice. Slice started in business-to-consumer (B2C) as an online pizza-ordering app and has quickly become a force on the B2B side. Slice provides independent pizzerias the kind of resources that brand-name chains offer franchisees. Everything from sales and marketing management to digitized tracking and restocking of cheese, sauce and other supplies. If you're looking to start a pizza shop, Slice can handle the arrangements. There are many examples of similar platform models evolving in other industries.
In fact, automated inventory management is in the near future for several state-of-the-art B2B platforms. When a retail customer buys a dress or orders an entrée at a restaurant, e-commerce platforms that have digitized supply chains could ultimately register the transaction and order a replacement without the merchant lifting a finger.
B2C e-commerce is another front of innovation where many areas of commerce have still been under penetrated. While Amazon AMZN -1.6% set the stage for digital trade in everyday consumer goods, gaps persist in technology for credit-sensitive and contract-based transactions in key areas, such as consumer loans and home buying.
Blend, an Oak HC/FT portfolio company, and Lemonade created online platforms for people to obtain home mortgages and home insurance. While these platforms have proven these services can be fully delivered online, there are still elements of home buying, such as closing, that are not fully digitized. We can assume that in the near future, platforms will emerge to tackle the full end to end process head on as well.
While progress in digitizing complex B2B and B2C transactions has been slower than retail, it is ramping up quickly. Within a couple of years, critical links in supply chains across the business spectrum will be digitized, making it simpler and less costly to run - and start - a company. For individuals obtaining a mortgage or a service, it will be far speedier and involve less paperwork than today, and the companies that sell them will reap substantial savings too. A win-win for everyone.
This article originally appeared in Forbes.