B2B eCommerce: Basics, Business Models and Best Practices in Business-to-Business Online Trade 3658385278, 9783658385279

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Gerrit Heinemann

B2B eCommerce Basics, Business Models and Best Practices in Business-to-Business Online Trade

B2B eCommerce

Gerrit Heinemann

B2B eCommerce Basics, Business Models and Best Practices in Business-to-Business Online Trade

Gerrit Heinemann Hochschule Niederrhein eWeb Research Center Mönchengladbach, Nordrhein-Westfalen, Germany

ISBN 978-3-658-38527-9    ISBN 978-3-658-38528-6 (eBook) https://doi.org/10.1007/978-3-658-38528-6 © The Editor(s) (if applicable) and The Author(s), under exclusive licence to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 This book is a translation of the original German edition „B2B eCommerce “ by Heinemann, Gerrit, published by Springer Fachmedien Wiesbaden GmbH in 2020. The translation was done with the help of artificial intelligence (machine translation by the service DeepL.com). A subsequent human revision was done primarily in terms of content, so that the book will read stylistically differently from a conventional translation. Springer Nature works continuously to further the development of tools for the production of books and on the related technologies to support the authors. This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Fachmedien Wiesbaden GmbH, part of Springer Nature. The registered company address is: Abraham-Lincoln-Str. 46, 65189 Wiesbaden, Germany

Preface

While digitized transactions have been established among manufacturers and wholesalers since the 1990s in the form of electronic data exchange, automated ordering, and eProcurement, only a small minority of German manufacturers engage in true e-commerce. Only a few B2B suppliers provide online shops for their commercial customers, although these can demonstrably reduce transaction costs in the processing of orders and at the same time increase customer loyalty. Without exception, associations and experts therefore also predict significant online growth in the B2B segment. It is striking, however, that often no differentiation is made, neither according to value-­ added stages nor according to uses and requirements. While it is undoubtedly obvious for finished products – both for industrial goods and consumer goods – that sales via online shops can replace catalogues, the advantages for project and plant business, supplier business, and system business remain largely unclear. It is not without reason that the European B2B online market is still highly fragmented and consists largely of niche providers as well as address lists and industry directories. Dominant market leaders – especially with an ecosystem like Amazon – are still missing. Therefore, it is not surprising that especially experienced B2C players like Amazon are now entering the B2B online market. Besides Amazon, other players such as the global marketplace Alibaba.com, eBay Supply, Mercateo, WerLiefertWas, and EuroPages are already active. This could become a huge threat to German wholesalers, especially because of a “consumerization in B2B business”: The same B2B customers who shop at Amazon Supply today are also B2C customers at Jeff Bezos and therefore expect the same service, i.e., “B2Me”. B2C providers can leverage their experience and familiarity here and use services like supplier credit to turn their B2C customers into loyal B2B customers. It is therefore not surprising that similar principles of customer approach are increasingly being used in the B2B sector as in B2C communication. Increasingly, many consumer goods suppliers are operating a B2B shop in addition to a B2C one. The result is a new combination of “Consumerated B2B and Disintermediated B2C,” i.e., a kind of hybrid distribution of branded goods. The appropriate term for this is “B2B2C” and is already being used in the e-commerce scene.

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Preface

The following factors are likely to fuel B2B online growth in the coming years: Firstly, large corporations, larger medium-sized companies, and “hidden champions” in particular are currently investing in digital and networking projects, which will lead to a higher degree of networking among companies. Secondly, the growing investment in digital business processes is leading to more extensive digital communication both internally and externally, which is also fueling the level of networking. Thirdly, more and more companies are selling on marketplaces, thus learning about online sales in the first instance. Fourth, the move into digital business models ensures a higher digital share of value creation. And fifthly, there is a great need for SMEs to catch up, which is increasingly being recognized. Mönchengladbach, Germany

Gerrit Heinemann

Contents

1 B2B eCommerce Specification   1 1.1 B2B versus B2C eCommerce ����������������������������������������������������������������������   1 1.2 Digital B2B Universe������������������������������������������������������������������������������������   5 1.3 Types of Suppliers and Sales in B2B eCommerce����������������������������������������   8 1.4 Types of Customers and Users in B2B eCommerce ������������������������������������  11 1.5 Digital Maturity Levels and Barriers in B2B eCommerce ��������������������������  13 1.6 Truth and Fiction in Digital Infrastructure����������������������������������������������������  15 2 Basics  of B2B eCommerce  19 2.1 Digital Basics of B2B eCommerce ��������������������������������������������������������������  19 2.1.1 Physical Versus Virtual Value Creation��������������������������������������������  20 2.1.2 Phases of Digitization ����������������������������������������������������������������������  24 2.1.3 EDI Versus Industry 4.0 Versus B2B eCommerce����������������������������  26 2.1.4 Platform Economy in B2B eCommerce ������������������������������������������  29 2.1.5 Growth Factors of the B2B Platform Economy��������������������������������  32 2.1.6 Forms of Operation in B2B eCommerce������������������������������������������  35 2.2 Business Types of B2B eCommerce������������������������������������������������������������  38 2.2.1 Project Business in B2B eCommerce ����������������������������������������������  39 2.2.2 Supplier Business in B2B eCommerce ��������������������������������������������  40 2.2.3 System Business in B2B eCommerce����������������������������������������������  40 2.2.4 Industrial Goods Business in B2B eCommerce��������������������������������  41 2.2.5 Consumer Goods Business in B2B eCommerce������������������������������  42 2.2.6 Integration Business in B2B eCommerce ����������������������������������������  43 2.3 Customer Interaction in B2B eCommerce����������������������������������������������������  45 2.3.1 Purchase Phases and Conversion in B2B eCommerce ��������������������  45 2.3.2 Selling Center Versus Buying Center������������������������������������������������  49 2.3.3 Onsite Versus Offsite Customer Interaction��������������������������������������  52 2.3.4 Upstream Versus Downstream Customer Interaction ����������������������  55 2.3.5 Customer Journey in B2B eCommerce��������������������������������������������  56 2.3.6 Transaction Behavior in B2B eCommerce Using the Example of Domain Sales����������������������������������������������������������������  59 vii

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2.4 Marketing and Sales in B2B eCommerce����������������������������������������������������  60 2.4.1 Marketing Policy and CRM in B2B eCommerce ����������������������������  61 2.4.2 Sales, New Purchases and Repurchases in B2B eCommerce����������  62 2.4.3 Shop Design and Usability in B2B eCommerce������������������������������  65 2.4.4 Conversion and Shop Productivity in B2B eCommerce������������������  67 2.4.5 Login, Purchase Completion and Check-Out in B2B eCommerce��  70 2.4.6 System Strategy and Shop Selection in B2B eCommerce����������������  72 2.5 Customer Centricity as a Basic Requirement for Online Retailing��������������  82 3 Business  Models in B2B eCommerce  91 3.1 Business Models in the B2B Consumer Goods Business����������������������������  91 3.1.1 The Digital Universe of Consumer Goods Manufacturers ��������������  92 3.1.2 B2B eCommerce for Consumer Goods as a Digital Ecosystem������  96 3.1.3 Five Conditions for B2B Consumer Goods Transactions����������������  99 3.1.4 Multi-channel Distribution as the Basis of B2B2C Commerce�������� 102 3.1.5 Future B2B eCommerce for Consumer Goods as B2Me����������������� 108 3.2 Business Models in the B2B Industrial Goods Business������������������������������ 112 3.2.1 Consumerization in B2B Industrial Goods Business������������������������ 112 3.2.2 Derivative Demand in B2B Industrial Goods Business�������������������� 116 3.2.3 Digital Marketing and Brand in B2B Industrial Goods Business���� 117 3.2.4 Digital Content for Industrial Goods Fairs �������������������������������������� 119 3.2.5 Future B2B eCommerce for Industrial Goods���������������������������������� 122 3.3 Business Models in the B2B Supply Business �������������������������������������������� 124 3.3.1 B2B Supply Pyramid and OEM as Customer���������������������������������� 124 3.3.2 B2B Suppliers and Outsourcing������������������������������������������������������� 126 3.3.3 Service Providers as Suppliers of Services�������������������������������������� 127 3.3.4 B2B in Sourcing and eSourcing�������������������������������������������������������� 129 3.3.5 B2B Customer Acquisition of PLMs������������������������������������������������ 133 3.4 Business Models in the B2B Systems Business ������������������������������������������ 136 3.4.1 B2B Systems Business as Systems Selling�������������������������������������� 136 3.4.2 Demand-side Connectivity in the B2B Systems Business���������������� 137 3.4.3 OEM as A Business Model in the B2B Systems Business �������������� 140 3.4.4 Value Factors and Brand Management in the B2B Systems Business�������������������������������������������������������������������������������������������� 142 3.4.5 Cloud Computing Commerce in B2B Systems Business ���������������� 143 3.5 Business Models in the B2B Project Business �������������������������������������������� 147 3.5.1 Phase-Related eCommerce in B2B Project Business ���������������������� 148 3.5.2 New Purchasing Requirements in B2B Project Business ���������������� 150 3.5.3 Pricing Leverage and Value Selling in B2B Project Business���������� 152 3.5.4 Online Configurator and Multi-channeling in B2B Project Business�������������������������������������������������������������������������������� 156 3.5.5 General Contractors and Consortia in B2B Project Business���������� 157 3.6 Integration Business as a Value-Adding Approach in B2B�������������������������� 161

Contents

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4 Best  Practices in B2B eCommerce 163 4.1 Best Practices in the B2B Consumer Goods Business���������������������������������� 163 4.2 Best Practices in B2B Industrial Goods Business���������������������������������������� 166 4.3 Best Practices in B2B Supply Business�������������������������������������������������������� 168 4.4 Best Practices in B2B Systems Business������������������������������������������������������ 170 4.5 Best Practices in B2B Project Business�������������������������������������������������������� 173 4.6 Best Practices in B2B Integration Business�������������������������������������������������� 176 5 Risks  in B2B eCommerce 179 5.1 Legal Risks in Online Trading���������������������������������������������������������������������� 179 5.1.1 Login and Identification of B2B ������������������������������������������������������ 179 5.1.2 The General Data Protection Regulation (GDPR)���������������������������� 180 5.2 Business Risks in B2B eCommerce�������������������������������������������������������������� 183 5.2.1 Risk of Lack of Business Planning �������������������������������������������������� 183 5.2.2 Lack of Digital Readiness���������������������������������������������������������������� 187 5.3 The Myths of B2B eCommerce�������������������������������������������������������������������� 188 References

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About the Author

Gerrit Heinemann  is director of the eWeb Research Center at Niederrhein University of Applied Sciences in Mönchengladbach, where he has been teaching business administration, management theory, and trade since 2005. He is also a visiting professor at the Management Centrum Innsbruck and the Zurich University of Applied Sciences.  Prior to his academic career, he held responsible positions in the retail sector for around 20 years, including head of marketing at Douglas Holding AG, central managing director of Drospa Holding, and head of the Retail and Consumer Goods Competence Center at Droege & Comp. Today, he holds various supervisory board positions in e-commerce and retail companies and supports start-ups on the advisory board.Prof. Heinemann is the author of more than 400 articles and 25 books on the topics of digitalization, e-commerce, and online and multi-channel retailing. His book Der neue Online-Handel (The New Online Trade) has also been published in English and Chinese and will be released in its 14th edition at the beginning of 2023.

xi

Abbreviations

3D Three-Dimensional 3G Third Generation 4G Fourth Generation 5G Fifth Generation AGB General terms and conditions of business API Application Programming Interface App Application B2B Business-to-Business B2B2C Consumerated B2B and Disintermediated B2C B2C Business-to-Consumer bevh Federal Association of the German E-Commerce and Mail Order Trade e. V. BITKOM Federal Association for Information Technology, Telecommunications and New Media BMWi Federal Ministry for Economic Affairs and Energy BP Business Process C2C Consumer-to-Consumer CAGR Cumulated Average Growth Rate CD Computer Disc CEO Chief Executive Officer CMS Content Management System CNC Cost per New Customer CPO Cost Per Order CPQ Configure Price Quote CRM Customer Relationship Management CSV Comma Separated Values D2C Direct-to-Consumer GDPR General Data Protection Regulation DSL Digital Subscriber Line e Electronic EAI Enterprise Application Integration xiii

xiv

Abbreviations

EBIT Earnings Before Tax and Interests EBITDA Earnings Before Taxes, Interests, Depreciation and Amortization EC Electronic Cash ECC eCommerce Center ECR Efficient Consumer Response EDI Electronic Data Interchange EDIFACT Electronic Data Interchange for Administration, Commerce and Transport EDP Electronic Data Processing ERP Enterprise Resource Planning EU European Union FAQ Frequently Asked Questions FMCG Fast-Moving Consumer Goods RTD Full Time Equivalent GAFA Google, Amazon, Facebook, Apple GPS Global Positioning System GU General Contractor HDE German Retail Federation HTML Hypertext Markup Language http Hyper Text Transfer Protocol IaaS Infrastructure as a Service IfH Institute for Retail Research Inc Incorporation IP Internet Protocol IT Information Technology JIT Just in Time KIT Communication and Information Technology LBS Location-Based Services LTE Long-Term Evolution M Mobile MAM Media Asset Management MB Megabyte MMS Merchandise Management System WITH Middle class and economic association of the CDU/CSU MRO Maintenance, Repair and Operations MST Marketplace Interface Tool NDA Non-Disclosure Agreement NOS Never Out of Stock ODM Original Design Manufacturer OECD Organization for Economic Co-operation and Development OEM Original Equipment Manufacturer OMS Order Management System OSB OEM for System Builder

Abbreviations

PaaS Platform as a Service PIM Product Information Management PIMS Product Information Management System PLM Private Label Manufacturing PoS Point of Sale PVH Production connection trade RFID Radio Frequency Identification ROI Return On Investment ROMPO Research Online Mobile – Purchase Offline ROPO Research Online – Purchase Offline SaaS Software as a Service SB System Builder SDD Same Day Delivery SEA Search Engine Advertising SEM Search Engine Marketing SEO Search Engine Optimization SoLoMo Socialization – Localization – Mobilization TAB Tencent, Alibaba, Baidu TCO Total Cost of Ownership TCP Transmission Transport Protocol UDP User Datagram Protocol URL Uniform Resource Locator USP Unique Selling Proposition VAR Value-Added Reseller VK Verkaufspreis W3C World Wide Web Consortium WAT Web Analytics Tool WLAN Wireless Local Area Network WWS Waren-Wirtschafts-System WWW World Wide Web XML Extensible Markup Language

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1

B2B eCommerce Specification

Abstract

Experts consistently predict significant online growth in the B2B segment, although electronic transactions between companies are not new. Even before the invention of eCommerce, manufacturers and wholesalers networked their IT systems to enable automatic ordering via Electronic Data Interchange (EDI). However, this relates primarily to repeat purchases or dispositions and is associated with a relatively high expenditure of resources and systems. The same applies to the comparatively complex EDI interfaces. For this reason, eProcurement of this type is generally only worthwhile for larger companies, whereas 99% of the German economy consists of small and medium-sized companies. These are often “too small” for such EDI solutions or do not have the basic system requirements such as high-performance ERP systems. In this respect, online shops and web-based ordering platforms could represent simpler and more attractive solutions for business customers. The forms of B2B eCommerce differ significantly depending on the types of customers and suppliers as well as the types of users and purchases.

1.1 B2B versus B2C eCommerce B2B eCommerce refers to online trade with companies or organizations as customers, whereas in B2C eCommerce the consumer is always the addressee and the seller is usually the retailer (Heinemann, 2018a, 2019a). In contrast, B2B operators are usually both manufacturers or producers and wholesalers or production link traders (PVH). The latter represent a special form of wholesale through which industrial goods are distributed. In contrast,

© The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 G. Heinemann, B2B eCommerce, https://doi.org/10.1007/978-3-658-38528-6_1

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1  B2B eCommerce Specification

Hersteller institutions PVH Handel Manufacturer

PVH = Production connection trade Manufacturer

Project service provider

Project service Hersteller provider

Manufacturer Manufacturer

Manufacturer

Manufacturer

Wholesale

Retail

Consumer

Retail

Consumer

PVH Handel Manufacturer

Manufacturer Project service Hersteller provider

Manufacturer

Manufacturer

Manufacturer

Industrial goods

Consumer

Consumer goods B2B

B2C

Fig. 1.1  B2B versus B2C. (Based on Backhaus & Voeth, 2014)

direct sales from manufacturers to manufacturers characterize the subcontracting business. This distinction is illustrated in Fig. 1.1. B2B and B2C eCommerce (hereafter abbreviated to B2B and B2C) are without doubt – especially in the backend – each subject to different initial situations, which must be taken into account. The front end and usability, on the other hand, are quite comparable for B2C and B2B. While B2C eCommerce focuses primarily on maximizing sales, B2B eCommerce has so far focused primarily on process efficiency. Product data, for example, plays an important role here. In this respect, it is primarily a matter of networking business processes and data between companies. The systems should support the complex exchange processes and therefore be as user-friendly as possible. The processes must also be as simple and quick as possible for employees to operate. Although these companies are professional buyers, most commercial purchasing decisions are standardized. In addition, the systems should also support the acquisition of new customers as well as the initiation of new business (Haller, 2018a, b). Key differences between B2B and B2C eCommerce are the motivation of customers and their purchasing behavior, which inevitably results in different functionalities of the software as well as its architecture and the processes behind it. For example, the average purchase amount in B2B is just under US$500, while the shopping cart value in B2C is just over US$80 (Haller, 2018a). Around 74% of B2B buyers spend more than 4 hours per day searching for products, with 57% of the purchasing process already completed

1.1  B2B versus B2C eCommerce

3

without any underlying active communication. In 30% of the cases, this involves five people in the B2B purchasing process, otherwise at least two. In this respect, it is not a matter of convincing just one person – for example, the responsible buyer – but of establishing consensus decisions between different interest groups and departments. Studies show that the likelihood of a purchase decreases as the size of the team increases. That’s why B2B retailers need to engage intensively with their customers to understand the complexity of their purchasing decisions. But not everything in B2B is different than in B2C eCommerce. Customers in B2C and B2B expect the same customer experience. After all, commercial buyers in the private environment also shop on Amazon & Co. This experience shapes the expectation in terms of navigation, menu structure, labeling as well as icons etc. and also requires a high convenience orientation on the part of the operator in B2B. Accordingly, the “consumerization of B2B” represents a key trend in eCommerce (Heinemann, 2019a). Finally, the digital socialization of “private” and “commercial” shoppers coincides, who are in doubt one and the same person. However, to deduce from this that B2C and B2B processes are more or less identical and that every B2C retail shop system can also be converted into a B2B eCommerce platform at the same time with a few simple steps could have fatal consequences (Haller, 2018a, b). This is because B2B eCommerce is not quite as simple as it is often made out to be. True, convenience requirements and customer experience expectations are quite similar in B2B and B2C. However, the underlying goals and purchasing processes are different (cf. Fig. 1.2). This will be illustrated by seven aspects, namely buying behavior, customer acquisition, payment methods, shopping baskets, approval/budgets, returns/revocation and data protection. • Purchasing behavior in B2B is determined by a comparatively small number of customers, each of whom makes relatively frequent purchases, whereas in B2C this is exactly the opposite and there is also a high level of customer fluctuation. Differences between B2B and B2C commerce lead to different process requirements Property

B2B

B2C

Purchasing behavior

Higher purchase frequency per customer

Higher customer turnover/churn rate

Customer acquisition

Customer base, few new customers

Customer acquisition has top priority

Pricing

Net prices/variety of conditions

Uniform gross prices

Shopping carts

Few large orders, many articles

Many orders and shopping baskets, few articles

Release/Budgets

Comprehensive rules

Age restriction at most

Common payment methods

Invoice/pre-payment

Paypal, credit card, factoring etc.

Returns/Revocation

Consumer protection not required

Comprehensive consumer protection rights

Data protection

Important, but relaxed rules

Important with strict rules

Fig. 1.2  Differences between B2B and B2C. (Source: Himmel 2018)

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1  B2B eCommerce Specification

• B2B usually works with stable customer bases without much attrition. In B2C, on the other hand, a large part of the marketing budget must be invested in customer retention as well as loyalty programs. • In B2B, purchases are usually made on account or with prepayment, while in B2C, PayPal and credit card are the most common payment methods in addition to purchase on account. • The shopping baskets in B2B are significantly larger and consist of a large number of items with a mostly low number of orders. In B2C, the number of shopping carts is much higher, but with a small number of items and relatively low sales values. • In contrast to B2B, no budget releases are made in B2C. • While returns are a big issue in B2C, they tend to play a minor role with commercial buyers. • Finally, there are also major differences in data protection, as this tends to be viewed in a more relaxed way in B2B than in B2C. In summary, B2B shop operators should pay attention to concrete recommendations for measures, such as those presented in a study by ibi Research on online purchasing behavior in B2B eCommerce (Haller, 2018a, b; ibi Research, 2018) (see Fig. 1.3).

Expectations of B2B online shops are either not met or over-fulfilled Comparison between expected and offered information in B2B Commerce Information

Expectation B2B

Offer B2B

Deviation

Availability

92%

90%

-3%

Price overview

91%

100%

9%

Technical specification

91%

92%

1%

Expected delivery time

89%

67%

-22%

Delivery costs

73%

74%

1%

Graduated prices

72%

49%

-24%

Invoice history

64%

46%

-18%

Total order history

60%

62%

2%

Customer reviews/opinions

59%

28%

-31%

Special offers/discounts

57%

62%

5%

Downloads (e.g. instructions)

54%

69%

15%

Information graphics

43%

36%

-7%

Product/instruction videos

42%

54%

12%

Fig. 1.3  Expectations of B2B online shops. (Source: Haller, 2018a, b; ibi Research, 2018)

1.2  Digital B2B Universe

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Regardless of the expectations for B2B online stores, the existing B2B universe is already massive and may have already overtaken B2C eCommerce in terms of online revenue generated.

1.2 Digital B2B Universe The main distinguishing features between B2B and B2C are first of all the number of customers and their differentiation. While 63 million of the approximately 70 million adults over the age of 14 in Germany now use the internet and 50 million of them regularly shop online, there are a maximum of 0.41 million B2B customers in Germany. These relate to the manufacturing sector as well as wholesale trade with a combined net turnover of around EUR 3500 billion, of which a good EUR 1162 billion is in wholesale trade (Statista, 2018; Destatis, 2019a). At the same time, of the roughly 2,45,000 manufacturing companies and approximately 1,55,000 wholesalers, only around 5500 companies operate a B2B online shop (Zimmermann, 2017). This corresponds to an online penetration of just 1.3%. As a study by ibi research has determined, there are specific reasons for the low number of B2B online shops in this country (Zimmermann, 2017; ibi research, 2018; Heinemann, 2019a): • The economy is predominantly medium-sized and thrives on multi-level distribution. Each trade level is specialized and delivers value-added contributions in terms of information, assortment and price. Therefore, a high level of IT competence was not necessary for the companies until now. • Due to the intensive processing of customers to date, an online channel does not close any gaps in supply, but must be built up via real added value and prepare a market for itself. • In the commercial sector, the number of product variants is many times greater than in the end customer business. In addition, each product has a customer-specific price, which is why the complexity of a B2B online shop is simply higher. It should therefore come as no surprise that only a small proportion of German companies sell their goods and services via digital channels, be it via a web shop or a mobile app, even though one in four companies uses electronic data interchange (EDI). In B2B SMEs in particular, there are still many blank spots on the digital map (Graf, 2017). In many cases, master data has not yet been digitized, and even customer databases are scarce. It is true that 45% of all German companies have implemented CRM software. But only just over half of those willing to use CRM, namely 24%, use their CRM and customer data beyond data collection – for example, for marketing purposes. It should therefore come as

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1  B2B eCommerce Specification

no surprise that although small and medium-sized enterprises transfer EUR 153 billion annually via digital channels, the vast majority of this (EUR 144 billion) is generated via digital transactions such as EDI and not via online sales. Only a small proportion of SMEs, just 16%, use the opportunity to market their products or services online at all, and not even a tenth of these use their own online shops. In this respect, it can be assumed that the generational change in management will lead to above-average online growth in the coming years, also because competitors and customers will offer or demand digitalization (Graf, 2017). Current figures, according to which investments in the expansion of B2B shops are increasing significantly, support this development. While around 6% of B2B online sales were earmarked for reinvestment in 2016, 9% are already expected for 2017 (Graf, 2017). Part of this will certainly be used for the expansion of processes, which must be implemented far beyond system boundaries, and for a stronger interlinking of offline and online processes as well as the implementation of an omnichannel strategy (Thürling, 2015). In any case, however, investments will fuel B2B eCommerce in the coming years. While in 2013 the total volume of all digital-based transactions including EDI was still EUR 870 billion, in 2018 this already amounted to around EUR 1300 trillion. The corresponding figures for B2B eCommerce for goods and services are shown in Figure 1.4. Serious forecasts for digital-based transactions assume a tenfold increase in growth over the next few years compared to annual economic growth (Graf, 2017). This would correspond to an annual growth rate (CAGR) of 15%. Of the total B2B eCommerce sales

Total and B2B eCommerce net sales for 2018 in billions of euros. >3,500 billion euros manufacturing sector and Wholesale Total Offline/Online

>1.300 billion euros B2B eCommerce total incl. EDI and eProcurement

Adolf Würth in D Best Practice with >20% Online

5.1% Online share (+21% p.a.)

>300 billion euros

C-parts and MRO ~17% online share (+11% p.a.)

B2B eCommerce incl. Procurement web-based

B2B eCommerce Goods & Services

>180 billion euros >55 billion euros

B2B eCommerce Goods/finished products

B2B eCommerce total

B2B eCommerce Goods & Services

B2B eCommerce Website /Marketplace

B2B eCommerce goods

Estimate – revenue development B2B eCommerce in Germany

Fig. 1.4  B2B eCommerce revenues in Germany. (Adapted from Graf, 2017; Hudetz, 2018; IFH Cologne, 2019)

1.2  Digital B2B Universe

7

in 2020, around one-third, or EUR 362 billion, will be truly web-based. This figure is likely to have been around EUR 300 billion at the end of 2017. The remainder is accounted for by eProcurement and EDI transactions. According to calculations by ECC Cologne, pure eCommerce sales in B2B  – i.e. genuinely online sales for goods and services  – amounted to around EUR 180 billion in 2018 (Hudetz, 2018), which corresponds to growth of 21% as well as an online share in this segment of 5.1% (IFH Cologne, 2019). In the MRO segment, the online share for C-parts was already 16% (+11%) and thus over EUR 55 billion. Accordingly, the online share in the B2B market is currently still significantly lower than in B2C retail (non-food) with around 20% (bevh, 2019). After all, B2B eCommerce already employs around 100,000 people, i.e. around one third of the employees in the German internet industry (Graf, 2017). In contrast to B2C online retailing, B2B eCommerce is mainly covered by German companies, whose level of digitalization, however, differs greatly depending on the sector. More than a quarter of the 5500 companies with B2B online shops expect an increase in eCommerce sales in the future. The following factors are likely to fuel B2B growth (Graf, 2017): • Higher levels of networking: Large corporations, larger SMEs and “hidden champions” in particular, which together generate the largest share of Germany’s gross domestic product, are currently investing in digital and networking projects. This ensures a higher degree of networking among companies. • Expansion of digital business processes: The growing investment in digital business processes is leading to greater digital communication both internally and externally, which in turn is fueling the level of networking. • Forcing online sales: More and more companies are selling on B2B marketplaces and launching their own online shops through to their own B2B marketplaces. • Multiplication of digital business models: The entry into digital business models ensures a higher digital share of value creation in the medium term, which in turn is increasingly mapped digitally. • Need to catch up in eCommerce: eCommerce has hardly played a role in German SMEs to date. In this respect, there is a great need to catch up. The dovetailing of offline and online processes and the implementation of an omnichannel strategy is critical to the success of all companies. If the various channels are not networked via interfaces, the customer cannot be served in a service-oriented manner on all channels. Especially companies that still think in silos and thus delineate branch versus online or sales versus marketing will have a hard time (Thürling, 2015). However, the most important prerequisite for a successful B2B eCommerce strategy is to understand the differentiation in the corporate landscape with regard to types of providers and sales as well as types of customers and users.

8

1  B2B eCommerce Specification

1.3 Types of Suppliers and Sales in B2B eCommerce The goal of a B2B online shop should undoubtedly be to increase productivity on the customer side in addition to increasing sales on the supplier side. In this respect, its functionality must make the work of buyers easier, faster, more transparent and more cost-efficient. An essential prerequisite for increasing process efficiency on the customer side is optimal product configuration in the B2B online shop, as several products often depend on each other here. A custom-made awning can only be attached to a certain surface with specific brackets. The brackets required for this can also only be fixed with compatible screws, and so on. Know-how is necessary for the selection of the right product combinations, which can be outsourced to a product configuration. In this respect, B2B customers buy differently. This will be illuminated by the following aspects (Haller, 2018b): Complex and Standardized Purchases As a rule, B2B companies have customers with whom they build a long-term relationship, which is due to the required stability of quality, quantity and delivery. For example, if ZF cannot deliver axle drives in sufficient quantity and quality, the assembly lines at BMW come to a standstill as a direct consequence. This quickly leads to enormous downtime costs and sometimes claims for damages. Furthermore, the interaction of the different channels in B2B is very complex, since in addition to the online shop, there is also field service, service, call centers, and most likely print catalogs (Haller, 2018b). A study by IbI Research on the topic of “Online buying behavior in B2B eCommerce” (ibi research, 2018) shows the diversity of B2B channels (cf. Fig. 1.5). The channels complement each other, and the online shop in particular increasingly has a support function for the offline channels, as ROPO is also used in the majority of B2B transactions (Hudetz, 2018). Functionalities that can support recurring standardized purchasing processes are, for example, ready-made search results based on previously purchased products, watch lists or item number-based forms for quick orders, punch-out procedures or upload of XML/CSV files. There is no doubt that sales via online shops are currently increasing, but standardized exchange processes still account for a high proportion of total sales (Haller, 2018b). Large Order Quantities Compared to B2C, the order quantities in B2B are considerably larger. There are usually considerably more products in the shopping cart, which in turn are provided with different pricing rules. This is why a powerful pricing engine is needed, otherwise the browser needs too long for the calculation. It becomes problematic if the prices are generated directly from the ERP system and are not prepared accordingly. As a result, the performance in the check-out can suffer, since the ERP is usually not designed for performance (Haller, 2018b).

1.3  Types of Suppliers and Sales in B2B eCommerce

9

Which sales channels German companies use Processing of written orders _____________________ 59% Shop system _____________________ 58% Direct sales through field service __________________ 54% Telemarketing _________________ 49% Catalog ______________ 38% Stationary specialized trade ___________ 33% B2C marketplaces _________ _ 29% Self-developed shop system __________ 28% Open source shop system __________ 27% B2B marketplaces ________ 24% Trade fair sales ________ 24% Closed source shop system ________ 23% E-procurement system ______

17%

SaaS (e.g. rental shop) __ 4% Other solutions __ 3%

Fig. 1.5  B2B channels used by German companies. (Source: ibi research, 2018)

Specific Product Catalogues Companies often work with specially tailored catalogs for different customer groups, which are often also customer-specific. B2B eCommerce systems therefore require powerful product catalog functionalities that support bulk editing, for example (Haller, 2018b). Long-lasting Customer Relationships In commercial B2B sales, emphasis is placed on building and managing long-term customer relationships that are based on reciprocity. Both customer acquisition and supplier evaluation are cost-intensive processes in B2B. This increases the value of the customer relationship, especially since in B2B the conversion rate is around 10%, which is enormously high. Therefore, many service functionalities are required, with which the buyer must also cope. This includes contract management as well as role, budget and rights management for buying centers. That is why CRM solutions are often used on the seller side that can communicate seamlessly with the eCommerce software in order to effectively map sales cycles, for example (Haller, 2018b). Complex Logistics In B2B, the delivery and billing addresses are usually different. Different delivery addresses must already be entered during the purchasing process. The logistics processes are also more complex and include, for example, delivery ramps, delivery gates, cold

10

1  B2B eCommerce Specification

chains, hazardous goods or multiple storage locations (order splitting). Based on different conditions, quite different goods may have to be delivered. Therefore, it can quickly become too confusing if several dealers are integrated into a company’s B2B portal, so that separate order management systems are then required. In addition, numerous backend interfaces are required on both the sales and purchasing side. For example, CRM, ERP, and call centers must be connected so that each person has all the information they need at their fingertips. Therefore, B2B has higher integration requirements than B2C (Haller, 2018b). Accurate Inventory Overview and Delivery Tracking In the commercial sector, buyers usually order large quantities. For this, they need detailed information about the available quantities. Equally important is reliable information about the delivery date and the ability to track deliveries. These are often intermediate products or raw materials that have to be included in the production process. For these, too, detailed advice from trained personnel is not infrequently required. It is not uncommon for complex scenarios to arise in which buyers as well as sellers have to serve different people with different needs and diverging interests. All parties involved need a uniform level of knowledge about a product and the related information in the sales and delivery process. This requires tools that go far beyond the usual self-service portals of the “My Account” type of a B2C eCommerce system (Haller, 2018b). Complex Products and Solution Selling B2B products – if they are not C-parts – can sometimes require a great deal of explanation as well as a great deal of variation. This then results in higher and more complex product attributes, whereby buyers not infrequently have to follow internal specifications that should be reflected in the product information. Examples of this are exploded diagrams for spare and wear parts as well as storage instructions. Additionally, graphics make it much easier to find the parts you need (Haller, 2018b). Thus, exploded graphics can make it easier for buyers to identify needed parts, for example, via the make/model selection in automotive aftermarket. These requirements not infrequently necessitate particularly powerful product information management. Customized Prices and Negotiations In the B2B sector, companies usually have a great deal of negotiating power, as sales are many times higher than in B2C. This often results in different price lists even for the same services, which can even be individualized with specific product catalogs. In addition, minimum purchase quantities can be negotiated in defined periods with corresponding price scales. This results in complex constellations between sellers and buyers and usually leads to complex price structures. This in turn requires a powerful price engine to avoid system crashes at check-out. With several 100 different articles, there can quickly be several 1000 different prices. This often results in differences between the prices in the ERP and in the online shop. However, since the prices are usually fixed by contract, this can

1.4  Types of Customers and Users in B2B eCommerce

11

quickly lead to trouble with customers. A powerful B2B eCommerce software must therefore be able to map the results of price negotiations (Haller, 2018b). Search Function Instead of Navigation In a B2B online shop, the offer is often very diverse and not infrequently unmanageable, as there are many more attributes, variants and product combinations. B2B customers work primarily with article numbers, while B2C customers tend to search via categories, product names and brands. Therefore, in the B2B context, the search function is the gateway to the site in seven out of ten cases. This requires a powerful search function that can handle semantics in addition to autocorrect, autocomplete and facet function. In addition, the general search schemes in the B2B sector do not only include simple keywords, but are usually solution-oriented. For example, in the craftsman sector, people search for “broken wooden frame” or “scratch in paint”. Therefore, a very sophisticated search function must be available (Haller, 2018b). Individual Buyers and Groups In corporate purchasing, it can either be individuals, or buying centers. In this context, buyers can have different roles. In addition, rules, approval processes and regulations must be taken into account. This means, among other things, that multiple log-ins are required for a company. Also, different roles, cost centers, approval processes, or budget management must be considered (Haller, 2018b). Specific System Solutions Professional purchasing requires efficient systems to be able to design the work more effectively. The activities and processes in the backend of sales and purchasing are complex and highly specialized. This concerns functional, informative and technical aspects. A B2B eCommerce system must meet these requirements. For example, the complex processes create special performance and load scenarios for the pricing engine. Automated eCommerce systems are also becoming increasingly important in the B2B context, as they guarantee the necessary connectivity to third-party systems via standardized API. This is also required by the complex customer journey of a B2B buyer group, which has many more contact points and information needs than is common in B2C eCommerce (Haller, 2018b).

1.4 Types of Customers and Users in B2B eCommerce Normally, in B2B eCommerce, the customer purchases a product in order to use it for the creation of his own services. This can involve raw materials and supplies or capital and fixed assets such as production machines, computers, office furniture or vehicles for the fleet (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014). The types of customers and users are highly diverse: whether manufacturers, original equipment manufacturers

12

1  B2B eCommerce Specification

(OEMs), original design manufacturers (ODMs), wholesalers, distributors, value-added resellers, engineering firms, general contractors, consulting firms, retailers, car dealers, workshops, other organizations or government agencies – there are no limits to the diversity, especially since these can be based on very different types of operations or business models. Manufacturer: Producers, OEM and ODM Basically, all types of manufacturers need materials or products to convert them into new services. Manufacturers who buy products to use them almost unchanged in their own products are usually called OEM users. These then use “ingredient brands” such as parts from Bosch, Hella or Continental. In contrast, Original Design Manufacturers (ODM) are companies that take on contract manufacturing on a large scale. The products are developed by other companies and sold under their brand without having their own production. This type of contract manufacturing is practiced by practically all major fashion labels such as Adidas, Boss or Nike. But also car manufacturers like to resort to ODMs in case of capacity bottlenecks (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014). However, it is not uncommon for a certain confusion of terms to arise due to the fact that manufacturers in the automotive industry also refer to themselves as original equipment manufacturers (OEMs) and that there are special OEM suppliers for them (at-rs, 2016). Wholesalers: Affiliated Groups, Distributors and Value Added Resellers This type of business purchases products from single or multiple manufacturers and then distributes them to other users. In doing so, they usually add value to the product offering by providing additional services such as, inter alia, warehousing, marketing, financing and servicing. If the customers are other manufacturers, they are usually production link distributors, otherwise they are normal wholesalers or groups of distributors. Value added resellers (VAR) go one step further, adding their own components to the product (e.g. software or finishing). It is not uncommon for them to design their own industry or user solutions and to be important marketing partners (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014). Project Service Providers: Project Planning, Engineering Offices, General Contractors and Consulting Firms If complex product segments are involved, project service providers such as project planning, engineering or consulting firms are usually active. Although they often only have an advisory function in the procurement process, they exert a great deal of influence on it as part of their activities. For example, they draft the requirement profiles for new systems or applications. They are held in high esteem by customers due to their qualifications and manufacturer neutrality (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014).

1.5  Digital Maturity Levels and Barriers in B2B eCommerce

13

Retail Trade: Consumer Goods Trade, Pharmacies, Car Dealers and Garages In the case of consumer goods, retailers represent the point of contact with end customers. They are of outstanding importance as gatekeepers and are predominantly responsible for marketing and selling the products. In addition, they are responsible for warehousing and increasingly for the delivery of goods. They are also usually service partners for the end customers and the point of contact for product defects and liabilities as well as warranty services. This applies in particular to car dealers and workshops (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014). Institutions: Other Organizations and Government Agencies Public and private institutions such as political parties, charities, churches, environmental organizations and transnational organizations also purchase supplies. This also applies to government agencies, which usually follow certain procurement rules, as well as to organizations that are bound by public budget law due to their legal form. Even private-sector organizations often pursue specific target systems that determine their procurement behavior (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014).

1.5 Digital Maturity Levels and Barriers in B2B eCommerce No matter what types of customers and users are involved: Studies show that almost half of SMEs do not consider digitalization to be relevant and 54% of them have not yet addressed the issue of digitalization (Deutscher Bundestag, 2015; Wittmann et al., 2017; ibi research, 2018). This digital refusal attitude is likely to be even more pronounced among SME manufacturers than in local retail, where project initiatives for the digitization of inner-city retail literally fall on deaf ears among large sections of the local retail community or turn into a damp squib (mgetail2020, 2015; Nordbayern.de, 2019). Nevertheless, it cannot be denied that digitalization is profoundly changing the economy. All experts actually agree on this assessment (Deutscher Bundestag, 2015). However, a certain degree of helplessness is evident among SMEs when it comes to the topic of digitalization. There is also a lack of theory on this topic, as most business management theories come from a different industrial age. Science and business certainly need to be more closely linked; however, this does little to change the increasing pressure to act. In this respect, medium-sized retailers in particular need to be helped in “with a shoehorn”, as Jörg Müller-Lietzkow from the University of Paderborn recommends (Deutscher Bundestag, 2015). On the other hand, however, there is no reason to fear that SMEs will perish as a result of the concentration processes associated with digitalization. On the contrary, digitization also offers opportunities to tear down barriers to market entry. For example, cloud computing opens up opportunities for small and medium-sized enterprises (SMEs) to use high-quality software that previously only large companies could afford (Deutscher Bundestag, 2015). However, these opportunities have hardly been exploited so

14

1  B2B eCommerce Specification

far. While digitalization already determines a large part of everyday life, the biggest changes are yet to come, especially in SMEs (Heinemann, 2019a). In this respect, it is clear that manufacturers and wholesalers in B2B sales must also implement the digital transformation in online business more quickly than before. Those who are too hesitant are already losing their future opportunities today. After all, 77% of companies are convinced that businesses that do not increase their pace of digitalization now will cease operations in five years at the latest (Krah, 2019). The digital maturity of companies shows that only 56% of processes and departments are already fully digitized. The areas in which this is the case in particular are shown in Fig. 1.6. In 2018, German companies invested an average of EUR 15,40,000 in the digitalization of their sales and service processes. This sum is expected to rise to EUR 17,90,000  in 2019. However, the right strategy is still lacking, as only just over half of companies already have a strong concept for digitizing sales and services in the B2B sector (Krah, 2019). Quite simply, there is a lack of innovators and pioneers, whereby in B2B eCommerce the issue of pioneers is particularly challenging because it also requires appropriate technology. This technology hardly exists in Germany, and young talent is also in short supply. The USA draws from Silicon Valley with Stanford as an institution. We actually need such a research center in Europe, but we don’t have one (yet). Perhaps industry will finally realize this and set up its own research institution – financed by the family foundations of the major German business clans – without always waiting for politicians. Because we need more innovation on the technical side in the future (Geistreich78, 2015) and also a reversal of the previous funding policy, according to which the Federal Ministry of

Share of digital processes in companies

%

Order tracking and management

64,2

Product Data Management

63,1

Marketing

61,4

Offer expansion

61,2

Customer service

59,6

After-sales service

57,0

Omnichannel customer experience online and offline

55,6

Field service of sales and service

53,8

Fig. 1.6  Share of digital processes in companies. (Source: Krah, 2019)

1.6  Truth and Fiction in Digital Infrastructure

15

Economics only funds technical product innovations and not innovative trade concepts. These are considered application-oriented and are therefore not eligible for funding. In this respect, the poor digital situation in Germany is no coincidence, but home-made. This is also true when it comes to the topic of fast networks, as broadband coverage in our country is catastrophically poor (OECD, 2018). To work, companies need sufficient internet speed, because the requirements for online presentations are becoming ever higher. How such conditions can be created is shown, for example, by small Estonia, which is nowadays considered a digital trendsetter (Dialogue Platform Retail, 2015). Every citizen has a constitutional right to the Internet – and this has been the case since 2000. WLAN must be accessible free of charge almost everywhere, including on public transport and in rural areas. In Germany, the mobile phone standard 4G, which is not even available nationwide, must also become faster in 2016. This realization has now also reached German politicians. Only action is obviously not being taken to a sufficient extent (OECD, 2018).

1.6 Truth and Fiction in Digital Infrastructure Only every second business in Germany has access to the fast network, as the Federal Statistical Office announced in January 2019 (Destatis, 2019b). Top places in the EU are occupied by Sweden and Denmark with 75% each, while only 51% of companies in Germany have a fixed broadband connection with a data transfer rate of at least 30 MB per second. But even such transmission rates are already considered insufficient among experts today (Techbook, 2019). It is now clear to everyone that Germany is a digital developing country and needs to catch up tremendously (Heinemann, 2018c). It is also no longer up for discussion that the digital network infrastructure urgently needs to be expanded for this purpose. While politicians and KIT associations have been happy to gloss over the situation so far, this digital lie has been over at the latest since our Federal Minister of Economics said that he was embarrassed by the German mobile network (Die Welt, 2018). However, Altmaier rejects his own responsibility for the situation, although he was, after all, Federal Minister for Special Tasks and head of the Federal Chancellery from 17 December 2013 until his appointment as Economics Minister on 14 March 2018. Obviously, for the time being, it’s all about apportioning blame, as is actually customary at the moment with all the leaders of the parties represented in the Bundestag, as well as all the representatives of the federal states. And this also applies to high-ranking industry representatives as well as association representatives, who are obviously also buckling, as was recently the case with Bitkom President Achim Berg, when he portrayed 5G coverage as too expensive. But how do we move forward on this issue now so that we don’t miss what is probably the last great opportunity for Germany to catch up digitally and slip from fifth to last place in the OECD ranking of future networks? After all, the situation now looks more than dramatic in terms of mobile and fiber-optic penetration. Germany, for example, is only 29th out of 34 countries in terms of fiber-optic networks, with a penetration rate of just

16

1  B2B eCommerce Specification

2.3% (OECD, 2018). It now seems important above all to distinguish between fiction and truth (Heinemann, 2018c). This will be explained in detail in the following sections. Thesis 1: We Do Not Need A Fiber Optic Network – 5G Is Sufficient The antennas and masts of any mobile network, including 5G, are always the ends of a cable network required for this purpose. That copper lines have outlived their usefulness is now also clear to Telekom, even if it defines them as broadband networks. However, caution is advised here, because under the “magic word” vectoring, the Internet connection obtained via copper cable is merely optimized by compensating for disruptive currents. Such internet connections, however, do not allow to expect more than 50 MB per second even under ideal conditions (Heinemann, 2018c; Techbook, 2019). However, since the cables to the next distributor are consistently longer than in ideal conditions, in reality it is likely to be even only a maximum of 20 MB per second. Better than nothing, however, just “pimping” a past solution. After all, the 5G standard promises more throughput, capacity and at the same time lower operating costs. In addition, the direct connection of mobile stations to the fiber optic network is expected to become even more important in the 5th generation of mobile communications. The only problem is that, with a penetration rate of only 2.3%, we actually have virtually no fiber-optic network and, despite all the innovations or proclamations, the existing mobile sites will form the basic framework for the 5G network (Heinemann, 2018c). Thesis 2: Grid Expansion Is Too Expensive and Must Be Financed Through Auction Revenues Allegedly, up to 7,50,000 antennas and 9,000 additional mobile network sites are required to implement 5G nationwide. At the same time, expansion costs of between EUR 60 and 130 billion are rumored, which the state would not be able to raise (Heinemann, 2018c). For this reason, the network agency would have to auction off the 5G frequencies in order to use the revenues to enable network expansion and to force the network operators to provide nationwide coverage by imposing conditions. First things first: Even if the expansion were to really cost the state EUR 130 billion, this sum would still be vanishingly small compared to the amounts paid for the “systemically relevant” bank bailout in 2009. However, saving Germany as a digital location is at least as systemically relevant as saving the banks back then. For the fourth-largest economy in the world and the largest business location in the EU, even EUR 150 billion would be easily bearable, especially since the Federal Republic still has enough financing potential with its comparatively low debt ratio. In addition, mobile network operators should be able to operate economically, so that completely shifting the burden of network expansion onto private companies would be counterproductive. There are calculations according to which around 85% of all households would be reached with 2/3 area coverage in Germany and, moreover, this coverage would be economically feasible from the operator’s point of view (Heinemann, 2018c). Around 14 billion would have to be spent on the remaining third, which would really be bearable for the state. However, we are only talking about the

1.6  Truth and Fiction in Digital Infrastructure

17

5G standard in these amounts so far. The fiber-optic network would have to be added and should be worth any price to a responsible policy-maker (Heinemann, 2018c). Thesis 3: The 5G Network Comes Quickly and Secures the Digital Location After all, the cabinet has set up a Federal Government Digital Council consisting of ten digital experts. This council is officially supposed to be at the disposal of the entire federal government. What is it actually for? It is clear that we need fiber optics. That 5G must come quickly is also clear. However, even the Digital Council won’t be able to work magic, and with its cumulative expertise it should actually know that it’s not just other industrialized countries that are significantly further ahead. While South Korea already used 5G networks at the Olympic Games in 2018, the 5G expansion in Germany will take years. In this context, the rights of use from the frequencies to be auctioned will predominantly only apply from 2021 (Heinemann, 2018c; Techbook, 2019). Furthermore, there are hardly any end devices for 5G so far, so that – similar to the diesel ban drama – the end user is forced to buy new devices. By the beginning of 2023, the network agency requires nationwide coverage of all households, all federal highways, all major federal roads, and the most important rail lines (presumably only ICE) (Heinemann, 2018c). By 2024, operators can extend the network to all other federal highways. However, the requirement is a transmission rate of 100 MB, which is not feasible in the copper cable network alone. The Digital Advisory Council is likely to confirm that this network speed will be far from sufficient for the digital topics of the future – i.e. autonomous driving, virtual reality as well as Industry 4.0. And it should be emphatically pointed out once again: It won’t work without a fiber-optic network, and that has barely grown in recent years (Heinemann, 2018c). Thesis 4: Politicians Take the Digital Issue Seriously and Take Action Despite vectoring, digital advisory board and quite correct digital visions: Things will get much worse! The digital situation in Germany will not improve significantly by the time 5G is rolled out – i.e. by 2023 – but will rather deteriorate considerably. Mobile internet usage, for example, has increased sharply in recent years and is expected to continue to do so in the coming years. So far, the amount of data transferred has grown by more than 50% every year (Heinemann, 2018c). It is almost certain that usage will continue to grow at the same rate in the future. Not only does the average duration of mobile internet use in Germany still have plenty of room for improvement in an international comparison, but also the type of use. In particular, the trend towards high-resolution videos (4K and 8K) requires ever higher data rates and capacities in the mobile network. The higher data volumes to be expected in this context will significantly overload the existing network in the next few years, to the point of total breakdowns. What certainly hinders the expansion considerably and should not be a taboo are the enormous building regulations in Germany. These not only concern the type and number of cable pipes and connections for buildings and private houses, but also the prohibition of above-ground lines or underground lines that are not laid deep. The exaggerated requirements for construction and laying alone make German grid expansion several times more

18

1  B2B eCommerce Specification

expensive by international standards. A corresponding change in the law should be possible quickly, if it is really wanted (Heinemann, 2018c). Conclusion

It is no longer bearable that politics and interest groups are again starting to lie about digital facts. Even what the digital agenda said about this was simply hollow chatter! And the Digital Advisory Council is also likely to be nothing more than a paper tiger in this muddle! After all, Ms Merkel has been warning since 2013 that Germany is missing the boat and that digitalization in all areas of life is important for maintaining Germany as an industrial location. All words instead of deeds, because the situation has deteriorated significantly since then and Germany now ranks in the middle of the pack at best in an international comparison. According to recent studies, we only come in 18th place out of 63 countries (OECD, 2018). This means that in terms of both digital technologies and the digital orientation of business models and state institutions, Germany is the opposite of excellent. What else should the Digital Advisory Council say about this (Heinemann, 2018c)?

2

Basics of B2B eCommerce

Abstract

In addition to the topic of digitalization, the term “Industry 4.0” is currently on everyone’s lips. However, this largely neglects B2B eCommerce and only talks about networking between companies and the platforms they use. This is not new, however, because it already existed before the Internet age or before the digital revolution it ushered in, which is characterized above all by the fact that it gives rise to new business models. It is therefore important to clarify the digital fundamentals as well as the specifics of virtual value creation. This enables a differentiated view according to business types, which are strongly influenced by their position in the value creation stage and the type of customer interaction. These factors determine which marketing and sales policy makes sense in order to be able to meet the demand for a customer-centric company in the first place. Traditional retail models will therefore find it increasingly difficult to survive in the constantly changing market. Digital platforms and online marketplaces in particular are able to guarantee efficient market mechanisms comparatively cheaply and quickly. For B2B multi-channel providers in particular, it is becoming increasingly important to differentiate themselves from the classic business model by offering additional services and thus score points with B2B customers.

2.1 Digital Basics of B2B eCommerce Industry 4.0 contains a large open flank when it leaves innovative business models out. In this respect, virtual value creation reflects a completely outdated state of digitalization. This is still functionally oriented and considers digitalization on an EDI basis at best. This does not yet enable a revolution in business models and business systems, which is, © The Author(s), under exclusive license to Springer Fachmedien Wiesbaden GmbH, part of Springer Nature 2023 G. Heinemann, B2B eCommerce, https://doi.org/10.1007/978-3-658-38528-6_2

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however, a prerequisite for customer centricity and therefore necessary for B2B eCommerce solutions. A wide variety of shop system options are already available for these, the benefits of which vary greatly depending on the type of operation and business. Overall, the customer journey in B2B is already strongly influenced by platforms. This offers companies a variety of opportunities to support the information and purchasing processes of customers through digital services. To do this, it is essential to cater to the needs and wishes of B2B customers. The better B2B providers succeed in simplifying procurement processes by means of interactive self-services, the more likely the product price in B2B eCommerce will move into the background.

2.1.1 Physical Versus Virtual Value Creation Especially in manufacturing companies, the physical world of materials, factories, products and customers is familiar to managers. In the course of digitalization, this world was already overrun by a virtual sphere in the 1990s, namely that of digitalized information (Rayport & Sviokla, 1996). Thus the “marketplace” was joined by the “marketspace”, which was often unfamiliar to industrial managers in particular. Although companies generally collect every conceivable piece of information about markets, customers and competitors, the abundance of data (“Big Data Problem”) is still often seen as a problem. However, with the help of this information, the entire physical value chain can undoubtedly be far better controlled, starting with the procurement of materials through to the delivery of finished products and services. This creates another value chain, namely the virtual value chain (see Fig. 2.1). Many car and aircraft manufacturers have already transformed some of their sub-­ functions accordingly. But few companies have really recognized that additional value can be generated with the help of this data. As a rule, the problem is on the sales side, as the VW examples Gett (Hage, 2018) or Heycar (CIO, 2018) show. Basically, the virtual value chain is a complement to physical value creation. There are basically four ways in which information can be used for better value creation (Marchand, 1999; Heinemann, 2017, 2018a; Hollensen, 2017): 1. Improved quality of work: In view of improved transparency, the quality of work can be improved in all functions, such as finance, accounting or controlling. Therefore, IT resources should not be spared, especially in these areas. 2. More effective cost management: Improved information primarily enables process optimizations and simplified transactions. This is closely related to business re-­ engineering and continuous improvement. 3. More successful product and service offerings: The more data available about customers and their demand, the better customer-specific offers can be made. Also, sharing the information with market partners usually improves customer satisfaction and increases customer loyalty.

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Physical value chain

R&D

Production

Define information problem

Organise, select and gather information

Marketing

Synthesize information

Sales& Service

Value

Distribute information

Value

Virtual value chain

Fig. 2.1  Virtual value chain as a complement to the physical value chain. (Source: Hollensen, 2017)

4. Optimized new product development: Customer data can also help develop new products that are more likely to be accepted by customers. They also enable shorter development cycles and faster time to market. These four possibilities require powerful electronic systems, as demonstrated by the major Internet platforms or information intermediaries. Above all, they have radically changed the competitive situation and the nature of the customer relationship. Therefore, these “four digital opportunities” need to be complemented by the “interactive interface” to the market, namely true B2B eCommerce. B2B eCommerce complements digitalization by two key aspects that have radically gained relevance through the Internet (Marchand, 1999; Hollensen, 2017; Heinemann, 2017, 2018a): 1. Maintaining and defending the customer relationship: Traditional intermediaries – such as brick-and-mortar retailers – have already lost their unique selling proposition at the customer interface in many cases and often no longer play a dominant role in the customer’s product selection. They are becoming less and less relevant to Internet users, as a result of which consumer loyalty and, consequently, willingness to pay are continuing to decline. 2. Radical improvement of competitiveness through new business models: Today’s customers are also Internet users and expect manufacturers to have an excellent online shop where they can prepare their purchasing decisions. Otherwise, customers will gradually migrate to platforms.

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Stefan Quandt made it abundantly clear at the Herbert Quandt Media Award ceremony in summer 2015. The largest BMW shareholder recommends not to paint digitalization as a specter on the wall, but to make targeted use of its opportunities in conjunction with the company’s own strengths, because time is pressing. Above all, the customer interfaces must be defended, over which the company currently (still) has sovereignty: “But only those who communicate directly with their customers will understand their wishes. And only those who consistently orient themselves to these customer wishes and offer the best solution for the corresponding needs will ultimately be able to survive in competition” (Quandt, 2015). This sentence is undoubtedly reminiscent of the inventor of customer centricity, Amazon founder and CEO Jeff Bezos. At the same time, it sums up a development that can be observed in almost all industries and will probably turn all previous value chains upside down sooner or later: The digital revolution is driving the decoupling of previous value chains, as a result of which traditional providers can no longer or will no longer perform essential value-creating activities. They will be replaced – for example at the customer interface – by infomediaries with an outstanding variety of offers, brokers with an infinitely large selection, recommendation engines with individual 1:1 recommendations, price and product search engines with an advisory function, and social networks that bundle trustworthy opinions and recommendations from friends (Heinemann, 2015). So Quandt is spot on with his warning. It is to be welcomed that he is calling on Europe’s companies to stand up to Apple, Google & Co. and defend their own contact with the customer, especially since Chancellor Merkel also sounded the same horn at the World Economic Forum in Davos in 2019 with the remark that we have fallen far behind in the emergence of the platform economy (Doll, 2019). In fact, it is about the sovereignty over the customer interface. However, it can be seen that this has already been surrendered in some industries. For example, the change in the value chain in the travel industry has practically already taken place. Only the consequences of this will only become properly apparent with a time lag. As a rule, bookings are already made predominantly on Internet travel portals. Booking.com and Expedia.com, with around US$90 billion in booking volume each, are reaching levels that even the world’s top tour operators cannot match (Booking Holdings, 2019; Expedia Group, 2018). At the same time, the highest profit margins in the “distribution” value-added stage are already achieved by these portals today  – around US$4 billion net profit at Booking Holdings alone (Booking Holdings, 2019). Traditional providers such as Thomas Cook are visibly losing their position as “one-stop providers” and are degenerating into interchangeable logistics service providers, with all the financial risks associated with asset-­ intensive business. It is significant that the classic providers have practically left the business and direct customer contact to the large travel portals without a fight. Just as this is already becoming apparent in retail, where Amazon & Co. are increasingly occupying the customer interface. Insiders assume that no industry will be spared this disruptive digital transformation in the medium to long term (Heinemann, 2017). Every attractive market segment will be fueled by investors until a digital player prevails. Market disruption is therefore inevitable for every industry, as Fig. 2.2 shows.

2.1  Digital Basics of B2B eCommerce

23

„Platform Economy: The digital revolution will disrupt all industries“ Mobility……………………………………………………………………… ………………………… Shaving

Home………………………………………………………………………….. ………………………… Luxury

Yooxgroup

Logistics……………………………………………………………… Communication……………………….. Banking Payment………........ Music………………………… Industry books…......... Retail…………… Media…………. Travel industry… Source: Own based on dgroup 2016 C

Prof. Dr. Gerrit Heinemann

Founded 1995 65 bn. $ GMV in 2017 10 bn. Provisions, 378 Mio. $ Profit

Founded 1997 (Priceline Group) 75 bn. $ GMV 12,3 bn. $ Provisions, >3,5 bn. $

2018 Heinemann

Fig. 2.2  Examples of digital disruption by new information intermediaries. (Source: Heinemann, 2017 based on dgroup, 2016)

In addition to the travel industry and retail, the media and music industries have also been completely transformed. This process of change was certainly additionally fueled by the digitalization of products in the form of e-books and music downloads. The banking sector is also facing a similar paradigm shift with Paypal & Co., as is the logistics industry with Tiramizoo and Shutl.com. Even the car industry, which is rather conservative in terms of sales structures, is already facing similar challenges, as Tesla & Co. are now selling new cars without branches. The entire used car market already takes place more or less online. In this respect, there is a danger for established providers in all sectors that, like travel providers with their fixed-cost apparatuses built up in the past, they will become more of a kind of vicarious agent without a direct customer relationship in the initiation of business (Heinemann, 2019a). What conclusions can be drawn from this for European providers? Obviously, the majority of companies in Germany have unfortunately still not realized the force with which the digital revolution is hitting. There is not only time pressure. There is rather a mood of alarm. In this respect, Mr Quandt’s initiative is to be welcomed without reservation. Even if the first company bosses are blowing the whistle on the online offensive, they are still doing so mostly half-heartedly or not at all – measured against the digital system investments (example BMW, Mercedes and VW) (Doll, 2019). However, there is one thing they will not be able to avoid: digital mobilization! And that costs – as dealers in the Lower Rhine region like to say – “no end of money”.

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2.1.2 Phases of Digitization Rarely has a buzzword been used so inflationary in recent years, especially among manufacturing companies, as digitalization. The usual statement is usually: “We are already digitally on the way”. But for most manufacturers and wholesalers in particular, it is not clear what digitalization even means for the company. Without a doubt, it has to do with computers and computing power. However, both have been around for quite a long time, especially since the first electronic universal computer will soon be 80 years old (Disrupt Consulting, 2016; Raitner, 2018). In this respect, it makes sense to take a closer look at the different phases of digitalization. First Digitization Phase Computers were used as early as the 1960s to accelerate or optimize business processes. Whether accounting systems, machine control, operational data management, automation or networking of machines and locations – digitalization actually supported operational performance in almost all functional areas quite early on. Typical of this era is the story of SAP, a company that was founded in 1972 and, as a market-leading manufacturer of enterprise resource planning (ERP) systems, still has its core business on the back end. Basically, SAP is synonymous with the term Industry 4.0, which is primarily about the intelligent automation of production. This is typical of the first digitization phase, which was primarily function-oriented in its thinking and moved into a second phase as a result of the Internet age. Second Digitization Phase The emergence of the Internet and the associated explosion of data changed the direction of digitization. Whereas until the turn of the millennium it was predominantly about supporting operational processes, the Internet put the focus more on new business models and thus on a holistic view of the company. The customer-centricity invented by Amazon is typical of the new phase of digitalization. This is mainly about digital disruption and the digital revolution it has triggered (Disrupt Consulting, 2016; Raitner, 2018). Its beginning can also be seen in the fact that in 2002, for the first time, more information was stored digitally than analogue (Disrupt Consulting, 2016). These two phases of digitization are shown in Fig. 2.3. The first phase represents the establishment of the intranet and the emergence of the extranet. Intranet Intranets are computer networks that are used independently of the public network and are not publicly accessible. They usually offer different, additional or restricted functions. Regardless of its technical definition, the term intranet is also often used to summarize the company’s internal web communication. In this context, the intranet is usually intended to secure and improve the supply of information to employees. This requires an optimization of business processes with regard to the quality-assured provision of information, its target

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25

“DQ:Digital revolution started in 2002 as a result of the internet economy” Until the turn of the millennium, the focus was mainly on supporting operational processes. Today, the focus is on new business models – i.e. digital disruption Digital-based business model innovations = Company 4.0

Traditional digitization Optimization and acceleration of existing business models Data Management Machines Control

1960 Accounting Systems

SAP Core

Internet

Digital Platforms

User-Generated Content

Process Automation

Crypto Currency

2002

1993

Network integrated Locations

Digital Products

Cobots Smart Phones

Cognitive Computing IoT

2010 Cloud Computing

Voice Assistant

2018

?

Wearable Computing

In 2002, for the first time, more information was stored digitally than in analogue form. Source: Own based on Disruptiv Consulting 2016; Wikipedia 2018 C

Prof. Dr. Gerrit Heinemann

Fig. 2.3  The phases of digitization. (Adapted from Disrupt Consulting, 2016)

group-oriented (personalized) distribution, as well as the quick finding and easy use of information in the context of daily work. Contents are usually internal public information such as company agreements, arrangements, process and workflow instructions. Documents, forms or employee magazines can also be the subject matter, whereby access by employees is often via an Internet portal. Access is usually secured by locking and is possible via simple authentication procedures such as a “login” mask (Meier et al., 2015; Wikipedia Intranet, 2019). Extranet The extranet represents an extension of the intranet when a further, privileged group of users has secure access from outside the company (Zahn et  al., 2001). Extranets make information available to other companies, customers or partners – but not to the public. They enable the efficient exchange of confidential data across company boundaries and are also suitable for cooperatively optimizing value chains. The topics Efficient Consumer Response (ECR) including Electronic Data Interchange (EDI) are synonymous with the extranet, which in principle uses the same technologies as the Internet (including TCP/IP, UDP). Although the extranet can now also be connected to the Internet via protective mechanisms, it is usually a completely separate private network that can only be accessed via a separate dedicated line or dial-up (Zahn et al., 2001).

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2  Basics of B2B eCommerce

2.1.3 EDI Versus Industry 4.0 Versus B2B eCommerce The digitization discussion often no longer differentiates between intranet and extranet. In this respect, it makes sense to neatly separate a few terms that stand for the different phases of digitization, namely EDI, Industry 4.0 and finally B2B eCommerce: EDI Electronic data interchange or EDI is the basic function of extranets with the direct involvement of application systems of the companies/organizations involved. In this process, the sender sends messages to a recipient unilaterally. In quite a few EDI applications, the original receiver in turn sends a message back. However, this is a different process, which runs separately in time and is again a pure sending process. In this respect, communication in EDI is based on the push principle and is not interactive, which is one of the crucial differences to e-commerce. Especially eProcurement uses EDI and extranet for automatic dispositions, but does not operate a digitalization in the currently understood sense and also no eCommerce, although the transactions are often wrongly classified there. Moreover, EDI was already used in the USA in the 1960s. Although there were no standards yet, data was transmitted electronically via telephone and telex lines using the means available at the time (Zahn et al., 2001; Wikipedia EDI, 2019; Wikipedia Extranet, 2019). In the meantime, EDI standards such as EDIFACT in particular have become commonplace, ensuring the cross-company transfer of standardized business data. Industry 4.0 The much-vaunted Industry 4.0 focuses primarily on production and is thus rather “isolated function-related”. It is true that eProcurement can certainly be assigned to the Factory 4.0 understanding, whereby extranet transactions can also take place there. However, the data exchange here is primarily internal to the company and falls under the term Enterprise Application Integration (EAI). In contrast, EDI always means the involvement of at least two different institutions. There is a large overlap between the tools used for EAI and EDI, which is why many components are developed and used simultaneously for both applications. In contrast to EAI, however, EDI always requires a contract to be concluded between the EDI partners and technical compatibility to be ensured on both sides. In addition, EDI requires a relatively high expenditure of resources and investment, which is why EDI users are usually mainly larger companies. However, the opinion that the “expensive EDI and Intranet” would be replaced by the “cheap Internet” and especially by XML is not unreservedly correct. This is because the challenges to EDI implementations are always primarily functional and/or business-related, rather than tool- or technology-dependent. For example, negotiating delivery terms between supplier and customer is always the same effort, regardless of whether an XML or an EDIFACT message is used (Yokogawa, 2019; Wikipedia EDI, 2019; Wikipedia Industrie-4.0, 2019). However, by no means does “Factory 4.0” stand for a holistic and future-proof digitization of the manufacturing company. This also does not apply to “additive manufacturing”, a term under which new

2.1  Digital Basics of B2B eCommerce

27

revolutionary processes are now supposedly also conquering industrial production (Bender, 2018). This is more about the holistic development of industrial components in metal and plastic – from the idea to product and process development – but less about the interface to the customer. Undoubtedly, additive manufacturing using 3D printers gives the freedom to think production in a whole new way. This makes it possible to develop components more efficiently, flexibly and cheaply, and to give them new functions for new requirements (e.g. using more compact designs or tiny functional structures that would either not be possible at all or only at extreme expense using conventional means). Similarly, downtime can be avoided, production times minimized, and spare parts can be economically produced in small quantities to meet individual requirements (Bender, 2018). However, it has nothing to do with B2B eCommerce in the true sense. B2B eCommerce What intranets, extranets, EDI and Industry 4.0 do not have on their screens, but what is likely to determine the future of all industries: interactive data exchange – i.e. real sales via the Internet and thus real B2B eCommerce. In this context, the direct customer relationship plays an increasingly important role. B2B eCommerce is basically an electronic transaction, but it can occur in different ways and therefore needs to be specified more precisely. Figure 2.4 shows the four types of electronic transactions, each of which is differentiated by the number of suppliers and customers (Agentur Handel, 2016): • Bilateral connection: This form occurs when there is an automatic exchange of data between two companies based on EDI. This usually takes place in the so-called bilateral eProcurement within the framework of the Extranet (electronic procurement). This form of computer-aided purchasing is common because it allows industrial companies to automatically reorder preliminary products of their production when a minimum stock level is reached. Large corporations usually order commodities such as paper, toner or office supplies using this method (Thürling, 2015). This enables simple purchasing via internal systems, in which individual orders are automatically forwarded to predefined suppliers via an interface. Of course, the necessary approvals and authorizations must be clarified beforehand, depending on the procurement value. Bilateral connections are not considered a form of B2B eCommerce because they are not Internet-based. • B2B Online Shop: This refers to platforms or online shops where individual providers offer goods or services to a large number of customers. This is a typical online shop with direct transaction options. This form represents the business customer-typical equivalent of the B2C online shop, whereby offering companies do not sell to end customers, but to trading companies or processing companies (Agentur Handel, 2016). The B2B online shop is considered the classic form of B2B eCommerce. • Sales via marketplaces: The third and currently still most important business model in terms of revenue is the exchange of data, information and goods via marketplaces. In this case, a large number of buyers face many sellers. The goal is to achieve an

28

2  Basics of B2B eCommerce

Procurement platform (n:1)

….

…. Bilateral connection (1:1)

B2B online shop (1:m)

1 Plattform ….

number of customers

Platform

Platform

….

n

Marketplace (n:m)

1

m

number of customers

Fig. 2.4  Types of B2B electronic transactions. (Source: Agentur Handel, 2016)

efficiency-­maximizing relationship between supply and demand under the most perfect market conditions possible. The extensive presence of buyers and sellers offers customers and suppliers above all the advantage of almost total (price) transparency, which in turn enables cost savings. Marketplaces are neither operated by buyers nor sellers, but are provided by an additional intermediary such as Mercateo or Simple System (Agentur Handel, 2016). Marketplaces are considered a classic form of B2B eCommerce that can also be combined with online shops. They are usually open and often represent a form of supply for different needs. Their main characteristic is active customer acquisition and retention. • Procurement platforms: Here, the procurement activities of a company are usually bundled in an electronic system, such as procurement platforms. This enables suppliers to automatically submit offers for goods and services that are in demand. In this case, buyers approach a broad market of mostly selected suppliers with their demand in order to cover their own requirements efficiently and cost-effectively (Agentur Handel, 2016). Procurement platforms are classified as B2B eCommerce, provided they function on an Internet basis. In contrast to marketplaces, they are not open and are usually structured, i.e. focused on specific requirements.

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29

In addition to B2B eCommerce activities, more and more manufacturers, especially manufacturing companies or wholesalers from the consumer goods sector, also operate a B2C shop and thus vertical online trade. Whether Boss or Adidas, Seidensticker or Esprit, the combination of B2B and B2C into a hybrid online sale is now common. Even car manufacturers such as Mercedes Benz now operate this type of sale as part of a multi-channel distribution.

2.1.4 Platform Economy in B2B eCommerce Computing power alone does not bring about digitization of a new kind. It is true that a wealth of information can be created, converted and processed in digital form. But everything remains local and limited to location-based effects for the time being. Thus, the problem of the music industry was not the MP3 file per se, but primarily the improved networking of computers with the file sharing platforms à la Napster that became possible as a result. Digital information, which was initially only available locally, thus became accessible to everyone, everywhere. At the same time, the music industry was still trapped in its old business model of selling recordings. It was only freed from this trap by digital visionaries like Steve Jobs with the iTunes Store or the founders of Spotify. Although the networking of devices is the basis, the platforms with their customer relationships make the decisive difference. In addition, the mobile internet and, in this context, the iPhone in combination with the App Store were a major game changer, because every new application on this platform led to an upgrade of the iPhone (Raitner, 2018). In the meantime, new digital platforms are constantly emerging on the basis of smartphones and apps, on which providers and consumers find each other (Heinemann, 2018b). Although the B2C area made the start, with the increasing consumerization of the B2B area, similar developments can currently also be observed in commercial purchasing behavior and in B2B communication processes. Through the Internet, the receiver of a message also (directly) becomes the sender of a message. As a result, the original roles of the communication partners are partly mixed or even cancelled; the sender/receiver roles become simultaneous. Virtuality eliminates the need for presence in the communication process, while multimedia opens up entirely new possibilities for the transmission of information by integrating a wide variety of media and means of communication. Interactivity allows mutual communication and thus promotes dialogue between individual trading partners. Virtuality results from dealing with digital information that is not real and is composed of a network of data streams and information channels. The digital information can refer to both digitized services (for example, rights, downloads, etc.) and real goods (physical world). In addition to the physical world, however, there is in any case a complementary virtual business world, which is characterized by networked information and communication channels. Both levels complement each other (e.g. ordering real products via the Internet), but can also function separately (e.g. paid downloads of software on the Internet). The virtuality of the trading level enables a detachment from space and time.

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2  Basics of B2B eCommerce

Suppliers and buyers can access the net at any time and from anywhere and do not have to be online at the same time, as information is exchanged via databases. This makes the Internet a ubiquitous medium (anytime/anyplace). However, while products can be sold “anytime” and “anyplace” worldwide via the Internet, physical delivery must take place outside the electronic layer (Heinemann, 2019a). Numerous media forms are available on the Internet (e.g. image, video, sound, text, etc.), which can be combined as desired and used in multimedia form. This makes it possible to make even complex content accessible to the communication partner. In doing so, the exchange of information takes place on a comprehensible and easily accessible level. At the same time, the electronic commerce level is offered to a broad consumer class. In addition, the content of digital information is made more perceptible, more attractive as well as more usable through multimedia presentation. This is also the main reason why the Internet has been able to develop into a mass medium. Especially music providers such as musicload.com use the multimedia presentation, in which both an image in the form of the record cover, a text describing the music title, the sound as an audio sample, as well as moving images in the form of video clips are offered for a piece of music (Kollmann, 2013; Brindöpke, 2018; Heinemann, 2019a). A decisive feature of B2B eCommerce and the platform economy that goes hand in hand with it is the active component for the exchange of information, since the participants have to go online interactively. The degree of interactivity or “two-way communication” results in each case from the interaction possibilities dependent on the software. In each case, however, there is an active individual transaction, which is completely different from the passive mass transaction. Thus, information is not only distributed from one market participant to another (“one way”), but the participants must also obtain the information themselves (“two way”). In contrast to classic forms of communication and commerce, where the customer is more or less continuously confronted with stimuli without taking an active step, on the Internet the customer has to take the first step and open a provider’s website. In doing so, a platform no longer primarily sells products, but provides access for companies to companies. In this world of absolute price transparency and almost unlimited availability, it is becoming increasingly difficult for companies to build and defend resilient customer relationships (Graf, 2017). One supposed solution is offered by platforms that provide direct customer access. As a result, customer acquisition and customer loyalty, i.e. customer relationship management (CRM), are becoming extremely important in the context of B2B eCommerce. Interactive communication is used here for individualization and personalization in its purest form (one-to-one marketing). However, platforms should also meet minimum standards and evolve. They must have certain characteristics, which are shown in Fig. 2.5 and are not yet fully met by most B2B platforms in particular (Brindöpke, 2018). The role of suppliers is also changing in the course of the platform economy, as the platform as a “pull generator” is becoming a revenue generator (Brindöpke, 2018). The comparison of target and actual or reality and future already addresses two different platform models:

2.1  Digital Basics of B2B eCommerce

31

Characteristics of a real platform

New role of suppliers

Offer of services

Marketing

Supplier Control Platform

Offer from Article

Operation

Use From Services

BI and Billing

Has: Product, Marketing, Budget Will: Sales, earnings, branding, Funding Platforms must Create pull to be used as Mediator between Customer and platform get elected

Customers

Implementation status

Today mainly focus on customer pull, in future as well focus on Supplier Pull

Fig. 2.5  Future characteristics of platforms and suppliers. (Source: Brindöpke, 2018)

• The classic offer model with products and services in the frontend, • The service model just outlined. Both approaches can be complemented by two further future models (Kleine et al., 2018; Heinemann, 2019a): • the ecosystem aspect, • the customer value aspect. Thus, four different platform models can be distinguished in principle, depending on the orientation of the scope of services (only services offered versus fully integrated services) and the focus of services (inside-out versus outside-in) (cf. Fig. 2.6): • PaaF platform: With the “portal-as-a-frontend”, services are offered exclusively in the frontend. Depending on whether it is a closed or open platform, the offer is either structured (e.g. for consumer goods) or unstructured (i such as eBay). • PaaS platform: In the “Portal-as-a-Service”, the PaaF platform is supplemented by service usage as well as control, marketing, business intelligence and billing. This model corresponds to the real platform according to Brindöpke (2018). • PaaE platform: In the “portal-as-an-ecosystem”, the fulfillment services for the partner companies are also offered “inside-out” to the greatest possible extent, such as warehousing, distribution, delivery/shipping, payment, marketing, etc. (such as Fulfillment by Amazon). (such as Fulfillment by Amazon). • PaaA platform: With the “portal-as-an-all-round-package”, the customer is offered an optimal all-round package from his point of view (outside-in perspective), which ideally leaves nothing to be desired (optimal customer value). This involves a shift in

Inside-out

Outside-in

2  Basics of B2B eCommerce

Integration of fulfillment services

32

PaaF-Platform - Portal-as-a-Frontend - Nur Leistungsangebot PaaSPlatform

PaaAPlatform

EXE

MP

LAR

Y

PaaS-Platform - Portal-as-a-Service -- Real platform incl. control + BI* PaaE-Platform - Portal-as-an-Ecosystem - Integration of fulfillment services

PaaFPlatform

PaaEPlatform

Range of goods/services

Fully integrated Services

PaaA-Platform - Portal-as-an-All-round-Package - Ecosystem focus on customer Value Conclusion: Offer of goods and services in the Frontend are only the basic factors

Performance Focus Quelle: Eigene C Prof. Dr. Gerrit Heinemann

Fig. 2.6  Platform models

thinking from product to solution (e.g. Thermobox.de with the “heat” solution including heating and insulation).

2.1.5 Growth Factors of the B2B Platform Economy Since the nineties, manufacturers and wholesalers have been networking their EDP systems in order to trigger the automatic ordering of certain products at previously negotiated conditions via EDI. It is not uncommon for the order to be placed automatically when a minimum stock level is reached. Automated ordering is now common practice among DAX-listed companies and hidden champions, especially for everyday products such as paper, toner or office supplies, as well as for raw materials and supplies. Employees can replenish goods via internal systems at the push of a button. Due to the high resource and system expenditure, such an approach is usually only worthwhile for large companies with high order volumes. However, 99% of the German economy consists of small and medium-sized companies, which often do not consider themselves large enough for such solutions. For this reason, orders are still usually placed by fax or by catalogue or telephone. Only a few B2B providers have recognized this gap and provide online shops for their commercial customers. This reduces transaction costs in the processing of orders and at the same time increases customer loyalty (Heinemann, 2018a). The launch of the thyssenkrupp shop “Materials4Me” was undoubtedly not meant altruistically in this respect. After all, in contrast to intranets and extranets, the internet can

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33

connect any computer with any other computer worldwide. Data is exchanged via technologically standardized data protocols, whereby browsers and servers of different computers speak a common language. In this context, free electronic mail has made it possible to communicate quickly and at any time, even on a global level (Heinemann, 2018a). Germany has the advantage that, with the telephone network, it had a developed infrastructure long before the Internet, on which modern online access could be built, even if this network is now considered completely obsolete. The exponential increase in computing power coupled with falling hardware prices and increasing miniaturization of hardware supported the Internet boom, as information can be transmitted in this way in a mobile manner and without restrictions in terms of time and space (Kollmann, 2013; Chaffey, 2014). The increasing storage capacities of the memory chips used, ever faster and more powerful processors and rising clock frequencies of these processors also contribute to this, as they promote further digitization and enable greater data transfer. Key Technical Factors The key factors of Internet growth are usually explained in technical terms (Rayport & Jaworski, 2002; Kollmann, 2013; Chaffey, 2014). Accordingly, Internet standards are based on the Hypertext Transfer Protocol (http) and the page description language HTML (Hypertext Markup Language). With them, it has been possible to offer graphical interfaces (browsers) with simple control by mouse click, as well as multimedia content, despite the initially severely limited bandwidth of the Internet. Standards and browsers in conjunction with improved network quality are the main technical pillars of Internet growth, whereby the Internet owes its great importance without question to the development of the World Wide Web (WWW), the global use of which, however, would not be possible without standards (TCP/IP). These in turn presuppose a worldwide agreement (W3C). The breakthrough of browser technology in connection with fast data networks enabled speed, uncomplicated downloading and platform independence. Based on the uniform standards, it was possible to realize simplicity for the retrieval and posting of content while at the same time providing a high degree of comfort through mouse control. With regard to content, the development of browsers as well as multimedia capability and technical openness are of central importance for Internet growth. Content use requires easy access, elimination of specific costs, and convertibility (Heinemann, 2019a). Network Effects of Ecosystems In addition to the technical factors, however, it is primarily the network effects that explain Internet growth, which are achieved in particular by digital ecosystems. These describe the interaction between customers, providers, operators of a platform and other partners (e.g. providers of additional applications). The hallmark of digital ecosystems is their independence from other providers, so that unlike horizontal marketplace partners, no external partners tend to be needed in the vertical direction – i.e. for value creation, customer contact, data management, etc. (Herda et al., 2018). Figure 2.7 exemplifies the ecosystem of Alibaba, a platform that is a prime example of Internet growth with US$853 billion in

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Technology Standards • Safety standards • WWW is open for everyone • TCP/lP standard • Worldwide agreement (W3C

Browser/Network Quality • Broadband/Networks • Speed/usability • Uncomplicated download • Platform independence

Content Content setting • Updateability • Browser development • Multimedia • Technical openness

Content usage • Identifiability • Easy and fast access • No specific costs • Convertibility

Fig. 2.7  The Alibaba Group ecosystem. (Source: Custer, 2014; Heinemann, 2019a)

trade volume (Krisch, 2019). Such ecosystems are characterized primarily by network effects. The more customers use the platform, the more providers will also be present on the platform. Additional network effects are added by providers of complementary products to the actual offerings, which in turn makes the platform even more attractive and increases frequency. If a critical mass is reached in the process, the network effect and thus in turn the number of users grow exponentially (Herda et al., 2018; Wikipedia Website, 2019). In this respect, digital ecosystems are reminiscent of biological systems in terms of structure and functioning. They are technically delimited systems that often interconnect organizations and their digital services via hardware, software, and platforms (“end-to-­ end”) and thus become independent of other providers. A typical digital ecosystem is, for example, the Apple ecosystem with iPod, iPhone, iPad, Mac desktop, MacBooks, peripherals, iCloud, iTunes, etc. (Herda et al., 2018; Neuhaus, 2018). Network Infrastructure as A Brake on Growth However, network quality remains a critical factor and more of a “brake on growth” in Germany. According to the OECD, which presented new figures on the penetration of fast internet in its 34 member states in its latest broadband statistics for the period ending 31 December 2017, Germany lags far behind in terms of mobile broadband and fiber optics. For example, Germany only comes 27th out of 34 countries in terms of mobile broadband coverage, and actually dropped two places from the previous year. This means that our supposedly highly developed country joins the ranks of Slovenia, Portugal, Mexico and Greece at the bottom of the league and has once again missed a year. As of December 2017, around 79.2% of smartphone and tablet owners in this country were surfing broadband through the mobile network. However, the average penetration in OECD countries is

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35

already 102.4%. Countries with mobile broadband penetration of over 100% are Japan, Finland, Estonia, the USA, Australia, Denmark, Sweden, Lithuania, Iceland and South Korea, because users there often use multiple mobile devices to access the internet (OECD, 2018). In addition, the mobile broadband network in Germany has a comparatively poor quality, despite the much praised and supposedly high LTE availability in the reports of the ministries (Bouwman, 2018). This is anything but good by international standards. The same applies to the mobile transmission rate. Here, Germany only achieves a speed of 26.4 Mbit/s. This is, however, with an availability that is comparable to that in other countries. However, the availability is roughly comparable to that in Turkey, where the network operates much faster at 31.2 Mbit/s (t3n, 2017; Bouwman, 2018). However, the comparison of countries looks even bleaker when it comes to fiber-optic connections, where Germany ranks 30th out of 34. Only around 2.3% of all broadband customers in Germany have such a connection. In the previous year, the figure was 1.8% and has therefore changed only marginally. In the case of fiber optics, on the other hand, the average penetration rate in the OECD countries is already over 23.3%. In Japan and Korea, fiber connections already account for over 75% of fixed broadband connections. The leader in Europe is Lithuania with 70.8% penetration (OECD, 2018). Only in the case of DSL and cable, i.e. the Internet connections of the past, does Germany still have an average ranking. In Germany, the power of the Internet for economic development is obviously underestimated. Probably the biggest problem in this country is that politicians and associations gloss over the situation, always report figures higher than they are in reality, and like to use the suffix “up to”. Thus, while many citizens have “up to” 50 Mbit/s transmission rates, the national average of 26.4 Mbit/s is still miles away from the self-imposed targets of the German government (Bouwman, 2018). For the Republic, the motto “DSL  – villages surf slowly” still applies (Heinemann, 2019a). Contrary to all accusations and proven deficits, Deutsche Telekom, on the other hand, considers broadband coverage in Germany to be clearly above the European average (FAZ, 2017). In particular, German counties criticize the vectoring process, which Telekom uses to upgrade copper cables to higher speeds, as a barrier to laying fiber to the homes and apartments. The much-debated question is whether vectoring or fiber is more helpful for Internet expansion. But surely it is also about the task of making Germany fit for the coming communications standard 5G, which integrates mobile and fixed networks. This will undoubtedly require more fiber, for which the framework conditions would have to be adjusted by removing fiber connections from regulation to allow more self-development and cooperation (FAZ, 2017).

2.1.6 Forms of Operation in B2B eCommerce B2B eCommerce can be characterized overall as a meta-form of operation (Heinemann, 1989; Barth et al., 2015). As in B2C online commerce, the handling of electronic B2B business processes can be fundamentally differentiated according to various categories or

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operating forms of providers. These are either multi-channel providers, online pure players or platforms or marketplaces (Heinemann, 2019a). B2B Multi-channel Provider The potentially largest group among manufacturers and wholesalers are probably the multi-channel providers, i.e. traditional providers with an additional B2B online shop. This supplements either their own branches (as with Metro) or their own sales representatives (as with the EM Group). The leading multi-channel provider in Germany is undoubtedly the Würth Group with its eshop.wuerth.de, through which, according to the company, more than 20% of sales in Germany are already made. A good example of B2B multichanneling is also the company Claas: The agricultural machinery supplier stages its product range with strong images and an aggressive use of color surfaces, while the Parts Shop enables the quick purchase of urgently needed spare parts (Claas.de). The steel trader Klöckner & Co also advertises the advantages of its online offers in an exemplary manner in its online shop (shop.klöckner.de) as does the workshop equipment supplier Normfest (normfest.shop.com). Without the combination of stationary as well as electronic sales channels, however, one cannot speak of “modern” multi-channel systems, but always only of “traditional” multi-channel systems, which have certainly existed for a long time (Heinemann, 2019a). For example, it was or still is common for wholesalers to also run/ operate catalogue business on a large scale. However, this does not exempt them from the need to also sell via an excellent B2B shop (Heinemann, 2019a). B2B Online Pure Player There is also a lot going on at the moment with B2B online pure players, which are mainly fueled by numerous start-ups and enrich the start-up scene. The launch of “Materials4Me” by Thyssenkrupp (materials4me.com) caused a sensation. But also Zamro (zamro.de) or Contorion (contorion.de) show that classic B2B business does not really need branch offices. Furthermore, the consumerization of B2B is currently leading B2C online pure plays in particular to increasingly engage in commercial B2B eCommerce in addition to their end-customer business. Here, B2C providers can leverage their experience as well as their familiarity and, with the help of additional services such as supplier credits, turn their B2C into loyal B2B customers. Therefore, it is not surprising that in the B2B sector, similar principles of customer approach are increasingly used as in B2C communication (Heinemann, 2019a). It is not uncommon for providers to operate a B2B shop in addition to a B2C shop for this reason, such as Reuter-Badshop or BOSS. This results in a novel combination of “Consumerated B2B and Disintermediated B2C”, i.e. a kind of hybrid distribution of branded goods. The appropriate term for this is “B2B2C” and is already being used in the eCommerce scene (Bolz & Höhn, 2019). Platforms and Marketplaces Finally, platforms and marketplaces are not as numerous as the other types of business, but they are likely to account for the largest share of sales. The procurement platform Mercateo

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37

(mercateo.com) is undoubtedly a pioneer here, although it is increasingly coming under fire from the GAFA (Google, Amazon, Facebook, Apple) and TAB companies (Tencent, Alibaba, Baidu). That’s because the dominant B2C market leader Amazon launched Amazon Business in the US back in 2012, offering a rich assortment of products for crafts, offices, labs and restaurants. Since the end of 2016, Amazon Business has also been online in Germany. With this, the online platform seems to be securing dominance in a segment that has been neglected so far, and once again beating the competition. Once Amazon has become synonymous with web shopping in the B2B sector as well, it will be difficult for the chasing pack to hold its own on the market with alternative offerings. For example, the online market leader with its gigantic offering is now also relying on a long-tail strategy for business customers, addressing a broad target group with restaurants, laboratories and offices, among others. For tradesmen and manufacturers alone, more than 50,00,000 items can already be found on Amazon Business, including lubricants, tools, safety goggles, varnishes and paints, etc. (Heinemann, 2018a). The offer follows the advertising slogan “Everything you love about Amazon. For work.” In doing so, the online retailer offers buyers and sellers the usual convenience of the B2C platform as well as a similarly large selection, which is also made possible in this segment by the many marketplace partners. Amazon Business is also to be taken seriously because the European B2B online market has so far been highly fragmented and consists largely of niche providers as well as address lists and business directories. Dominant market leaders – especially with an ecosystem like Amazon – are still missing (Heinemann, 2019a). It is therefore unsurprising that especially experienced B2C players like Amazon are now also entering the B2B market. Besides Amazon, other players such as the global marketplaces Alibaba.com and eBay Supply as well as the B2B platforms WerLiefertWas and EuroPages are already active. Figure 2.8 summarizes the operational forms of B2B eCommerce. Each of the types of business described above provides scope for a wide variety of different types of business, which can be grouped together on the basis of similar characteristics. The main differences certainly result from the sectors or product groups that are sold by the providers in each case. It makes a big difference whether consumer goods or industrial goods are offered.

1

B2B Pure Online Player Exclusively online

Start-up B2B online or complete transformation from offline to online Materials4Me, supr.com; aws.amazon.com; kollex.de

2

B2B Multi-Channeler Lead Channel Offline

Traditional wholesale provider with additional own B2B online shop under his name shop.klöckner.de; eshop.wuerth.de; claas.de Parts Shop; cairo.de

3

Platforms/Marketplaces Cooperative online

B2B online intermediary business either as non-interactive platform or as an interactive marketplace Mercateo; Amazon Business, Alibaba; Lieferanten.de; Restposten.de

Fig. 2.8  Forms of operation in B2B eCommerce

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2  Basics of B2B eCommerce

The following scenario undoubtedly applies to all types of business: With the completion of the “New Silk Road” in a few years at the latest, Internet-based global sourcing will enter the boom phase and give professional B2B eCommerce providers the “ultimate hype”. Until then, “hybrid sales” will increasingly take place, where after online research, purchases are still made or collected from stationary or field sales staff. Depending on accessibility, price, availability and service, the point of sale is selected only after the product has been found on the web, as in B2C. Based on Fig. 1.1, a distinction must also be made between project or system business, supplier business, system business and integration business. This concerns the different business types in B2B eCommerce.

2.2 Business Types of B2B eCommerce Business markets initially concern not only manufacturers and wholesalers, but also other organizations such as public companies, distributors or service providers who, among other things, offer consultancy and project services on professional markets. In the following, however, the focus is clearly on manufacturers and wholesalers, i.e. wholesale companies. At the same time, not all transactions that are conducted between businesses are to be regarded as equivalent in B2B eCommerce. The purchase of C-parts, for example, has a completely different significance compared to that of a production plant or a building, not only for financial reasons, and requires different marketing approaches in professional online commerce (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014). Therefore, the classification into: • • • • •

Project Business, Subcontracting business, Systems business, Product business and Integration business.

In the product business, however, a distinction must be made between consumer and industrial goods. In particular, the industrial goods-based production link trade functions according to completely different laws than the consumer goods sector, at the end of which the retailer stands. In addition, the integration business must be considered separately. This involves services that are distinguished on the supplier side by an individual customer-specific presentation and are purchased in an identical design by the same customers again and again in the same way. Figure 2.9 summarizes the business types of B2B eCommerce.

2.2  Business Types of B2B eCommerce

39

Provider QR Purchasing Alliance Supply business

Demand QR

Transaction type

Systems business

Integration business

Project business

Product business Consumer goods

Single transaction Single customer

Market situation

Industrial goods

Anonymous Market

Fig. 2.9  Business types of B2B eCommerce. (Adapted from Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014)

2.2.1 Project Business in B2B eCommerce Projects as well as facilities are usually complex offers that are procured only once. Typical examples are strategy or refurbishment projects in the consulting business or the purchase or construction of production facilities as well as logistics centers. Hotel or ship construction also fall into this category. These are self-contained purchasing processes in which sales and production precede. The purchase decision is always made on a project-specific basis and at a specific point in time. Therefore, the decisive question here is whether the supplier is in a position to produce the project or plant in the specified time and quality and at the negotiated price. The services offered here are characterized by an extreme degree of specification, so that a concretely constructed plant usually finds no other buyer on the market. In addition, such transactions are not infrequently debt-financed, so that contract manufacturing can lead to the conclusion of contingent contracts in which specific consequences are agreed in the event of certain conditions (e.g. payment upon commissioning, etc.). In the plant and project business, the supplier as general contractor not infrequently uses various subcontractors, which increases complexity. In this respect, the long-term relationship plays a less important role for procurement in this type of business; it is primarily transaction-oriented. In addition, sales structures differ depending on the country and world region. For example, while in Asia, as in Europe, large companies tend to build plants, in the USA this is usually the responsibility of consulting and development companies (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014).

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An example of B2B project business is provided by GastroHero (gastro-­hero.de), a company that also sells canteen kitchens online in B2B eCommerce. Automation24 GmbH (automation24.de) shows that complex automation technology can also be sold online.

2.2.2 Supplier Business in B2B eCommerce The supplier business is typical for original equipment manufacturers (OEMs) who are supplied with components or finished parts or semi-finished products. If these are incorporated unchanged into the company’s own products, they are often ingredient brands, which are usually also highlighted to profile the new product, for example with the slogans “Intel Inside” or “Gore-Tex Product”. At the same time, the ingredient brands can basically represent their own OEMs. It is typical for a supplier of OEMs that, as an original equipment manufacturer, it manufactures products in its own production facilities, but does not market them itself, but predominantly supplies them to other production facilities, i.e. OEMs. This is why there is a close partnership in a number of sectors. As in the case of Bosch, however, a combination is also quite possible in which the branded goods are not only supplied to the automotive industry, but are also sold to end customers through the company’s own branches. OEMs usually give suppliers precise specifications for new components to be developed. In addition, there is also close cooperation in logistics in the form of JIT (Just in Time). Since the supplier market is usually manageable and consists of few suppliers, it is of great importance for the supplier to be taken into account in the purchasing decision. For example, in the case of a new model, the business relationship usually lasts as long as its life cycle. The supplier business in the retail sector is certainly to be regarded differently, where in the private label business supplies are made by contract suppliers. But here, too, the supplier relationship is maintained for at least a complete season or fiscal year and then renegotiated in the annual meeting. In this respect, the strength of a supplier’s negotiating power is of course quite decisive. On the other hand, more and more suppliers are taking over shelf sovereignty in the retail sector, but this is then more likely to be assigned to the integration business (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014). There is still a long way to go in B2B eCommerce in the supplier business. On the other hand, the example of Thyssenkrupp’s “materials4me” shows that it is also possible to sell successfully online in the supplier business.

2.2.3 System Business in B2B eCommerce In contrast to the project business, it is not uncommon in the system business for there to be purchasing alliances between different purchasing processes that successively build on one another. A typical example of this in consulting is the offer of a preliminary phase and later a main or implementation phase that builds on this. System technologies such as

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41

PIM, ERP or shop systems are also often purchased in bundles, although usually not as a complete package but as individual systems. In this case, the individual system components, which can also include services, are closely interrelated, which is also determined by the system architecture. This is of particular importance due to the time component, as system architecture changes can cause high costs. This is undoubtedly different in the product business, where a supplier that no longer appears acceptable for price or quality reasons can be relatively easily exchanged for another supplier. Therefore, in the systems business, customer confidence in the current and future competence of the systems provider is crucial for procurement decisions. In this respect, all marketing activities of a system supplier should primarily concentrate on the presentation of its competence as well as the provision of the corresponding services. It is true that in recent years there has been an increasing trend towards the development of “open systems” which allow the system user to integrate parts of the system from different suppliers into his own system without difficulty. However, these are based on largely established standards (e.g. norms and industry standards) and can therefore also have an innovation-­ inhibiting effect. Innovations that go beyond existing standards have an extremely hard time gaining acceptance. There is often a lack of belief in the long-term establishment of a new system architecture as a standard, which is very difficult to communicate to potential customers (Backhaus & Voeth, 2014). It is generally assumed that systems cannot be sold online. However, the examples of the shop system provider supr.com (de.supr.com) and “Hospitality Digital” of Metro AG (hd.digital) show that this is generally not correct.

2.2.4 Industrial Goods Business in B2B eCommerce Industrial goods are services of a supplier that can be produced in a largely standardized manner and marketed anonymously. They are intended for both isolated and permanent use by customers. While individual units such as pumps are used in isolation by the customer, permanent requirements such as primary products (raw materials, consumables and supplies), work clothing, intermediate products and operating resources or C-parts can be called off permanently. Industrial goods are predominantly found in production linkage or production intermediate trade (PVH), which is organized by wholesale companies and comprises the trade of goods between two production stages (Gabler Wirtschaftslexikon, 2019). Products and goods such as tools, construction articles and products, industrial preliminary products or semi-finished products, steel or other materials are also purchased by manufacturers or craftsmen from PVH wholesale for the purpose of further processing (Wikipedia PVH, 2019). It is not uncommon for the products to be assembled (including sawn, cut, welded, painted, etc.) or otherwise processed at PVH.  In addition, it is predominantly branded products from leading manufacturers that are found there.

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PVH is a hybrid of various types of business. Delivery wholesalers (primary form of distribution) can be distinguished from pick-up wholesalers (supplementary form of distribution), although both can also be found in combination (Wikipedia PVH, 2019). Most PVH wholesalers are united in large purchasing associations, such as NORDWEST Handel AG, E/D/E  – Einkaufsbüro Deutscher Eisenhändler GmbH, Hagebau, EUROBAUSTOFF or Union Haustechnik, among others. With a few exceptions, these PVH suppliers already operate their own B2B online shops. The online shop of the Würth Group (eshop.wuerth.de), to which Normfest also belongs (normfest.de), can also be assigned to PVH wholesale. In addition, with “esska.de” there are also the first start-ups that have successfully established themselves in PVH as B2B online pure players.

2.2.5 Consumer Goods Business in B2B eCommerce Even though consumer goods are rarely used for industrial processing, but are produced and traded for private use or consumption, they are generally sold in the form of B2B transactions. The customers are either retailers or wholesalers as well as bulk buyers (e.g. restaurants and hotels). However, it is only when a consumer good is actually used that it becomes clear whether it is ultimately consumed or, like a vehicle, is used as a work tool in a production process. Consumer goods can either be consumables (e.g. fuels, food and medicines) or durable goods. The latter are not consumed in the true sense of the word, but are subject to wear and tear through repeated use (Meffert et al., 2015). Overall, different categories of consumer goods are distinguished, namely goods of daily use, goods of search and comparison shopping, special products and specialties, and goods of externally initiated purchasing (Wikipedia Konsumgüter, 2019), which are explained in detail below (Meffert et al., 2015): Necessities These consumer goods are also referred to as convenience goods and are purchased frequently and without intensive planning or preparation. Generally, these are goods with a comparatively low price that are sold via mass marketing by the manufacturer and can be purchased in many places, such as food. In this area, Metro in particular is currently pushing its B2B eCommerce business online (shop.metro.de) in the cash and carry segment, primarily to restaurateurs and small specialist retailers or kiosk operators. Kollex (kollex. de), a cooperative platform of the German beverage industry, is considered a promising B2B eCommerce start-up in the beverage industry. Goods of the Search and Comparison Shopping These are typical shopping goods that are generally bought less frequently and are more expensive than food. In this respect, a certain amount of planning is required when making a purchase. In the course of the purchase decision process, product comparisons are made in order to select the best possible option. Goods of search and comparison shopping are

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43

advertised by both manufacturers and retailers who then distribute them. Examples include perfume, branded furniture, branded clothing and automobiles. The first B2B eCommerce providers such as “restposten.de” sell online search and comparison shopping goods, for example. Metro also already sells such products online in its cash-and-carry business (shop.metro.de), primarily to small traders. Something is also happening in tire wholesale. For example, tire dealer Pneuhage (interpneu.de) also offers a B2B online shop for commercial customers. The same applies to the large travel portals such as expedia (expedia. com) or Opodo (opodo.de), which also sell their services to commercial customers. Recently, BVB in Dortmund has also been engaging in genuine B2B eCommerce by offering its fan articles to specialist retailers via its online shop (shop.bvb.de). Special Products and Specialties These products are also called specialty goods. They are mainly luxury goods for which there are only limited alternative brands on offer and which are therefore not very price-­sensitive. Such goods (e.g. luxury watches, expensive china, crystal goods, wines, writing instruments, etc.) are highly priced and tend to be advertised with exclusive marketing strategies. Distribution channels are specially selected brand retailers. Most manufacturers have so far primarily used B2C eCommerce, while wholesale is still carried out in the traditional way. Goods of the Externally Initiated Purchase There is only a comparatively low demand for such “unsought goods”, since either it is not known that these goods exist at all, or these products are rather rejected emotionally. Customers are reluctant to deal with these goods because they are perceived as a nuisance. Their sale is not infrequently supported by aggressive advertising and also promoted by direct selling, as in the case of insurance services or energy. Here, direct sales are usually made to companies in a special B2B corporate customer business. It can be assumed that most banks and financial service providers already sell their products online to corporate customers and small businesses (e.g. deutsche-­bank.de; mlp.de). The fact that “unsought goods” can also be sold online via B2B eCommerce is demonstrated by the electricity provider Digitalstrom (digitalstrom.com).

2.2.6 Integration Business in B2B eCommerce The integration business combines the individual customer-related transactions with the simultaneous existence of a temporal purchase link (Backhaus & Voeth, 2014). This is reminiscent of a typical extranet connection in the supply business with automatic scheduling. What is meant here, however, are more Internet-based transactions such as subscription and rental models. Maintenance and service contracts or the usual licensing business of software providers can also be subsumed here, provided that it is relatively easy to switch. Typical integration businesses in B2B eCommerce are, for example, cloud providers such as Amazon Web Services (AWS) (aws.amazon.com) or Google Cloud. Typically, the integration business is characterized by developing marketing programs for individual customers. This also involves establishing a longer-term business

44

2  Basics of B2B eCommerce

relationship with the customer in order to prevent a switch to other providers. As a rule, this type of business involves services that are developed specifically for individual customers. In this case, the customer’s purchasing processes are tied to a one-time solution that has been developed for a longer period of time. The individualized service offerings of automotive suppliers are typical integration transactions. If very special parts are developed and supplied for a specific model, both partners are difficult to substitute for each other during its life cycle. The lower the substitutability of the customer for the supplier, the more important the individual customer becomes. It can be assumed that B2B system businesses are usually also integration businesses and that dependencies can be created here via specific compatibilities. In the cloud business, the B2B eCommerce market leader AWS also achieves this through the ease of use, through which users are downright spoiled and not infrequently force their employers to use the AWS cloud, which is definitely having an effect in times of the “war for talent”. But project businesses are also increasingly becoming integration businesses, as the example of GastroHero shows (gastro-­hero.de). Here, B2B eCommerce sells large kitchens that have specific compatibilities in terms of equipment and spare parts. It can also make sense to successively cover different needs around a specific target customer. This is practiced, for example, by the E. M. Group Holding AG, which emerged from the hotel linen sector and now covers different needs for hotels with various brands and B2B shops, including Vega-Hotelbedarf (vega-­direct.com), Jobeline-Berufskleidung (jobeline.de), Lusini-­ Gastronomiebedarf (lusini.de), PoggemeierGastronomieausstatter (poggemeier.com) and Pulsiva-Gastrobekleidung (pulsiva.com).

Conclusion

Altogether, the six types of business described above and the three types of business described above result in 18 constellations of B2B e-commerce, for each of which “real-life” examples can be found (cf. Fig. 2.10). B2B business types

B2B operating forms

Consumer goods business

Industrial goods business

Supply business

Systems business

Project business

Integration business

Online Pure Play

Online Online Pure Online Pure Play Play Pure Play Consumer good Industrial property Suppliers

Online Pure Play Systems

Online Pure Play Projects

Online Pure Play Integration

MultiChannel

MultiMultiMultiChannel Channel Channel Consumer good Industrial property Suppliers

MultiChannel Systems

MultiChannel Projects

MultiChannel Integration

Marketplace/ Marketplace/ Marketplace/ Platform Platform Platform Consumer good Industrial property Suppliers

Marketplace/ Platform Systems

Marketplace/ Platform Projects

Marktplatz/ Plattform Integration

Marketplace/ Platform

Fig. 2.10  The 18 constellations of B2B eCommerce

2.3  Customer Interaction in B2B eCommerce

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2.3 Customer Interaction in B2B eCommerce It is true that companies still prefer to look for new suppliers at trade fairs. However, with the increasing maturity of the buyer’s market, a radical change in purchasing behavior can be observed. In the process, B2B eCommerce is destroying old customer relationships, as, among other things, direct sales by the manufacturer are facilitated (Heinemann, 2015). Wholesalers and middlemen are eliminated, as are telephone sales or agent visits. Switching suppliers is becoming easier thanks to electronic marketplaces and online platforms. According to recent surveys, 49% of buyers in Europe now spend almost half of their budget via the Internet. All in all, industrial procurement in Europe is still very traditionally oriented – 88% order spare parts, raw materials or accessories via telephone, fax or e-mail  – but at the same time supplier websites and mobile apps are rising in favor among purchasing companies. However, not every buyer has freedom of choice yet, as a third of businesses are only allowed to buy from certain suppliers and a fifth can only choose between certain products (Ungerboeck, 2017). This is not surprising, as there are usually long-term framework agreements in corporations. As long as these regulate prices, qualities and quantities, loyalty is still writ large in the industry. But the number of B2B customers buying directly from the manufacturer is rising sharply in Europe. Traditional PVH wholesalers are increasingly ceding market share to online marketplaces and manufacturer shops. On the other hand, the need for service is also increasing rapidly: according to the survey, 76% of businesses expect repairs, technical service and support on site. On the one hand, this requires an offline service presence, and on the other, rapid delivery of spare parts (Ungerboeck, 2017). However, this obviously refers primarily to relatively simple purchasing processes that occur frequently and have a relatively low importance for the company. These are usually C-parts, indirect requirements (MRO), office supplies or business trips. In the case of projects or systems that are purchased infrequently but are of great importance to the company, the purchasing behavior is undoubtedly somewhat different. Here, it is certainly necessary to differentiate according to purchase class as well as purchase phase. In addition, it makes a big difference whether these are first-time purchases or repeat purchases. In this respect, it makes sense to take a closer look at the specifics of B2B purchasing behavior (Ungerboeck, 2017).

2.3.1 Purchase Phases and Conversion in B2B eCommerce Basically, several phases can also be distinguished in B2B eCommerce, namely the specification phase, the research phase and the purchase phase (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014). These are directly related to the conversion, which becomes more and more likely in each phase and finally comes to fruition through the purchase. Specification Phase The specification phase is associated with the identification of the problem, the definition of the product characteristics and the description of the necessary product characteristics.

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The impetus for a new purchase can have the most diverse reasons and be triggered by the most diverse places (e.g. cost reasons, replacement procurement, expansion investment, competitive advantages, acquisition talk of a supplier, etc.). If the B2B supplier succeeds in making contact with a potential customer at this stage, it can have significant benefits. However, this is extraordinarily difficult, even though online marketing (e.g. Google Adwords) makes it easier today than in the pre-Internet era. If he succeeds, the supplier has the opportunity at a relatively early stage to influence the customer’s unresolved ideas and requirements. He should do this in the direction of the solution fields in which he has a particularly powerful product offering. He can also identify the customer’s needs and, if necessary, offer, develop or modify special products for them. This already influences the definition of the product features. For this purpose the offerer should inform the potential customer to a large extent, which can take place today also by email. In addition, he can bring about a preliminary decision by means of appropriate evaluation aids and arguments in such a way that the particular strengths of the supplier are brought to bear. Configuration tools that are not available from other providers can also be helpful here. In the subsequent description of the product features, the offering company should make considerable efforts to convince the buying company of its problem-solving competence. Particularly in the case of complex business types or very novel projects, the procuring company will not want to rely solely on its own judgement and the available information. For this reason, it is not uncommon to use consulting firms that have experience with procurement and the use of relevant products. Therefore, it is helpful to have contact to relevant consulting companies. The definition and description of product characteristics is usually preceded by an intensive search for information. Suppliers should therefore make their sales documents, configurators, references, etc. available on the Internet and thus enable qualified customers to get a precise picture. In this way, the supplier already influences the research phase. Research Phase This phase is characterized by the search for suppliers, the supplier evaluation, and the solicitation and evaluation of offers. In the supplier search based on the product specification, those suppliers have an advantage who already had contact with the company in the specification phase. In particular, they have a head start in terms of time because they were already informed about the project earlier and can therefore set themselves apart from their competitors through their own activities (e.g. configuration tool or construction of prototypes). When selecting potential suppliers, it also happens that the procuring company invites suppliers of other – but similar – products to bid if their past performance is judged positively. Especially in the case of new purchases, a company is more likely to use established suppliers. In this case, the strengths of B2B eCommerce can be fully exploited: If no supplier is known yet, it is very easy to identify potential suppliers online, even abroad. Direct contact is usually not yet necessary, as long as the information available on the Internet is sufficient. This changes at the latest when it comes to obtaining and evaluating offers – i.e. the exact prices and financial conditions. In the case of complex procurements, it is extremely rare that suppliers meet all the requirements and that the price

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specifications are not exceeded. In addition, the procurer usually has a number of offers, each covering a different range of services at different prices. Reliable procedures and/or consultants are available for the comparative evaluation of such offers, which usually takes place several times and can take quite a long time. The evaluation is greatly facilitated by the provision of a compatible format on the Internet. However, even such assistance cannot take the purchasing decision away from the customer. The goal should be for the buyer to click on an online advertisement or link, scan a QR code or enter the www address of the B2B supplier at the end of the research phase. Purchase Phase The buying phase includes supplier selection, negotiation and closing, ordering and fulfillment, and performance feedback and re-evaluation. The usual supplier evaluation systems are generally used for supplier selection. In the case of previously unknown suppliers, however, there is no precisely quantified experience with regard to quality and delivery reliability. However, supplier rankings provide assistance here (e.g. eBay Business). However, suppliers will tend to be cautious about such publications. At the end of the decision phase, only a few suppliers remain in the selection process (“short list”), with whom negotiations then take place. In this phase, the focus of negotiations is usually no longer on the technical characteristics of the products, but on the commercial details, such as prices, contractual terms, delivery dates, etc. In the negotiation and finalization phase, the focus is on the quality and reliability of the products. In the negotiation and conclusion phase, auctions and similar automated award procedures have become more or less established for standard products. For complex new procurements, on the other hand, direct contact in negotiations between suppliers and customers will be necessary for the foreseeable future. However, this does not necessarily have to be “face-to-face”, as negotiations can now also take place via e-mail or other communication channels such as chat functions or video conferencing. Finally, the order and order processing phase begins with the placing of the order and includes the delivery time, the delivery as well as the installation up to the ready-to-use handover. In this phase, it is not uncommon for completely different departments at the supplier (e.g. technical service departments) and procurer (e.g. production preparation) to meet, who were often not involved in the decision-making process and may have very different ideas about the project goal. Negative experiences in this phase can make the acquisition of future business more difficult, especially since offers from competitors can still be expected in this phase. Once agreement is reached between the two parties, the order can be placed and executed based on the agreed terms. In B2B eCommerce, orders can be entered once and the systems can be linked on both the supplier and the client side. Once the order has been completed, the procuring company normally carries out a critical analysis of the procurement after the products and systems have been put into operation. In doing so, the objectives of the procurement are compared with the benefits that have been achieved and the costs that have been incurred. This often leads to renegotiations with the supplier. In any case, the analysis is also the basis for the same or similar procurement situations in the future and should be taken seriously by the supplier. It is not uncommon for negative aspects from such an analysis to rebound not only on the

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supplier, but also on the group of people involved in the selection of products and suppliers, the so-called buying center. Members of a buying center can get into considerable trouble, which is certainly not a good basis for further cooperation with the customer. Therefore, the highest possible transparency of the departments and persons involved in the buying center must be established. This is the subject of the following section. Conclusion

Specification: Problem identification, definition and Description of the product characteristics

2

Search: Search for Products and suppliers

3

Provision of information, references, 1 Supplier rankings and configuration tools

Conversion

Click on an online Advertising material or a link; Scan a QR code; Entering a www address

Hard Conversion

Soft Conversion

1

Buying phase: Pre-sales actions on the website Leads

Sales on the website/ Buy online Buying impulse on the website/ Offline purchase – Sales Showrooming in the store/ Online purchase – Sales

Online and offline Information offers

Provision of Information on the Corporate website/one specific landing page

Offer to register, for download, for Recommendation, for Request for quotation

Online sales (type, turnover, contribution margin) Offline sales (type, turnover, contribution margin) Online sales (type, turnover, contribution margin)

Multichannel Sales

Tracking of the desired actions across all channels to online/offline purchase C

Prof. Dr. Gerrit Heinemann

Fig. 2.11  Conversion funnel in B2B eCommerce. (Adapted from Kreutzer, 2015)

Activities of the B2B supplier

Activities of the purchasing company

The main goal of the B2B eCommerce provider must be to increase the probability of a purchase conclusion in all purchase phases and thus to achieve a conversion. Therefore, it makes sense to understand the purchase phases as a conversion funnel. Increasingly, a distinction is being made between “hard conversion” and “soft conversion”. While the “hard conversion” refers to the actual purchase, the “soft conversion” expresses different actions that take place behind the landing page, i.e. after the first click. This is why online retailers are increasingly moving towards analyzing conversion paths as part of web analytics (Kreutzer, 2015). One such path is shown in the form of a typical conversion funnel in Fig. 2.11. Here, not only the conversion steps that take place onsite are shown, but also those that already begin offsite. This enables a holistic view, goal-oriented path analyses and the identification of usage patterns that provide indications of optimization opportunities (Kreutzer, 2015). In B2B multichanneling in particular, the conclusion of a purchase no longer takes place only online, but increasingly also offline. It is a concern, however, that offline purchase completions are often not taken into account when calculating the conversion rate.

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2.3.2 Selling Center Versus Buying Center People involved in the buying process on the purchasing company’s side are often grouped together in a body called a buying center. The participants are thereby assigned different roles with regard to the procurement process. In the literature on B2B marketing and sales, the focus is usually one-sided on the buying center on the side of the purchasing company (Backhaus & Voeth, 2014), but not on the sales organization of the B2B eCommerce company. In parallel, however, on the selling side, the Selling Center has established itself as a multi-personal form of acquisition for larger projects and represents a quasi response to the Buying Center. While team members in purchasing are assigned roles as initiator, information selector (gatekeeper), influencer, decision maker, buyer and user, this looks completely different on the B2B sell side. Especially in the case of complex services (and products), these are salespeople, key account managers, system and application specialists, or the management itself (Lippold & Lutz, 2018). However, B2B eCommerce is primarily changing the roles of salespeople and key account managers, who are not infrequently already being replaced or at least supplemented by the eCommerce manager. In this context, management should be careful to make up for any deficiencies in the qualification profile of those involved through their hierarchical position. In Fig. 2.12, the team members of the Buying Center are compared with the corresponding sales representatives of the Selling Center as an example. The juxtaposed roles of the Buying and Selling Center can be considered typical for most larger acquisition processes, provided that complex products and services are involved (e.g. projects, plants, systems). As a simplified form of selling center, a tandem

Selling Center

Systems Specialist Online Marketing

Key Account Manager

User specialist SalesEmployees

eCommerce Management

TopManagement Decision maker

Decision maker

Buyer Users

Gatekeeper Buying Center

Influencer

Fig. 2.12  Comparison of buying and selling centers. (Source: Lippold & Lutz, 2018)

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can also be formed consisting of a customer manager and a concept manager or combining an application-oriented and a system-oriented salesperson. It is also conceivable to combine a consultant who is more strategy-oriented and one who is predominantly implementation-­oriented. Such a tandem solution saves costs and enables a division of labor (Lippold & Lutz, 2018). It is crucial that with the formation of a selling center, the diverse demand for information on the purchasing side is counterbalanced by a corresponding weight on the sales side. The critical success factor here is which people are deployed on which side in which phases with which activities (Lippold & Lutz, 2018). In this regard, it is wise not only to involve sales staff in negotiations with the customer, but also to present other areas of the B2B supplier to the customer. Especially the areas of research and development as well as production can help to convince the potential customer of the offered service (Wirtschaftslexikon24, 2019). Figure 2.13 shows an example of the sales and purchasing sides in the acquisition process with their respective center members. The composition of the respective center changes depending on the process phase. The goal in B2B eCommerce must be to actively shape the relationship with the participants on the buy side in every phase of the buying process: • Needs identification and supplier search: The starting point of the B2B purchasing process is the needs identification phase within the framework of the specification. In this process, the basic need must be analyzed and defined. The concrete need can be triggered by internal or by external suggestions. Internally, this is usually done by a member of the customer organization (user, initiator), while externally a need can be triggered by benchmarks, reference selling, indications by key account managers, direct marketing campaigns or by trade fairs. This is followed by the supplier search,

Selling Center

OnlineSocialE-Commerce Marketing Media Leiter (Social Media/ SEO/SEA)

SalesSalesE-Commerce E-Commerce Employees Employees Leiter Leiter E-commerce Director

User specialist

Customer acquisition

Demand recognition

Specification

Buying Center

Initiator SocialE-Commerce Media Leiter User

Key Account E-Commerce Manager Leiter

Key Account Sales E-Commerce Manager Employees Leiter

Systems Specialist

TopMangement

Conversion

Supplier search

Request for Proposal

Research User User E-Commerce E-Commerce Leiter Leiter Buyer Initiator Gatekeeper

Influencer

OnlineMarketing

Check-out

SupplierPreselection

Negotiations and Closing

Service provision and Delivery

Purchase User E-Commerce Leiter Buyer

Buyer E-Commerce Leiter Decisionmaker User

After-Sales Rating and complaint/ Repair Experience

User Buyer

Fig. 2.13  Comparison of buying center and selling center. (Source: Lippold & Lutz, 2018)

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51

which involves identifying the consultants or suppliers in question. Online catalogues, portals, industry directories as well as recommendations and references play an important role. Previous experiences of the customer with the supplier as well as the general reputation of the supplier are important selection criteria, especially for larger projects that have a considerable influence on the structure and processes of the buying organization. In the buying center, influencers and users are active contributors (Lippold & Lutz, 2018). • Request for proposal and pre-selection: From the provider’s point of view, this step is primarily concerned with highlighting the benefit criteria and the advantages of the provider’s own offer. The preparation of offers is quite time-consuming; however, they are also to be understood as a marketing instrument. Procurement projects must be put out to tender in accordance with EU directives in the case of public contracts. On the customer side, buyers, users and influencers usually cooperate in the solicitation and evaluation of offers, and a supplier preselection is then made on the basis of the available offers. This also involves users and buyers in the buying center. It is not uncommon for suppliers to be asked to make a formal competitive presentation (“pitch”). This is common practice for consulting services and means a not inconsiderable upfront effort for the participating consulting firms. The result of this request for proposals and the pre-selection is usually a so-called short list, which contains only a very small number of providers. These should meet all the minimum requirements (“order qualifications”) (Lippold & Lutz, 2018). • Negotiations and conclusion: The negotiation phase now begins with the shortlisted candidates. All order modalities, such as type, quality, scope and duration of the service, price, transport costs, supplementary services, warranty aspects as well as delivery and payment terms are negotiated. Buyers, users and decision-makers participate in the buying center. The result of the negotiation phase is the conclusion of a contract with the supplier (Lippold & Lutz, 2018). • Performance and evaluation: The final performance and evaluation is concerned with the fulfilment of the contractually defined services and their evaluation. In the case of larger projects or in the plant business, delivery and evaluation can also be carried out in time segments, in which case milestone plans are used. These offer the user the possibility of carrying out interim checks (Lippold & Lutz, 2018). As a general rule, in B2B decisions several people are involved in both the sales and the purchasing process and decisions on both sides can possibly only be made jointly in a team. The reasons for the involvement of different people lie primarily in the complexity of B2B purchasing decisions as well as in the – compared to many B2C purchases – significantly higher purchasing risk.

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2.3.3 Onsite Versus Offsite Customer Interaction When using B2B online channels, information intermediaries such as Google also play a prominent role in communication and interaction. Therefore, customer interaction should at least be differentiated according to whether it takes place onsite or offsite (Heinemann, 2018b, 2019a): Offsite customer interaction refers to all activities outside the website as well as sales on marketplaces or engagement on platforms such as Google, WhatsApp or Twitter. Although typical social media platforms such as Facebook, Pinterest or Instagram have so far played a minor role in B2B eCommerce on the offsite side, they already play a major role for employer branding (Heinemann et al., 2019). Furthermore, last summer WhatsApp introduced an official business solution for large companies. This WhatsApp Business API allows companies to offer scalable and professional customer communication via the most popular messenger. This can not only make communication with customers more efficient and cost-effective, but also greatly increase customer satisfaction (Internetworld, 2019). In contrast, marketplaces such as Alibaba, Mercateo, Amazon Business or eBay Supply, among others, are not social media platforms, but can also be classified as offsite customer interaction. This is because customer contact here takes place only indirectly and outside the company’s own website (Haug, 2013a, b; Heinemann, 2018b). This also applies to the B2B portals Wer-Liefert-Was and Euro-Pages (Heinemann, 2019b). Onsite customer interaction includes all measures in the company’s own online shop. As shown in Fig. 2.14, these are primarily interactive additional functions, customer ratings, customer opinions, customer clubs and also any form of consumer generated content. Other examples are configuration or calculation tools. However, links to offline channels, for example multi-channel services offered on the company’s own website, can also be regarded as onsite customer interaction (Haug, 2013a; Heinemann, 2018b, 2019a). Interactive Onsite Add-On Functions Onsite, a variety of interactive design elements can be used to simplify the process of product selection and evaluation for customers. Their unifying task is to make recommendations, present alternatives and offer suggested solutions. The customer benefits from a reduction in the time spent on product selection and an increase in the quality of the selection process. The following interactive additional functions are possible (Kreutzer et al., 2015; Heinemann, 2019a): • Direct customer advice via customer phone or chat functions: While a call center is now the standard, especially for products that require intensive consultation, B2B customers increasingly want to receive advice via chat or messenger. Video live chat is a special form. It is important that all interactive consulting functions take place in real time and are not associated with excessively long waiting times. • Product reviews from customers: This tool involves the active participation of customers. For this purpose, corresponding dialog elements for product evaluation must be

2.3  Customer Interaction in B2B eCommerce

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“Customer interaction needs to happen onsite and offsite” Customer interactions Onsite Customer Interactions Connected where they buy

Product/performance evaluations

Offsite customer interactions Buy where they are connected 2019

Customer opinions/references Individualization/specification Multichannel-Hopping/-Services Linking to trading partners Configuration/calculation tool Business referrals

Fig. 2.14  Onsite and offsite activities in B2B eCommerce. (Source: weforum.org, 2019)

integrated on the website. This kind of customer involvement can have positive effects on customer loyalty. At the same time, an important added value is created for the supplier, since the person giving the rating must at least enter his name and e-mail address before submitting the rating. The five-star system, which is also used by Amazon, has become established as the rating scale. Frequently, comments in text form can also be submitted in addition to the rating by stars. In addition, there is increasingly the possibility of a personal exchange of experiences in corporate blogs, in which a wide variety of topics related to the product can be discussed, which, however, presupposes independent and authentic reporting. • Ratings: More and more B2B providers offer customers the possibility to rate their offered articles on a scale of values within the framework of a so-called rating. The number of ratings given and the average rating are displayed in the article display, which allows the potential customer to get a first impression of the product quality relatively quickly. • Testimonials: Testimonials written by customers give potential customers the opportunity to form a differentiated picture of a product. Such testimonials have a high degree of credibility and are therefore also frequently included in product advertisements. • Expert opinions: Product recommendation possibilities are also offered by references or test reports and recommendations from independent third parties, i.e. experts. Compaq, for example, provides an overview of such expert statements on its website (www.compaq.de).

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• Suggested lists: The provider can suggest a narrower selection of proven products to the customer and thus narrow down the range of choices. It is a good idea to list the most popular items for different product areas/categories on the “Suggested Lists”. • Checklists and shopping lists: For many applications, it is also conceivable to combine several products from one supplier or other compatible suppliers. In such cases, it is possible to compile corresponding lists that give the customer an overview of the components required (checklists). For example, Hornbach provides material and tool lists for specific applications on the Internet (www.hornbach.de). • Best-seller lists: The provider shows its best-selling products on best-seller lists at regular intervals and in updated form according to subject areas, needs, applications or problems. The shown sales success of the products represents a reference point for the customers. • Search and filter functions: The search function bar has outstanding importance, especially for B2B customers, but still works suboptimally for most shops. It requires that all products are provided with all conceivable indexing, which can mean a lot of effort. In addition, customers like to use specific filter options that allow narrowing down the search space to detailed product specifications. • Collaborative Filtering: Here, the presentation of products and services is provided with references and links to other products or services that buyers of the currently reviewed article have also purchased. • Configurations: If a product can be combined from different components in several variants or versions (for example, color combinations or additional equipment), configuration tools, also known as “constructing electronic catalogs”, are a good choice. The advantage of this tool is that the customer can configure or assemble the product according to his individual wishes relatively time-efficiently himself on the PC and can see the result immediately. It is advantageous if the customer can calculate the price of the product at the same time, as Cisco does for highly complex network systems, for example. • Product comparisons: This can make it easier for customers to compare products. For example, Hewlett Packard (www.hp.com) offers a tool with which the customer can compare the most important key data of three freely selectable articles in a category in table form. • Needs analyses: Providers can use this tool to clarify the customer’s needs and to explore which articles or services from their range are suitable for meeting these needs. For this purpose, corresponding dialog elements are used on the websites with which the customer’s general conditions and preferences can be recorded. Here, the web-­ based needs analysis comes relatively close to the character of a real sales and consulting discussion, because here, too, a certain degree of trust in the competence of the provider is required. • FAQ lists: FAQ lists are a clear list of frequently asked questions in connection with answers formulated by the provider. They can also be regarded as a selection and evaluation aid, insofar as they relate to the provider’s products and services. It may well be

2.3  Customer Interaction in B2B eCommerce

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that FAQ lists make the effort of a personal enquiry unnecessary for the user and thus also eliminate the waiting time for an answer. At the same time, of course, the online merchant also benefits from the reduced number of customer inquiries to be processed as well as from the information that is indirectly contained in the questions. • Tags: When storing data in files, tag refers to meta or additional information (for example, keywords in the form of tabs) that is added to a file so that it can be found on another website at any time by simply clicking on it and can be accessed directly. In addition to the data to be stored, additional information is stored, for example, about its origin or intended use (Wikipedia Tag, 2019). Many of the selection aids presented draw on customer data. The systems used must therefore be able to evaluate and use this data accordingly, as is already standard in B2C eCommerce today. In B2B eCommerce, too, it is extremely useful in terms of customer loyalty to pick up on and fulfill customer wishes with these additional functions.

2.3.4 Upstream Versus Downstream Customer Interaction Interactive value creation has undoubtedly received a decisive boost from the Internet. It enables interesting business models, especially for consumer goods manufacturers and their B2B eCommerce, as retail customers increasingly demand products produced exclusively for them (e.g. for private labels). It distinguishes between the principles of customization and open innovation (Reichwald & Piller, 2009). Customization refers to the creation of individualized goods and services. If this is done with the efficiency of comparable mass offers, it is mass customization. The decisive difference to Open Innovation lies in the involvement of the customer at a later point in the value creation process, namely after the start of production. In both cases, the involvement of the customer involves an externalization of company services. As a result, a “cost-relieving effect” can also be realized if service requests, for example, from bloggers and community members, are answered in advance without the company having to do anything (Fuhlhage, 2009; Heinemann, 2018b, 2019a). Open innovation predominantly refers to interactive value creation in the context of design, while mass customization intervenes in the manufacturing of products. It can be relevant in the context of refinement, but also for the sales process of already finished products. In this respect, it makes sense to differentiate interactive value creation according to whether it takes place before and during production or only after the products have been completed. Usually, all company activities up to the completion of a product are referred to as “upstream processes”, while the subsequent marketing functions are “downstream processes” (Hollensen, 2017). Following this, it is appropriate to refer to both mass customization and open innovation as “upstream customer interaction” and to label all post-manufacturing interactive activities as “downstream customer interaction” (cf. Fig.  2.15). However, the latter should be distinguished according to whether they take place on the company’s own website (onsite) or on partner platforms

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Upstream customer interaction

Field of interaction

Mounting Refinement Value creation phases

Design space

Field of interaction

Display/Zoom Rating/Opinion Filter/Selection Marketing Distribution After Sales Value creation phases

Customer interaction

Manufacturing

Provider as a valueadded partner

Solution space

Market launch

Customer interaction

Concept/Prototype

Customer integration

Idea generation

Customer as shapers of the Added value Customer integration

Customer/User as a valueadded partner

Solution space

Mass Custom.

Open Innovation

Provider company as shapers of the Added value

Downstream customer interaction

Design space

Fig. 2.15  Upstream and downstream customer interaction

(offsite). The focus of the following explanations is on the offsite interaction, i.e. the activities on the partner platforms outside of one’s own website. All offsite activities outside the own website usually serve to generate visitor frequency on the website and to convert these into purchases or orders. This involves influencing the customer journey. This means that there are various stages between the first thought of buying and the final click. The process to the final purchase can take several weeks. This includes search, discussions in review platforms, exchange of experiences or research on price comparison portals (Gehrckens & Oersma, 2013; Heinemann & Gaiser, 2016). In this respect, the customer journey approach must always bring together the online and offline worlds. This requires qualified data collection. On the other hand, it focuses on offsite and downstream interactions, even if physical touchpoints in the form of landing pages and online shops also exist in onsite form. Within this focus, innovative forms of downstream customer interaction should be at the forefront of consideration. A recent study by ECC Cologne (Schmelter et al., 2018) shows the relevant touchpoints in the B2B customer journey (cf. Fig. 2.16), which are explained in detail below.

2.3.5 Customer Journey in B2B eCommerce In the age of digitalization, the potential points of contact are rapidly increasing in both B2C and B2B. B2B customers want to benefit from similar digital experiences and customer journeys as B2C customers. This is because buyers in the B2B segment are increasingly transferring their multi-optional purchasing behavior, which they learned as private end customers and which has become a habit, to professional purchasing (Mahr, 2018;

2.3  Customer Interaction in B2B eCommerce

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Customer Journey – Overview CJ in B2B is characterized by a variety of different touchpoints. Go to Online channels dominate the search for information. High potential for digital services in aftersales. Question: When procuring C-parts or MRO items, which channels do you regularly use to search for information for the Procurement and in the after-sales phase (Aftersales Services) Information search

Internet

Personal Contact

Print media

75

60

73

Procurement

• • • • •

Internet online marketplace search engines price comparison Forums/Network

• • • • • •

Personal visit phone email mail Fax/Order form SMS/WhatsApp…

• •

Supplier catalog Catalogue/Flyer for the Product category Catalog of several suppliers Flyer with offers

• •

71

77

• • • • •

Onlineshop online marketplace e-procurement Internet of Things Various supporting Services

• • • •

office work sales force deal trade fair/ Event

Aftersales • 38

• • • •

cross-channel Order history document download Return online Chat with Customer service …

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Fig. 2.16  Relevant touchpoints in the B2B customer journey. (Source: Schmelter et al., 2018)

Schmelter et  al., 2018). Moreover, they come into contact with a growing number of touchpoints during the information and procurement processes. This is why the customer journey is also a priority in B2B eCommerce, albeit under slightly different auspices. In the B2B segment, for example, content is particularly important for building effective digital customer experiences. This is because B2B buyers now take a lot of time to research and largely rely on the internet as a source of information. They primarily head for search engines, which is why a high ranking on Google and Co. as well as an excellent online presence are critical to success for B2B companies. In this respect, the customer journey must be mapped in such a way that it corresponds to the actual buying behavior of business customers. To this end, the needs of the various function holders in the buying center must also be analyzed, as several decision makers are usually involved in the B2B sector. In this respect, B2B decision-makers today increasingly inform themselves via digital media. They research more intensively than in the age before the Internet and expect factual information in a wide variety of forms during their research. That’s why providing multiple content formats with varying depths of information is important. It’s all about gaining reach for the content and reaching the decision makers that are relevant for lead generation. That is why content marketing in B2B is an essential lever for systematic lead generation via relevant content (Lutz, 2018). The current ECC study by the IfH Cologne confirms the effects of digitalization on information behavior and the procurement process in the B2B sector (Mahr, 2018; Schmelter et al., 2018). For this purpose, the behavior of 481 customers in the manufacturing sector as well as in the construction industry in the procurement of C-parts or MRO items was investigated. The results of the study show that digitization is also steadily advancing in the B2B sector, but that the complexity of the customer journey is

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Channel change during the customer journey High complexity in the context of the information and procurement process: the majority changes with at least every second procurement the channel. Only 2% never change the channel Question: How often do you switch between the Internet, personal contact and print media when procuring C-parts or MRO items?

58%

Personal Contact

Internet

69%

58%

Only 2% never change Between channels

58%

Print media Lesebeispiel: 58 Prozent der Befragten informieren sichfor beiatmind. ihrer Beschaffungen im persönlichen zuvorininprint Printmedien, Legend: 58 percent of respondents obtain information leastder halfHälfte of their procurements in personal contact Kontakt beforehand media. bei den kleineren bauhandwerksbetrieben ist diestrades, mit 5%punkten seltener der Fall. This is less common among the smaller building at 5% points.

Fig. 2.17  Channel switching during the B2B customer journey. (Source: Mahr, 2018; Schmelter et al., 2018)

significantly higher here than in the B2C sector. The information processes in B2B are therefore anything but efficient. It turned out that the customers surveyed continue to switch frequently between channels when searching for information and making purchases. The majority of B2B customers surveyed switch between information channels – except for only 2% of cases – at the latest in every second information and procurement process, i.e. between online channel, personal contact and print (Mahr, 2018; Schmelter et al., 2018) (cf. Fig. 2.17). The frequent change is actually unnecessary, because it rarely offers customers any additional added value. The only explanation for switching channels is therefore uncertainty. This results from the lack of transparency in the market. Around every second channel change is made in order to obtain price information. Harmonized, transparent prices across channels that are also in line with the market can help to make information processes more efficient in the future. Intransparency and uncertainty are also causes for the increasing importance of online marketplaces. Above all, they offer their customers access to all relevant product and price information. In addition, platforms bundle a wide variety of providers and their service offerings. This reduces processes and simplifies complexity for the benefit of customers. This is why digital platforms are the winners in B2B eCommerce, as they create market transparency by bringing together suppliers and customers and enable efficient market mechanisms. The customer journey of three out of four buyers is already significantly determined by platforms. Companies can use this insight for themselves by integrating self-service functions and interactive elements into their B2B online shops. In most companies, personal contact and digital channels are still in competition with each other. This

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is due to the lack of a clear division of roles between online and offline in many cases. On the other hand, B2B customers usually have clear ideas about what they expect from each channel. From the customer’s point of view, standardized processes should be mapped above all. The online shop should only be one element of a holistic digital strategy, but it must function as excellently as Amazon & Co. do. B2B customers would like to take advantage of the different channels. However, their roles are often not clearly defined or demarcated from one another. This means that they cannot always make the most of their respective advantages (Mahr, 2018; Schmelter et al., 2018).

2.3.6 Transaction Behavior in B2B eCommerce Using the Example of Domain Sales Success in B2B eCommerce is often also determined by who takes the initiative first. An online transaction does not always have to be initiated by the B2B supplier alone, but is often also initiated by the buyer. In principle, the side that is better prepared always has the better cards in a B2B transaction. However, the approaches of B2B sellers and B2B buyers differ fundamentally (Fries, 2018). • B2B buyers: As a rule, a professional buyer will not wait for an interesting offer to be brought to his attention by chance. It can be assumed that the first step is to identify suitable offers, i.e. to consciously search for corresponding “targets”. If, for example, the sale of domains is involved, then the next step is to obtain background information on the project and the owner. The latter is important because it makes a big difference whether the owner is a professional or an amateur who is more of a hobby webmaster. Not all professionals also run confessional blogs or are on the road as speakers. While amateurs might well respond happily to low-ball offers to buy, it is not uncommon for professionals not to respond to the same requests at all. Thus, a search for names or common “footprints” (e.g. Affiliate ID, Analytics ID, AdSense ID, IP address, linking domains) is quite appropriate to find out something about the owner and his references. Google or common SEO tools such as the SISTRIX toolbox or Whorush can help with this. Furthermore, social networks such as XING can generate additional information. Once the domain owner has been identified and examined in more detail, the next step is to evaluate the product (Fries, 2018). More on this in a moment. • B2B seller side: For a successful deal, the seller should attract as many interested parties as possible and prepare the value-determining information in such a transparent and comprehensible way that all questions can be answered from the buyer’s perspective. He will therefore first identify potential buyers. However, before the exposé is sent out after the first enquiries, it can make sense to conclude a “non-disclosure agreement” (NDA) with the potential buyers. Such a contract, which stipulates silence about negotiations, negotiation results or confidential documents, should always be concluded when exchanging confidential information. However, there is also the possibility of a

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two-stage exposé, as is common with online real estate offers. The reduced exposé contains much less information than the complete offer and could also be handed out anonymously. It then conveys a first impression without the need to sign an NDA, which might scare off interested buyers. If the buyer then expresses interest, the NDA can be requested and, after it has been signed, the second exposé can be sent afterwards. This then provides full information about the project for sale. Sellers in the B2B sector should always expect that a buyer is only feigning interest in order to obtain confidential information about a project (Fries, 2018). • Value-Determining Factors: Regarding the value-determining factors of a project, which determine the price, it should be ensured that buyer and seller are talking about the same thing. High sales potentials are not infrequently offset by high costs for Google Adwords or advertising. As with corporate acquisitions, the value of a project or domain is usually estimated based on potential cash flow using the multiplier method, i.e. amount of gross revenue multiplied by a common multiplier. This varies depending on the assessment of the risk associated with the revenue. The range starts at six (very high risk project) and usually ends at 24 (very low risk project). Financial success is often determined by the amount of traffic. Basically, a distinction must be made between direct traffic and indirect traffic. Direct traffic results, for example, from brand strength, which is why users visit the site directly or originally. Indirect traffic usually comes from links to other pages or from Google. Both have to be analyzed in detail, also with regard to the stability of value. An expert opinion can also help, although it is of course debatable how realistic the estimates of an expert opinion are (Fries, 2018). Ultimately, however, supply and demand still determine the price, which is likely to be individual for each project. Incidentally, this is an essential characteristic of B2B eCommerce: individual and an infinite number of different prices, price calculations and an almost unmanageable variety of conditions. Anyone hoping for shop systems with comprehensive price formulas in B2B eCommerce will be disappointed. Uniform solutions do not exist, and one should initially view each system critically, especially if it has so far been used predominantly in B2C eCommerce. More on this in the following Sect. 2.4.

2.4 Marketing and Sales in B2B eCommerce In no other area do marketing and sales aspects play so closely into each other’s hands as in B2B eCommerce. While marketing policy is responsible for frequency generation and creates the conditions for sales with the marketing mix, sales policy is primarily responsible for conversion.

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2.4.1 Marketing Policy and CRM in B2B eCommerce B2B eCommerce marketing policy must be clearly distinguished from B2B online marketing, which is indeed about websites, and corporate websites in particular; however, these are something completely different from a functioning B2B online shop that generates sales (Kreutzer et al., 2015). The Würth Group shows more than impressively that such B2B online sales can account for more than 20% of business activity. Furthermore, it should be made clear that a good B2B online shop should be the essential flagship of the company and thus usually replaces the corporate website. All experiences show that all information of a corporate website – at least via buttons and links – should be found on the landing page of a shop. This applies not only to the imprint, but to all essential information about the company – i.e. investor relations, company history, press department, etc. The interactivity of the B2B online shop should go hand in hand with the possibilities of the Internet to generate customer data automatically and promptly. In contrast to classic marketing from the offline age, the focus here is on fulfilling customer wishes as individually and interactively as possible, which is actually what B2B business is predestined for. Customer needs are treated in a highly differentiated manner on the basis of individualized offers. Basically, in contrast to the old offline world, online retail also practices flawless “one-to-one” marketing in B2B, which can be regarded as differentiated in terms of both customer value and customer needs (cf. Fig. 2.18). It uses comprehensive information about the preferences of business customers and can make use of detailed customer descriptions as part of profiling (Heinemann, 2019a). This helps especially the relatively anonymous system and industrial goods business or PVH out of the anonymity trap. The permanent interaction also allows, especially in B2B eCommerce,

value of the Customers

FrequencyMarketing

One-to-OneMarketing

“Loyalty Programs”

“Online Dialogue”

Nicheand Target Marketing

Classical Marketing

“Print Advertising”

uniform

uniform

Customer needs

Interactivity

Expansion of needs

high differentiated

“Events” high differentiated

Fig. 2.18  Classification of one-to-one marketing. (Adapted from Peppers & Rogers, 1997)

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an expansion and deepening of the degree of individualization over time (dynamic profiling). Target marketing with the subdivision of the market into homogeneous subgroups is closely related to profiling, which can be done relatively inexpensively compared to the past due to the cost efficiency and timeliness of digital data. However, it should not be underestimated that special technology is required to build and manage customer data, which in any case is a weighty cost factor. However, this has an investment character, simplifies the automation of processes and reduces wastage (Kollmann, 2013). The marketing mix in the “one-to-one” marketing of online retailing is completely different from that in offline-oriented classic marketing. Similar to catalogue-based mail order wholesale, the focus here is primarily on CRM and customer data management (Thieme, 2006). Similar to B2C online retailing, the goal of CRM in B2B eCommerce is to acquire new customers, increase the value of individual customers for the company, and thus increase profits and company value (Schneider, 2001; Braun et al., 2017). Here, too, customer data management plays a central role. In this regard, it is about a systematic preparation of all relevant customer data. Interesting information is provided, for example, by the composition of purchases according to needs, the type, number and prices of items, as well as the place, time and frequency of purchases. For B2B providers, the number and type of complaints and returns should also provide important insights. Ideally, a targeted and individualized customer approach is achieved if it is possible to link this data with the help of personal data relevant to purchasing behavior (for example, customer data from the data warehouse) (Kenning, 2014). However, a major problem is that in the online sector there is now too much rather than too little information available (“Big Data Problem”) and this cannot be used to exploit customer potential (Heinemann, 2019a). In B2B eCommerce, these are to be differentiated primarily according to new purchase and repurchase (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014).

2.4.2 Sales, New Purchases and Repurchases in B2B eCommerce The conception of B2B eCommerce is first of all about the complete coverage of the sales processes. These should cover the purchasing phases on the customer side largely onsite. Basically, the onsite sales processes can be subdivided into pre-purchase, purchase, and post-purchase phases, whereby the offsite and offline interfaces must also be taken into account (see Fig. 2.19). The pre-purchase phase is about attracting potential customers and then confronting them with the product offer. A key role in this phase is played by the offer search (eSearch process), in which a product matching the need is searched for and possibly found by the customer. Once the product has been selected and placed in the shopping basket, the transition to the purchase phase takes place, which starts with the activation of an order button. This purchase phase (eSales process) involves the business agreement between supplier and buyer as well as the transaction processing (eFulfillment). This also includes online payment (ePayment) and product delivery (eDistribution). After purchase completion and

2.4  Marketing and Sales in B2B eCommerce

Pre-purchase Internal Info search

B2B shop visit

Product search

Comparison of alternatives

63

Post-purchase

Purchase

Online Shopping cart Product identification

Transactional Settlement (Online Fulfillment)

Online Purchase

Delivery (Offline Fulfillment)

Complaint/ Repair?

Online Complaint

Installation/ Use

Control (E-Controlling)

Online Payment (Online-Payment)

Evaluation

Fig. 2.19  Sales processes in the B2B online shop. (Adapted from Kollmann, 2013)

complete transaction processing, the post-purchase phase begins, within which support and service offers, customer evaluation, complaint and repair processing or online complaints, as well as control (eControlling) for optimizing the process setup and for reviewing all sales-relevant company activities can be described (Kollmann, 2013). In contrast to B2C eCommerce, returns tend not to play a role in B2B eCommerce, as consumer protection does not apply here and there is no right of withdrawal typical of online retail. It is important that the system records information about the ordered products, services, desired delivery and payment modalities as well as the customer at the beginning of an order process, whether from internal databases or in dialogue with the customer. It must be possible for the customer to add or remove goods from the order list at any time. The same applies to the delivery and payment modalities, which must be modifiable at any time and tailored to the individual customer. Regular customers should be able to access stored master data. The standard is the creation of an order document on which the previously made selection is recorded and the price calculated or, in the case of complex products, calculated transparently as a total price. It is also necessary to create an immediate order confirmation after order release or an immediate invoice. Throughout the delivery period, customers should be kept informed about the status of order completion (Schobesberger, 2007). Experience has shown that this increases customer satisfaction and thus customer loyalty. Furthermore, it leaves room and time for complaints or error corrections. Purchase Classes in B2B eCommerce Basically, three purchase classes can be distinguished in B2B eCommerce, which are directly related to customer acquisition and customer retention and which distinguish between the B2B new purchase (New Task), the modified B2B repeat purchase (Modified

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Purchase class

Dimensions Novelty of the Problems

Information needs

View new Alternatives

high

maximum

significant

Modified Repurchase

medium

limited

none

Identical Repurchase

low

minimum

none

New purchase

Fig. 2.20  Purchase classes in B2B eCommerce. (Source: Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014)

Rebuy) and the identical B2B repeat purchase (Straight Rebuy) (Godefroid & Pförtsch, 2013; Backhaus & Voeth, 2014). These are summarized in Fig.  2.20 and explained in detail below: • New B2B purchases: In the case of a new B2B purchase, a company is buying a specific product for the first time for which it has no experience of its own. Therefore, there is a great need for information and considerable uncertainty. If standard products are being purchased for the first time that are already being used by other companies (e.g. a computer system), the risk can be reduced by accessing the experience of others. Customer ratings and opinions, which are now also accessible for business products, undoubtedly help here. In this respect, it is then simply a matter of choosing the right product that is factually suitable and acceptable in terms of cost. It is more risky if the desired product has yet to be developed and a suitable supplier has to be found for it. • B2B modified repurchase: In the case of modified repurchase, products already available in the company are brought up to date through new procurements or capacities are expanded through additions. In this respect, the company’s purchasing department has experience with the use of the products or services to be procured. Therefore, the need for information is essentially reduced to the differences to the already known products. Accordingly, the number of alternatives considered in this purchasing situation is also lower than in the case of a new purchase. However, if additional suppliers are included in the selection for cost reasons, the number of alternatives considered can also increase

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in the case of repeat purchases. Modified repurchases can also arise from an identical repurchase situation if the original decision is doubted or problems with the previous suppliers have arisen (e.g. due to quality defects, delivery delays, price increases, etc.). • B2B identical repurchase: In identical repurchase, a procurement decision once made is repeated 1:1. As long as the company is satisfied with the initial purchase, there is no reason to revise the decision made. In this respect, the use of order optimization systems and automatic scheduling (e.g. via EDI or Web-EDl) is also a good idea. For the supplier, the situation of identical repurchase is enormously advantageous from a marketing point of view, as he can continue his business with relatively little marketing effort. Suppliers who have not been considered (“out-suppliers”) will therefore try everything to raise an identical repurchase situation at least to the level of a modified repurchase or even a new purchase, be it through product innovations or price changes. In doing so, they can set in motion a new purchasing process in which they will then be taken into account. The differentiation of the purchase classes has outstanding significance for the type of marketing in B2B eCommerce. While it can make sense, depending on the type of business, to rely more on extranet and EDI instead of eCommerce, for example, in order to initiate a longer-term relationship in the supplier business, the initiation of new purchases at the latest justifies the use of B2B eCommerce. This is indispensable for all types of business from the aspect of acquiring new customers, regardless of how much transaction volume it ultimately handles. While the design of purchase classes and sales processes tends to follow an inside-out orientation, the customer perspective and thus the outside-in perspective must not be neglected. Decisive for the customer orientation are above all the shop design and the operability, which is also called usability.

2.4.3 Shop Design and Usability in B2B eCommerce Shop design and usability are important pillars in B2B eCommerce to position oneself in the competition. These have a significant influence on conversion, which, however, must be differentiated according to eight different dimensions and then again according to 50 elements. Conversion quality, i.e. the amount of B2B eCommerce sales actually achieved, is influenced by at least 250 criteria in total, which should be explicitly taken into account in shop design. Figure 2.21 shows the essential dimensions and elements. The dimensions mainly concern the usability of the shop. This describes the usability in terms of product access, presentation, advice, ordering processes and customer integration. In addition, the check-out process in connection with checkout and payment procedures, delivery and complaint or repair handling – i.e. service – also influence the customer experience. For each dimension and each element behind it, a target positioning should be defined that is

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Service

B2B-Online-Shop

8 Dimensions

Productaccess

Home page Login Navigation 50 Elements

Search/Filter Access routes

Online Consulting

Orderprocess

Article detail page

Recommendations

Shoppingcart

Images

Advisoryfunction

Display

Zoom Multimedia Article text

Product list/ Service list

Available/ Delivery time info

Quicklinks

Additional Features

Checkout Customeraccount

Productcomparison

FAQs/Lists

Chatbot

Customerspecifics

Calculator Date booking

Company Info/Authorisierg. Check-out

Customerinvolvement

Customer interaction/ Chat Hotline/Call Back Button Product Review Social Media Individualization Newsletter

Delivery

Complaint/ Repair

MultiChannelservices

Scope ofservice

Contact

LocationFinder

Deliveryservices

Appointment

Availabilityquery

Pick-up service

Reservation

Delivery time/ -date Deliveryoptions

Costs

Fees

Duration

Deliverystatus/ Transparency

Feedback/ Transparency

Click& Collect Field ServiceLink

250 criteria

Fig. 2.21  Dimensions of usability in the B2B online shop. (Adapted from Gehrckens & Oersma, 2013; Heinemann, 2019a)

suitable to optimize the customer experience (Gehrckens & Oersma, 2013; Heinemann, 2019a). At first glance, the eight dimensions of usability of a B2B online shop resemble the dimensions of customer experience in B2C eCommerce, but the associated elements go far beyond this and give an indication of the greater complexity of B2B eCommerce. For conversion, the access paths to the products and the type of presentation as well as the online advice are of outstanding importance. Different access paths to the product range can be established, for example, via onsite measures, blogs/trade journals and newsletters. Ideally, current topics and contents are used. However, the larger the assortment, the more difficult it is to present. In the case of category killers, the complexity should be reduced in any case through appropriate product access. This can be done by product lists or filter options. This avoids that the customer has to dig through hundreds of articles (Gehrckens & Oersma, 2013). Product information in conjunction with content plays a key role in B2B eCommerce. Nevertheless, many B2B online shops have empty product detail pages. However, the classified ad formats of classic catalog retailers are not a good model here. Instead, the articles should be presented in a way that is as enticing and salesy as possible, even for B2B customers, and at the same time correspond to reality. Otherwise, B2B providers should not be surprised about complaints. Customer engagement offers good opportunities for differentiation from competitors. Making interaction in the (online) shop visible makes it seem more lively, for example through configurations created by users, which can be seen as recommendations of matching and compatible products (Gehrckens & Oersma, 2013; Heinemann, 2019a).

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With regard to the shop design and usability, customer ratings provide information about customer satisfaction, which in turn is crucial for the continuation of the business relationship from the customer side and thus for customer loyalty. Online order processing, which is usually assigned to customer service, plays a central role in customer satisfaction. The basic prerequisite for order processing to function properly from the customer’s point of view is first and foremost product availability, which in the case of multi-channel providers should also be able to be queried as a multi-channel service at branch level. If the goods are not in stock, the delivery time is extended. In the meantime, delivery within 24 hours, at the latest after 48 hours, is already standard. If parts are needed immediately – for example in the event of a production plant breakdown or on construction sites  – a bring express service is extremely appreciated. In the meantime, special service providers have established themselves for this purpose, such as the Lufthansa Cargo subsidiary “Time:matters”, which incidentally operates B2B eCommerce in an exemplary manner (including a price calculator and multi-channel services, etc.). If the service is not available or there are problems with the delivery logistics, customers should in any case be informed about possible delivery delays before they make the purchase. This helps to avoid misunderstandings on the customer side, but requires the technical possibility to check the availability of the desired product as well as to be able to indicate the concrete delivery time. Such precise information of the customer about the delivery status has meanwhile become standard. In addition, professional complaint management and excellent service are also “state of the art”. Especially due to the lack of personal “face-to-face” contact, complaint management in B2B eCommerce should never be fully automated, but should always include a telephone contact option for customers. In this context, “call-back” functions are becoming more and more popular, with which the customer can click on a call-back request and be called back within a few seconds. As in B2C eCommerce, the friendliness and expertise of the staff naturally play a key role here, which must be considered in any case in the event of total outsourcing of customer service. The same applies to delivery via service providers, who have the final contact with the customer and thus also decisively shape the appearance of the B2B provider.

2.4.4 Conversion and Shop Productivity in B2B eCommerce Conversion refers to the number of purchases made in relation to the frequency of visits. This key figure is an important indicator of the success of the shop presence, while the conversion funnel (see Fig. 2.11) looks at the path to conversion. At the same time, it is an indicator for the quality of the shop design as well as the offer performance. In particular, the assortment in combination with the assortment access should undoubtedly be the biggest conversion lever. In this respect, the dimensioning of the assortment in terms of breadth and depth as well as overall scope and topicality directly influence conversion. Many of the traditional rules of trade also apply in B2B eCommerce. In this respect, the experience that the assortment is the heart of the store and the essential point of attraction

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for customers is particularly relevant. While in brick-and-mortar retail the square meter turnover is considered the central productivity indicator, in the B2B online shop the average article turnover as well as the size of the shopping cart are the essential productivity drivers, which are summarized in Fig. 2.22. In many cases, operators of online shops complain about insufficient sales, which then lead to statements such as: “E-commerce is not worthwhile” (Diekmann et  al., 2012; Heinemann, 2016; Heinemann, 2017). In contrast, a somewhat more precise and differentiated look should be taken at the sources of productivity so as not to arrive at rash blanket statements. First of all, this concerns turnover, which essentially comes about through the generation of visitor frequency in the online shop as well as through the skimming of this frequency. Both levers are shown in Fig. 2.22 together with their individual factors. In this regard, conversion and the value of the net shopping cart (net-net after discounts and special conditions) play a key role. The latter is generated from the number and average value of the items placed in the shopping cart by the customer. This sounds trivial at first, but it already points to a first cardinal error of most online shop operators: Where there’s no assortment, there’s no shopping cart value. Unfortunately, most online retailers disregard this basic rule: even in many B2B online shops of the PVH, there are often only rump assortments. Those retailers are often the ones who complain the loudest that eCommerce is not worth it. If multi-channel sales are also included in the productivity analysis, multi-­ channel services and innovative offers such as “ship from store”, i.e. fast delivery to customers from the branches, open up additional productivity potential. This primarily involves the following productivity indicator, which is likely to be the key to success for online retailing, namely net sales per visit. This in turn can be leveraged to an equally

Frequency Skimming

Number Buyer

Turnover/ Visit

Conversion

Shop Visits

Nonbuyers

Number Visits

Frequency Generation

Frequency OffsiteSearch

Purchase Article ØPrice

Acquired

Non-users

No Demand

User

Competitor

Random Visits

Platforms

Pure Play Multichannel

Info search Willing to buy

Shoppingcart

Generic

Assortment

Availability

SaleArticle

Click Article

MCArticle Number Cancellation

Focus: Operational Optimization

Fig. 2.22  Sources and key figures for online shop productivity

Wide

Ship fr. Store

Organ.Visits Web to Store Store to Web Web in Store

Media

Depth Ship to Store

AcquisitionVisits

Social Media ContentPortals

Operator

Marketplaces Priceportals

Focus: Strategic Further development

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important metric, namely customer value, which, given the enormous customer acquisition costs, is “key issue” for the contribution to success of a B2B online shop and should be maximized via value-based customer management (Heinemann, 2019a). This should also be the central task of web controlling. This should improve the quality of decisions in the operational context. In this respect, there are hardly any differences to classic controlling in the key figures of sales, goods and earnings performance. However, these are not enough, because in B2B eCommerce, decisions are usually data-driven. For this purpose, the company needs key performance indicators (KPIs) in all functions that are regularly measured beyond order, sales and profit (Meffert & Meffert, 2017). Online-­ specific metrics take into account the specifics of the business system and in particular “attraction, acquisition and retention” (Heinemann, 2019a). The attraction of the online shop is reflected, among other things, in the number of visits and visitors. In the “Attraction” category, however, these are only meaningful in combination with the conversion rate and the length of stay. The outstanding role of CRM is reflected in the “Acquisition” category, which focuses on new customer acquisition and the number of newsletter subscriptions. “Acquisition” also includes the important key figures CPO (Cost per Order) and CNC (Cost per New Customer). Web Analytics as A Component of Web Controlling For the collection of the most important quantitative key figures, the common web analytics tools can help, which are also called web controlling tools. In addition to visits and visitors, they can also be used to determine page impressions, conversion rates, dwell times, bounce rates and click-through rates. The data obtained from this also provides a good basis for optimizing the website, as it provides information on the click behavior of website users, their abandonment behavior and the weak points of the website in comparison with the competition (Düweke & Rabsch, 2012). Of the following web analytics providers, Google Analytics is certainly the best known and most widely used standard tool. However, the additional use of complex and expensive software can be useful if more detailed and up-to-date data is required (Düweke & Rabsch, 2012; Steireif et al., 2015): 1. Google Analytics (www.google.de/analytics) is currently the most widely used tool that can be used free of charge and is easy to use and install. In addition, a premium version is available for a fee. 2. Adobe SiteCatalyst, formerly Omniture (www.omniture.de) is relatively widely used, especially by larger websites, and has been offered as Adobe Online SiteCatalyst since its acquisition by Adobe. 3. Webtrekk (www.webtrekk.de) is a web analytics data warehouse that focuses on analyzing user behavior in larger German online shops. 4. Econda Shop-Monitor (www.econda.de) is a web analysis solution from Karlsruhe, which was developed especially for online shops and already contains the common eCommerce key figures in the standard version.

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5. Piwik (www.piwik.de) is an open source solution that can be used free of charge and is therefore an alternative to Google Analytics. Other providers include Nedstat (www.nedstat.de), etracker (www.etracker.com/de/), CoreMetrics (www.coremetrics) and Webtrends (www.webtrends.com). The paid tools are usually compensated based on the number of page impressions. However, not all systems allow the same measures. Therefore, the selection of software solutions that go beyond the free standard tools should be made with care. For example, although quite a few providers allow raw data analysis, only a few solutions allow the parallel use of raw and aggregated data (Graehl, 2012). Furthermore, the software should be able to be connected to other systems via plug-ins and interfaces. Furthermore, it is advisable to pay attention to data protection concerns with non-EU providers as well as to the total cost of ownership (TCO) and investment security. What all web analytics methods have in common is that they are an indispensable tool for running a B2B online shop in a targeted manner and within budget. They also help to better understand visitors and customers. The web analytics tools thus provide important information for fine-tuning online marketing measures as well as optimizing usability and thus improving the quality of the online shop (Düweke & Rabsch, 2012).

2.4.5 Login, Purchase Completion and Check-Out in B2B eCommerce It is not uncommon for B2B online shops to neglect the importance of login, purchase completion and check-out for customers. The most sophisticated online shop concept is of no use if unauthorized customers can enter the shop and place an order. Therefore, the handling of the login should be unproblematic. Since there are numerous consumer protection regulations to be observed in B2C eCommerce, it is quite tempting for B2B providers to limit their offer to entrepreneurs (Brünen, 2017). This is because in B2B business, they do not have to take into account the information obligations towards consumers. Thus, B2B customers do not have a right of withdrawal and therefore do not have to be instructed or informed about it. Moreover, B2B online shops can simply regulate their payment and delivery terms in their general terms and conditions (GTC) (Heukrodt-Bauer, 2014). In order to do so, however, B2B eCommerce companies must ensure that end consumers do not order from the B2B shop, even if they feel they are being targeted. The following precautions suffice for the legally secure exclusion of consumer involvement: • Notice on every page in the online shop that sales are made exclusively to commercial customers, i.e. entrepreneurs, tradesmen, freelancers and public institutions. • Explicit confirmation box in the ordering process that the order is placed by a commercial customer.

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How the notices are to be visually designed is not clearly regulated. To be on the safe side, however, they should be clearly highlighted by a special choice of color or by bold print. Without a doubt, the user login remains the most secure option for B2B shops (Giese, 2017). In addition to the login question, it can also be helpful for B2B customers if the B2B provider provides options in his shop that can be used to regulate which employees on the customer side are authorized to do what. Figure 2.23 shows an example from Normfest, which shows a company account with the corresponding company information, which regulates exactly who is allowed to shop in the Normfest shop and in what form. Particularly because of the high entry barriers for customers in B2B eCommerce, the subsequent purchase including conclusion of the purchase and check-out should be as simple as possible, whereby extensive automation is helpful. A maximum of three mouse clicks until a product order is triggered is standard today. By then, all relevant customer data for carrying out the transaction should have been requested, including customer registration. A visualization of the purchase transaction can be helpful. Its essential elements

Fig. 2.23  Example of a Normfest company account. (Source: Normfest, 2019; Commerce, 2019)

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are the shopping cart, the checkout, the payment procedures as well as the check-out (Mahrdt, 2010): • The virtual shopping cart must meet several requirements. First of all, it should be easy to find and be able to hold several items of the same type at the same time, which the customer can also delete and put back if necessary. It is also important that item details can be viewed from the shopping cart and that subsequent changes can be made. In addition, the customer expects the price, VAT, shipping costs and possible payment methods to be displayed in the shopping cart. • The checkout should be designed sensitively, as purchases can quickly be cancelled here. Under no circumstances should it lead to unpleasant surprises, e.g. by suddenly pointing out minimum order values or additional charges. Nor should information about possible sales, delivery delays or the invalidity of voucher codes be given only at the checkout. The checkout should provide a clear overview of the items ordered and allow for easy deletion of items that were ordered too much or incorrectly. Also, the customer should be able to go back to the shop at any time and add more products. • The payment procedures should not impose any restrictions on the customer and should not create any barriers if possible. It is now common to offer all payment methods in B2B as well (Siebers, 2011; Werner, 2014). • The check-out is also a frequent reason for abandoning a purchase. This is often due to conceptual weaknesses of the online shop. • The persistent shopping cart makes it possible to save the content and display it again on a revisit, as the client server is identifiable. This makes it easier for the customer to find back to the previously researched articles when re-entering. According to the motto “after the purchase is before the purchase”, the check-out can be used for marketing purposes and provide incentives to visit the online shop again. In addition, check-out marketing is relatively uncomplicated for online shops and an easy way to create added value.

2.4.6 System Strategy and Shop Selection in B2B eCommerce The minimum requirement in B2B eCommerce is powerful processes that ensure the fastest possible processing of customer orders. This requires a strategic concept for IT deployment that is closely aligned with the growth targets of the online shop in terms of scalability. In this respect, the selection of the right shop system plays a key role (Krekeler & Heinemann, 2017). Automating the sales process and its sub-processes (for example, information search, ordering process, payment, product delivery) can help ensure speed, save time and human resources, and generate quality benefits. Amazon is the best example of how automation can increase perceived service quality. For example, the “1-click purchase” option

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significantly reduces the customer’s effort because the delivery address does not have to be entered again, a login as well as a request for payment data through cookie use are no longer required and, overall, the Internet user can bypass all individual steps that are normally part of the purchasing process for all future purchases. From the customer’s point of view, this considerably simplifies and accelerates the purchasing process, which in turn allows the online retailer to minimize the risk of discouraging the customer from making a purchase due to obstacles in the sales process (Kollmann, 2013). But not only the time and personnel expenditure can be reduced by automation, but at the same time quality advantages can be realized by avoiding errors. The efficient processing of transactions can also increase sales, although the sales department is relieved. However, this presupposes a standardization of the transactions so that they can be managed professionally regardless of time and number and allow a larger transaction volume without increasing the sales costs. These are typical economies of scale. However, a prerequisite for the realization of such economies of scale is that the transactions are designed as efficiently as possible. This is only possible if automation takes over all tasks that can be standardized. This makes it possible to offer information (for example online advice) promptly to the internet user, which promotes sales (Heinemann, 2019a). Customers communicate with the company in the online channel via a software interface. The importance of IT and its infrastructure is reflected in its evolution from a supporting area to a core function integrated into all value creation stages and processes. This makes the use of IT a key prerequisite for success in online retailing. The instantaneous data transfer of all accruing data of the sales process requires a simultaneous user and needs analysis, which can give clues to problems in the execution of a transaction (Kollmann, 2013). This argues for enabling immediate data transfer at as many points as possible through cross-user automations. This not only supports pure sales on the company side, but also simplifies the purchasing process on the customer side (Heinemann, 2019a). With sales promotion, the essential goal is achieved that is pursued with the automation of the sales process and its sub-processes (for example, information search, ordering process, payment, product delivery) (Kollmann, 2013). Automation is particularly common in the context of sales promotion. For example, it is relatively easy to introduce email systems that can be used to make the workflow and user experience of creating mailings more effective. These should be integrated into the merchandise management system and the online shop. It is possible for newsletter editors to import the entire product information from the online shop or merchandise management system directly into the e-mail by entering a short article code. In this way, the name and description of the article, image, price and URL are automatically transferred. A defined newsletter design, which was set up at the beginning, ensures the uniform formatting of all newsletters sent out (Schwarz, 2008). However, automation, simplification and acceleration of shopping are also associated with certain dangers. The circumvention of individual steps when activating the “1-click button”, for example, also facilitates the misuse of user accounts if other people have gained access to the fixed settings. Such dangers and a certain sensitization on the

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customer side with regard to the “pitfalls of shopping on the Internet” (Heinemann, 2019a) also speak in favor of a clean login solution. Principle of Scalability Experience shows that the more centralized an expansion can be, the higher the degree of automation and the less complexity the system landscape has, the more scalable the operator model is. Particularly due to the high intensity of fixed costs in eCommerce, this is critical for amortization. However, scalability tends to require centralized systems and organizations. In the case of internationalization, for example, locating country functions in a single headquarters saves costs primarily by sharing resources such as administration and IT. In centralized systems, resources can generally be better utilized and thus economies of scale are more likely to be realized (Leybold, 2010; Krekeler & Heinemann, 2017). There is a tendency for the scalability of an operator model to be influenced by the following three elements, which are derived from business requirements (Booz-Allen & Hamilton, 2003; Krekeler & Heinemann, 2017): • Best possible integration with existing systems. This certainly also depends on the organizational integration of the Internet channel (for example, spin-off, greenfield, start-up versus organizational embedding), but should prevent manual execution of processes (“media breaks”) as far as possible. • Maximum degree of standardization of Internet solutions within the company. On the one hand, compatibility and thus linkability must be ensured, and on the other hand, process efficiency, transparency and verifiability should be kept in mind. Isolated solutions should be avoided as far as possible. • Extensive IT coverage of all value creation processes and support. This is another reason why process flows should be ensured without media discontinuities and the basis for speed and full automation should be created. The online players that have been particularly successful here are those that have dispensed with integration in the existing back office and have been able to develop a completely new system architecture from the customer interface through to production and logistics. All three elements quickly become complexity drivers if they are ignored. In addition, the speed requirements of customers are increasing, so that nowadays at least a 48-hour delivery must be ensured. The even faster online retailers have more success with 24-hour delivery, which then requires back-office integration in any case (Heinemann, 2019a). Selection of the Shop System To select the right shop system, it is first necessary to clarify which requirements it should meet. In this regard, the first step is to analyze the target customers. It is a matter of clarifying the expectations of the buyers with regard to usability and functions. In addition, the context in which the shop is to be used must be determined. This is constantly changing due to the mobilization of the Internet and the enormous spread of smartphones. In the

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context factors, it is also necessary to check which requirements the products have to meet. With increasing complexity, the need for flexibility usually increases. A product with many variants and nested pricing rules quickly pushes standard systems to their limits. The following criteria can be used to select a shop system (Zenner, 2012): • Scalability: The possible frequency of visits is mainly determined by the speed and functionality of an online shop. Therefore, the number of visitors and orders should be planned early on. In addition, the number of stored categories and articles should be determined in order to be able to dimension the shop technology. • Internationalization: In this respect, the required degree of internationalization should be defined in good time and it should be clarified which languages and country-specific regulations are to be taken into account. The question of differentiation between countries should also be determined. • Sales promotion: The shop system must also be able to support the planned sales promotion campaigns. This concerns coupons and discounts, newsletters and also the connection to platforms. • Agility: The implementation speed of shop systems, also referred to as “time to market”, is becoming increasingly important. Small and fast providers can now place offers on the web within a few weeks. SaaS solutions have the advantage that roll-outs in different countries can be carried out quickly because an integrated platform solution already exists. • Interfaces: As a rule, a shop system is not operated as an isolated solution, but integrates interfaces to other systems such as payment and logistics systems, merchandise management systems or cash register systems. Thus, it is necessary to synchronize information such as stock levels, etc. from the various sales channels. Standard solutions should tend to be preferred when selecting systems. • Know-how: It is ideal if an online department already exists, which can then take responsibility for the design and server administration. However, the technical set-up and maintenance are often left to a competent agency. Rental models are also conceivable. • Budget: The costs for setting up and technically operating the online shop are only part of the total costs, which also include process costs as well as logistics and marketing expenses. In addition, it must be clarified whether the shop is to be financed from available capital (KapEx) or from the operating business (OpEx). All in all, many questions and criteria influence the selection of the shop system. Therefore, a detailed analysis and an investment calculation are crucial in advance. Irrespective of this, however, the size of the online shop as well as the trading volume and the internationality of the trading company already provide decisive indications for the shop selection. Shop systems can be divided into four categories or usage models (Zenner, 2012; ibi research, 2018), namely:

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• • • •

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Open Source, On Premise (Purchase Software), SaaS solutions (“Software-as-a-Service”, i.e. rental software) and Extensions (plug-ins).

Open source is undoubtedly an interesting approach, but it is more suitable for medium-­ sized shop sizes. Purchased software, on the other hand, appeals more to larger companies and “professional sellers”, especially since it requires some willingness to compromise. Small and medium-sized enterprises (SMEs) are increasingly turning to SaaS solutions and can thus finance their shop from ongoing revenues without making huge initial investments. For small online shops, plug-ins or content management system (CMS) extensions have emerged as the preferred solution (ibi research, 2018). The selection of the right shop system is undoubtedly one of the most difficult undertakings, for which a company should in any case bring in expertise. In any case, the decision must be made according to target turnover size classes. Entry-level models do not make sense here, nor do systems focused exclusively on B2C. In principle, however, all common shop systems can now also be used in a B2B context. Although not all standard solutions have a dedicated “B2B suite” (i.e. special B2B functions), this need not be a criterion for exclusion if the system can be adapted accordingly. Although SAP Hybris is an obvious choice when using SAP, its usability depends on which other systems are in use in the company. Hybris is clearly considered the “Ferrari of shop systems” and is primarily used in highly complex multi-channel structures. According to the ibi study from 2018, Magento is the leading system in B2B eCommerce with a share of 20%, followed by Shopware with 14% and SAP Hybris with 11% in third place (cf. Fig. 2.24) (ibi research, 2018). Clarification of the Technical System Requirements in B2B eCommerce When starting out in B2B eCommerce, the first question that inevitably arises is whether the shop design has to be created from scratch or whether a ready-made template or design is used and adapted if necessary. The answer to this question depends on which online shop software is used. Standard software solutions such as Magento or Shopware already come with a large selection of ready-made designs that can be quickly installed and used. It is possible to choose between many design variants. For example, themeforest.net offers more than 350 designs or themes that can be used for Magento and also individualized in each case. These can be installed within a few minutes (Steireif et al., 2015) and are comparatively uncomplicated. It becomes more difficult with a complex interaction of several channels and the integration of external software or providers. As a rule, a wide variety of puzzle pieces have to be brought together for online shop solutions. The most important system components here are undoubtedly ERP, PIM, CRM, newsletters/emails and external service providers (Steireif et al., 2015):

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Which shop systems are used in B2B eCommerce Magento Shopware SAP Hybris oroCommerce xt:Commerce

_____________________ 20% ____________ _______ _______ 6% ______

5%

Intershop

______ 4%

WooCommerce

______ 4%

IntelliShop

______ 4%

OpenCard

______ 4%

Salesforce (Demandware)

____ 2%

OXID eSales

____ 2%

Oracle iStore

____ 2%

IBM Websphere ePages Other

14% 11%

_

1%

__ 1% __

20%

Fig. 2.24  Shop systems in B2B eCommerce. (Source: eSales4u, 2018; ibi research, 2018)

• ERP (Enterprise Resource Planning) refers to a system with which all available resources can be planned and controlled in a timely manner and in line with requirements. In addition to the usual basic functions of a company such as purchasing, production/operations, marketing/sales and administration, this primarily concerns materials and merchandise management as well as product data management. A typical provider of ERP systems is SAP, for example. • PIM (Product Information Management) stands for a system in which all product data is managed, maintained and modified in a media-neutral manner. This ensures that the various systems and sales channels are fed consistent and error-free product information from a single source. It classically replaces the Excel spreadsheet chaos in companies and usually consolidates decentralized data sources into a central and uniform overall solution. • CRM (Customer Relationship Management) refers to the planning, control and execution of all processes relevant to customer relations. • Today, newsletters/emails require personalized newsletter campaigns that can no longer be run manually, but only system-based and fully automated. • External service providers are typically payment service providers such as Paypal, shipping service providers à la DHL, credit assessment service providers such as Klarna and controlling service providers such as Nitrobox. The essential task for the development and smooth operation of an online shop is to combine the various software components and integrate the shop into the existing IT

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infrastructure. There are different forms of integration that need to be weighed against each other (Steireif et al., 2015): • Online shop as a stand-alone system is the least complex form of integration. Here, predefined software packages are used whose components are already configured and can be operated independently of other software solutions. This form of integration is the classic approach for a smaller online shop, which then maintains all data, functions and processes itself. The advantage is a faster “time to market”, but the disadvantage is that customer and product data must be maintained multiple times. • In functional integration, certain functions of a software component are used by other components of the IT infrastructure. For example, it makes sense to integrate the credit check into the payment process. In this case, the online shop calls up a defined service in the ERP system and receives the desired information from it. This type of integration requires adherence to certain standards and is thus very strongly linked to the components of the individual systems, which cannot be adapted quite so easily without creating data chaos. • Data integration: If this variant is selected, several components from the IT infrastructure access the same data, so that redundancies and inconsistencies in data management as well as unauthorized access to it are avoided. Especially in multi-channel systems, it would not make sense to maintain customer data in different systems, which is why data integration is almost a must here. The only question to be clarified is whether the ERP or the CRM system should be the leading one. • Combined integration: In this form of integration, functions and data are blurred. Here, it is no longer concretely defined interfaces that are accessed, but rather defined services. An example would be the possibility of a CRM system to create an order for the customer, which is then not stored in the database of the CRM system, but is created directly in the database of the online shop via services. This allows the customer to track his orders in the online shop. When integrating into the existing infrastructure, a healthy balance should be struck between open and standardized interfaces or a more coupled integration into the IT infrastructure. A certain degree of flexibility and vendor independence also provides more investment security. Standardization and Interface Solutions With the large number of external systems and service providers, a wide variety of data is required in a wide variety of places. This sometimes involves confidential data that is not equally accessible to all system partners for data protection reasons. In this respect, bringing together the various systems requires a bundle of interfaces that must be understood and also operated (Menzel, 2012; Himmel, 2018). If the interfaces are not disclosed, integration of external components is hardly possible or very difficult. Also, as a system network of an online shop application, such integration projects are always a complex

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environment that also requires a suitable counterpart for each of the instances to be connected. This can be provided by a middleware that offers a regular range of interfaces. It is able to absorb unforeseen changes in sub-functions, which would mean a considerable effort for the subsystems, by allowing the adjustments to be made separately without having to change the shop at the front end. Interface management only requires that all subsystems communicate with the middleware, which must therefore have all relevant information. Therefore, the middleware should be the leading system in every respect, bringing together and coordinating all processes (Menzel, 2012; Himmel, 2018). By synchronizing the separated subsystems instead of an integrated solution, partner systems can be replaced relatively easily if necessary, which can be permanently checked and, if necessary, completed on the basis of economic factors. In the process, the service providers become more interchangeable, but not the middleware operator. Furthermore, the functionality of the middleware becomes the determining factor for all connected partner systems (Menzel, 2012; Himmel, 2018). This also leads to logistics service providers in particular increasingly offering their own interface systems. Except for the firmly connected logistics and warehouse management systems, these then also represent a middleware solution, but require an objective analysis for the online shop operator in advance of the system decision. Figure 2.25 illustrates the principle of middleware, the functionality of which depends to a large extent on the strategy, the business model and system, and the structural organization of the company. Resource Requirements An online shop sometimes requires considerable investment and thus raises the question of ROI (return on investment). In the end, more should always come out than was put in. In Strategy, positioning and business model

Sales channels

Content/assortments

Middleware

IT structure and systems

Fulfillment

Multichannel set-up

Fig. 2.25  Integration of middleware into the online world. (Adapted from Menzel, 2012; Himmel, 2018)

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most cases, however, the effort required for the successful implementation of an eCommerce project is underestimated. Especially traditional providers with multi-channel solutions have to realize that it will not work without significant system investments. But the forced investment in systems is the only way to survive in the long run. The key to success is automation: In the future, customers will be even more spoiled than they are today in terms of production processes and logistics requirements (brand eins, 2014; Zukunftsinstitut, 2014). The same applies to after-sales aspects. In modern society, these primarily concern time savings, smooth transport and assistance with product selection, as well as new services. Marketing automation can help with this. More and more processes like lead nurturing, re-marketing, email personalization and analytics are being automated. This also helps small online store owners to get better insights and attract more customers (Adeshara, 2014). It is about “Auto Efficient Selling”, which can also help with the real-time localization of products and objects. Radio Frequency Identification (RFID) is certainly the best-­ known technology for tracking objects. However, GPS, WLAN, ultrasound, ultra-­ wideband and/or infrared also enable the real-time localization of goods and merchandise. For online retailers, such tracking tools bring immense cost and time savings as well as warehouse space optimization through automated processes. It also meets the wishes of customers to hold purchased products in their hands as quickly as possible without having to wait days for delivery. However, this requires physical high-tech logistics centers with highly optimized and automated processes (brand eins, 2014; Zukunftsinstitut, 2014). In order to cope with this “logistical automation”, mega-logistics centers with more than 1,00,000 m2 on greenfield sites as well as local depots in cities and/or close to customers will be required in particular, which is unlikely to be possible without system investments. In addition, there is the “Big Data problem”. The more data the company has, the more difficult it is to perform the corresponding analyses. All online retailers talk about the use of “Big Data”, but the implementation and successful use of data to address customers in a customer-oriented and appropriate manner is still in its infancy. Yet the management, collection and optimal use of data volumes – Big Data – can bring many benefits, such as higher sales through tailored cross- and up-selling, lower returns through specific offers, more targeted addressing through individual banners, Adwords or even newsletters, higher customer loyalty and much more (iBusiness, 2014a, 2014b). Predicting future customer buying behavior is becoming increasingly critical to the success of companies. In this regard, the growing volume of real-time data and reduced time for decision making are driving factors for the implementation of analytics and intelligence systems. Customers need to be targeted according to different touchpoints and preferences. However, increasingly complex sales concepts and further shortening innovation cycles minimize the return of actions (iBusiness, 2014a, 2014b). The wise use of analysis tools for simulation and forecasting is becoming increasingly crucial to master the transformation from Big Data to Smart Data. In this regard, cloud solutions and applications are likely to simplify the collaboration of business units involved in the evaluation of customer data in the future. Accordingly, the

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work of analysts, IT specialists, strategic managers and operationally responsible employees will be more closely linked. Processes will be simplified and thus make a decisive contribution to the evaluation of company-relevant data. The goal will be to study consumer habits and preferences and thus capture the trends of tomorrow (Plewinski, 2014). With the help of big data analysis, retailers can place advertisements for individualized items that address each customer personally. This can serve as a model for the entire retail sector. Through the exchange of consumers in corresponding shopping communities, companies can analyze the trends and individual taste preferences of customers in the future and use these as the basis for new collections and products (Plewinski, 2014). Smart convenience also requires system investments in this respect. Multi-channel retailers should, however, make sure that they do not take the fifth step before the third, because the basis can only be an excellent and “stand-alone” online shop, as Würth shows (www. wuerth.de). Technical Realization Figure 2.26 shows how complex the interaction of the required system components is in B2B eCommerce. The online shop system is only one small component. As a rule, B2B eCommerce stands and falls with a high-performance ERP system that is indispensable. This ensures the provision of digital data in real time. The middleware coordinates the ERP as the most important pillar in the backend with the shop system as the essential pillar in the frontend. The master data management and the ERP are closely connected and exchange data in a permanent flow with the PIMS (Product Information Management

Newsletter system subscriptions/ impulses/ Offers

CRM Customer Relationship Management/ Database

Master datamanagement Article master/ stocks/ Prices

OrderEntrance

Search system Intelligent Finding aids

PIMS ProductInformation system

Middleware System Mediator = Adapter set RCE Recommendation Engine

Online shop frontend Production control and monitoring Operating data output/recording

Order

Orderconfirmation

OMS Order Management System

Ordermanagement

Cash system

ERP system Enterprise Resource Planning = Merchandise Management = EWS

CMS Content Management System

Warehouse

Picking

MST MarketplaceInterfaceTool

WAT WebAnalysis Tool

Packing

Fig. 2.26  Most important system components in B2B eCommerce

Return Return

Shipping

Delivery

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System). The checkout system, the search system and the RCE (Recommendation Engine) system are connected. On the other hand, the newsletter system and CRM system work automatically in close connection with the PIMS as well as the ERP.  The front end is complemented by the OMS (Order Management System), CMS (Content Management System), MST (Marketplace Interface Tool) and WAT (Web Analytics Tool). The technical implementation, which involves programming as well as connecting the shop to the external systems, is comparatively simple (Menzel, 2012; Steireif et al., 2015; Himmel, 2018). Undoubtedly, these are very agile project phases for which not all requirements can be planned in advance down to the smallest detail. Therefore, changes and adaptations often still occur in this phase, which should be planned for in terms of time. The same applies to the test phase and “going live”. Nevertheless, none of this makes sense if the technical implementation is not preceded by a sound digital strategy including business planning. Furthermore, it must be clarified whether the realization should be done internally or externally. For in-house developments, the necessary capacities and the required know-how are often lacking. Delegating the topic to the advertising or IT department usually goes wrong. eCommerce agencies are usually professionals who have the necessary knowledge for such systems. The requirements are enormously high. In addition, there is the technical change, which is why the technical realization also deserves a certain amount of respect (Himmel, 2018).

2.5 Customer Centricity as a Basic Requirement for Online Retailing The basis for the business model of an online retailer must be customer centricity. It breaks away from the functionally oriented marketing doctrine and places the passion and credibility of the entire company management and an unconditionally customer-centric company at the center of business activities. Above all, it is about the key question raised and visionarily pursued by Jeff Bezos: “How can I make life easier for my customers?” (brand eins, 2014). But what does this mean for marketing and corporate practice? First of all, it is about a new dimension of professionalism, the implementation of which – contrary to widespread opinion – requires much higher investments in marketing, customer approach, organization and systems than is the case in traditional sales channels. However, these investments are likely to pay off in the long run, because customers appreciate and reward being at the center of business activities. Customer-centric companies that think in terms of maximizing customer delight are demonstrably more successful than “merely” customer-centric companies. Customer-­ centricity implies passion and credibility of leadership and an unconditionally customer-­ centric company. Jeff Bezos, CEO of Amazon, firmly believes that only superior customer service and a thorough understanding of customer needs can ensure long-term success. Because customers want to compare offers from different retailers on a product, he has

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allowed other retailers to offer on Amazon as well, even at the risk of Amazon being undercut by other retailers. “If you don’t, the customer will,” is his motto here. Customer-­ centricity permeates the company’s entire business system and provides employees with a guiding framework for their daily decisions. Ideally, each customer is viewed as an individual. In anonymous markets (e.g. systems and industrial goods), individualization is not always economically feasible. Therefore, customers are statistically assigned to relevant segments here (personalized). These are either formed statically (in traditional companies) or dynamically/chaotically (in Internet providers). The art of customer centricity lies in the superior individualization or personalization of the company and in the right implementation, which must be a “matter for the boss”. Only if the top management is convinced of customer centricity is it also prepared to set a credible example of this and to systematically align the company in a customer-centric manner. A four-stage approach makes sense here (Himmel, 2018; Heinemann, 2019a): • Phase 1: Understanding customers. Here, the focus is on questions of customer segmentation (segment of one, static or dynamic personalization), the wishes of individual customer groups, their performance, the degree of fulfillment of customer wishes by the company in comparison with the competition, and the activation intensity. • Phase 2: Formulate corporate goals. Derived from the strategy, the sources of future growth are to be determined; in doing so, differentiation is made according to products and customer segments. Ultimately, targets are set for the individual customer segments. • Phase 3: Developing measures. In this phase, concrete measures that lead to an increased recommendation by customers are developed and implemented according to the 80/20 rule. This is accompanied by milestone planning and controlling. • Phase 4: Create organizational conditions. The promoters and blockers of change are identified in the organization and harnessed for the change process, trained and possibly transferred or replaced. Furthermore, the necessary structural prerequisites and the processes are defined and adapted. Business systems in online retail are new territory and cannot be compared to anything that has existed in retail before. Online retail companies must align themselves in a customer-­centric and process-oriented manner. This poses major challenges, especially for multi-channel retailers, which have been organized primarily hierarchically and functionally up to now. The measurement of success must also take into account the special features of the new business system. Above all, it is a matter of meeting the specific needs of the interactive medium of the Internet without losing sight of the necessities of a retail company. For this reason, online controlling is also of great importance. It is based on an understanding of the productivity sources of online shops and value-oriented customer management, which provides the framework for quantitative controlling and also includes qualitative aspects in the interpretative analysis. Regular benchmarking can also provide

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good assistance in this regard. This also makes it possible to derive the relevant success factors in B2B eCommerce in combination with the relevant key figures (Heinemann, 2019a). Online Trading System Only a few experiences from the usually functionally structured industry can be transferred to B2B eCommerce. This is because it is not just a new sales channel in the traditional sense, but a completely new business with new capability requirements. In B2B online retail, locations, sales staff and branch inventory management processes are insignificant. Location-based assortment concepts are not applicable either, as target groups and assortments cannot be defined in e-commerce. Complete rethinking is required in the areas of branding, brand profile and advertising, because the considerable complexity of B2B eCommerce requires a new Internet brand management. In the almost immense variety of brand names and shops, attention and brand awareness must be achieved above all, otherwise online shoppers will fall back on better-known providers. Instead of predominantly functionally oriented processes, B2B eCommerce is consistently moving towards customer-oriented business processes. These are efficient, lean and geared towards speed. In addition to speed, the focus is also on transparency and service orientation. The speed of internal decision-making and work processes plays a key role here. Efficiency and “throughput time reduction” or ePace are considered the essential basis of success in online retailing (Heinemann, 2019a). This claim can only be fulfilled if the organization is made leaner, faster and more powerful through a process-oriented realignment. In addition, there is the demand for uncompromising customer orientation, which is a basic prerequisite for competitiveness as a result of drastically shortened customer response times and forms the basis for growth momentum. This requires a customer-oriented all-round handling in processes. In doing so, it is necessary to design continuous processes between the procurement and sales markets with as few interfaces as possible and thus to create “a window to the customer” for each process. This is the only way to achieve the real “customer orientation” that characterizes online retailing and allows direct feedback from customers (Osterloh & Frost, 2003). For each process, there must be a process owner and a case worker. Depending on the scope of work, it is also conceivable to make an entire team responsible for a process (case team), which then coordinates itself by way of self-coordination. However, this presupposes well-developed team skills and the ability to make decisions on one’s own. For this, the employees need appropriate authority (empowerment) in order to be able to satisfy the customer within the framework of the respective process variant. This usually goes hand in hand with larger management spans and flatter hierarchies. The result is customer-­ oriented all-round processing with a minimized number of interfaces (cf. Fig.  2.27), which, however, requires an Internet-specific business system that follows the principles of business reengineering (Osterloh & Frost, 2003). The B2B eCommerce company should organize itself as a “bundle of core processes” in such a way that continuous processes can be realized without interfaces from the supplier to the customer, thus enabling customer-oriented all-round processing. As shown in

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Customer-oriented all-round processing

Order processing

Procurement Functional view - Purchase department - Production department - Sales/Marketing Department - Service department

Production/ Logistics

Marketing/ Distribution

Process-oriented view

Vertrieb

- Fulfilment of the customer’s order

Fig. 2.27 Ability to provide customer-oriented all-round processing. (Source: Osterloh & Frost, 2003)

Fig. 2.28, this includes three “innovative ideas”, namely the process idea, the triage idea and the idea of informational networking (Osterloh & Frost, 2003): • The process idea involves a 90-degree shift in the organization, a breakdown into core and support processes, and the corresponding process teams and process owners. It involves a reorientation from the traditionally vertically oriented, division-of-labor organization to a horizontal, cross-functional view. The distinction between core and support processes makes it possible to differentiate between customer-relevant (benefit-creating) and less customer-relevant (non-benefit-creating) activities. Customer-­ relevant processes (for example, order fulfillment) are often the source of competitive advantage (for example, speed) and should not be outsourced, which is not the case for less customer-relevant processes (for example, cafeteria operations). The formation of process teams and the determination of process owners follow the general rules of team formation and assignment. • The idea of triage is based on a term from military medicine (from the French trier = “to sort”, “to select”), which denotes stratification, classification or prioritization. In the context of business reengineering, this term stands for the horizontal segmentation of processes. This is done according to functions, complexity areas and customer groups. Functional segmentation takes into account the fact that, within the framework of core processes, certain functions for order processing, such as purchasing, logistics and

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2  Basics of B2B eCommerce

Process idea

Triage idea

Functional Segmentation

90 ° shift of the Organization Core processes and Support processes Process team and Process Owner

Segmentation according to Complexity

Customer-oriented All-round processing

Segmentation according to Customer groups

Informational networking

Email Ethos

Decentralized Data access

Simultaneous, paperless Data processing

Fig. 2.28  Business system principles of B2B eCommerce. (Based on Osterloh & Frost, 2003)

sales, must be fulfilled in any case, but attempts to minimize the interfaces through process responsibility (process owner). In contrast, segmentation according to complexity differentiates between activities and their problem content. It arranges these according to routinability (for example, complex cases, moderately difficult cases, routine cases) in order to possibly automate them. Finally, segmentation by customer group is about differentiating by customer value and giving priority to “key customers”. This basic principle is also reflected in customer relationship management (CRM), which is an important basis for Internet commerce. • The idea of informational networking is to dispense with paper-based information transfer as far as possible, as this quickly reaches its limits and runs counter to the basic principle of digitalization in online commerce. It essentially involves the email ethos, decentralized data access, and simultaneous and paperless data processing. This requires intelligent networks, which allow a decentralized structure of networks (client-­ server solutions) as well as hypermedia structures of the content offered in the networks. The decentralized structure of networks makes navigation decisions superfluous, for example, by allowing individual areas to work with their own servers. In contrast, hypermedia allows users to jump back and forth between documents or within documents without having to search for them, call them up or read them through completely.

2.5  Customer Centricity as a Basic Requirement for Online Retailing

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Following the principles of the B2B eCommerce business system, the B2B company should be structured as a process organization in which the core processes map the strategically relevant value creation processes (for example, sales). Ideally, these always have external market contact (for example, sales markets), since they serve to fulfill customer orders. They are supported by the support processes, which do not have to have market contact and have a pure supplier function for the core processes. Their service interdependency with the core processes should be so low that they can be separated or outsourced as an independent service at any time. However, this is not readily possible in the case of central departments (functional schools), which offer specific expertise and primarily have a service function with regard to the transfer of knowledge to the processes (for example, market knowledge in marketing). Business Organization in B2B eCommerce Since in B2B eCommerce, above all, customer-oriented business processes and unrestricted customer orientation are central prerequisites for success, the business organization plays a key role. The core topics of speed, transparency and service orientation stand or fall with the business organization. The most common mistake is to still align the processes functionally, for example according to procurement processes, order processes or delivery processes. This is particularly characteristic of catalog mail order, but it misses the point of view of the customer. With the automation and “digital integration” of all processes, however, it becomes possible to align the processes in a customer-centric way and to adapt all functions accordingly. Amazon has led the way and defines the core process accordingly as a customer value delivery chain (Heinemann, 2019a). Customer Value Delivery Chain Figure 2.29 shows Amazon’s “Customer Value Delivery Chain”. Customer service specifications such as “one click to purchase”, “less than 24 hours throughput” or “e-mail in 24 hours and phone within one minute” are a matter of course, but they are far from being valid for a typical German retail company. However, criteria such as “three clicks to the target”, “call-back after a maximum of one hour”, “delivery in a maximum of 48 hours” are now “state of the art” in online retail and the benchmark for every lateral entrant from stationary retail. This demand can only be met if the organization is made leaner, faster and more effective through a process-oriented realignment (Heinemann, 2019a). Added to this is the demand for uncompromising customer orientation, which is a basic prerequisite for competitiveness as a result of drastically reduced customer response times and forms the basis for growth momentum. It has been proven that the reduction in throughput times brought about by radical process optimization can result in an improvement in efficiency of between 20% and in some cases even more than 60%. This results, among other things, from increased inventory turnover rates, productivity gains, inventory reductions, and significant minimization of non-sales activities. However, this feat can only be achieved if not only the cost structures but also the entire business system are trimmed to meet the requirements of multi-channel retailing. Particularly in branch-based

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2  Basics of B2B eCommerce Exa mpl e

Website Speed Topicality Clarity

Offer With three Clicks to the target Individual Customer guidance

Consulting

Coherent Price

Personalization

Risk minimization (e.g. listen in)

SelfService

Logistics