B2B Convenience at the Beginning of its Journey, Not The End

B2B Convenience at the Beginning of its Journey, Not The End

One of the largest trends I'm seeing in commerce broadly right now has a tremendously boring name: direct procurement.

Basically it means acquiring materials and products from a vendor that are necessary to the core operations of your business. (As opposed to indirect procurement, which is for things like travel and office supplies).

One tiny example for your reference: Imagine if you are a factory and need chemicals to run your factory, where do they come from? How do you get them? Do you have backup suppliers? How do you purchase them?

While the consumer segment is in a hurry to get any product to your door in 5 minutes -- without worrying at all if it's capital efficient or required by the consumer to do so -- there are entire industries that are simply not digitized at all, and there is barely any supplier connectivity.

It seems to me that's a much better use of capital right now. And private equity is starting to wake up to that fact.

There are hundreds if not thousands of specialized categories which support commerce - most of them we might call direct B2B procurement that have nothing to do with Amazon (today). It doesn't mean Amazon couldn't have success there (Amazon Business is growing much faster normal Amazon).

Private Equity is starting to look very hard at eCommerce investments in spaces related to this because:

- emergence of higher growth digital channels who are searching online for these

- buyers are demanding more convenient methods of purchasing and service

You could in some ways call it the "Amazon-ification" of everything else. While there are a few nascent marketplaces in these sectors (ChemDirect is one example), a kind of hybrid between a D2C and a B2B strategy is coming to the forefront. Where you want to attract new buyers, but you also want to vet those buyers and take them of them in particular ways.

You want the ability to custom quote, offer special payment terms, and all without hacking together a mess of apps, plugins, and overlays, and completely custom coding.

You want it to connect to your CRM, ERP, and Product Information Management solution easily. You want to be able to support digital transactions with your suppliers and supply chain actors (which are specialized in these industries), rather than relying on your sales reps to remember to call back your customers at the right time. The sales reps are still important, but they need to be supported by modern digital toolsets.