Return on investment of B2B e-commerce platform

Return on investment of B2B e-commerce platform

A guide with an example of how to assess benefits of adopting a B2B e-commerce.

Companies working in the B2C environment have been using e-commerce platforms for much longer and have already realised benefits of this sales channel. Nowadays most of companies selling to consumers have online shops to reach more customers and increase the quality of service. The era of B2B e-commerce is just beginning and your B2B company should definitely consider adopting this platform and get competitive advantage before it is too late.

This guide will help you to estimate benefits and costs of implementing a B2B e-commerce platform. These considerations are general and may vary from company to company. This model shows total savings and revenue growth if the number of clients has not changed after the system is adopted. However, if the market is not fully penetrated it will be more wise not to decrease the number of trained staff, but to invest the gains into finding new clients.

Example company

Let’s consider an example company in order to better understand the benefits and challenges in implementing a B2B e-commerce platform. This company sells its products by own sales team to local supermarkets and shops. If you wish you can use the return on investment online calculator for B2B e-commerce system to calculate financial benefits for your company.

Total sales$50 000 000
Average order size$500
Number of orders100 000
Number of clients1041
Number of sales reps20
Average transportation costs per rep$2400
Order entry personnel10
Clients willing to use e-commerce platform50%

Currently, 20 sales reps take 50% of orders when they are visiting their clients. The rest orders come from emails and phone calls.

Logision Order B2B e-commerce platform is implemented.

The following benefits, costs and challenges will be considered:

BenefitsCosts and challenges
  1. Cost of sales representatives
  2. Cost of order entry
  3. Cost of printing and emailing invoices and marketing materials
  4. Order entry errors
  5. Promotions and discounts
  6. Substitute and cross-selling
  1. Setup and maintenance costs
  2. Support from inside of company
  3. Cost of the B2B e-commerce platform

Benefits

  1. Cost of sales representatives

Since 50% of the clients place their orders in the e-commerce system, less sales reps are needed to serve the rest of clients wishing to discuss their orders with the reps.

BeforeAfter
Number of sales reps2010
Salary$62,000$62,000
Transportation $2 400$2 400

Total cost

$1 288 000$644 000

Total savings $644 000.

  1. Cost of order entry

The same is true for the order entry staff. 50% drop of calls and emails requires 50% less personnel.

BeforeAfter
Number of order entry staff105
Cost per year$55,000$55,000
Total cost$550 000$275 000

Total savings $275 000.

  1. Cost of printing and emailing invoices and marketing materials

B2B e-commerce platform allows you to go paperless. Invoices are sent instantly inside the system, while the digital catalogue with big bright images works much better than a printed catalogue.

BeforeAfter
Number of invoices printed100 00050 000
Cost per invoice$0.62$0.62
Number of catalogues printed12 5006 250
Cost per catalogue$3$3
Total cost$99 500$49 750

Total savings $49 750.

  1. Order entry errors

When orders are entered manually the possibility of error is very high and the clients may get not what they ordered. This leads to lost revenues and decrease of customer satisfaction. With B2B e-commerce platform clients make orders directly in their personal accounts and can review and make changes anytime if it is needed.

BeforeAfter
Number of errors2 0001 000
Cost per error$30$30
Total costs$60 000$30 000

Total savings $30 000.

  1. Promotions and discounts

Information about all special propositions that you prepared for your clients will always be seen and considered when the e-commerce platform is used. At the same the lead time of such promotions is much shorter because they are instantly available without any need of printing and distributing.

Percent of sales increase3%
Revenue increase$750 000

Total revenue increase $750 000.

  1. Substitute and cross-selling

If clients can not find a product that they need in your price list they may want to find a substitute. However, searching in a printed catalogue is much harder than navigating in a digital version and the possibility of not finding the needed product is higher. With the B2B e-commerce platform you can easily offer substitute products and additional products to increase the possibility of cross-selling.

Percent of substitute and cross-selling0.5%
Revenue increase$125 000

Total revenue increase $125 000.

Costs and challenges

  1. Setup and maintenance costs

Every software that is installed in-house is associated with significant setup costs. The system must be installed on a powerful server that is securely protected to work under any conditions. Then, integration must be made to connect the new software with current ERP system. The upfront costs may be very significant and may jeopardize the whole initiative. Moreover, to function properly the software needs costly regular maintenance. All this costs can be eliminated if a SaaS B2B e-commerce platform is chosen.

  1. Support from inside of company

Any B2B e-commerce platform will not give desired results if it is not supported from inside of the company. All stakeholders must be acknowledged about the system, its benefits for the whole organization and for each of them. Customers may be offered a temporary discount to increase the willingness of adaptation of the new system.

  1. Cost of the B2B e-commerce platform

There are many different B2B e-commerce platforms on the market and they differ on many features. For example, some of them are SaaS solutions and does not require any installations while the other must be installed on a server. The pricing model can also be based on different things: number of orders, number of users, number of integrations, etc. If Logision Order B2B e-commerce platform is considered you can expect about the following pricing:

Cost per order$0.20
Usersunlimited
Integrationsunlimited
TypeSaaS
Free orders per month50

Under this pricing the costs of the system will be:

Cost per order$0.20
Number of orders100 000
Free orders600
Total costs$9 880

Total costs $9 880.

Result

Total% of revenue
Savings$998 7502%
Revenue increase$875 0001.75%
Costs$9 8800.02%

Conclusion

Implementing a B2B e-commerce platform is very profitable. If a SaaS solution is chosen the upfront costs are almost zero and the profit from using the system can be generated from the very beginning. However, the initiative must be strongly supported from inside of your company.

Andrii Popov

Written by ANDRII POPOV

Andrii is passionate about business and startup intelligence. As most of the startuppers he has got experience in almost all business areas.
Andrii has MA in Marketing from the University of Queensland.

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