Digitising is no longer a matter of choice but of survival and businesses that stay ahead of this transformation – and that lean into this global B2B ecommerce opportunity – will be the next generation of market leaders, says John Caplan, President of North America and Europe at Alibaba.com
As the pandemic and stay-at-home orders took hold earlier this year, many businesses across the country were forced to find new ways of operating.
For small- and medium-sized business-to-business (B2B) companies, that are not traditionally known for being early adopters of technologies, that meant acting quickly to move their businesses online, and, for many, offering their products and services through an ecommerce storefront.
Digitising was no longer a matter of choice but rather, of survival.
While this trend can be seen across industries, the latest Alibaba.com US B2B Small and Medium Business (SMB) Survey of 5,000 US-based B2B companies, conducted in late 2019 and again in September 2020, reveals how dramatic this transformation has been with 93% of B2B SMBs now doing some portion of their business online, up from 90% in December, and 43% using ecommerce platforms, an eight percentage point increase over the same period.
Supporting online growth
An industry like manufacturing, which has been slow to adopt online sourcing and selling tools, reveals just how much change took place this year: before the pandemic, manufacturing companies lagged behind almost all other industries when it came to online trade. By September, when nearly all industries were increasing digital trade, manufacturers were digitising at twice the rate of other industries and surpassed many they previously trailed. Indeed, companies across industries are even hiring to support their online growth: 56% hired new staff to support their ecommerce operations since the start of the pandemic, and 79% plan to hire employees over the next year to support their increased online business.
What is lesser known is that as B2B companies rapidly digitised, many were globalising at the same time and connecting with trading partners all over the world. According to the same Alibaba.com survey, cross-border business is increasingly important to small B2B companies, making up an average of 25% of their business—a significant rise from 17% in December of 2019 before the pandemic. This is in spite of the fact that cross-border trade—while increasing for the last two centuries—has met recent challenges in the form of disruptions in trade policies as well as weaknesses in the supply chain exposed by the pandemic, such as human capital shortages and lack of shipping capacity. Yet these logistical hurdles are proving to mean little in the face of the global opportunity, which is enormous.
How enormous is the global opportunity?
Well, there’s no doubt that we are all personally familiar with the growth of B2C ecommerce, having ordered household supplies, groceries, or other personal items while sheltering in place this year. On the B2B front, companies that pivoted online and into ecommerce at the start of the pandemic found opportunity in the $23.9 trillion global B2B ecommerce market, which according to the US International Trade Administration is actually six times larger than that of B2C ecommerce. B2B ecommerce has undergone incredible transformation involving replacing legacy supply chains and distribution systems, and now this trend is only accelerating, enabling even more companies of all sizes to access the global marketplace.
Businesses throughout the world are making the shift to digital and global. As soon as face-to-face sales halted in the spring, a company that may have only sold within the 100 miles that their trucks could sell and service in one day, for example, realised that getting digital also meant the ability to go global and reach international markets—not tomorrow, not next year, but now.
Through the very nature of ecommerce, which inherently knows no borders, businesses that go digital have the chance to not only reach new markets and new distribution channels, but also to expand their offerings and bring those offerings to market more quickly—positioning them for future growth.
And so, the stage is set for even more access to the tremendous global B2B ecommerce opportunity. As we recover from the economic disruption ushered in by the pandemic, more and more B2B businesses will digitise and globalise. The B2B landscape as we know it is already changed forever – for the better – because these are not trends that you pick up only to put down. Both drive efficiency, profitability, and – most critically – resiliency, and as such they will not only continue, but become an even greater force of growth for the global economy.
Agile businesses that stay ahead of transformation and who recognise and lean into this global B2B ecommerce opportunity, will be the next generation of market leaders.
John Caplan is President of North America & Europe at Alibaba.com
