Coalition Technologies CEO: Successful B2C Can Co-Exist With B2B

The changing e-commerce landscape is creating opportunity, but it is a whirlwind world that can be confusing even to those who are part of it.

Jordan Brannon, president and CEO of Coalition Technologies, says there is a great deal of opportunity to go direct-to-consumer with products, whether it’s their first try at e-commerce, they already have a B2B operation going and/or they have a marketplace presence. Companies can boost sales and gain flexibility with a direct B2C operation, and at a reasonable cost, Brannon said.

Brannon says Coalition works with companies to enhance online operations and, in many cases, to get them started. An important consideration, he said, is companies can initiate B2C operations without big investments in technology and personnel.

“A lot of our conversation is about where they are today because there usually are those incremental steps that can be taken and can be productive and can be results-oriented without necessarily leaping forward in terms of technology,” Brannon said. “Part of the conversation would be how are they handling their B2B sales. Sometimes the lowest-hanging fruit is just introducing an e-commerce experience associated with that. That’s been probably one of the most popular steps we’ve seen and also one of the ones where we’ve seen some of the best feedback.”

So, companies launching B2C sales can look to their existing businesses to support the new e-commerce effort, Brannon said, in many cases using the company’s traditional sales or account rep force. In many cases, B2B operators can introduce a toolset for B2C and not have to make or deal with major changes in practice.

To avoid clashing with retailer customers, manufacturers and distributors that are going direct to consumers have innovated to avoid conflict, Brannon said. Many have created separate brands that differentiate B2C merchandise from what they provide retailers. As such, they operate the brand in the B2C context but respect commitments to and avoid directly competing with B2B customers.

“That’s been pretty successful,” Brannon says. “Some of those clients we’ve done that with a long time ago have turned that into a very successful piece of their business that has had longevity.”

Companies that can pair B2B and B2C effectively in their operations can minimize some additional effort and cost. In that case, going direct-to-consumer can add value to a business and become a profitable operation quicker, Brannon said. Investments should be focused initially on where they can generate immediate benefits.

“For a typical B2B customer, one of the areas we talk about is a value-driven investment as in photography and videography for content. A lot of B2B customers have had some, frankly, subpar photography and videography, and partially because of the nature of Amazon or whatever market they are selling through, they have been able to subsist there. But improving B2B and B2C photography and videography content can be a meaningful needle mover in terms of improving conversion rates and orders. It’s very important on the B2C and increasingly important on the B2B side.”

The cost of initial investments doesn’t have to include a significant outlay for the platform that can handle B2C sales and for maintenance thereafter. As for consumer outreach, social media platforms can be a good place to start with B2C sales for novel value products, Brannon said. For more quality and performance products, he recommends a paid search or organic SEO strategy, which is likely to have more value because people do comparison pricing through those functions.

Still, regardless of the form of marketing a B2C operator chooses, “being in a position to capture email and mobile phone numbers is important because every time you get an order, every time you get a visitor to the site there is a chance to capture that data. If you are waiting to do that, you are putting yourself in a bad situation.”

When B2B operators are looking to go direct to consumers, marketplaces have certain advantages, especially existing traffic. Yet, the marketplace platform includes direct and indirect competitors, as well as hosts that have their own agenda as to operations and practices that can favor it more than participants.

“Most brands that have been selling marketplaces today, and even those that have just started to research into that decision, will have realized that there is a certain lack of reliability,” Brannon said. “You don’t own the customer relationship. There are strong incentives for the marketplace to feature competitors along with your own listings. There is a lack of control around pricing and pricing strategies that tends to accelerate as you gain positions within those marketplaces. You’ll see high-volume Amazon sellers having more pressure on pricing that begins to influence their rate of sale, and they can’t respond accordingly.

“So, whether you’re in a marketplace today or not, I think the fact that you lack control of what’s happening in the marketplace is something you should be considering,” Brannon continued. “In B2C strategy, whether that is focused on picking up added opportunities that first came from a marketplace, a more standalone strategy gives you a degree of control that really is quite valuable financially. Given the cost of launching an initiative, there is very little reason why you should not have a modest B2C effort in place from the day you go live on a marketplace.”

The cost of successfully operating and promoting a B2C website in tandem with a marketplace store has shrunk.

“The toolset needed to connect inventory and data between marketplaces and B2C platforms has been decreasing,” Brannon said. “The opportunity is to use marketing techniques and marketing technology to capture marketplace customer information in a way you can use for follow-up marketing and generating business without the extra 15 points that’s taken by an Amazon or Walmart.

“All those things are reasons you should have the B2C piece always running even if your marketplace is the bigger component of your strategy. There certainly is a captive audience within the marketplace. They’ve done the marketing, they’ve got the customers and memberships that get people to them. That’s the upside. The downside is you build your presence there, but your presence there is beholden to them, whereas if you are building your own dot.com, you are in much more control of what’s happening.”

Businesses that invest in their own websites and take more responsibility for the entire process of running them may have to make more investments, but Brannon says that doesn’t have to be overwhelming, even as the operation scales up.

“On the labor side, one of the upsides, if you pick the right toolset, you generally are opening up a much broader market than you might have otherwise in terms of using sales experience and sales support and things of that nature,” he said. “To some extent, that is part of the advantage. Being more technology dependent tends to reduce direct dependency on labor. We had a client who only operated three U.S. regional reps. One of those reps left. In a bygone era, six to nine months prior, a lot of his record keeping about who his clients were, what he was calling about, what they were interested in, what they were purchasing, would have been dependent on him to turn in.”

Because the Coalition client had adopted a digital function, “now most of that data existed in a usable software tool that allowed them to follow up, to sustain the relationship until they had a new rep in place,” Brannon said.

Brannon said that the right e-commerce tool set can reduce some labor market risks but also everyday associated costs. It isn’t a challenge to find people who have sufficient basic experience with relevant technology nor developers that might be necessary as the business becomes more involved, he added. Automation can even help with onboarding new hires.

“You can remove some of the more simplistic aspects of the job so that the person you’re hiring is more dedicated to a particular function rather than being part data entry, part customer service, part administrative, part finance,” Brannon said. “The software applications can handle a lot of that.”

Brannon says lots of success stories exist regarding B2C launches in home furnishings, housewares and small kitchen appliances.

“One example we’ve had is a customer who found that their B2C site, which they had launched independent of a B2B initiative, and their marketing initiatives around it were being used quite regularly by their sales people in the field to support B2B sales,” Brannon said. “The sales people were not relying on the pamphlets and collateral that were being produced for the B2B selling. They were actually going to the website, going to the social media channels and using the content that was there in support of sales. They saw that as a clear indicator that maybe we shouldn’t be the stick in the mud on the B2B side of things. So they linked strategy.”

Similarly, Brannon said, a B2C operation can support the start-up and operation of a new marketplace store.

Certain e-commerce platforms can be helpful in advancing an e-commerce strategy, he said. For example, BigCommerce has a working relationship with Walmart, which can be helpful to an operator on the platform that wants to launch in the marketplace setting.

“A lot of those e-commerce platforms also allow for content management and inventory price management within the marketplace, so you can simplify some of the oversight across channels,” Brannon said. “There are a lot of different ways that this tends to work out as a win.”

In the case of a small appliance manufacturer wanting to develop a B2C operation, the first step was an evaluation of the content it already produced.

“Perhaps the biggest for them was a greater investment inside of that content production effort,” Brannon said. “Once that was done, it made it much easier for them to scale. That was the starting point there. Beyond that, it wasn’t significant. I think that’s what surprised everyone. There was some investment in the front-end experience, what the site would look like and what the consumer could read. And then there was some cost in terms of integrating it into existing software solutions, spending some time connecting it into their existing ERP and inventory and accounting solutions. That took a little bit of an investment.

“Once that was done, it made it easy for them to really begin to sell B2C at whatever pace and scale they wanted, and as those individual orders came in, it was fairly easy for them to begin to support that sales initiative and invest in a coordinated way,” Brannon continued.

Brands often approach B2B and B2C initiatives as if they are enormous projects that will require tremendous time and investment.

“The reality is, that it’s not often the case,” Brannon said. “You can begin in a much more scaled way. You can go through and make a financial investment as you want. Most businesses that are doing well in B2B are going to have the makings of a business that can do well in B2C. The message is: Let’s focus on what is working, let’s emphasize those things and see where you want to make a commitment. There’s a commensurate return on investment. If you start with a nominal investment, don’t expect a $7 billion outcome. But don’t be surprised when you do have a modest outcome for a modest investment. That should give you some proof of concept.”

An investment in B2C and developing that business can even rebound back and lead to a company’s improving its B2B operation.

“One of the cycles we sometimes see is we have a B2B merchant, as an example, who is doing well on Amazon,” Brannon said, “developing some brand interest inside of Amazon. Then the merchant gets tired of competing at a price point, feeling like there was a pressure inside of Amazon to pursue a sort of a bottom dollar marketing approach. They invested in a B2C website that was using the same brand name, featured the same product catalog and then honored the price commitment they had within Amazon. So you were buying essentially the same product at the same price you would get from Amazon but in this case directly from the brand. What they did differently on their B2C site was putting a significant emphasis on creating more of a quality story that differentiated their product at the time.”

Even if they had to sell the Amazon-listed product for the Amazon price, the company was free to do what they liked on other versions on its proprietary website.

“They did that well,” Brannon said. “They marketed aggressively as a B2C piece even to existing Amazon customers who were registering for warranties and things along those lines. There’s some policy stuff there you can get into, but ultimately the outcome of that is they were able to increase their price 3X inside of Amazon within a year and a half. So they were no longer competing at the bottom dollar, but they were able to command a much higher price for a very similar product.”

An additional benefit the company realized was that some consumers were going to the retailer looking for their product. Although those consumers had the opportunity to buy B2C, some chose to buy on the B2B side of the business, which can happen for various reasons including free shopping deals. As such, the crossover purchase supported the B2B relationship. For its part, the company got a sale on the B2B side and continued to enjoy the marketing advantages it got, including platform traffic, from working on the partner site while also familiarizing another consumer with its products and selling proposition for potential return purchasing.