Covid-19 epidemic Cementing e-commerce into everyone’s daily routine in 2020, and as we see further, B2B e-commerce is rapidly becoming the next frontier for founders and investors.
Businesses have shifted to online, and the emergence of B2B markets and e-commerce infrastructure is accelerating a new wave of growth that is projected to reach 6 3.6 trillion in annual total commercial value (GMV) by 2024.
But one key ingredient is missing from the stack: Check outIs, which is an opportunity for B2B e-commerce to become more widely the ultimate.
The challenge of B2B e-commerce
Historically, B2B e-commerce has been held back by deeply rooted behavior and lack of cloud-based infrastructure. While the market is evolving rapidly, there is a buzz of B2B purchases making way for more complex purchases than consumer e-commerce. Most likely, these barriers fall into three buckets:
Payments: PayPal had unlocked the early days of consumer e-commerce, and Stripe’s ease of integration into card payments has given strength over the past decade. But in B2B, the challenge has always been that sellers don’t want to pay a 3% surcharge – so much so that they suffer the pain of payable physical checks and accounts instead. In 2018, verification was carried out by 60% B2B payment streams, and the speed of digital non-payment has been a major hurdle in e-commerce.
Permission: Most B2B transactions go through agreements and receipts, requiring multiple parties to sign up on each transaction. This creates friction in the way of purchase, as the seller will not be able to tell whether the buyer is authorized or not. Instead of hitting the purchase, buyers need to fill out the form frequently so that the seller can get in touch. This can slow down the deal from seconds to weeks.
Deposit: Most B2B transactions are completed in the form of some credit, whether it is a capital loan, factoring, or in the form of a payday. Credit applications are usually completed on paper forms (or at best hosted PDFs) by an army of people reviewing internal credit departments. In context, John Deere has over 1000 employees with “credit” in his job descriptions. This costs a lot and distributes sensitive information on paper documents, which further slows down the transaction.
The net result of these barriers is the inability to make immediate purchases online, as we have used as customers. It is a combination of fintech problems that require a platform rather than a series of point solutions.
The answer is why checkout?
While the term “checkout” doesn’t sound particularly novel, modern checkout is clearly a new category in fintech combining digital payments, identification, fraud, credit and more. It builds a powerful network, the kind that can not only build trust but enable one-click transactions on a scale.