THERE was much noise over digital platforms in the previous weeks about the 11.11 Sale.
Certainly, only a small segment of the population was able to escape from the pervasive online and billboard advertisements about it. Filipinos used their breaks to look for the best deals and save their finds in time for checking out on the date itself. Others were constantly comparing notes on their intended purchases the week before as well. The 11.11 sale promotion already seemed successful even before closing on the said date.
While this type of promotion has been regularly rolled out, it was expected to see other local retail stores roll out their own 11.11 promotions to capture some of the sales stirred by the frenzy over it. One of the glaring differences that online selling platforms like Lazada offer small retailers and startups, however, is an opportunity to inflict brand awareness during these “sale holidays.”
Through the website design, consumers can see a selection of other brands available in the categories they shop from. The deals are usually too good to pass up. For example, lower-priced brands vis-a-vis tried-and-tested or household brands would have a higher chance of being bought through an online platform.
If you’re an owner of a small or medium enterprise (SME), but cater to businesses as well, it might have crossed your mind to extend your products and services to capture the end-user too. Selling through online platforms might not necessarily increase your sales, but can definitely get your brand name out there.
Knowing the difference before making the shift
Should B2B (business-to-business) businesses make the shift? If it’s the best option to scale and a business is capable of expanding to cater to the consumer market, then it would be a good risk to take. Of course, one must assess the specifics to make a good and informed decision.
Generally, both models require excellent customer service, but the focus in communications differs. Marketing to businesses would be more direct and focused, as they are more knowledgeable in the industry and the products or services your offer. When it comes to selling what you offer to consumers, you have to be ready to get emotional. This means that, as opposed to providing functional benefits for your B2B customers, consumers need to be “courted” to capture their minds and hearts. It’s not just the functional benefits that win over consumers that are usually more fickle, but providing intangible benefits that target their psyche and emotions as well. For example, buying value meals from a fast food chain doesn’t only help those with a budget (functional benefit of saving), but also hits an emotional benefit like friendship goals (an intangible goal for the younger market in terms of fitting in).
Providing regular communications to consumers can also be more costly when it comes to planning and executing marketing targets, but if done well, could unlock a big potential for SMEs.
Another highly relevant point of difference is the payment terms between a business and a consumer market. Businesses who buy in bulk have the privilege of paying in longer terms (30, 60 or 90 days), depending on the industry and agreement made between the buyer and supplier. Many B2B SMEs have noted that the struggle they experience whenever they encounter negative cash flow spikes are due to late payments. These can be unavoidable and SMEs, in turn, try to improve their current financial capabilities for such occurrences.
However, most do not succeed, especially when faced with multiple purchase orders or business opportunities during such times. The consequences of not being paid on time directly impacts SMEs’ capability in accepting new projects due to lack of capital expenditure. Thus, instead of gaining more income and scaling, they are left with no choice but to forego the business opportunity.
Sometimes, B2B SME owners encounter clients who simply do not repay their debts. Some would even go as far as filing cases just to collect from their clients. When it comes to late payments, B2C businesses are more protected, as small purchases call for cash payments.
For credit card terms, they are also usually shorter than B2B payment terms. In effect, it enables smoother operations for SMEs through a shorter receivables cycle.
The benefits of online platform sales for SME owners
Offhand, if an SME owner decides to cater to consumers, selling through online platforms introduces the brand to a larger market, which is what B2C (business-to-consumer) marketing is all about. Sales may not perform as well as popular brands, but it surely gets the name out there, so that when budget calls for trying something cheaper or if a bad experience calls for trying a new brand, it could fall into the next possible option.
Partnering with online platforms also solves logistics limitations, as they are more equipped in shipping logistics. If your business is only capable of delivering to specific places, it’s another great vehicle for getting your brand to more cities and provinces.
Support for capital spending
Time is important. Your competitors in the industry with the same B2B model may already be planning the same move. It’s best to get ahead of more competition coming in while it would be easier for consumers to drown out too much noise.
Important things to remember when planning the shift and ensuring its success are the benefits the shift provides your business and if your company is capable, both financially and logistically.
If you feel like your cash flow is too thin at the moment, you may consider help from financial technology (FinTech) companies like First Circle. First Circle provides fast, convenient, and reliable financing. We are trusted by the Philippine government and are a finance partner of the Department of Trade and Industry. First Circle is one of the FinTech companies licensed by the Securities and Exchange Commission.