In this week’s episode, Andy & Brian give a preview of Master B2B’s State of eCommerce Report, which will be released in July.  But we didn’t want to wait to share some of the key findings about how both B2B buyers and sellers have changed their behaviors over the past year.

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Brian Beck: It’s Friday, Andy Hoar, welcome to Friday’s 15. Everyone, my name is Brian Beck, here with Andy Hoar, for another week of Friday 15 fun and we got a great topic today. Andy, great to be here with you. 

Andy Hoar: Great to be here too. 

Brian: So let’s jump in on some breaking news here, Andy. Where’s my breaking news music? There it is. [MUSIC PLAYING] Andy, did you see this? Home Depot sees first annual decline in more than a decade as housing streak ebbs and rates jump. So Home Depot came out with earnings, and said basically that, hey, we’re not doing as good as we were, in terms of a variety of factors. But what was interesting is they’re leaning into B2B on the B2B side. Home Depot saw stronger sales from larger pro customers than smaller contractors. Interesting to see this. I think we’re seeing some of that softness in the consumer side. But again, they continue to lean heavily on that B2B side. Any thoughts on this, Andy? Any reactions?

Andy: I think a couple things are going on here. One is that low end of the market, the handyman sort of thing, or do it yourself, person. There’s a lot of competition for that person’s dollar. You can go to Walmart and buy nails, right? And so Home Depot has seen some cannibalization of that on the low end because of other industries. At the same time, Home Depot is also realizing that B2B is a pretty good business. And that they’ve got that pro customer that’s really become the backbone of the company. And it’s the same thing with Lowes.There’s slight differences between them. But both HD and Lowe’s for pros, for example. These are serious B2B companies. In fact, I think if you look at their revenue, there’s more revenue coming to Home Depot and Lowe’s from B2B than there is from B2C. 

Brian: Yeah, it was interesting. Well, obviously that big distribution acquisition earlier this year, that Home Depot announced the last month. So they’re doubling down on B2B and I don’t blame them- It’s good business. I just thought the interesting part was the larger pro customer piece. They’re clearly trying to move up market through that distribution acquisition. So well, this week, though, we’re going to be previewing our report that we’re coming out with – The State of B2B e-commerce 2024, pretty exciting stuff. Andy, you spearheaded this from our side. 

Andy: I want to preview a little bit what we’re going to preview. Preview me to preview? I’ve done these even prior to this on an annual basis back in the day when I was at Forrester. And from year to year, you don’t see mega trends, but you see trajectories. And you see variation within the trajectory. And I think we’re going to reveal some interesting results here. I think what we’re continuing to see is this a continuance of what we’ve seen before. It hasn’t changed. It hasn’t gone in a different direction. We’re not going back to analog, so to speak. So the march of digital continues. But within that, there are a couple of interesting findings. So this is a survey of B2B e-commerce professionals in both the US and Canada. It’s in the hundreds. We do the supply side and the demand side. So we’re talking to the people selling as well as the people buying. Sometimes we compare the results. Sometimes they match up. Interesting enough. Sometimes they don’t. For years, we used to see the seller saying they think they’re really good at this stuff. And the buyers would say, actually, they’re not very good at this stuff. And never looking the other direction, by the way. And never was the buyer saying, oh, these guys are much better than they think they are. So the exaggeration takes place on the side of the buyers who think they’ve really nailed it. 

Brian: Well, our goal is to really assess the current state of B2B e-commerce. Where are we in this? And it even goes beyond e-commerce. I was surprised by some of the stuff we found in our survey, and of course, our report when it’s released will have more detail about our findings. You may all download that from our site when it’s released. So look out for that. But this is one of the things that was really interesting to me, Andy. Omnichannel. We talked about this in consumer for years, right? But it’s arrived in B2B. We asked this question: What percentage of your purchases for work do you typically research offline, like visiting a branch or talking to a sales rep, before you purchase online? Typically, everyone asks the other question. We asked that too. But what was interesting is 27% of people research, 50% of more of their purchases offline they were buying online. I was pretty surprised by that, were you? 

Andy: This is highly variable. It depends on whether it’s a highly considered purchase or not. If it’s a less-considered purchase, a more generic item, not as much, or if it’s a highly considered purchase, it’s higher. What’s interesting about this is that these channels, to your point, work together. And for years, kind of an open secret for people in the industry is that online influenced offline, and we’re going to talk about that in a moment, but also that offline influences online in a measurable way. For example, if you open a branch in a certain location, the online sales in that geography go up. That’s not something that people originally expected would happen. We know that when you put a website up, it drives people to offline environments. But who would have thought that when you build a branch that it drives online sales, it just makes the point that these channels cross-modify one another. 

Brian: We found this in retail. I lived in that space as a VP of eCom for many years. That these channels work together. And the other question we asked was, What percentage of your purchases for work do you typically research online? And the bigger story– and it’s been the story– is that 54% of people research 50% or more of their purchases online before going offline. But the overarching story here is that we’re seeing the offline side. And don’t you think these work together? These are not separate channels. And so this is an implication for everything. When you think about B2B organizations, how they’re structured, or where P&L lies, how you give attribution to digital investments, how you make your case. Right? We’re going to talk about this next week at our Summit Andy, right? That’s a top-to-top big one. 

Andy: It’s a big one because they undervalue digital. That’s why. Because they say, oh, digital sells online. And then the digital people say, no, it actually influences offline sales. And if you have a cross-channel attribution model in place, you can measure these things. But there’s the skepticism that online does actually influence offline. But it does because, clearly, the majority of purchases made offline are researched online. And so just because they’re not booking the business online, doesn’t mean that digital does have a tremendous impact on the offline business. 

Brian: So we wanted to know what companies, what are B2B sellers, what are manufacturers, distributors, driving their internal users, their customers to do. What are they focused on? So we asked a question, How much are you really focused in these different areas and what you do want your end client, your internal clients, your end users to do? Now, this was really interesting. The number one was research prices online. Really, that was shocking to me. That means that you want your customer to go, or your internal users to go, and use the online system to research prices. Which, OK, if we’re driving them to do that, there’s got to be a reason behind that, right? Other things that were highly ranked. So 86% were strongly agreeing or agreeing that that’s what they’re doing. Other things were using ratings and reviews, which is interesting because B2B has been reticent for a long time to use ratings and reviews. I don’t want customers to rate my products, how good they like them. I don’t want that exposed publicly. Buy more online was 69%. Agreed or strongly agreed. They want them doing that. They’re pushing them to do that. And the other interesting thing was auto reorder 62%. That makes a lot of sense. That one didn’t surprise me as much, but using auto order functionality online to have folks take those more transactional routine purchases and push them into a more efficient or lower cost to deliver a channel, right, Andy? What do you take on this? 

Andy: What we’re seeing here is the emergence of a sophisticated B2C-like B2B buyer. Because what they’re doing is they’re going to research things and then making purchases elsewhere. They’re offloading the replenishment orders online, which is what they do with B2C. You want an extra couple of shirts, whatever, just go in order, dump them in the cart and it shows up. The ratings and review thing – I agree with you. I remember years ago I was at the early stages of that talking to companies and the funny thing is the B2B companies wanted all the positive reviews, but none of the negative reviews. And it’s like, that’s not the way it works. And by the way, the dirty little secret about that is if you had only positive reviews, people were less likely to buy from you than if you had a mixture of positives and negatives because they don’t trust it. So try explaining to a B2B executive, you actually want some negative reviews in there because you know it causes people to trust you more and buy more frequently from you. They just didn’t get it. They get it now. 

Brian: This is a debate we had 15 years ago in B2C. And it was the same initial reaction. But yes, absolutely so. And when there’s some mix of reviews, the conversion rate on those products on the online channel was higher if there was some negative. It was interesting. We wanted to also know how do B2B buyers want sales reps involved. So we asked all different kinds of scenarios, hey, I want to just interact in person as my primary source, different scenarios. The number one, 68% top answer, 68% they strongly agree or agree that they want to gather info online before interacting with the rep. I find gathering information on my own superior to interacting with the sales rep prior to making a purchase for work. That was the number one choice. So I think this is again, we think about those stats about younger millennials and Gen Zers, actively avoiding sales reps. It’s playing out here in our data as well. This continues to happen, right? 

Andy: Well, wait until AI becomes a factor here. Pretty soon we’ll be asking: Do you want to interact with a human or a chatbot? And so there’ll be a third option here. And then I think eventually the chatbot will squeeze out the humans. Not for all purchases, but I’ve seen these. I’ve seen demos of chatbots that are empathetic. Talk like humans, they have infinite knowledge. No need to be trained. Don’t leave the job. Don’t ask for raises, et cetera. And– Working anywhere. It’s inevitable. Plus in B2B, we know a lot of these sales folks are very experienced people, but they’re also older. And they’re leaving the workforce. And so they can’t find enough 20-somethings who have their knowledge. So this is a problem they have to solve anyway. And I really think AI driven chatbots with the right data and the right sort of tuning and training of the bot could be a real solution here. 

Brian: We also wanted to know where are people doing their research? Where is the B2B buyer starting their journey? This one was fascinating. Number one, we asked a question. Where do you start your research? Number one was actually brand manufacturers. And to your study years ago, Andy with Forrester are about trust and the halo of trust companies get from looking at a manufacturer’s site. Number two, Amazon Business, almost 20%. What surprised me is that so much more there than industry distributor websites, industry distributor websites, only 13 or about 14% said they started their search there. Distributors, this is a trend!  We saw early last year, we talked about our predictions on the great distributor squeeze. Well, holy crap, this is showing up on our data. People going to Amazon significantly more than industry distributors.

Andy:  What’s interesting about this is that’s where they start their research. But for years, and it continues where they make their purchases, tend to be industry distributor websites. So they start on brand manufacturers and Amazon, for example, and then they make the number one answer is usually industry distributor and then, of course, increasingly Amazon. So people are not buying on the manufacturer website, but they’re doing their research there. And you’ll hear distributors say, hey, I don’t care, as long as they end up with me, I don’t care where they start. Well, you should care where they start, because increasingly brand manufacturers are selling direct and they’re selling through Amazon. Amazon. So distributors do compete for eyeballs at the top of the funnel. And the brand manufacturers do need to sell to folks, because it’s not a great experience to be on a brand manufacturer website, find the product you want, and then be told, great, here’s one of six completely different sites you can go to and have completely different experiences on. And you got to register, et cetera. And people are like, I just want to buy your product from you. And they’re willing to pay a premium for it. So that friction needs to be removed. So everybody’s got to do a better job here. But I agree, if I’m an industry distributor, I would be worried that people aren’t starting at my site. 

Brian: And why is Amazon winning at the top of the funnel here? We asked the question, why do I buy where I buy? Number one, and number two, number one, is easiest to use, right? And number two, where I find the broadest selection. Well, easiest to use is huge. And Amazon is great at selection. They have a huge assortment, bigger than most distributors in most B2B categories. And so I think this gets to the whole easing friction as being the key to winning in B2B commerce. And it said this in my book a lot, making the buyer’s job easier. This is clearly standing out in our data today. And so the buyer — and that combined with the sales rep data we shared earlier — this is telling a story here, right? You need a really well-functioning e-commerce capability. 

Andy: And you need to be aware of where your partners are and you need to be aware of where people are going to make their initial decisions, et cetera. It’s a whole ecosystem that you need to be aware of. But the day of churn and burn, and assuming just because they’ve been in customer of yours in the past, it’s not the same anymore. 

Brian: We asked – What about AI? How likely would you use generative answering functionality, like a ChatGPT on a B2B website, to find information about products? 45% said yes. You see they’re willing to use that. And you see this in it being integrated now into like Google search results for AI generated answers. This is coming. It’s here, right? So the customer is saying they want to use it. So that, AI is another major trend we pulled out. 

Andy: Do you realize that 2 years ago that was zero? Isn’t that crazy? Zero. 

Brian: Yeah. It’s nuts. It’s what I love about this industry, Andy. It changes so quickly. And to this point, we’ve got quick buyers. This is another key takeaway here. Buyers want speed above all else. What’s your chief reason for shifting more work purchases online from offline? Number one answer, 36% said faster process.I think this is telling us some stories about, easing the customer journey. It’s about omnichannel. It’s about removing the notion of channel, in terms of how you manage the customer relationship. It’s more about the overall experience. 

Andy: If  you’re a procurement manager or you’re a power user, your circumstance will be slightly different from somebody using the spot market. This is more kind of focused on the spot market, and I’ve had a lot of B2B companies just dismiss that. So, our typical customers use EDI or whatever, or they use their website, and all they care about is blah, blah, blah. Look, the world is a lot more complex than it used to be. Everybody goes and checks prices now, which is, by the way, why you need to have prices on your website. Because I’ve never been to Amazon, for example, and not seen a price. So, it does matter, no matter what. And this is a bigger deal in B2B than it is in B2C. If you don’t nav as much, they don’t browse as much. Speed matters, but that’s why search really matters. That’s why, friction points, removing those things matters. So, customer experience is really critical in B2B. If you make it hard for them, but go someplace else.