B2B or B2C? That is the question – or, at least, it was. For decades, manufacturers focused on one commercial model or the other. In many cases, B2B won out. Supported by crowds of wholesalers and distributors, many manufacturing enterprises kept their customers remote, at least one distance removed from direct product development or feedback.
If this approach worked well in a world without digitalisation, and without intense competition from emerging markets, the situation is now changing fast. Bolstered by new technologies, a growing number of manufacturers are now embracing the so-called ‘B2B2C’ model. Partnering with retailers to sell directly to customers online, many enterprises are taking an increasingly active role in the customer experience, from the factory gate to the consumer’s front door.
But if B2B2C makes profound sense for a range of enterprises, implementation is not always straightforward. Encompassing data analysis, cybersecurity and more, this new way of working often requires new digital technology capabilities, as well as broader changes to how business is done. In fact, embracing such an approach more often than not necessitates a profound change in mindset.
B2B2C’s strenth: personalisation and digitalisation
The allure of B2B2C can fundamentally be understood in a single word: consumers. Many manufacturers may once have been far removed from the final users of their product. But as a recent McKinsey report found, in a world where personalisation can generate 40% more revenue than mass production, this approach is no longer tenable.
Marketing Budget Optimization through Market Mix Model for Furniture Retailer in the USBy Hexaware-Technologies
“I think expectations from consumers are higher now,” adds Kamal Maggon, corporate vice president & global head – manufacturing & consumer, at Hexaware. “The consumer now expects the manufacturer to know him or her directly. I think they now expect a more individualistic approach.”
If shifting customer habits is one facet of the B2B2C revolution – manufacturers are being driven to understand their consumers personally, rather than relying on middlemen – any practical changes would be impossible without similar leaps in technology.
But as Maggon explains, versatile new e-commerce platforms mean that making an impact “right at the point where the transaction is happening” is far easier than a decade or two ago.
At the same time, actually implementing digitalisation is now far simpler too. In the past, corporates eager to sharpen their sales and marketing teeth were often stymied by what Maggon calls “monolithic” digital capabilities. In practice, he explains, it was slow and expensive for manufacturers to integrate their own IT systems with those of retail partners further down the supply chain.
Now, however, SaaS providers offer ‘plug-in’ services that can easily be scaled up across an enterprise’s supply chain. Not only does that save time and money, it means manufacturers can start intimately getting to know their customers.
Maggon puts the theoretical benefits of this approach bluntly. “Why rely on retailers to generate brand loyalty,” he asks, “when you can do that yourself?”
A fair point, especially when you consider the statistics. According to polling by McKinsey, 71% of consumers now expect brands to deliver personalised interactions – and 76% get frustrated when this doesn’t happen.
A report co-published by Hexaware subsidiary Mobiquity, ‘How To Win Big In A Competitive D2C Market Benchmark Report‘, analysed leading D2C companies across Europe and the USA to determine key success drivers and learnings for how enterprises can improve their current D2C offering. Among the 11 key learnings was the value of offering “personalisation to tailor your product offering and pricing to add more value for the shopper”, and the need to treat the MyProfile section as “a strategic feature to help shoppers”. Service and support, it concluded, was “your gateway to creating a better brand experience”.
Beyond the chance to directly serve customers in new, personalised ways, a related strength of the B2B2C model is the centrality of data. With so much information at their fingertips – 2020 Statista reported that e-commerce sales accounted for 18% of all retail sales globally – B2B2C can help manufacturers plan demand cycles and avoid excess stock.
Nor are these strengths merely hypothetical. According to work by BCG, enterprises that integrate personalisation and customer data into their business model can expect revenue to soar by up to 10% – two or three times faster than those that don’t.
Maggon is clearly convinced of the advantages of B2B2C. All the same, he warns that embracing the model comes with a range of challenges.
For one thing, the moment an enterprise handles customer data, they need the analytical tools to understand it. There are also potential worries around cybersecurity.
B2B2C transformations can also be challenging in more fundamental ways too.
To explain what he means, the Hexaware corporate vice president cites a project with a mid-sized furniture manufacturer. Historically, the company would send bulk shipments of chairs or tables to the retailer, which would then be tasked with selling the pieces to customers.
All this changed with B2B2C. Suddenly, the manufacturer was dealing not with one retailer – but rather with thousands of individual customers, each with their own needs and concerns. “You’re not shipping 10,000 of anything,” he explains. “You’re shipping one thing 10,000 times.”
Given this complexity, many manufacturers are unsurprisingly working with retail technology experts to develop new e-commerce platforms and smooth the path towards the B2B2C uplands.
As far as Maggon and Hexaware are concerned, he says that his firm’s joined-up offering, combining a series of interconnected digital platforms, can be a real boon for manufacturers starting their B2B2C journey. “I would say digital technology, cloud capabilities, services being packaged – it makes this all a lot easier.”
These tools are doubtless vital when building a platform capable of exploiting mountains of customer data. But as the example of the furniture company implies, deeper cultural shifts are just as important. Maggon stresses that before implementing any technical changes, his team will always encourage customers to think carefully about what they want to achieve.
“‘Customer at the heart’ is a standard mantra for every retailer,” he says. “What does the customer want and need? We build our transformation plans around that.” Given how comprehensive B2C2C transformations need to be – and the vast opportunities they offer manufacturers and consumers alike – this thoughtful philosophy is surely just as well.