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Financial Solutions
20 Feb 2018

Pick up speed in the B2C market by focusing on strong partners

What challenges await B2B companies in the B2C business?

For a man, his tool is often more than just a utensil. This also applies to one of my friends, who spends hours in his basement, where all sorts of tools have accumulated over time. Most recently, he showed me his blue Bosch drill that was used when we finished the room for his first baby.

Generally, the colour of a drill is irrelevant to me, but my friend tends to differ; after all, hobby craftsmen like us usually only have the green Bosch tools. That’s why we asked ourselves the question which many men may have had already: why is there a blue and a green drill by Bosch?

If I did not work in e-commerce, I probably would have just shrugged my shoulders, but I had an explanation: the blue Bosch products were made for professional use in trade and industry only; the range of green products is for DIY enthusiasts like us. Originally, Bosch only produced their tools for retailers, until the company eventually decided to create a new sales market. New product range, new price range – in addition to the original B2B business, Bosch was now also in the market for end customers.

In Bosch’s case it sounds very simple, but in reality the step from B2B to B2C comes with challenges. If the value chain is designed for a B2C business and a distributor has previously been the intermediary, it might be reasonable to sell the products through your own online store. However, there is a risk of cutting off the original distribution channel. What do retailers gain by opening up a new market, while possibly losing their much more profitable relationship with the distribution partner?

If the B2B business is extended to B2C, the entry strategy is not the only factor that determines success and failure. The speed in the B2C market is much faster and presents a major challenge for distributors: their corporate structures must be designed for a 24/7 business. Companies are suddenly faced with very high demands on customer service and distribution – two departments that need to be expanded, in terms of personnel and logistics, when moving from B2B to B2C.

However, capable employees and the best logistics are not enough to keep up with the rapid speed of the B2C market. In the long term, companies cannot ignore automated processes. The necessity arises from the increased demand: since Bosch & Co. managed to maintain the individual relationships with their key customers and process orders manually, these companies suddenly have thousands of customers after entering the B2C market.

This not only increases the demands on the ordering process and distribution, but on payment in particular. More orders, and consequently more receivables, mean much more complex debtor management, posing great challenges to some distributors. The lack of larger payments can be particularly problematic for start-ups and SMEs.

Many companies need a strong partner to process payments when they move from B2B to B2C. This is exactly where we can help, with AfterPay: while customers decide how and when to pay, distributors have reassurance that someone else is taking care of the administration, from risk management to the dunning process.

My recommendation is to immediately find the right partner, who not only perfectly manages the actual financial processes, but also takes end customer satisfaction as the core of his responsibility. Companies therefore ensure the best possible buying experience and increase customer loyalty in the long term.

Don’t miss out on the right support. After all, when you’re renovating, you’re grateful for every helping hand – especially if your friend is standing at the door with a professional drill.

Find out which strategies a B2B distributor can apply when entering the B2C market, and which five points should absolutely be observed, in our interview with e-commerce expert Stefan Mrozek.

Sebastian Kespohl

Managing Director | AfterPay Germany

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