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With Amazon research finding that nearly three-quarters of business buyers today are millennials, it’s safe to say that these digital natives have ushered in a new era for B2B sales. Deals with long sales cycles that were once secured with a handshake are now being conducted instantly online -- a fact that has caused B2B ecommerce growth to significantly outpace retail ecommerce, with the former expected to reach $9 trillion by the end of 2021 compared to less than $3 trillion for retail.
For the HVAC industry, set against a backdrop where high demand is being complicated by pervasive inventory and supply chain challenges, this evolution of sales couldn't have come at a better time. Before we explore the opportunity that this presents for the HVAC industry, let’s take a look at how we got here.
The ‘Amazon Effect’ in B2B Sales
Amazon's influence can be seen everywhere. Continuously raising the bar for what it means to provide a remarkable customer experience (CX), Amazon has inspired new ways of doing business across almost every area of our lives. In doing so, it’s
conditioned consumer expectations for things like speed, personalization and convenience. This is particularly true amongst today’s younger generations who’ve grown up in an environment where virtually everything is just a click away.
As these generations have made their way into the business world, they’ve brought these consumer expectations along with them and begun to apply them to their B2B roles.
As these generations have made their way into the business world, they’ve brought these consumer expectations along with them and begun to apply them to their B2B roles. We’ve seen this happen before in similar ways with the consumerization of IT. Take for example the Blackberry -- once lauded as the ultimate enterprise device, it’s been almost entirely replaced by the iPhone and other consumer devices due in large part to younger generations' use of and preference for them.
A similar shift is taking place in B2B sales, and it’s only being accelerated by how the Covid-19 crisis has illuminated the urgency surrounding digitization. This presents a massive opportunity for organizations to provide experience that meet the expectations and demands of today’s purchasers. But it also means that those that fail to embrace this shift will risk being left behind.
Capturing the Online Opportunity as Demand Continues to Heats Up
It’s growing increasingly clear that ecommerce will not only be key to harnessing the explosion of demand brought on by Covid-19, but it will also be crucial in helping manage inventory as orders continue to skyrocket. This is something that is especially impacting the HVAC industry, where inventory levels are reportedly between 15% and 25% higher than usual, and expected to remain double digits higher than normal even after the pandemic subsides.
The past year has brought with it a significant amount of challenges impacting the entire B2B space, and solutions that will remain.
Simultaneously, many contractors, distributors, and manufacturers have reported record sales during the second half of 2020 and the first half of 2021, and there are no signs that momentum is slowing down. There are signs, however, that illustrate the extent to which ecommerce has been a driver of this momentum. In fact, data from the Billtrust eCommerce team (formerly Second Phase) shows that B2B businesses experienced a 259% increase in ecommerce sales revenue in 2020. Furthermore, McKinsey research found that 70% of B2B decision makers say they are open to making new, fully self-serve or remote purchases in excess of $50,000, and 27% would spend more than $500,000.
With demand soaring, this also means that buyers’ needs are rising, creating an increasingly competitive market where sellers are fighting to become the preferred HVAC provider of today’s digital-savvy purchasing professionals. As their expectations for a digital experience rise, continued investment in ecommerce will be crucial for all suppliers’ growth strategies. And the evidence is there to show that companies that do make these investments reap the rewards financially.
Preparing for the Road Ahead
The past year has brought with it a significant amount of challenges impacting the entire B2B space. And looking ahead, it’s likely that many of the solutions that have been created to address these challenges will become permanent features of the modern HVAC business. This is especially true when it comes to the shift towards ecommerce solutions that create better experiences, not just for customers, but for staff as well.
After all, 76% of HVAC businesses moved at least some of their staff to remote work over the last year. And it’s likely that a percentage of these workers will remain remote in the months ahead. As a result, the sell from anywhere, anytime capabilities of ecommerce solutions have become even more crucial -- especially as this widespread digital transformation accelerates the movement of money, and contributes to a more competitive and fast-moving economy.
Regardless of this new normal, it’s been clear for some time that As these generations have made their way into the business world, they’ve brought these consumer expectations along with them and begun to apply them to their B2B roles. And as digitization continues to top c-suite’s priority lists going forward, it’s also clear that HVAC distributors will need to upscale their ecommerce strategies to be well positioned to supply the next generation of influential purchasing professionals.