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.

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Sept 27, 2022

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/)
Sept 22, 2022

How an Amazon SEO Agency Should Be Serving Your Brand

If you’re in the global ecommerce space, you are most likely aware of Amazon, and probably selling your products on the marketplace. With over $470 billion in sales in 2021 alone, Amazon stands as the third largest company in the world based on revenue. The ecommerce giant is a household name in the U.S. and working hard to grow its market share across five continents worldwide.

Having your products available on Amazon and being competitive there, though, are definitely two different things. If you want to really succeed on Amazon, you’ll need specialized insight into how Amazon works and how to make it work for you. So, for many brands, it’s a great idea to work with an Amazon Search Engine Optimization (SEO) agency.

At Pattern, Amazon SEO optimization service is one of our key competencies. We understand that technology, data-driven insights and expertise  are the most important tools brands can leverage to win top listing spots on digital marketplaces. With expert teams and years of experience, we help brands conquer the Profitability Death Spiral as they compete with other products and sellers online. We offer Amazon SEO agency services as a core solution to brands that need more resources to get ahead. 

What is an Amazon SEO Agency?

An Amazon SEO agency serves brands by improving their products’ rank and listing performance on Amazon. They make strategic decisions about ad spending and placement that lead to higher traffic, conversions, and revenue for ecommerce brands.

A great Amazon SEO Agency partner will:

Prioritize Your Success

Unfortunately, many Amazon SEO agencies profit in unfair ways from your brands’ perceived success based on the ROAS numbers they provide. This is done through including branded search terms in ROAS reports, which naturally skew listing performance

Let’s say, for instance, your brand is called “Annie’s” and you sell lollipops. Your brand has a very high likelihood of winning the top listing spots on Amazon for lollipop search terms that are paired with “Annie’s,” your brand name. So, SEO agencies will spend your ad money on those terms and report a very high ROAS. 

To avoid scenarios like these, it’s best to look for an agency that either calculates their profits on metrics other than your ROAS scores or weighs branded search terms differently in the performance metrics reports. Regardless of your Amazon SEO agency’s cost structure, you should align onbranded search terms before committing to a scope of work.

Provide Detailed Competitive Insight

A great indicator of a high-quality Amazon SEO agency is the level of insight they can provide into your competitors’ listing positioning and how it compares to yours. Data fanaticism is so important at Pattern that we’ve developed proprietary technology to display this exact information with precise detail for every brand we work with. In fact, you can find our free version here to see how you compare to some of your top competitors based on ASIN.

It’s certainly possible to improve your Amazon search performance with blind spending strategies. But a truly great solution will help you to know where your dollars are at their most powerful and competitive.

Reduce Your Ad Spend Over Time

Amazon’s A10 algorithm prioritizes customer satisfaction—it wants to show consumers the best products that align with their search intent to improve conversions and sales. So, the best way to gain momentum on Amazon is to work on incremental wins. 

Improving your performance on more obscure search terms that align with your customers’ search intent is a great way to increase ROAS for the long term. A10 will reward your success with better rankings on higher-volume search terms and the virtuous cycle can help you conquer your most-coveted listing spots. And the best part? This process of gaining momentum, if done right, will naturally decrease your ad spend over time as Amazon recognizes your value and works with you to keep your products at the top of consumers’ search results.

Amazon SEO Optimization and More

As an Amazon SEO specialist, Pattern knows how to help your brand win better success for long-term profitability on Amazon. With our data-driven tools and brilliant teams of ecommerce experts, we help brands with listing management, content optimization, Amazon ad strategies, and more.

Contact us to learn more about our SEO optimization services.

Sept 20, 2022

Global Ecommerce Weekly News: 20th September 2022

Get up to date with this week's ecommerce headlines from around the globe. --- Amazon News --- Amazon to raise pay and add extra work benefits for delivery drivers Following the rise in fuel prices and protests by Amazon workers, the ecommerce giant is raising its delivery drivers’ pay and adding more work benefits. Amazon has mentioned that it will be investing $450 million into rate increases along with an education program and a Delivery Service Partners program. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/amazon-to-raise-delivery-drivers-pay-and-add-more-work-benefits/) Amazon announces it will give away shipping software to merchants at no cost Amazon has recently announced that it will be giving ecommerce merchants free software to manage shopper orders on and off its platform as it extends its reach. The ecommerce giant will be ending monthly costs for sellers using Veeqo, a shipping software it recently acquired and instead offer to them a new, free shipping software. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/amazon-to-give-away-shipping-software-to-merchants/) --- Other Marketplace News --- Walmart unveils new virtual fitting rooms In an effort to drive clothing sales, Walmart has launched virtual fitting rooms while competitors reduce spending amid the cost of living crisis. The virtual try-on tool can be used by Walmart customers to virtually measure the clothing items and see how the products would look on them. Shoppers will now be able to see how over 270,000 clothing items on Walmart’s ecommerce site would look on their bodies. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/walmart-launches-virtual-fitting-rooms-to-drive-clothing-sales/?utmsource=Retail+Gazette+Subscribers&utmcampaign=2da7f0f8f8-EMAILCAMPAIGN202209150742&utmmedium=email&utmterm=0d23e2768b6-2da7f0f8f8-61040615) THG slashes sales and profit expectations The Hut Group has slashed its forecasts for 2022 as rising interest rates, inflation and energy costs take a toll on consumers. Previously, THG estimated its sales growth to be between 22-25% but after a recent evaluation, has lowered this prediction to between 10-15%. Initial predictions did not take into account the negative effects of ceasing sales in Russia and Ukraine along with the impact that the cost-of-living has had on consumer spending. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/15/thg-slashes-forecast-as-cost-of-living-crisis-hits-consumers-wallets/) --- Other Ecommerce News --- DHL and Post Office team up to provide click and collect services Through a partnership between delivery company, DHL and Post Office, a new click and collect service is to be tested at Post Offices before rolling out to over 1000 branches across the UK. Online shoppers will now have the option of choosing their local Post Office as a collection point, and DHL will fulfil the delivery aspect, opening up networks for both parties. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/14/post-office-partners-with-dhl-express-to-provide-click-and-collect-services/) US consumer watchdog plans to further regulate the BNPL sector The US Consumer Financial Protection Bureau (CFPB) has raised concerns regarding the collection of consumer data and the fast-growing nature of the BNPL sector, which includes companies such as Affirm and Klarna. The CFPB is worried that these companies could be negatively impacting consumers’ financial health and aims to put better regulations in place to ensure consumers are safe and empowered. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/16/us-consumer-watchdog-to-start-regulating-bnpl-sector/) Japanese ecommerce market estimated to grow by 6.9% in 2022 The ecommerce market in Japan, largely dominated by domestic online retailers including Reakuten and Mercari, is set to reach $194.3 billion USD in 2022, after seeing an annual compound growth rate of 5.2% between 2018 and 2021. This makes Japan the fourth leading ecommerce market globally, following China, the US, and the UK. [Read more on Charged Retail](https://www.chargedretail.co.uk/2022/09/13/japan-ecommerce-market-to-grow-by-6-9-in-2022/) Ecommerce brands are spending more on TikTok ads TikTok may soon be surpassing Facebook and Google as the most lucrative advertising channel, with ecommerce brands spending 60% more on TikTok ads in Q2. Facebook is still ahead as the top choice for ecommerce advertisers but only grew by 5.6% from Q1, while Google grew 20.5% in Q2, and Snap declined 10.8% in Q2. [Read more on SearchEngineLand](https://searchengineland.com/ecommerce-brands-spent-60-more-on-tiktok-ads-in-q2-387876)