A recent study into B2B buying habits has concluded that 68% of procurement professionals now purchase goods for their businesses online. The State of B2B Procurement Study was conducted in 2014 by Acquity Group and has determined that there has been a sharp rise in the number of companies doing their procurement online, with the 68% in 2014 up from 57% the previous year. But what does this tell us about the nature of B2B procurement and how does it differ from the consumer sector?
For many years the world of procurement in business was more about who you knew and what you offered them than it was about competitive prices and quality of service. Particularly at the larger end of the spectrum companies that were so huge as to be distanced from the staff manning their procurement operations would routinely see departmental budgets being spent with the salesman doing the best schmoozing routine.
Those purchasing team members who are in charge of sizeable company budgets for equipment and services would often feel a lack of any real pressures to negotiate good deals on behalf of the firm or seek out the best rates. Instead your typical B2B procurement professional has traditionally been very susceptible to the shady world of corporate hospitality. A little bit of back scratching and greasing the wheels would often ensure the spending power of your company fed through to the pockets of those doing that corporate entertaining. After all, why wouldn’t you thank that selling company for their efforts by buying up all that expensive stock of items your business needed anyway?
The problem has been a lack of accountability at mid management level. If you’re running a one man band where margins are tight then it’s in your interests to seek out the very best prices you can get on all your essentials. But when it comes to splashing the cash as a purchasing department, the pressure to get maximum value from your purchases is that much more removed. And this is why there has seemingly been a reluctance to move with the times to online purchasing, cutting out those salesmen keen on commission with their offers of fancy seats at the football or extravagant meals where the drinks keep flowing. But do these latest stats show signs that this is finally changing?
Technology as an Enabler
Although the concept of buying online is far from new, and statistics suggest that we’re only buying more online as consumers with every passing year, within the B2B space the move to online shopping has not been so swift, principally for the reasons given above. However, with the advent of eProcurement software and systems designed to significantly streamline the whole supply chain process for both buyers and vendors, we are now starting to see the volume of B2B transactions online increase at a more rapid pace.
All of a sudden there has been a sharp rise in the number of procurement professionals who’ve recognised just how much better served they are by accessing procurement portals online where suppliers can tender their goods and services, allowing easy at a glance determination of who offers the very best deal for the business.
Getting Savvy Like Consumers
In exactly the same way as the proliferation of comparison sites and huge shopping portals has opened up the world of eCommerce to allow us as consumers to seek out the most attractive offers, so too can those in business also afford to shop around and seek out the value. In fact, the Acquity Group report found that only 12% of B2B buyers have any inclination to meet with a sales representative anymore, showing just how much more reliant the sector has become on transactions being concluded entirely online.
So does this mean the end for the suited up salesman? It’s unlikely, but there’s certainly a case for the pushy peddler of cheap stationery being given his marching orders as modern businesses wise up to the racket they once ran. And with a more clued up customer base, ultimately the suppliers are forced to up their own games in terms of being competitive and offering a higher quality of service. So the buyer is the real winner and the businesses once hemorrhaging funds into the coffers of greedy suppliers are able to thank the more modern practises of eSourcing and eProcurement for enabling this better and fairer world for all.