The Growing Digital Influence in B2B

In the last few years, the influence of digital has grown “disproportionately”. This article aims to throw more light specifically on the IT, mobility and consumer durables industry, and the impact of digital influence on this industry.

It would be noteworthy to mention here that there is a key difference between digital online sales, and digitally influenced sales. More and more shoppers are definitely getting digitally influenced, using the internet more and more. As a thumb rule, mobile phones, laptops, IT products and core wearables still dominate a bulk of all consumer durables sold online. With several brands offering different variants and SKUs of the same products online, this sale is being speeded up.

However, as the e-commerce market is maturing, sales of B2B has also started shifting online. Rising smart phone usage, a decline in smart phone prices at the low and mid-range, and offers by e-commerce and marketplace players are prompting even B2B shift to online.

Brands and distributors would realize that when it comes to buying goods online, in the consumer durables category, the general trend so far is that somehow shoppers prefer pure play e-commerce aggregators like Amazon, Flipkart, Noon etc. more than brand or distributor websites for shopping. A very large number of online buyers prefer buying via e-commerce aggregators, while a very small number prefer buying through the brand website or the brand or distributor app.

When we start looking at e-commerce statistics for this industry, it is very important to note that, besides sales shifting to online, a larger percentage of people are influenced online as well.

Over the next three to five years, it is estimated that that the percentage of those who will be influenced online is likely to be almost seventy five percent. This is a very significant number.

One key area comes out very clearly. Top brands and their distributors would have to increase their spending on digital ad spends for a mind share of click-happy customers. Hence, it is essential to look at a re-allocation of the cost budget from just distribution to ads & promotion spends.

For a long time, physical distribution competency has been a benchmark to gauge a consumer brand or a distributor’s dominance. The larger or deeper the physical distribution network, the higher a brand ranks on competitive positioning. This is likely to change to a blended model.

For the first two decades of this century, many large retailers focused their efforts on expansion of both storefronts and square footage. However, retail market conditions have profoundly changed since then.

The lack of willingness or means to adapt to a more volatile and fast changing market environment can immediately result in serious troubles for large and small retailers alike, regardless of how established they are in the market or how successful they have been in the past. ‘Business as usual’ is no longer an option in the retail sector, driven by new technologies and the influence of pioneering digital-first companies like the Amazons of the world.

Today, consumers have easy access to real-time information about products, pricing and quality, and social media enables them to amplify their options and complaints. Price transparency made available to consumers by online retailers and marketplace players maintains pressure on margins along the whole value chain. Additionally margins are being squeezed by more frequent markdowns combined with constant discounts, as consumers expect year-round discounts. Consumer durable distributors and retailers′ business success and resilience increasingly depends on their ability to adopt new strategies.?

However, this requires the willingness to change as well as major investments, a more difficult task in times of tight profit margins.

One thing coming out clearly is this. Brands and distributors would need to spend more on digitally influencing their sales. They would need to work together with, and assist online marketplace players specializing in the B2B space in distinct product categories like IT and mobility products. Newer arrangements, newer alliances are the mantra for better success.

- Niranjan Gidwani , Consultant Director, TEXUB.