Cross-border ecommerce opportunities have been growing consistently for the past few years. Even though most of the attention has gone to the B2C space, B2B buyers and sellers have started to realize the advantages of expanding their supply, distribution, and sales network. Cross-border has the potential to transform the B2B ecommerce landscape.
This reality, while exciting, is still fairly new, which can be intimidating for new players to hop on the trend. Jay Wang, Director of Marketplace Operation at Alibaba, attended VTEX CONNECT LATAM last September and shared what he considers the most important opportunities and challenges of going global through digital channels.
The booming demand
The worldwide lockdowns experience of the last two years did impact the B2B landscape in a similar way than it did with other areas: for the first time, B2B sellers are more likely to offer ecommerce channels than in-person selling, according to McKinsey. Alibaba’s own data reveals that B2B global cross-border demand is surging across all categories.
According to Wang, there are three main reasons why people buy cross-border. The first two being specialty and diversity.
“If you think about very high-end apparel, the first countries that come to mind are Italy and France. Every country produces specialized stuff depending on current world trading trends. For diversity, maybe you want to see Chinese-made silk, but other types of apparel might interest you more if it comes from India”Jay Wang, Director of Marketplace Operation at Alibaba
The third element is one that any business owner will be familiar with: profitability.
“Buying global will help you utilize the global supply chain advantages and reduce your operation costs to achieve a higher profit”Jay Wang, Director of Marketplace Operation at Alibaba
Some countries have even started to build good rapport with certain buyers. Such is the case with Mexican manufacturers, whose products are seen in the USA as a good balance of price and quality.
How planning beats challenges
For Wang, every challenge that a potential B2B cross-border seller will encounter can be divided into three categories: Information, Transaction, and Fulfillment. “Those are the things you have to solve if you want to be a successful cross-border operation.”
When it comes to Information, some of the main concerns are: building a professional storefront, aligning different channels and catalogs to offer the best possible buying experience, and having good communication with buyers and potential buyers.
Transaction deals mainly with elements such as payment processing, order management from multiple channels, and synching of inventory.
Lastly, Fulfillment deals with logistics, regulation, and return processes and policies.
Most of these challenges can be overcome by choosing the right partners to work with: the right digital commerce platform can take care of the storefront stability, alignment of catalogs and inventory, and even customer communication.
Mixing in integration with the right marketplaces can also assist with payment methods and logistics so that the right seller can easily jump into the global market with most of their bases covered.
The previous recipe might sound fairly similar to what we would expect from a B2C operation. But the sheer size of B2B’s digital commerce demands means that a company has to be faster, more flexible, and more efficient in order to fulfill larger orders.
“Logistics issues can be solved by cost, timing, and transparency. You have to know how much you want to pay, what your speed of delivery is going to be, and whether you’ll need to pay a premium, and your customer needs to be informed of those delivery times. For B2B, all of these terms are negotiable”Jay Wang, Director of Marketplace Operation at Alibaba
Wang highlighted that this formula is important when figuring out the total cost of the product, which is a vital element when buyers decide if it’s worth buying a product internationally instead of domestically.
One other key issue when going global is the multiplicity of regulations. “Regulations shouldn’t be seen as an obstacle, but as an opportunity,” says Wang. If an industry has a higher number of requisites in order to participate, that means less competition and an even greater opportunity if a company takes its time to master said requirements.
This opportunity is evident when we look at the AOV.
A rising tide
Interest in B2B ecommerce has grown in the last few years, making it more attractive for some companies that have not tried to dip their toes yet. As all data shows, the demand for products is there, so it’s just a matter of preparing well to meet that demand.
Still wondering about the costs and benefits of different ecommerce platforms for your B2B operation? Contact a VTEX specialist today and learn why our solution might be exactly what your business needs to improve profitability and expand its market presence.