Digital channels have become an essential tool in business export strategies. Norwegians use the Internet more than any other European population. They trust new technologies, have a high level of digital competence, and are avid online shoppers. These habits and the generally high purchasing power also influence the business world. So how can German companies win Norwegian business customers through digital media channels?
In this blog post, Dr. Georg Wittmann, managing director at ibi research at the University of Regensburg and managing director at German competence centre for digital trade, interviews Bård Larvoll from the Norwegian e-commerce service provider YDP. Together with the Norwegian trade association Virke, YDP has analyzed the maturity of the Norwegian business-to-business (B2B) e-commerce market. This is the first analysis of its kind.
The competence centre supports and assists German SMEs in their efforts to digitalize their business.
Dr. Wittmann: What would you describe as the core features of business-to-business (B2B) e-commerce?
Larvoll: There are many aspects of B2B e-commerce that need attention for a successful solution, such as top-of-funnel marketing, lead nurturing, sales conversion, shipping, and fulfillment. But I think it’s crucial to view all of these as tools to build what matters and that is the personal relationship you make with a client.
In B2C e-commerce, the buyer is also the user in most cases. In B2B e-commerce, however, the buyer is often not the user. This distinction is vital because one buyer represents many end-users, and the consequences of a poor customer journey have a more significant financial impact. If you want to move an existing customer from a physical to a digital sales channel, then the quality of their customer journey needs to be better. Otherwise, they will not change their established routines.
Dr. Wittmann: How would you describe the Norwegian B2B e-commerce market?
Larvoll: From a European perspective, Norway is quite mature when it comes to B2C e-commerce: High adoption rates, many startups offering new services, and a population with a high buying power. When you compare that to what’s happening in the B2B e-commerce market, I would say it’s an early growth market.
There aren’t any established marketplaces for B2B sales. Many companies still have online catalogs on their websites, their customers are often laggards in adopting new technology, and price structures are quite complex.
But there are signs that this is changing. According to the Scandinavian B2B report for 2021, 15 percent of all B2B companies have a dedicated Head of e-commerce. This number increases to 25 percent in larger companies. One of the bigger obstacles many of these companies experience when they want to sell products online is the lack of quality master data. Their ERP system is often outdated and needs to be upgraded or replaced before providing the necessary data.
Dr. Wittmann: What are the main trends in the Norwegian B2B market?
Dr. Georg Wittmann
Managing director at ibi research at the University of Regensburg and managing director at German competence centre for digital trade
Larvoll: As mentioned earlier, the Norwegian market is in an early growth period. Around half of all companies have mapped out their customer journey, but most companies tend to focus on top-funnel metrics, such as online sales and website traffic. However, what is worrying is that only 12 percent of B2B companies measure customer satisfaction related to their online sales.
If you look at the smaller companies, only around half of them have a webshop. For larger companies, around 57 percent have supported digital sales for more than five years. All of them expect their online sales to grow in the next couple of years, and 27 percent expect it to increase by more than 25 percent.
Dr. Wittmann: What are Norwegian buyers expecting from their suppliers?
Larvoll: First and foremost, it’s that it just works. Buyers are quite used to their suppliers going the extra mile to serve their needs. Industries such as car parts or heating, water, and sanitation expect fast deliveries, competitive prices, and the possibility of placing an order quite late in the evening and getting it delivered the following day.
Other important things are prices and discounts, complete order history and reports, good integrations, and a close and personal relationship with their suppliers. Trust is a keyword here, and many suppliers put extra focus on this area since they know that a customer with a close relation to their key account manager stays loyal.
Dr. Wittmann: What do you think are the challenges of B2B e-commerce as a business model?
Larvoll: The biggest obstacle to overcome is existing routines that have been tested and fine-tuned over many years. For many B2B customers, digital platforms can seem a bit complicated. Many prefer to have “their” personal salesperson to ensure that they get the best prices, fast deliveries, someone to get advice from if needed, good customer service if anything goes wrong, and the possibility to quickly get re-supplied if they run out of components they need for a project.
Bård Larvoll
Bård Larvoll has worked in different management, teaching, sales, and consulting positions for the last 15 years, ultimately gaining experience in company restructuring, strategic planning, management consulting, IT, sales, e-commerce, training, and purchasing at various levels. Bård has been working as a teacher for several years at Heriot-Watt University and holds a Master’s in Business and Administration.
There is also another perspective that needs to be taken into account: the sales personnel themselves. They may see the e-commerce platform as a threat to their established working routines and, even more importantly, their sales. If you want a successful B2B e-commerce project, you need a great onboarding process with the sales personnel. Then, they can use their customer network and onboard them on the platform. This way, the webshop becomes a sales tool that both your employees and customers want to use.
Dr. Wittmann: What are to channels to reach Norwegian B2B buyers?
Larvoll: There are not many on the market yet. You have the Norwegian marketplace called Finn.no, which is primarily a site for B2C customers but also offers some B2B services. Other than that, it’s building your own site.
Dr. Wittmann: How do you maintain a positive customer experience throughout a B2Be-commerce business model?
Larvoll: It’s all about catering to the customer’s needs. I would highlight these three areas: a personalized customer journey, excellent customer service, and being open to honest customer feedback.
Dr. Wittmann: What are some key metrics to track in a B2B e-commerce model? As a seller, how do you track success?
Larvoll: I would divide my answer into two categories, e-commerce, and B2B sales. The metrics for e-commerce are focused on Customer Acquisition Cost (CAC), Return on Advertising Spend (ROAS), email / SMS open and click-through rates, Customer Retention, Sales Conversion, and Average Order Value.
For B2B sales, other metrics come into play, such as onboarding by customer segment, online order frequency, buyer satisfaction with your B2B e-commerce site, and the number of orders placed outside business hours.
YDP is a Norwegian e-commerce supplier based in Oslo. The company was founded in 2018 by three experienced sales professionals with a background in delivering CRM, ERP, procurement software, and e-commerce platforms. With experience from both the retail industry and handling complex business-to-business processes, the team quickly established themselves as a leading supplier in the Norwegian market.
Today, they serve several clients in everything from the cosmetics industry to the construction industry and deliver solutions to consumers and business professionals. Together with Virke, they have launched a B2B e-commerce report that analyzed the maturity of the Norwegian market. Their primary goal is to help small and mid-size stores, distributors, and manufacturers create and implement practical strategies that beat their competitors.
Dr. Wittmann: What would you say are some technologies that have streamlined the B2B e-commerce experience?
Larvoll: You can’t disregard the impact of the B2C e-commerce user experience on the expectations of B2B buyers. Even though you buy products on behalf of someone else, when your workday is over, you use B2C e-commerce platforms and services as a consumer. These experiences, conscious or not, are then transferred over to your work expectations.
The rapid evolution of Software-as-a-Service (SaaS) has also lowered the adoption rate for many companies by offering technology previously only available to larger companies. Lower costs and faster implementations also accelerate this development.
Dr. Wittmann: In your experience, what are some of the essential B2B e-commerce third-party partnerships to a successful e-commerce business?
Larvoll: There are many third-party partnerships you need to integrate with. For many industries, you have specific databases where you need to provide data to gain access to that particular industry. But in general terms, I would highlight payments, accounting, and logistics as crucial for a successful e-commerce business.
Dr. Wittmann: When entering the Norwegian market as a seller in the Norwegian B2B e-commerce market, what should German companies be aware of?
Larvoll: Norway is a country with long distances between cities, and the urban areas are pretty small from a German viewpoint. Around 5,3 million people live in Norway, and about 51 percent live in the southeastern parts in and around the capital. The other major cities are positioned in the west and the middle of the country. With many sparsely populated areas, mountains, and fjords, the distribution of goods in Norway is quite expensive, and the transportation providers to choose from relatively few.
On the other hand, Norwegian customers are used to late cut-off times when purchasing products. They often buy in larger quantities, expect full customer service, are price-sensitive, expect a hefty discount, are risk-averse as buyers and want to establish long-term relationships.
These attributes make them a demanding customer, but with a general high buying power, the suppliers who manage to deliver on the customer’s terms are also quite profitable.
Dr. Wittmann: Any key takeaways that you have experienced when delivering to Norwegian B2B customers?
Larvoll: There’s a strong focus on long-term partnership amongst Norwegian customers. Seeking mutual value creation is seen as a healthy indicator of successful collaboration. With a strong emphasis on a personal relationship between supplier and customer and many set habits, it tends to be quite the change management project to implement a B2B platform.
High customer demands have also led to customization, and there are few standards to follow. Despite their increased purchasing power, they are pretty price-focused, and many industries have quite a complex price structure, especially when it comes to projects.
Last but not least, their organizations are often silo-based. Thus, many internal policies and frameworks need to be re-defined since everything from marketing, IT, accounting, and logistics are involved.
If you want to learn more about the topic and meet both Dr. Wittmann and Bård Larvoll as well as others, do join our webinar on B2B e-commerce in Norway on Monday, June 28, 2021. The event will be held in German and English.