Canadian B2B e-commerce to grow by 22 percent by 2005: Visa study

Canadian e-commerce B2B selling will increase by 22 percent by 2005, according to a national study released by Visa Canada..

The study entitled How Business Sells, conducted by Market Probe for Visa Canada, includes responses from 514 mid to large-scale businesses across the country. The study shows that 72 percent of B2B selling professionals prefer selling through traditional channels, in-person and over the phone, rather than electronically because traditional channels enable sellers to build and maintain personal relationships with customers.

Despite the preference for traditional channels, the amount of in-person and phone selling will decline from 70 percent to 57 percent of total B2B sales by 2005. During the same period, the use of e-commerce sales channels will almost quadruple from eight percent to 30 percent creating a significant hurdle for sellers by complicating their ability to establish personal contact with customers. In addition, rather than displacing direct, person-to-person selling, e-commerce will create additional channels for sales professionals to manage.

The findings also indicate that the transition to electronics is, in part, driven by pressure from the B2B buying side. A previous Visa study (How Business Buys) indicates that the Canadian purchasing industry anticipates placing 37 percent of their orders through e-commerce channels by 2005 compared to nine percent today. The study also shows that buyers expect in-person and phone ordering to decline, accounting for 39 percent of their ordering activity by 2005 compared to 53 percent today.

Sales professionals’ preference for in-person selling is best reflected in their use of web sites. Only six percent of the companies surveyed sell through web sites and 22 percent of sellers do not even have a web site. The balance of the respondents explain their limited use of web sites by pointing to the need for personal contact and by citing the difficulties of customized selling and discussing complex products online. In this regard, sellers are out of step with purchasers, 22 percent of whom buy through web sites.

"The findings point to some interesting challenges for both sides of the B2B market in Canada," said Jacqui Hurd, Senior Manager, Commercial Card Products, Visa Canada. "Clearly sellers have to adjust to the fact that their customers are pushing for the efficiencies that electronic ordering provides them while finding ways to maintain the personal contact that underpins successful selling. Buyers on the other hand, will have to be sensitive to the ability and willingness of the sell side to mesh with the internal electronic purchasing systems they are planning to introduce."

The study indicates that B2B sellers are partially addressing the limitations inherent in e-commerce-based sales channels by turning to extranets, proprietary electronic systems that provide the ability to post and control access to information about customized product- and service solutions, customized price lists and tailored product descriptions. The findings show that 23 percent of the respondents expect to be using corporate extranets as B2B sales channels by 2005 compared to five percent today.

"The Visa survey indicates that B2B sales professionals prefer to sell in person," said Terry Ruffell, President, Canadian Professional Sales Association. "There’s no question the sales process is changing. Many sales professionals are beginning to integrate e-commerce into their sales strategy, but it is clear that to effectively meet the needs of the buying community, a solid understanding of e-commerce will be required by all sales professionals."

For more information about the study call Jacqui Hurd, Senior Product Manager, Visa Canada, at (416) 860-8875