Unpacking B2B eCommerce Buzzwords and Trends with Mark Brohan of Digital Commerce 360

Sawyer Frank: Welcome, everyone, back to the B2B Uncut podcast. My name is Sawyer Frank, and I'm your host for today. Very excited to welcome Mark Brohan. I hope I'm pronouncing your name right there, Mark. You're a legend amongst us in the eCommerce world, having covered this industry for quite some time. Could you introduce yourself a little further to our audience here and tell us a bit about yourself?

Mark Brohan: One of my stock phrases for this kind of event these days is, "dinosaurs still do roam around the earth a little bit." And I say that because I go back to almost the beginning of eCommerce. We launched Internet Retailer magazine in 1998. I was the editor of it. We were there when Amazon was two years old. We were there two years before the dot-com bubble. And beyond, the B2B world debuted in 2000, if you will. So, over the course of many years. And then I was our director of research for 15 years at Internet Retailer. I'm the guy who basically wound up creating a database that ranks 6000 online retailers across the globe on web sales, annual metrics.

So, I grew up on both sides of eCommerce, and my colleague Paul and I have been covering the B2B side since about 2000. We can take a very long, realistic, and detailed view of where eCommerce has been, and more importantly, where it's headed. And in the end, what we are is just journalistic researchers, more or less reporters. So, we like covering eCommerce; it's what we do. We just talk to people all day long and then benchmark the trends. It's as simple as what we do.

Sawyer Frank: I think it's hard for a lot of people not to look into the past, but obviously, I think we need to be focused on the future here. I'm interested to better understand from you, moving into a new year here, 2024; it always seems like it's going to be the big year, the big boom for B2B eCommerce. What do you think are some of the biggest trends in the market right now?

Mark Brohan: It's funny; I consider myself almost the eCommerce historian because I've seen it all. Even though B2B is entirely different from business-to-consumer online retail, there are some benchmarks. And you can see if you look at the metrics the right way and talk to people about what they're doing and what they intend to do and how soon they have the results of it, you can see the sea change or the shifts in the market coming.

Now it's old news, of course, that digital buyers flocked to more digital channels during the pandemic. Old news that it accelerated across the board, digital commerce and digital transformation. What is news though, is that you've got an entirely different genre of younger digitally-minded business buyers. And what they do is they will engage with a B2B selling organization, be it a wholesaler, retailer, manufacturer, marketplace operator, somebody in between. What they will do is they will visit that particular B2B seller across anywhere from three to 10 channels, and all of those channels are digitally driven. So, one of the biggest shifts in B2B eCommerce is that eCommerce transactions on the platform grew 18% last year and it’s now a $2.2 trillion market.

But the broader picture is that it's an omnichannel business-to-business environment, between three channels or 10 channels, depending upon who you are and how you do it. All of those are digitally driven by more self-service-oriented, younger B2B purchasing teams. And that is one of the trends accelerating all of this transformation for more B2B digital across the board. And what also has changed is the expectations of what this younger B2B buying team wants to do on a platform, and they're very unforgiving. They will take up to a month and sometimes three months to look at any one to one of 10 sites before they pull the trigger on a transaction.

So, as a B2B seller, if you think you're not being scrutinized by B2B buyers out there, think again. They scout you out, and they look at you not just on what you're offering on the eCommerce site or potentially what's behind the firewall, which is what past a lot of eCommerce today. They want to know, do you have the products, the services, the pricing, the features, the functionality, not just across just the eCommerce world but across up to 10 digitally driven channels. And that is the challenge and the opportunity for the B2B buyers and the B2B sellers.

So, if you're a selling organization and you can meet that criteria, then it's a very rosy future for you. And if you can't, it's not going to look so good because it's pretty fast moving these days. So, in a microcosm, yes, the market is shifting dramatically. The market is growing by X amount, and it's nothing short of a sea change. The sea change doesn't happen in a semester or a quarter or a year. But from our vantage point, the numbers that I gathered and the people we talked to, that sea change is now three years in, and a lot of permanent shifting is occurring and will occur more. That's the status quo. That's where it's at.

Sawyer Frank: Excellent. So I think there's a lot to unpack there, obviously, starting with the evolution of the buyer, right. I think in our perspective, we're even seeing businesses being handed down from generation to generation. And the reality is this new generation is having different expectations on how they buy products online and this results looking at it through the lens of their customers.

Beyond that, I think you mentioned these different channels and a big buzzword in the industry right now, I would say, at least from the vendor perspective, is Unified Commerce. I'd be interested to understand how do you think this term differs from an omnichannel to you? How would you define Unified Commerce? And I guess from your perspective, does it differ from each channel?

Mark Brohan: It depends on which buzzword you want to use. It could be connected commerce, or omnichannel or whatever term you want to use. But in the end, the definition is the same, which is the B2B buyer engages with a B2B seller across a multitude of different sales channels, and how effective that digital seller is in connecting with that B2B buyer across the channels they choose to use to engage with you as a seller. That's just the definition of it. That is what could pass for eCommerce, connected commerce, omnichannel commerce, that's what it is.

Here's an example. Historically, healthcare eCommerce has been a very cloistered small world. Healthcare is unto itself, if you've worked in healthcare, and I have for many years at a time or two, it's very insular, you have to be from healthcare to understand it. And if you are not from healthcare, you sometimes spend a lot of money and come away not understanding it, and you call it a failed business.

But for instance, if you look at the eCommerce lifestyle of the 25 largest enterprise healthcare systems, which make up the majority of healthcare purchasing for the $18 trillion healthcare industry, here's a closed world, the top 25 healthcare enterprise organizations ie big hospital chains, they use the same buyers day in day out because they were vetted, new healthcare, all of that. What changed was during the pandemic, there wasn't much profit to go around.

Suddenly, you had these enterprise organizations flocking to B2B marketplaces, couldn't get enough of. Why? Because the traditional customer journey, digital or otherwise couldn't produce what they needed when they needed it. So they went to new forms of digital commerce primarily marketplaces to find what they needed.

So that was a big sea change for just one vertical market. I could magnify that across other industries, including steel chemicals, the service world is very big on this, logistics is another big one.

We track more than 500 B2B vertical marketplaces in our research, and I am very confident sigh two years, that's going to be 1000. So that's two metrics, right there one example of an industry where you're seeing connected commerce come of age and kind of change how people do things, and then just the sheer genre of marketplaces. And what they're overtaking is another example of how B2B in general is being changed by this connected commerce equation between buyers and sellers.

Sawyer Frank: And so looking at the marketplace lens amd how they've evolved, I know obviously, the numbers have increased year over year and you and your firm Digital Commerce 360 are tracking this growth. Obviously, I'd imagine Amazon is playing a big role in this but I'd also like to understand what manufacturers and distributors can do to prepare for Amazon and business coming on in some cases. I would imagine that manufacturers are actually going to compete with distributors through these marketplaces. So I'd love to get your perspective there on what manufacturers and distributors can do to prepare and what the next evolution here is, in terms of how the marketplace will change the current landscape.

Mark Brohan: The more things change, the more things stay the same. eCommerce is never going to change. What I mean is it does not matter the size your organization, you could be as big as Amazon business or as small as some of the very small B2B manufacturers and wholesalers that Paul and I talk to every single day, but the mission is the same. Do you have the product, the expertise, the user experience, the delivery mechanism, the customer service mechanism to deliver what your customer wants digitally?

And so the mission has never changed in 28 years of covering eCommerce. What has changed, it has been delivered to go back to Amazon business for a second, their 35 billion in gross merchandise sales, depending upon whose projection you look at. They've done that in less than three years time. So in the biggest markets of industrial supplies are MRO supplies, you know, the Granger, Global Industrial, MRC world, Amazon business now accounts for one and four transactions of that vertical that shows you how quickly an Amazon business can come on and take market share.

Does DG McPherson, Granger worry about that? Yeah, you bet. And you see that and hear that from time to time. But will an Amazon business put a Granger out of business? No. Might they take market share away? You bet. But my point to you is that if you are a B2B seller, and you have invested in the right strategy, and the rights technology that is appropriate for your business, that and so you've tailored that to understand your customer, then you're going to grow.

If you haven't, that's why we're going to have problems. So manufacturers and distribution companies of all sizes, to come back to your question here, are looking at the same benefit-challenge opportunity. And some companies like Caterpillar have been very successful in meeting all the way through that whole customer journey, what their customers want. And Caterpillar, they sell something like 2 billion in parts sales a year, but there are plenty of other small to mid-sized manufacturers that have gone and readjusted their experience, added new channels like new wholesalers and new marketplaces, and they're doing just fine.

What the tie that binds here is staggering out all those digital channels where the customer interacts with you as a seller. That's the key to success. And that is the benefit and the challenge that a lot of companies are struggling with. And some are doing better than others and beating that's where the future is.

Sawyer Frank: Love it. We're seeing a lot of success on our side, too, from the landscape of startup marketplaces. It presents an opportunity within certain verticals that haven't experienced digital transformation. Are there any key verticals, which you guys are seeing more transformation than others? When it comes to jumping on the marketplace? You had mentioned industrial distribution. Any other key verticals come to mind?

Mark Brohan: Yeah, I mean, you know, there's a company and I think your listeners should be aware of this company. Mike Brown is the founder of Bowery Capital. So who's Bowery Capital? Bowery Capital knows the B2B marketplace world probably better than anybody else. And they began documenting all the verticals, making the shift to the marketplace movement going back several years.

So Mike Brown and Company not only invested in these companies because they're an investment shorter, but more importantly, they began to recognize which verticals were kind of moving out versus which ones were not. So we came across Mike and company, gosh, I don't know three, four years ago. And I've had Mike as a speaker at our Envision B2B show on several occasions as he helped us get into tracking in the broader vertical world of B2B marketplaces, chemicals coming along nicely.

Healthcare nice steady went been around for 20 years; automotive, nice steady veteran for 20 years; steel coming along. You've got a couple of players, they're making some inroads. But if you're looking at the verticals, where you're seeing the fastest evolution of B2B marketplaces, it's the service world and it's the last mile logistics world and is some of those types of marketplaces that kind of bring together buyers and sellers of services where you're seeing the fastest growth.

Anything from freelance talent to finding brokers to trading blocks of finance is just all over the place. One important perspective here. The term B2B marketplace is frankly just a generic name for a type of marketplace that basically does eCommerce between buyers and sellers in a different way. I mean, you guys track them too. There could be as many as one to two to three to four to five to six definitions of what passes for a B2B marketplace is one more generic term.

So there are hotspots, if you will, vertical market platforms calling themselves marketplace, they're integrating big amounts of buying and selling, and logistics and services are two big fast-growing worlds. They have the most launches these days, by the way.
Sawyer Frank: It's very cool. And great insight. Speaking of buzzwords, obviously, I think a lot of us are tired of hearing about AI, right? A lot of our audience would genuinely be curious about your perspective on how AI has affected the eCommerce market.

Mark Brohan: AI is nothing new. If you think about live chat that's been around forever in a day, right? Maybe the retailer's had its first. But on any good B2B site, you've been hit with a chat box. That's AI that's been around forever. I think we're moving past the hype by a fair amount in B2B. But what's happening with B2B AI is two things. First off, there's a big disconnect between what people tell you in a survey versus what they're actually doing.

Is AI a big deal to you Mr manufacturer, Mr distributor, blah, blah, blah? and they answer “Oh, indeed, a huge frickin deal.”
What uses for this do you see? - “Oh, all kinds of things, marketing, customer service, merchandising, supply chain procurement.” Great.
You see survey after survey where there is keen interest there. But then you look at the lag time.

I have seen other studies and I forget who from but there's a lag time because B2B eCommerce grew 18% last year, but you know what B2B spending has sunk and that includes IT spending. And maybe you guys are seeing it too, I don't know. But I could tell you for a fact that a lot of companies are doing there's a folding pattern on eCommerce technology buying these days, because inflation is still not down.
So a lot of B2B organizations are stuck, still not ready to spend money yet. So even though the intentions are how biggest new eCommerce platform to you? “Huge priority.”

The disconnect is the priority is there, but the spending level is not. So AI is rolling out. But how fast is gonna roll out across the B2B ecosystem, which could be 14 different touch points on a digital technology map, it remains to be seen. It was just on the drawing board.
Where you can see it in behind-the-scenes is search engines, for transaction processing, the bread and butter eCommerce stuff, if you will. Farther along, you're gonna see it roll out in the logistics, fulfillment, order processing, and then the overarching customer service marketing.

So it's front and center now in personalization, marketing merchandising, more so in the supply chain too. It's the rest of the ecosystem, including the platform where you probably going to see more activity in 6 to 12 months versus now because of this technology spending fog.
A lot of worry there are still in, a lot of wait and see up there, a lot of pent-up demand still not being done. I think that we're still in the current first phase, although much of this has been in production now for several years in reality.

Sawyer Frank: But do you have any idea or perspective of what the results have been? How is this actually affecting the business to this point, whether it be personalization, or search or any of the aforementioned features with AI that are currently live in production?

Mark Brohan: It's funny if we had done this podcast in the month I’d have some great war stories for you. Paul Emery has been my friend and colleague and wingman on B2B for 20-plus years. And Paul knows more about B2B eCommerce than even me because he'd been out for far longer. And he's probably the most underrated knowledge source and all the stuff that there is out there.

And my point, we had not seen any reporting across the entire digital technology ecosystem. So we're breaking that down for some analysis here. And we're reaching out to the vendors to the users to find out okay, how real is this stuff? How far along is this stuff? And then when does this actually really hit the market for not just merchandising, marketing, personalization, supply chain stuff?What about the other parts of the enchilada, the transaction processing, the fulfillment, all of that.

So we're just beginning to report that now. So we tend to have some findings for the industry and maybe about a month or so right now. I think he had shared a lot in a month. I'm happy to come back and tell you about what we did fine.

Sawyer Frank: So aside from that report, and obviously the metrics there, how do you think businesses can best prepare for this evolution of AI in the eCommerce ecosystem? Are there particular resources online that you're aware of that are available? Or where should they start?

Mark Brohan: Well, I'm going to plug Digital Commerce 360, we do a fair amount of job of covering all this stuff. I think the end result is you talk to people like OroCommerce vendors. And I don't think it that's always a good term. Technology, platform companies, eCommerce technology companies, eCommerce application service development company, because what you folks are along with other folks in the genre out there, you guys make the stuff that makes the stuff happen, you want to know what's going on, go and talk to OroCommerce. And they will tell you way down the rabbit hole if you want to go that far, where the technology is, how it works, and where is it going.

So I always go to the end user, or the start of the food chain to figure out what's going on with this stuff. Paul and I are talking to folks like you now because you're the ones developing it. You're the ones to put stuff on the drawing board. So that's where you start.

Sawyer Frank: Absolutely. And I think any good software vendor is utilizing their current customer base or even prospect base to understand what needs are in the market that aren't available within the product today, and that can affect the product roadmap.

Mark Brohan: With AI though, I will kick to the curb to my own surveys, we've done a ton of on AI, there is not a lot of ROI information out there just yet, because it's still to do. You gotta get live for a year, 18 months, two years to see what the stuff is.

There's a lot of tire kicking, a lot of initial work going on, if you will. It’s probably going to be a couple of six months anyway, before you start to see I think real mainstream results for companies come forth and say, Okay, here's my ROI for doing this particular AI application. I don't think we're there yet.

I could come to you and you would have 3000 case studies that would talk about how well companies are doing ROI on your platform, right? It's established, it's a known word. So AI and headless and connected and all these other emerging technologies are not quite there yet. Give it six months, you're gonna see some definitive results. We'll find some anyways.

Sawyer Frank: Yeah, with the good, there's always the bad, right, talking about or maybe even referring to a bit of the mock lash that I've heard in the market around businesses that weren't prepared to go fully composable. And I know we can unpack composable in a lot of different ways. But have you seen any of that, on your side, some of these implementations that maybe were oversold in the context of requiring fewer development teams or less architecture to actually build the solution that is, in a way able to service all those channels that we mentioned earlier?

Mark Brohan: I'm gonna give you a core example here. And I've written about this for a few years, there's a company called State Electric and State Electric is very well run well-established distribution company that sells electrical products, and their VP of everything has been around for 40-plus years, great guy. And he's one of my bellwether companies. State Electric has about maybe 60 branches across Ohio, West Virginia, kind of that part of the country. They're a bread and butter distribution company, been in business for 60 plus years.

And they will tell you, they came back for an AD conference several years ago, the VP marched into the CEOs office and said, You know what? We got to do eCommerce. The CEO said, great, you're in charge, go do it. And you know what, that began a three to four-year history, and a very expensive one for how this particular company began. They went out there and the first thing they did was they made the core mistake that they thought of the eCommerce technology as the be-all and end-all strategy.

The first mistake a lot of companies still make today is that they think that if they focus on the technology, that's the strategy for achieving the eCommerce results they want. It's just the opposite. Where companies need to flip-flop things is think of eCommerce technology as part of eCommerce strategy that's going to work for you. So in the case of State Electric, they bought a beautiful platform, did 18 months of testing and was about to go live. And you know what they found out? Their content wasn't ready.

They had something like 200,000 SKUs that were dirty data on the back end, there was not a back end integration worthy enough to go into this brand new eCommerce system they spent 18 months perfecting and this is a very common occurrence even yet today.They spent the next two years going back rewriting realistically painstakingly a taxonomy for a B2B search for 200,000 SKUs.

It took them two years to complete to get the data clean enough to flow into the new eCommerce platform to finally do eCommerce. Now, of course, that was a couple of years ago for them. But there are companies like that all across the roadmap today at eCommerce.
for a lot of companies their back end and their data might not be ready for what's to come when they want to pull the trigger on an eCommerce platform.

So there still is a lack of holistic thinking from start to finish on the eCommerce journey as it applies to technology. So that's where a lot of companies today are still struggling to figure out how to meet those buyer expectations we've been talking about. The short side is the window for doing that is getting shorter and shorter, more AI, more headless, more connected stuff can put you into a whole new world of technology and connect with buyers quicker. The thing is, if your data's not ready, and your platform’s not ready, what's the point?

Sawyer Frank: Yeah, exactly. We've said it for the longest time is garbage in garbage out. That's still a playable thing.

Mark Brohan: For every worst-case user scenario I hear about, I hear of three other people, who are doing it just right, because they took the time to talk to customers, vendors, distributors, the garbage can guy, and they figured out the right strategy for them. That's the way to do it. It's the strategy of the technology that a lot of companies missed the mark on. If you really think that’s where success starts.

Sawyer Frank: I couldn't agree more. And there's a lot of forums out there now to understand how companies have done it well.
We'll likely see you in your hometown in Chicago at B2B Online this year. And of course, I saw that you guys recently are launching B2B-specific eCommerce awards with our friends over at B2B EA and Brett Sinclair. Could you tell us a little bit about that?

Mark Brohan: Thank you for mentioning that because for one, they're long overdue. And for those who don't know, Brett Sinclair is the executive director of the B2B eCommerce organization. I love Brett, and I can listen to that guy talk all day long. And he's always walking and talking. Brett had the foresight to come up with one of the ways to move an industry along is to recognize the thought leaders, the movers, the shakers, the doers, and tell their story.

And what better way to do that than with a B2B eCommerce awards program. So we've been talking with Brett for the better part of a year on this and took us a year to do it. We're his media partner. So there's eight different categories from manufacturer of the year, distributor, the year B2B retailer of the Year, Best Newcomer of the year, those kinds of titles, and it's wide open to submit a nomination because we weren't recognized in conjunction with this association, who are the thought leaders out there, they should be recognized and tell their story.

Because when you learn what the leaders are doing, that brings to light all kinds of best practices. And it moves the industry along. And that's the whole point. The more nominations, the better. And it can even come from anybody, my cats in here can nominate somebody. If you know somebody who you think is worthy of a nomination, nominate them there.

Sawyer Frank: And that goes for technology partners. So there are not too many technologies that I find that sit above us in the pecking order of implementing solutions.

I think we've talked about this in past conversations, how eCommerce has become so prevalent, but with the statement around clean data in clean data out and creating a good user experience. I've said it for the longest time. The reality is that an eCommerce platform is only as good as the data it receives, which is why I'd say the ERP platform is potentially above us in that pecking order, I would admit it is.

But there's so many other solutions out there that are so critical to the ecosystem, right? The procurement or payment or again, data cleansing tools like a PIM or a DAM, for example. So I think there's so many different players out there that can nominate their clients who are a part of a B2B ecosystem and their technology plays a role in that ecosystem.

Mark Brohan: I wholeheartedly agree. It is funny because each of the last three or four nights here, I've been going through some of the stories that Paul and I've been doing and I think I nominated three manufacturers last night and three marketplaces. It's not just these big guys. We know a lot of small to midsize movers and shakers. And part of what this awards program is meant to do is to recognize thought leadership where it is and you don't have to be huge to do that. You can be a mover, a shaker, a thought leader by doing what you're doing. And we are looking for those kinds of stories to tell.

Sawyer Frank: Absolutely. And let's be real, it's never a one-size-fits-all here in B2B. I've been saying it for the longest time as well as I'm not sure they'll ever be a by and large vendor that is the clear winner or leader in B2B eCommerce. There are specific solutions for a reason. There are composable and monolithic solutions for a reason. It's really interesting because a mid-market company in the same industry or even an enterprise company doesn't matter size could have completely different needs in terms of technology. And as a result, use completely different platforms or vendors.

Mark Brohan: There are all kinds of stories out there. And the quick one here is the oil and gas fittings industry, gaskets and exciting stuff like that. 14 different companies compete with one another. But they needed to do a PIM system pretty fast and because the time was for it.
But none of these companies was big enough on their own to build the PIM that was going to outdo the other PIM. So they've got an Industry Association, and they decided to collectively build a system they could all use. So they all came together. And they did, what industry should and can do, which is they defined terms and standards and funded a technology partner. So they create a unified platform for them all to compete individually, where technology became the enabler, to more B2B opportunity on the eCommerce side, versus I've got to build one and make my customers use it, I had a view.

So there's gonna be more stories like that, as newer forms of technology roll out. It's gonna be fun to see how these new technologies that's going to be mainstream very quickly here. That's how fast the stuff moves. I think you guys do know that far better than me. But you know what, that's the new world we're living in. And it comes on a lot faster than the old world. So on we go.

Sawyer Frank: Absolutely. This has been such a wonderful conversation today, Mark, definitely encouraging our audience here to nominate your company or your friend's company, anyone that you've found to be a pioneer, mover or shaker, as you mentioned, in the B2B eCommerce world. I think this is important. And kudos to you and Brett for leading the charge. Any last words for the audience here today, Mark?

Mark Brohan: Yeah, I get this quite a bit, which is what can I do to grow my eCommerce business. It’s very simple. Listen to what your customers want, and then do the best you can to service those digital buyers who are now becoming a critical mass to you.
So you don't have to be Amazon business. Amazon business has never gotten to know a vertical as well as a 60-year-old distribution company in HVAC, or plumbing or tools or what have you. Because you guys do. That's what you do for a living.

Just switch to what you're doing more digitally. Because that's what your customers want. But you know what, serve your niche and you got to be just fine. Those are words to live by, that allows smaller companies, if they do it successfully, they will conquer eCommerce, no question about it. There's plenty of room for everybody. It's my point. So thank you for having me. I really appreciate this.

Sawyer Frank: Yeah, it's been really fun. Mark, I wish you a good day. Thank you for joining, and we'll talk to you again soon.

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