Digital is accelerating business model change in the B2B landscape

15 November 2016

Pursuit of the digitalisation agenda is enabling B2B organisations to transform their business models, expand outside their traditional markets and enable operational innovation, finds new research. In the coming months, B2B leaders expect to bolster their digital sales & marketing capacities, with e-commerce, big data and analytics top of their agenda.

In a bid to understand how digital and technology are impacting the B2B business landscape, Vanson Bourne, an independent research and consulting firm, conducted a study, commissioned by Intershop, among 400 decision-makers with responsibility for e-commerce, marketing, products, or strategy in the UK, France, Germany, the Nordics, Benelux, and the US. 

The study* finds that digital has, and will continue to, reshape the face of B2B practices across industries. Nearly every single respondent (99%) stated that digital has led to some form of marketplace disruption, as a result of technologies and digital tools changing the rules of engagement. Nearly half (47%) said that digital is the driving force behind more products and services being released, in combination with a higher frequency. This comes with a downside – digital-led turnover is drastically shortening the life span of existing products and services, putting a strain on innovation and business models. 46% stated their sector is becoming more global than before – traditional boundaries of doing business are broken down by digital and online platforms – while 37% reported an increase of stealth practices: competitors or unexpected market entrants that, within no time, successfully establish a mark.

Impact of digital in B2B landscape

Interestingly, companies in the Nordics are most at guard for stealth competitors. Across the board, 43% of respondents are concerned about fast moving competition, while in Scandinavia, nearly three quarters (72%) regard this as a concern. The French are the most confident of their own capabilities. More than three-quarters (77%) of the respondents surveyed believe that their organisation is digitalising at a faster rate than other market players, the French however score 95% on this aspect. 

The far-reaching influence of digital channels is having a profound business impact in the B2B realm, finds the study: four in ten (40%) respondents surveyed confirm the pursuit of digital transformation has resulted in a complete change of their organisation’s business model. Companies report that today 55% of their organisation is ‘digital’, with the supply chain (54%) and demand chain (52%) the most likely areas for implementation.

Competitive side of digitisation

B2B sales

The study also looked into how digital is impacting B2B sales, finding that operations have over the years been overhauled through the possibilities of enabling technology. A staggering 99% of respondents’ organisations surveyed said that digitalisation is transforming operations and processes. In terms of the benefits, half (50%) reported digital has made sales more cost-effective while 48% said the sales process is more efficient. Other main benefits include:

  • 43% are successfully selling to customers that would not buy from them before
  • Over one-third (36%) report that the have been able to expand globally at lower risk
  • 44% are generating more total sales - and more sales per representative
  • 40% are leveraging digital B2B channels to persuade existing customers to purchase more items across more product categories

Impact of digital on business model

When asked which channels they plan to use to sell products and services in the next 12 months, organisations anticipate their own e-commerce site remaining the most widely used channel (71%). However, other digital channels including B2B market places such as Amazon or Alibaba (up from 41% to 49%), social media (growing from 41% to 46%) and mobile shops (up from 22% to 32%) are expected to increase in use over this time frame. 

On the back of the growing importance of online and digital channels, a large majority of companies indicated that they are planning to ramp up their B2B sales efforts. Almost half the respondents (46%) confirmed tech savvy leaders like the CEO and CIO are spearheading their digital transformations. 40% of organisations say the IT department as a whole is one of the primary drivers of digitalisation with a third (33%) saying it’s the non-C-level senior IT team that is accelerating digital adoption. For others, however, it is senior marketing and sales management (29%) and operations management (25%) – individuals working at the sharp end who need to enable their organisation to become more agile fast – who play a leading implementation role.

B2B Sales channels

Big Data, the Internet of Things (IoT) and smart products are earmarked as the trends that are expected to have the most value added on B2B sales. 54% of the respondents highlighted that Big Data will be their organisation´s next big investment, despite more than half acknowledging that their company does not make effective use of the technology. An impressive 95% expect to benefit from IoT and smart automation in the near to medium term, with 37% stating they plan to invest in IoT over the next 12 months.

According to another report, the European B2C e-commerce market is now worth around €500 billion.

* The study by Vanson Bourne and Intershop, titled the 'E-Commerce Report 2016', can be downloaded on this page.

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Four ways digitalisation is transforming car brands and dealers

16 April 2019

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”