Forrester research projects that B2B e-commerce sales will surpass $1.13 trillion by 2020.
Who — other than Amazon — is leading this race? And while e-commerce in both the B2C and B2B realms have shown tremendous growth in recent years, is Forrester's prediction realistic?
Off to the E-Commerce Races
B2C e-commerce emerged in the mid-90s and has flourished in the 20 plus years since. eMarketer projected B2C e-commerce sales (pdf) in the US would pass $349 billion last year, an over 14 percent increase from 2014.
While still less than 10 percent of overall US retail sales, that’s a tremendous amount of growth. The expectation is that this will continue for the foreseeable future.
B2B e-commerce had a much later start than B2C, but Forrester Research predicted US revenues in 2015 of $780 billion — or more than double the revenue for B2C e-commerce. While I suspect the $780 billion total includes existing Electronic Data Interchange (EDI) transactions, the question is who (besides Amazon) is benefitting from this shift from traditional ordering to moving them online?
The Many Faces of B2B E-Commerce
Internet Retailer’s 2016 B2B eCommerce 300 provides the most cost effective source I've found for identifying these companies. Surprising (at least to me), ExxonMobil topped the list of companies, claiming the number one spot with 2015 B2B online transaction revenues of $43.5 billion. This is roughly 40 percent of Amazon’s $107 billion 2015 revenues.
Without giving up too much more, of Internet Retailer’s top 10, four were oil companies and two were automotive companies who are heavily dependent upon oil. Of the other four, two were familiar technology names, one was a well-known manufacturer and one was a lesser known distributor.
Other companies worth noting included Alibaba, Staples Advantage, the B2B division of Staples, and W.W. Grainger.
Despite the Chinese economy facing some challenges in 2015, Alibaba saw its international B2B revenues grow by 18 percent and domestic B2B revenues grow by 35 percent in third quarter fiscal 2016. Unfortunately, Alibaba does not report out its gross B2B merchandise sales so its hard to do an apples to apples comparison with other companies. Alibaba takes a small percentage of every transaction, and is widely viewed as a leader in B2B, having helped pioneer the market even though it is not included in the Internet Retailer's 300 report.
While Staples is not a B2B pure play, it's estimated that the company did somewhere between $11 and $12 billion in combined B2B and B2C online transactions in 2015 as its 2014 online revenue was just under $11 billion. However, according to Internet Retailer, Staples Advantage B2B sales were $8 billion in 2015, good enough to score 21 on the list, so somewhere the numbers need reconciling. That being said, its transition to online is progressing.
And finally, industrial distributor and long time e-commerce proponent W.W. Grainger, had 2015 e-commerce revenues of $4.1 billion, up 13.6 percent from 2014’s $3.6 billion. If Grainger can maintain that online sales growth rate, within 2 years, e-commerce will generate roughly 50 percent of its revenue.
What Does B2B E-Commerce's Future Hold?
Where do we go from here?
The future looks bright, for both B2C and B2B e-commerce — but is it bright enough to reach Forrester Research’s projection of $1.13 trillion by 2020?
Given that we haven't reached the midpoint of 2016, it's too early to tell. But given Forrester's background in the area, it's as good a target as any and one that suggests healthy growth for the next several years.
While no one company has emerged to lead the B2B side like Amazon has in B2C, all of the top 100 B2B leaders are well established companies, which adds credibility to the argument that B2B will tower over B2C. Rather that one company dominating, given the many areas that B2B covers, many companies will maximize this new sales channel.
And perhaps, given the awareness of how B2C e-commerce evolved, there's a greater possibility of keeping Amazon in check. Either way, it looks like the next several years will be interesting to watch, as B2B e-commerce is clearly warming up.