Modo Chief of Business Development, Donald Chapman, discusses the changing landscape of B2B payments. New payment processes allow B2B companies to save money, reduce operational overhead, and increase efficiencies.
There’s a lot of really interesting things going on with B2B eCommerce. Besides the fact that it’s a $12.2 Trillion dollar market, according to Statista, and that is 6 times the size of the B2C eCommerce market, around half of all sales still happen through manual processes. So you’re talking about sales reps, you're talking about purchase orders, you’re talking about very paper driven business processes that leave a lot of room for improvement with respect to efficiency and effectiveness that can really help grow businesses.
There’s a massive opportunity for B2B commerce to continue it's low double digit growth as well as accelerate that growth for any companies who either are already there or are looking to get into the space.
You have traditional players in the B2C eCommerce space like Amazon and like Alibaba that have extremely dominant positions. And now, there are new manufacturers, new distributors, new marketplaces coming about that are making a very big difference in helping to drive the growth of the overall market. When it comes to different payment types within that market, they've been dominated by traditional things like trade finance, like invoicing, like checks, and now a lot of folks are starting to accept credit cards. But really that might not make a lot of sense where you have either low-margin businesses or really high ticket items in the B2B market, especially in contrast to the B2C market, where thinking about what other sort of payment options should be brought in and whatever workflows and different payment processes could really make a difference.
B2B companies that are beginning to go online, whether they're starting new eCommerce operations or whether they're in eCommerce and looking to optimize, need to really think about payments. “Payments” is the most important thing.
Many people think, “Hey, payments is a normal thing. I send a purchase order, I get an invoice, I send a check" as normal activity. At the same time, what we're finding is that the businesses that are the buyers really care about their payment options. And the important things to them are really, 1. Do I have different payment options? Whether those are the traditional invoice, whether those are some sort of credit. Maybe they want to put it on a credit card, they've got loyalty points or some other thing even associated with their business accounts, airlines miles, etc that could be important to them. 2. Or whether there is some other method of payment that might be important to them - real time payments, even ACH, things as simple as that. All make a very big difference when considering different payment types to enable within a B2B eCommerce checkout.