Why Businesses Are Buying Online Instead of Through Your VARs

Tim Wilson

August 24, 2021

In the yester years of B2B sales—and let’s be honest, it’s still happening today—manufacturers worked directly with value-added resellers (VARs) to sell their product. VARs meet one-on-one with business leaders to provide meaningful sales experiences centered on a product, offering consultations or trainings with each sale. Historically, when manufacturers wanted to expand their reach into the market, they’d just sign up more VARs. These days the world of business sales looks much different.

The rapid growth and popularity of B2B ecommerce and online marketplaces has shifted buyer behavior dramatically. Buyers aren’t going through VARs anymore. They’re hitting the web, making the traditional way of doing things more challenging and less lucrative.

Here’s why buyers are buying your products online instead of through your VARs and what it all means for your business.

Amazon Business is growing

Amazon has made online shopping easier than ever, and not just on the consumer front. Businesses, too, are taking advantage of online purchasing in large numbers.

Amazon’s business-only platform, Amazon Business, has seen record growth over the past few years. During Amazon’s Q1 for 2017, 40% of B2B shoppers finished their business purchases on the business platform. In May of this year, it hit $25 billion in worldwide annualized sales, and Amazon Business’ gross sales grew 2.9 times faster than the total sales for Amazon, according to Digital 360. Currently, Amazon Business serves over 5 million businesses.

Amazon Business is unique, because it enables third-party sellers of any size to sell to large organizations. As the name suggests, it’s tailored specifically to businesses, allowing them to browse a wide selection of business-only products with special pricing. There’s a large appeal for B2Bs to operate there, especially at a time when B2B ecommerce is at an all-time high.

B2B ecommerce is projected to increase to $1.8 billion by 2023, and Amazon is fully plugged into that growth. According to Jeff Bezos, former CEO, Amazon Business remains a priority for the corporation as they look to expand, and Amazon sees itself as direct competition for industrial supply corporations like Grainger and Staples.

In short, customers and businesses are flocking to Amazon Business in droves as it explodes in growth, leaving the old model of buying through VARs behind.

Millennials are the decision makers

Amazon Business and other B2B ecommerce platforms are growing in popularity, but why? Look no further than the segment of buyers largely driving that popularity: Generation Y.

Millennials are quickly becoming the primary consumer segment in the United States. They’re also taking more mid and upper-level management positions, giving them more power in B2B strategy and buying decisions. Unlike generations before them, Millennials are almost innately web savvy, and because their buying habits differ so dramatically from those of previous generations, marketplaces have shifted to make space.

According to a recent McKinsey report, 2/3rds of buyers prefer remote human interactions or digital self-service to traditional interactions with a supplier. Millennial buyers in particular are looking for ease-of-purchase experience, and they find more value in self-education on online channels than in speaking with a sales rep. Millennials want to shop for their businesses the same way they shop for themselves, and that means more ecommerce and marketplace transactions and less transactions that require a middleman.

Online shopping offers a better customer experience

When brands purchase products through VARs, the process can be tedious and inefficient. They first have to talk directly with a salesperson. They then have to submit a PO and often wait weeks for their products to ship to them. Why would a brand do their B2B business this way when they could otherwise purchase products from Amazon and have them in-hand in two days?

Businesses are buying online instead of one-on-one through your VARs because buying online is much easier and more efficient. Over 60% of product searches begin on Amazon. That’s a huge indicator of how critical ecommerce is.

Customers are finding your VARs online

The truth is your products will eventually make their way online whether you intend for them to be there or not. Because VARs are very aware of the opportunities that can be found on platforms like Amazon Business, they may be the ones listing your products. While it’s great for your brand to have some kind of presence on ecommerce marketplaces, it can also present problems if the VARs doing the listing aren’t ecommerce savvy.

While brands may find plenty of success offline, offline success does not equate to online success, nor do good offline partners automatically make good ecommerce partners. Often, in fact, your best traditional partner will be a poor ecommerce partner, because no one can be good at both.

Though a VAR may be highly educated in selling your products, they will not be as familiar with the complexities of Amazon. They won’t be as dialed in to your brand messaging, they might not put the right keywords in product listings, or they might list pretty mediocre images or copy that are a poor reflection of your product. Without the same care that you have for your product, this can be a real detriment to your customer experience. It can also be a detriment to your margins if you have a slew of VARs selling your products and very little control in the online space.

The VAR model of having as many distributors as possible simply doesn’t work anymore, online or off. The wider your distribution network, the higher the chance that unauthorized sales activity and price erosion will occur. A VAR can underprice your product, and just like that, they’ve negatively impacted every other distribution partner you have across all channels because those partners are forced to lower their own prices to compete.

Ecommerce marketplaces matter. They’re the now and the future, so having control and having partners that know what they’re doing is key.

Conclusion

It’s true—the traditional way of conducting B2B business is rapidly becoming a relic of the past. As more and more brands and consumers flock to online channels, watching the online space closely for opportunity and having a strong ecommerce strategy is critical for long-term success.

If you’re looking to improve your online presence, take control of your brand online, and enter the Amazon Business space with the best strategy and partner for your brand, Pattern can help. Our Predict software is the best in the business for assessing what is and isn’t working for your brand on Amazon and helping you hone everything from your advertising, reviews, and listings to your product design and brand control.

To learn more about how Pattern can help with your online business, visit us at get in touch today or email zach.barber@pattern.com for more information.

Explore Our Ecommerce Resource Library

Find relevant content to accelerate your ecommerce business. Stay on top of industry trends and best practices.

Amazon's Sponsored Product ads
Blog

What Are Amazon’s Advertising Products? Sponsored Product, Brand, & Display Ads

What Are Amazon’s Advertising Products? Sponsored Product, Brand, & Display Ads

Utilizing Amazon sponsored ads can be a smart way for a brand to drive greater traffic to a product listing and start increasing sales. While many brands still struggle to manage their advertising strategies, 30% of Amazon brand sellers increased their advertising budgets in 2022. As ecommerce executives (or even on the nose with VPs of ecommerce?)  approve their 2023 advertising budgets, it may be worth it to take a look at Amazon’s advertising products and the benefit they may have on increasing conversions. 

​​Pattern is the premier ecommerce accelerator with all of the expertise, data-driven insights, and technology brands need to gain control on Amazon and maintain their competitive niche. We know the high value of and how to utilize Amazon’s advertising products to drive the most traffic and conversions to benefit and accelerate your brand.

Here are Amazon’s three main advertising products you should know about in order to drive listing traffic to your products and increase conversions: 

For a brand executive who is selling their product on Amazon, you may not already know the differences between campaign type, so we will walk you through the differences and uses for each of these three ad campaigns.

Sponsored Product Ads

Sponsored Products are a mid-funnel advertising strategy that gives visibility to products above the top organic listings (see example below). This strategy uses custom keywords to get products in front of the consumers who are searching for them, however it can be used to capture new audiences as well.These cost-per-click (CPC) ads require no additional copy or images, but usually receive the most interaction of the campaigns and need to be monitored closely.

As you can see, these ads look just like an organic listing, however they say, “Sponsored,” on them. These types of ads can be especially effective forms of advertising because they tend to blend in with the organic results around them. With Sponsored Products, you can get your products in front of qualified customers who are searching for your product in such a way that doesn’t make them feel like they are being served an advertisement.

Sponsored Brand Ads

Sponsored Brand Ads are a top-of-funnel brand awareness tool and function on keywords. This ad format helps show a customer what they may be in need of and where to get it.  Commonly used to promote product lines or best sellers, a Sponsored Brand ad shows up as a banner above the search results (see example below). This type of ad requires that the brand showcase at least three separate products.

Unlike other campaigns used on the Amazon platform, Sponsored Brand ads require ad copy and a unique logo. These ads also can take customers to a custom landing page, or a page on the brand store, that way they get a clear and overall picture about who your brand is, what other products you sell, and why they can trust your brand

Sponsored Display Ads

Sponsored Display ads can be a tactic for top, middle, or bottom of the advertising funnel due to its varying targeting abilities. Although most commonly found under the bullet points of a detail page, these ads can also show in emails, newsletters, and even more locations off platform.

Unlike the previous ad campaigns discussed, sponsored display ads can target shopping behaviors, like repeat purchasers, similar product purchasers, and even people who viewed the detail page but did not buy. Sponsored Display ads help customers discover your brand, drive awareness, and create loyalty. 

The example above shows just one of the many placements Sponsored Display has.

Accelerate Your Sponsored Products With Pattern 

Rather than competing with each other, each of the three sponsored ad products focus on a different section of the sales funnel, allowing you to target your customers and hit your sales numbers, all while edging out possible competitors. When brands use these advertising campaigns, they can better optimize their ad budget to improve ROAS and build revenue. 

At Pattern, we have all the resources to help your brand build successful advertising and digital marketing campaigns on Amazon so you can increase traffic and conversions, which will in turn increase your revenue

Global Ecommerce Weekly News: 27th September 2022
Blog

Global Ecommerce Weekly News: 27th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon drives renewable energy push with 71 new projects Amazon is planning to add 2.7 gigawatts of clean energy capacity through a couple of new projects as the company attempts to use 100% renewable energy by 2025. The ecommerce business will soon have a total of 329 renewable energy projects, generating 50,000 gigawatt hours of clean energy, which is equivalent to powering 4.6 million US homes every year. [Read more on Reuters](https://www.reuters.com/business/sustainable-business/amazon-drives-renewable-energy-push-with-71-new-projects-2022-09-21/) Amazon launches Prime Early Access Sale Amazon is launching a new 2-day shopping event for its Prime members only, beginning on the 11th of October. Across 15 countries, Prime customers will have access to the shopping event, with thousands of deals on offer globall, ranging from fashion to electronics to essentials. The event has the purpose of giving Prime users the chance to spread the cost of items over the winter months, 6 weeks ahead of Black Friday. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/26/prime-early-access-sale/) --- Other Marketplace News --- Shopify unveils new localisation tool Shopify is launching a new localisation tool, called Translate & Adapt, which works with Shopify Markets to offer localisation for sellers who are looking to expand into new markets. The tool translates a user’s online store into different languages, including product pages and information pages. Merchants are also able to create different shipping terms for each market using the new tool, which allows international expansion and offers a more localised consumer experience, unveiling new potential. [Read more on Ecommerce News](https://ecommercenews.eu/shopify-launches-new-localisation-tool/) Etsy is set to invest hundreds of millions into its marketing platform Etsy CEO claims that the company is on route to spend more than $570 million USD on marketing this year. Even during a time of macroeconomic pressure, inflation and rising interest rates, the company is preparing itself and its sellers for the upcoming holiday season and is focused on retaining interest from buyers. [Read more on Yahoo News](https://uk.news.yahoo.com/etsy-600-million-on-marketing-ceo-154054219.html) --- Other Ecommerce News --- Meta looks to cut costs by 10% in the coming months Meta employees are facing job redundancies as the company plans to cut its costs by 10% over the next few months. Meta reported a 22% YoY increase in costs and expenses, totalling over $20 billion USD. The cuts are expected to come in the form of job redundancies as a result of department reorganisations rather than formal layoffs. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/22/meta-to-slash-costs-by-10-over-coming-months/) DHL teams up with Quadient to offer smart locker deliveries in the UK DHL and tech company, Quadient, have partnered to offer smart lockers parcel pick-up throughout the UK. The new contactless, secure locker stations will give recipients more choice and flexibility to receive their parcels at a time and location best suited to them. The partnership plans to install 500 locker stations across the country by the end of 2022. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/21/dhl-partners-with-quadient-to-offer-smart-locker-delivery/) The online fashion market is set to be worth nearly $170 billion USD in 2025 The European online fashion retail market is set to grow 50% by 2025, with an online turnover of $170 billion USD, which is 33% of the retail branch’s total. Cross-border marketplaces prove to be the largest drivers of this growth, with online websites and apps like Vinted largely pushing the market’s online growth. Zalando recently became the largest cross-border fashion retailer/marketplace, responsible for 11.7% of the online market’s share. [Read more on Ecommerce News](https://ecommercenews.eu/online-fashion-market-worth-e175-billion-in-2025/)

Top 5 Ways to Prepare for Peak with Google Ads
Blog

Top 5 Ways to Prepare for Peak with Google Ads

Peak season is almost upon us and with all signs pointing to it starting earlier than ever, with Christmas gifting searches now ramping up in August and September, it’s time to start preparing for peak. In this article, we’re sharing our top five tips for planning and preparing for peak season with Google Ads and the strategies required to get your Paid Search ready so you can drive success over this crucial period.

1. Go Early

In 2021, gifting search terms started increasing in popularity in August. The general trend is that people are looking, researching and weighing their options early, so it’s best to start your Paid activity early to ensure that you’re capturing that early research traffic. This will help drive revenue alongside aiding those consumers who are in their research phase.

From 2020 to 2021, spend during Cyber Week actually only rose 2% but in the weeks leading up to it, it increased by 16%. However, Cyber Week is still the biggest period during the latter half of the year, accounting for 23% of all online spend by consumers over peak. Being prepared and starting early will help you to maximise your time during this period.

2. Get Ready for Privacy Changes

 According to Google, 48% of global consumers have stopped buying or using a service due to privacy concerns. Privacy is front of mind when consumers are shopping online and we know that Google is phasing out 3rd party cookies in 2023. This is going to make it much harder to track users online and it’s something that brands need to think about this now – waiting isn’t an option.

From a Google Ads point of view, you want to ensure you have set up the Google Ads tag across your site and have enabled ‘Enhanced Conversions’, which ensures all conversions are tracked and allows you to monitor other actions such as ‘Add to Cart.’ This is relatively easy to set up, especially if you use ‘Google Tag Manager’.

It’s also vitally important that you build up your first-party data during this time as this is data you own and it can be used when targeting consumers that have provided your brand with their email address. Pattern’s own experience shows that by segmenting and using first-party data, you can see a 10% improvement in revenue and ROI.

3. Ensure Consumers Can Discover your Brand

A full-funnel approach is now more important than ever as consumers become more discerning and have more choices than ever of where to shop.

Pattern has seen success with Google Ads’ ‘Discovery Campaigns’ (image-based ads that appear on Google platforms such as Gmail and the Google app), which have driven success both from a traffic and revenue perspective.

The performance of these campaigns is significantly enhanced by adopting a segmented and nuanced approach to first-party data and incorporating these into your campaigns. Other options for a full-funnel approach include YouTube and testing bidding on keywords that are more representative of the research phase. (e.g. ‘best baby clothes’ for a baby clothes brand)

4. Get Moving with Performance Max

Earlier this year, Google announced that they were moving away from Smart Shopping and launched Performance Max. This is a new campaign type that incorporates features and placements from Smart Shopping but expands them onto other platforms such as Gmail but also alternative creative options, such as images and videos.

Since Google has already started automatically upgrading Smart Shopping campaigns to Performance Max, expect to see some fluctuations in the first 2 weeks following the switch over but results generally seem positive. We recommend upgrading sooner rather than later to limit any potential impact to peak period.

5. Flight Budgets Accordingly

Peak period will be even more competitive than in 2021 and you’ll need your budgets to support this period, we recommend boosting budgets in October to start capturing that early peak traffic. As we enter November and the Cyber Period, start early and make sure you are capturing those consumers looking for early bargains, ensuring you are being nimble in your optimisations and reacting to the data that you are seeing.

Overall, peak period is vital to help drive your sales and by preparing early, you will see strong results and drive success for your brand. If you want to discuss how your brand can navigate this next peak period, contact us to discuss your options with our performance team now.