B2B eCommerce in the Food Industry is Ripe for Growth

To be successful, produce wholesalers must embrace technology that can balance increasing sales with higher productivity.

Jhonatan Sanchez

Technically speaking, B2B electronic transactions fall in two large segments: electronic data interchange (EDI) and over the internet (email, ecommerce store, online exchanges, etc.). Most of the B2B activity has taken place in the EDI arena, a cumbersome standard that has outlived its usefulness. EDI is a restrictive communication method that was conceived before internet browsers were invented, delegating to computers the exchange of business documents between companies. The problem with this approach is that it requires an immense implementation effort, typically with consultants and expensive licenses. And if you want to change anything after implementation, you can't -unless you bring in the consultants. As a result, in addition to being notoriously inflexible, EDI is very expensive. It would be ill-conceived to willingly choose EDI if you were making the decision to engage in B2B e-commerce today. The reason EDI remains alive is because the large and dominant players in their respective industries have invested massive amounts of capital making those systems work; and if you want to do business with them (don't you?), you have to pay up too. However, EDI is rapidly losing ground and being replaced by the internet. As new technology and platforms emerge, the internet will continue to grow and position itself as the de facto B2B method. The size of B2B e-commerce transactions has not peaked yet, and it continues to grow at a staggering rate. But, how big is this market? It's huge! The combined B2B e-commerce market is expected to reach nearly US$7 trillion by 2020.

B2B Process Automation is where the money has been

B2B transactions are at the core of Reserva. Our customers already know how Reserva helps them connect with buyers and suppliers. The vendor discovery problem is well understood in the produce industry, and there are many companies addressing this such as Alibaba and TradeKey. Yet, the most critical part of B2B trading is what happens immediately after discovery. Business to business transactions involve time sensitive documents that must follow strict processes defined by each party. Sometimes these documents travel across departments, sometimes they don't. In the best case, trading partners are equipped with complex enterprise systems that handle such transactions. This scenario is characteristic of larger organizations that have invested heavily on deploying resources to improve productivity. However, most small and medium size food companies still do business exchanging actual paperwork and manually executing each transaction. This includes unproductive tasks such as taking orders over the phone, transcribing faxes and emails into the system, etc. Even more time is wasted having to update customers with periodic order status and every time something happens. Against common beliefs, this is not customer service. This is actually part of the order processing and fulfillment process; and incidentally, this is where industry leaders with their well-oiled machine beat the small produce traders. This is a huge opportunity to help these businesses grow faster and to close the technological gap with larger companies. This is precisely what we are betting on at Reserva. Our focus on B2B process automation, rather than just discovery, is the reason why we built Reserva on a state-of-the-art Enterprise Resource Planning (ERP) platform. The main advantage of an integrated solution is that while the system helps you manage the order management process (acknowledgement, processing, and fulfillment), your customers are automatically notified of what is happening with their orders. They can get event-based notifications (i.e. your order has shipped), or they can access the portal to check the latest status. And yet, this does not require any additional work for the vendor.

Perishable Products and E-Commerce

The main challenge of implementing E-Commerce in the produce industry is to cope with the perishable nature of agricultural products. There are two critical aspects of a successful E-Commerce channel:  (a) keeping up to date pricing pricing and product availability and (b) having a robust order processing and fulfilment system. E-Commerce should be effortless -and nimble. Keeping an online store with up to date pricing and availability is a must because the fundamental premise of buying online is to know what is available for purchase and how much it costs. Alarmingly, most produce businesses with online ordering capabilities typically disregard both counts. An online form for customers to send their orders is not an E-Commerce store. This is wrong on so many levels but the main problem is that it gradually dilutes your credibility with the customer. Allowing customers to place orders without validating availability and other commitments just sets the wrong expectations with the customers. It is not just about getting the order in; it is about keeping customers happy. To prove this point, ask any business doing this about their key fulfillment metrics such as order fill rate, on-time delivery, or order accuracy. Anything less than 100% is an unnecessarily missed opportunity. This is why having an adequate fulfillment system becomes a necessity. The unfortunate part of not being able to provide live product information on the website is that the business does have this information, but it is managed separately. Either on a different system, or managed by a different department, or by a different facility, or something else. The E-Commerce store must be part of the company's enterprise system. Again, E-Commerce should be effortless -and seamless. E-Commerce should not require anything extra; it is just another medium, like email, the phone, or the fax. Except that it is much more because E-Commerce is a new channel on its own merits. It has the advantage of serving existing customers but also luring occasional shoppers. E-Commerce, if done properly, could be a lucrative low-hanging fruit for your business.