B2B eCommerce Insights with IDC Analyst Jordan Jewell
Brandon Kim: Hello everyone. Welcome to today’s podcast, I’m excited to be joined by IDC analyst Jordan Jewell today. I think many people know you from writing the IDC MarketScape report on digital commerce, but I’d love if you can provide a brief introduction about your role at IDC and some of the areas you cover.
Jordan Jewell: Thanks Brandon. Really excited to be on this podcast. So, I think a great place to start is just to talk about IDC in general. IDC, International Data Corporation, is a technology market research firm, and we look at all sorts of technology areas, markets across the globe. We have analysts across the globe. I particularly look at digital commerce, so I’m our prime analyst looking at digital commerce, and I look at software that enables businesses to build their own online stores, process orders, facilitate payments, and create digital marketplaces. Anything really you can think of that has to do with eCommerce.
Jordan Jewell: The MarketScape reports that you mentioned are IDC’s version of a vendor evaluation, so we look at the fields of vendors and see what they do and don’t have, involves up to about 100 customer interviews that we did for those, and we also do other sorts of research such as surveys, market sizing and forecasting, business value studies, and I’ve even done a focus group in digital commerce. That really I think highlights what my role is at IDC, just looking at the eCommerce market and trying to figure out what’s going on and where it will go in the future.
Brandon Kim: Perfect. I know IDC has a lot of different expertise in a lot of different technology fields, so we’re very used to reading your guys’ research reports, so thank you for sharing that. Now, let’s dive into the meat of today’s conversation. I know there’s a lot of literature around B2B eCommerce, but I’d love to hear from your perspective, Jordan, as you’re in this day-to-day, from your perspective, how really different is B2B eCommerce from B2C?
Jordan Jewell: Yeah, I think there’s a lot of buzz around B2B right now. We’re seeing that in our data that IDC has. We track the market and B2B market is growing about twice as fast as B2C, and a lot of that can be attributed to the maturity of the market, but just in general, there’s a lot of buzz going on. Whenever there’s buzz, whenever there’s a lot of growth, that pulls in a lot of interest in the market, it draws technology companies to want to come out with a solution, market to that area, and we’re seeing that right now.
Jordan Jewell: But fundamentally, there’s a big difference between B2B and B2C. If you think about when the types of transactions, when a consumer goes online to shop, it might feel like a need, that they need to buy something, but whether it’s to fix their house or purchase something as a gift, or whatever it might be, it might feel like a need, but really it’s a shopping experience and they’re choosing the product they want the most.
Jordan Jewell: It’s still kind of a want transaction in my mind. On the B2B side, a buyer engages in the transaction not really because they want to, they don’t really wake up in the morning and say, “I can’t wait to engage in a procurement process to buy more inventory for our Phoenix warehouse.” They’re there to do their job, so that fundamentally changes why the transaction’s happening and really how the platform should cater to that commerce experience.
Jordan Jewell: It’s less about making it an engaging experience in some ways, and more about making it simple to do their job, efficient to do their job. Because businesses want to maximize this efficiency, B2B purchases tend to be more complex than B2C. So, some examples are in payments, approvals that must occur across the organization, and products being ordered to different warehouses and locations at different times. Those are all factors that differentiate B2B and B2C in my mind.
Brandon Kim: No, absolutely. I think in terms of B2C eCommerce, and let’s just take shipping for example, shipping for B2C eCommerce for any consumer would be … Whenever the item arrives, the quicker the better, and it’s more of a nice to have whenever the shipment arrives. However, I know in B2B eCommerce, a lot of these times when you’re making orders for different parts, they’re a particular component and end product that you sell. And so any delayed shipping for example, may affect your bottom line. I think in terms of shipping, in terms of pricing, payments, and approvals that you mentioned Jordan, there are some stark differences in terms of the high level picture.
Brandon Kim: One of the things I’d love to discuss as well is it’s heavily covered that B2B eCommerce, the market size for B2B eCommerce is much larger than B2C. In fact, 2018 was actually the first year where B2B sales for electronic channels like eCommerce and EDI actually surpassed the traditional B2B sales channels. This primes me to my next question, there’s been a lot of attention around B2B commerce, yet at the same time, I think there’s also a lot of confusion.
Brandon Kim: For example, we see B2B companies investing in eCommerce platforms that were typically built to address B2C eCommerce. I’m curious if you see this as a viable option for B2B businesses and what your take is on that.
Jordan Jewell: Yeah, and that goes back to what I mentioned on the last question, that there is a lot of buzz in this market and that’s blurring the narrative of what B2B commerce really is, B2B digital commerce in this case. My simplified answer to that question is probably not. A platform designed for B2C probably will not suffice for most B2B organizations.
Jordan Jewell: There are some cases where I’ve definitely spoken to customers who are using a B2C platform for B2B, and it’s a really weird arrangement where their customers, their business customers, are actually purchasing things like they’re a consumer, and it’s not as password protected, it’s just a credit card payment, the delivery is as you mentioned, just as soon as possible.
Jordan Jewell: They have to adopt a more consumer buying method. That’s not optimal by any means. But for most B2B organizations, you really need a platform designed for it. There’s a lot of vendors out there that are what I would call B2C turned B2B in this case, that they’re really pivoting towards B2B and they’re still sorting out what that means. But really most B2B organizations that have complex sales, and especially in the enterprise space, will really want to look for a platform that specifically is built for B2B at the onset.
Brandon Kim: Excellent. I’m curious, then why do you think B2B companies are looking towards these B2C eCommerce solutions?
Jordan Jewell: For a few reasons. I think first and foremost, the maturity of the market. B2B is about 5 to 10 years behind B2C in terms of eCommerce software. If you think about investment that’s happened in these markets, most of the investment upfront happened really in the retail space and in B2C, because every retailer wanted to appeal to consumers and win over the consumers early on, and it became an arms race early upfront.
Jordan Jewell: Whereas in the B2B space, our research shows that B2B organizations don’t view their online presence with quite the same level of urgency as retailers. Part of that is cultural, it’s the B2B sales channels and sales people you have, it’s buyers wanting to buy the same way they always have. But for those various reasons, B2B’s behind and that maturity is part of the reason the paradigm exists.
Jordan Jewell: Another key reason is that B2B organizations do not actually fully understand the requirements at this point. It does go back to that maturity, but when I speak to organizations looking to buy a commerce platform, they don’t actually really know entirely what they’re looking for. When they’re putting together the RFP of their technology platform, they’re really starting from a list that would exist in the B2C platform.
Jordan Jewell: They’re looking at the beginning, with B2C requirements, so it needs to have promotions, it needs to have certain kinds of shipping, it needs to be able to accept credit cards, it needs to support merchandising that would exist in B2C. It might favor those B2C functionalities while not looking entirely quite as deeply at B2B needs as they should.
Jordan Jewell: For that reason, I think that leads to B2B organizations who are looking to build a digital commerce platform, and they end up looking at some of these platforms that really don’t cater quite to their complex B2B needs.
Brandon Kim: No, no. That makes a lot of sense, and I appreciate you sharing that. I know you speak with a lot of folks that are looking to start on this digital transformation initiative. I’d love to shift the conversation a little bit. I think digital commerce as a space is trending quite a bit, and I think you Jordan, you offer a really unique perspective, and you can offer some real keen B2B eCommerce insights.
Brandon Kim: I know you’ve attended numerous trade shows, conferences, meetups that talk about digital transformation, about eCommerce. I’d love if you could share with our listeners, what are some common trends that you’ve been seeing in the digital commerce space, as you attend these various meetups and conferences?
Jordan Jewell: Yeah, that’s a great question. If I had to boil it down to two, number one would be removing friction and this applies strongly for both B2C and B2B. While B2B and B2C are fundamentally different, like I mentioned, removing friction is very important for both. Consumers want to find what they’re looking for relatively easily, and like I said, B2B buyers, they just want to get their job done.
Jordan Jewell: In the B2B world, buyers, they don’t want to spend too much time searching near identical products or cross-referencing a product catalog with their organizational policies. At the same time, all business buyers are also consumers, so they go to their job with those expectations that are built up in the consumer world.
Jordan Jewell: Really, they go to their jobs with this expectation that’s set by Amazon, and Amazon has a very frictionless buying experience. Amazon is all about showing as many products to consumers and creating as many sales as possible, and making the sales very simple to transact. So, B2B buyers go to their job with this expectation. All businesses selling online need to make removing friction a top priority for this reason.
Jordan Jewell: The other main trend I would call attention to is commerce customer experiences. So, everyone knows that transactions do not happen in isolation. A seller needs to make sure they effectively communicate with their customers both before and after a transaction takes place. No matter how great your online store looks and feels, if the product arrives late, that harms the customer experience.
Jordan Jewell: Some of these elements of commerce that are not directly thought of as part of the customer experience, things that are not part of marketing, sales, contact center for example, all of this really ties into the customer experience. Even the ERP system ties into the customer experience, because if your integrations don’t work particularly well and a customer sees that you have a certain inventory and they make an order, and then it turns out you actually don’t have inventory, that also harms the customer experience.
Jordan Jewell: So, customer experience is really a very full view of keeping your customers happy and really going beyond their expectations.
Brandon Kim: That makes a lot of sense, and I know a lot of companies may think that eCommerce is just an automated way to get revenue and don’t necessarily invest in the strategy of optimizing the customer experience, and really using this as another strategy for their business. Businesses that succeed the most in eCommerce really put customer experience front and center, so that makes perfect sense on our end, Jordan.
Brandon Kim: I’d love to talk about innovative technologies, because when we go to these conferences, there’s a lot of buzzwords, a lot of new technologies that are thrown. I think it’d be great to understand really what of these new innovative technologies are actually practical? So, I’d love to ask Jordan, how are digital commerce vendors incorporating innovative technologies such as for example, I hear a lot about cloud technology, mobile, voice, AI, blockchain, some of these technologies. How much traction do these technologies have with the customers you speak with?
Jordan Jewell: Let’s throw in two more buzzwords for the heck of it, IoT, and autonomous vehicles. I live in San Francisco and technology companies hold a lot of conferences in San Francisco. So, the whole city gets painted with clouds and all of these buzzwords, so I hear as much of it as you can imagine. There’s a lot of difference between some of those technologies you mentioned.
Jordan Jewell: Like for example, cloud and mobile have been around for longer than the others, let’s say. They’ve been around for at least 10 years, so they’re further along the adoption curve, the real value of them has been realized, whereas some of them less so. I think for really all of those technologies you mentioned, so cloud, mobile, voice, commerce, artificial intelligence, blockchain, IoT, and autonomous vehicles, they really will change how commerce is going to happen in the future.
Jordan Jewell: Software vendors are really figuring that out right now. At IDC, our motto is to analyze the future, so we really are thinking about where commerce is going in the future. My job is to paint the picture of what commerce is going to look like and helping organizations get there. When I think of the future of commerce, both for B2B and B2C, I think of it as being more autonomous or passive versus right now, it’s not as much about going out and shopping and adding to a cart and going through the checkout process. It’s more about the commerce happening in the background, once you set it up.
Jordan Jewell: I’ll go a bit deeper into that, but I actually see this happening a bit more in B2B than B2C. So, an example you might imagine is that a factory might set up IoT sensors to recognize when a part in a machine is about to break. Without any human intervention, the machine can place an order for a replacement part, and that can be approved by a manager on their mobile device, and then this part is delivered via an autonomous vehicle, and it arrives before the machine even breaks, so preventative commerce in that case.
Jordan Jewell: While this sort of scenario would look seamless to those on the factory floor, a new part arrives, they install it, everything goes as usual, there are actually numerous handoffs between technologies happening. Various different technologies, cloud is embedded in all of these, and then finally, because you asked about blockchain, this is probably the technology I see the least right now. There’s a lot of buzz around it, of course the cryptocurrencies, and I haven’t seen any actual customer use cases right now.
Jordan Jewell: But there’s a lot of opportunity in the supply chain and fulfillment in general, where organizations can better track raw materials and during the fulfillment process when a product is delivered. There’s opportunity everywhere, it’s just about for organizations selling things online and for technology vendors, its really about figuring out what will help their customers the most. I think that’s how all organizations should be looking at it.
Brandon Kim: Perfect. One of the questions that I wanted to ask was open source technology has been a staple in digital commerce, and I think it’s been a staple across all of technology in fact. If we take a look at people using WordPress as their CMS engine, or using Firefox as their web browser, or even Linux as their operating systems, open source technology has really seen rapid adoption in today’s world.
Brandon Kim: Jordan, I’d love to understand your take on open source technology and how customers perceive open source technology in the digital commerce space today.
Jordan Jewell: Yeah, that’s a great observation. I think commerce is one of the most applicable areas for open source, at least right now. Historically, some of the largest vendors in the digital commerce market have been rooted in open source. This is kind of a contrast to some of the other enterprise application markets.
Jordan Jewell: At IDC, I’ve covered various markets like ERP, collaboration, and a few others like finance, and you don’t really see many, there are a few, but you don’t see many open source accounting platforms, or open source conferencing applications for example. That’s totally different in digital commerce, and much of this is driven by the fact that organizations view their digital commerce platform similar to how they view their brick and mortar stores. They view it as an asset used to make sales and organizations like to own this asset.
Jordan Jewell: With open source, you actually own the code, you own the platform, versus it being proprietary software that you’re more renting or have to purchase outright. In this era of multi-tenant cloud computing now, organizations also expect software to receive updates automatically and without breaking. We’re seeing it transition forward with that.
Jordan Jewell: In my mind, one of the biggest benefits of open source, across all vendors, is the communities that exist there as well. Commerce is one of those. Because digital commerce is a bit more a new market than something like accounting, accounting’s been around for hundreds of years, if you’re an organization with a digital commerce platform and are struggling to have effective sales and to make the platform more efficient, you have that community to fall back on and find a developer or find a community member who can help you with that.
Jordan Jewell: Going with an open source product offering means you have those experts and that’s really, there are various benefits of open source, and that’s one of the biggest ones, in my mind.
Brandon Kim: Excellent. You alluded to the fact that digital commerce is relatively new for the B2B space. One of the things that I wanted to ask was, and I think our listeners would be very interested in hearing, what are some of the common challenges companies face when implementing a B2B digital commerce project?
Jordan Jewell: Yeah, so two big ones come to mind. First off would be the amount of work and money that goes into implementing a digital commerce platform, getting it up and running. This happens across all software but when you go to a technology vendor, they’ll tell you a price that the platform costs, and you might look into how much the implementation costs. But in many cases, it ends up exceeding that estimate, and this is especially true if customizations are needed to get the software exactly where you need.
Jordan Jewell: Digital commerce is one of those areas where an organization really might have an idea of what they want their platform to look like and they want it to be exactly like that. I’d say the second area of challenges would probably be around culture, so B2B organizations are used to their established long term relationships with their customers. Whether that’s through a B2B salesperson engaging with their customer in person, over the phone, via fax, whatever it might be.
Jordan Jewell: These relationships really drive B2B commerce in a different way than B2C commerce. Employees are hired to support these kinds of selling channels, so it’s actively being renewed and re-supported. They’re supporting this high touch selling channel, including the contract creation process. So when B2B organizations look to implement a digital commerce platform, they are essentially saying, “We want to do business differently.” This is because digital orders tend to be self-service, and many of the back office work is automated.
Jordan Jewell: So, employees might see this as a stark difference from what they’re used to and end up having to go, there might have to be change management within the organization. It is very important that B2B organizations looking to implement a B2B digital commerce platform clearly inform their employees and tell them about this digital transformation process, about these new selling channels, and the value it brings to the organization, the value it brings to those employees about how their roles can improve, and really retraining employees both in the technology and training them in these mindset areas, and training them how to support customers on these new selling channels. I think those are the main challenges the customers I speak to are facing.
Brandon Kim: Great. I’m going to ask you a pretty loaded question here, Jordan, but I think the million dollar question here is for businesses that are looking to embark on B2B eCommerce, what return on investment are businesses seeing when purchasing digital commerce applications for their company?
Jordan Jewell: This is a great question. This is a very important one. I’m going to give you a simple answer and then I’m going to give you an analyst answer. Partly because it is a loaded question. The straightforward answer is that the ROI on average is pretty great. It’s a good return on investment for organizations to buy a digital commerce platform.
Jordan Jewell: One pretty good reference point I have is those MarketScape studies that you mentioned earlier. In those reports, we interviewed about 100 customers either in person or over the phone, from over 20 software vendors. We got back a lot of feedback, a lot of numerical data, and this was across both B2B and B2C. In those customer interviews we asked 10 questions where respondents had to choose between one and five, where one was poor, and five is greatly exceeds expectations.
Jordan Jewell: One of the questions was about the level of value delivered, relative to the cost paid for those digital commerce platforms. On average, across all the vendors, not singling anyone out, this was the second highest rated category, and it was well above the average across all questions. This shows that on average, organizations buying digital commerce platforms find a lot of value in it.
Jordan Jewell: They might disagree with certain areas of what’s happening, like the roadmap or the customer support, but on average they’re getting a lot of value. The value is actually exceeding their expectations. Something interesting here I would point out is that this metric was higher for B2B than B2C. It was actually about 10% higher among B2B respondents than for B2C respondents. I think that’s showing that B2B respondents are getting even more value, I might point out, but I don’t know if this is statistically significant, so I’m just going to point you to that kind of takeaway.
Jordan Jewell: And then because I am an analyst, I have to give you an analyst answer which an analyst answer is always it depends. This applies to the ROI question. It’s a bit complicated to pin down ROI. In many cases, you have to really control for certain factors to make sure what’s really causing value, and the digital commerce market as a whole is growing very fast.
Jordan Jewell: So, on average, any organization that builds a digital commerce platform and does a decent job at it is going to see pretty good returns. What I’ve seen talking to customers, is that when an organization, let’s say a retailer, builds a digital commerce platform, they set low expectations for themselves because they’re used to these brick and mortar or old sales channel returns. When they see over 100% growth, they’re really impressed.
Jordan Jewell: Another reason it’s complicated is the implementation and integration services, to get the platform up and running, tend to be overlooked, like I mentioned. They definitely shouldn’t be. Those costs need to be factored into that ROI, so that needs to be part of that ROI analysis. IDC does have a division that measures ROI and the business value that technology brings. Unfortunately, we haven’t done it deeply across all vendors in digital commerce.
Jordan Jewell: Another area we might focus on is so if you buy a platform versus building it yourself, what’s the value that those engineers, those software engineers that are not spending their time building a platform, ’cause they might not be experts at it, what are they doing with that time? What value are they bringing to the organization? Those are the kinds of things we look at when we calculate business value, so it depends from that answer, but overall we’re seeing pretty positive ROI.
Brandon Kim: I know Jordan, obviously we’ve just finalized a whitepaper together titled Overcoming Digital Commerce Complexity With The Future Proof Platform, so I have to ask, with the title being the focus of the question, what should B2B companies that want to invest in future proof digital commerce platforms realistically look for?
Jordan Jewell: Yeah, this was a great report to write because I’ve been looking at this market for a couple of years now, and haven’t had a great chance to write all my thoughts down. I was able to do that with this whitepaper on B2B digital commerce, and I think one of the most valuable parts for any B2B organization that’s dipping their toes in the market, B2B organizations like I mentioned do not always know what to include in their RFP, and luckily we’ve laid that out for them in this whitepaper.
Jordan Jewell: There’s a list of some of the key functionalities that all B2B organizations should have on the platform, and they’re not nice to haves, they’re really should be, must have. Including from the get-go means that you do not need to go back and customize the product later, which is obviously not the best way to go about it.
Jordan Jewell: Additionally, I would say because B2B commerce is less mature than B2C, B2B companies should look for a technology vendor that will act as their partner on an ongoing basis. We saw that in the MarketScape reports I mentioned earlier. Customers, B2B organizations really value the platforms that focus on B2B and will work with them to go through that digital transformation process.
Brandon Kim: Perfect. Well Jordan, I appreciate you hopping on today’s podcast. I think you share some incredible B2B eCommerce insights that can’t be found elsewhere. To just close off today’s podcast, I’m curious, any last advice you’d like to offer companies that are looking to either start or upgrade their digital commerce environment?
Jordan Jewell: Yeah. Thanks Brandon. This has been really fun, this is my first podcast, and I’ve listened to a ton, but it’s great to be on one. B2B commerce is a great topic. If I had to add, it seems like I’m doing everything in twos today, but if I had to add two more pieces of advice for any organization, but probably especially in B2B, these two pieces of advice are related, but you have to tie it together at the end.
Jordan Jewell: The first one is focusing on getting the basics right. I think organizations too often looking to digitally transform have a specific idea and vision of what their platform will do, and they focus on those details and they really need to get it, they want to get it right upfront. But in the long run, I think a lot of organizations are better off just getting the platform up and running, standing it up, and getting it done relatively quickly, and getting some of that first data in, getting some of that feedback from your customers before iterating on that.
Jordan Jewell: Focusing on getting the basics right is the first one, and then the second one I would give advice for is innovation should be seen as prerequisite to success. Commerce is changing extremely fast. Every organization needs to be thinking about how they can innovate and adjust their business model. Even Ford, which everyone might think of as a car manufacturer and a car company, is now thinking of itself as a transportation infrastructure company.
Jordan Jewell: They have the intention of charging customers subscriptions for different transportation options. Again, I live in San Francisco and there’s Ford GoBikes all across the city now. They’re getting in different areas such as this, and they’re going to change their business model over time. So, if some of these companies that have been around for a very long time and if they’re changing their focus, I think that’s an indication that all organizations should be doing it.
Jordan Jewell: Every company needs to think about change, but then innovation isn’t always about technology. It’s just about doing things differently and often that even means doing something that’s been done 50 years ago, or 100 years ago in some cases, but just readapting that to your company. These two tie together because when a B2B organization thinks about being future proofed, they should focus on nailing down the basics like integrations, the architecture of their platform, and the customer experience, but then being willing to innovate elsewhere, even on the business model itself. I think that’s really the advice I would give.
Brandon Kim: No, I think flexibility is important for any business, regardless of technology. So, those are some great B2B eCommerce insights. Jordan, it was a pleasure speaking with you. Last question here is for those listeners that may want to contact you, ask you any questions or things like that, how can people reach out to you?
Jordan Jewell: I think the best way honestly for me, is LinkedIn. I’m not a huge Twitter person. LinkedIn, just Jordan Jewell, last name J-e-w-e-l-l. I also can be found on IDC’s website, same name, and my email would be email@example.com. I’m happy to provide my thoughts on a market and answer inquiry questions, ’cause that’s my job at IDC.
Brandon Kim: Perfect. Well, Jordan, thank you again for your time and pleasure speaking with you today.
Jordan Jewell: Great, thanks Brandon.
Brandon Kim: Thanks for tuning in to today’s podcast. To get the latest updates on OroCommerce and access to the latest episodes, follow us on Twitter, @OroCommerce. Also, be sure to check us out at OroInc.com/ecommerce-podcast for most episodes.
- Jordan Jewell is an analyst at IDC and specializes in digital commerce and enterprise applications across the world.
- On average, any organization that builds a strong and reliable digital commerce platform will see a good return on their investment.
- B2B buyers want to get their job done quickly and efficiently. Provide a platform that does both!
- Jordan's advice: Focus on getting the basics right by getting your platform up and running quickly, then refine based on customer feedback. Simultaneously, make innovation a priority for your commerce operations.