Dubbed in some circles as the ‘great accelerator’, the COVID-19 pandemic has catalyzed a global technological shift across sectors – including within business-to-business (B2B) commerce, which saw many companies turning to e-commerce to survive. However, B2B is a different beast from business-to-consumer (B2C). Where many purely digital B2C companies are thriving, B2B companies and customers alike still want an omnichannel sales experience that balances the traditional and the digital.
Early efforts to transform B2B commerce in Asia revolved around getting small and medium enterprises (SMEs) to migrate from traditional manual-heavy operations to automated, digital processes. But as the sector enters its growth phase, it is time to think about the long-term role that technology can and should play in its evolution, as well as how technology can be designed to help the industry sustain its growth trajectory and realize its full potential. This is especially important given our internal research has found that B2B constitutes up to 80 percent of Asia’s retail spend, or USD 13 trillion – and is expected to grow at around 6 percent for the next 10 years.
Strengthening the relationship factor
While many new tech platforms are optimizing working processes across the value chain for the B2B ecosystem, they also often minimize necessary interactions and erode opportunities to build valuable bridges, which are integral to doing business in Asia. The majority of traditional SMEs in Asia have trusted suppliers and distributors that they have built strong, years-long working relationships with. They rely on them for market feedback and business introductions and often meet them once or more a week. Few would consider jeopardizing these priceless connections, even for better operational efficiency.
One way to change the conversation could be to focus on technological ‘enhancement’ instead of ‘replacement’ of traditional practices, thus striking a balance between the old and the new. If done well, this could result in innovative new solutions. For example, Ula, an Indonesian e-commerce startup, launched the Titik Ula initiative for anyone to register unused office or home floor space as informal warehouses for businesses to keep extra stock, while their Teman Ula program enables people to act as direct selling agents and distributors within their community for a chosen catalog of products.
Ensuring product-market fit
When it comes to designing and pitching B2B technology solutions, user requirement is paramount. An app could be very powerful and have all the features in the world, but if it does not ultimately solve the user’s pain point, it is not needed. User experience is the next key determinant; if an app takes too long to load and is not intuitive to navigate, it is also unlikely to be popular.
As such, it is crucial to go on-ground and spend time with B2B owners to gain first-hand insight into how they run their business and the pain points they face. For instance, a shopkeeper may prefer keeping accounts on pen and paper – even though it is time-consuming to track receivables over time – because it is faster and easier in the moment when serving multiple customers, or in comparison to the learning curve of adapting to new software. With this insight, developers can then design a suitable technology-based product or service.
This on-ground research may also shed light on other unmet needs or opportunities for technology to plug the gap. The aforementioned shopkeeper, for instance, might be looking for and welcome technological help in submitting their goods and services tax (GST) each month over an automated accounting solution. Others may need help managing orders from multiple suppliers, but may not want to use a standalone solution, so integration capabilities would be vital.
Changing processes and mindsets that have been in existence for many years is no small feat. There is often a prevalent inertia and even pushback among traditional B2B businesses in embracing technology because, as they say, ‘if it isn’t broken, why fix it?’ However, the reality is that businesses need to be agile, adaptable, and efficient just to keep pace with the rising rate of inflation and increasing competition, which requires eliminating inefficiencies and improving business visibility where possible. This is where technology can give them a competitive edge.
Pricing visibility, for instance, is a common issue in traditional B2B value chains – especially for retail brands. Some larger brands partner with a combination of distributors, wholesalers, and stockists to get their products into Tier 3 and Tier 4 cities in Asia because of the difficulty in reaching mom-and-pop stores in those areas. However, with pricing typically being a close-kept secret through the value chain, it is challenging for brands to identify if pricing is competitive, if there are revenue leakages, and/or how best to offer promotions and deal support to build brand awareness and drive sales.
With technology that automates inventory management and records sales data in real-time, B2B players will have greater visibility across the value chain and more market insight into what will and will not sell. In fact, retail giants such as Unilever have even built their own B2B digital solutions to streamline ordering, improve product/price visibility and reduce channel complexity among their business partners.
Powering into a new age
Technology powered the recent rapid rise of the B2B commerce space in Asia, and technology is what will continue to sustain that momentum in the coming years and decades – if correctly developed. The region has the potential to lead the innovation and reinvention of the retail distribution landscape of B2B commerce, especially when complemented by its growing middle class, young tech-savvy population, and desire for choice and variety. If growth continues apace, Asia could very well cement itself as the B2B commerce hub of the world.
TechNode Global INSIDER publishes contributions relevant to entrepreneurship and innovation. You may submit your own original or published contributions subject to editorial discretion.
Keyword: How the right technology can sustain the B2B commerce momentum in Asia>