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 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)
Sept 20, 2022

4 Ecommerce Consultant Must-Haves

Entering the ecommerce landscape is a huge undertaking for any brand—it usually requires a large investment in resources and expertise to really be successful. Any brand can quickly get in over their heads trying to navigate the nuances of SEO, fulfillment and logistics, distribution control, listing optimization, and meeting the numerous other requirements and administrative tasks to show up well on marketplaces. 

Unfortunately, because it’s so easy for third party, gray market, and unauthorized sellers to obtain and sell products online, many brands find themselves pressured to execute an ecommerce plan without the right resources to succeed on marketplaces and their other channels.

So, for brands looking to enter the ecommerce space or improve their current and future performance, it makes sense to partner with an ecommerce consultant.

Pattern’s global presence and proven success with hundreds of brands has allowed us to develop highly effective ecommerce consulting services. We can guide your brand to navigate issues both large and small in marketplaces worldwide. To maximize your ecommerce efforts, you’ll need to understand what an ecommerce consultant does and how to select one who drives the right value for your brand and products. 

What is an Ecommerce Consultant?

An ecommerce consultant is a specialist in the ecommerce space who can give you personalized guidance on how to market your products and grow their presence on digital marketplaces.

An ecommerce consultant should be able to analyze your brand, audience, category, opportunity, and current roadblocks and help you understand how to utilize your resources (or what resources are missing) to be most effective in capturing your opportunities in the ecommerce space.

Not sure how to evaluate a consultant? Here are 4 key attributes to look for as you make your choice.

1. Brand Obsession/Specialization/Passion

At Pattern, we prioritize brand obsession for a reason—we know that a brand-centered mindset makes a crucial difference in the outcomes and results our partners achieve. So in our experience, when you begin your search for an ecommerce consultant, it’s important to look for a partner who is specialized in ecommerce, invested in the product, and passionate about helping brands build and improve their strategies. Typically, this means finding someone that consults exclusively for ecommerce marketplaces, rather than choosing a consultant who offers many different services. 

2. Proven Results

It’s also important to avoid choosing a consulting partner who can’t deliver the right experience for your brand. The best indication of whether your potential consultant can do that is to review their history, data, and results with other brands. Ask if they’ve helped others in your selling category, if they’ve solved specific issues your brand is facing, and why they feel you are a good fit. The key is to leave the conversation feeling confident that you understand your consultants’ capabilities and whether or not they match up with your needs.

3. Wide Range of Marketplace Expertise

It’s best to pick a consultant who knows how to guide a brand onto and through multiple marketplaces worldwide. You’ll want to take a look at your long-term strategy and think about the regions and platforms you’re currently on and where you might want to take your brand in the future. If your consultant is truly great at what they do, they’ll be able to help you perform well enough with your current product roadmap that it’ll be a no-brainer to expand your presence at the right time.

4. Network of Resources

The most effective partnership with an ecommerce consultant will be able to give you both recommendations and point you to solutions for making those changes in your planning, processes, and execution. Your time and money is valuable, so you want to make sure that you’re spending it as efficiently as possible as you follow your consultant’s advice. So, before you commit to an ecommerce consultant, ask about the resources and concrete solutions they typically recommend to the brands they work with.

Achieve Your Ecommerce Goals With Pattern

Finding an ecommerce consultant that checks the boxes can be a difficult task. At Pattern, our entire focus and drive centers around giving brands the tools and resources they need to succeed on domestic and international ecommerce marketplaces. 

With over 100 global ecommerce consultants across 10 global offices, we have the right tools to partner with brands across the world to achieve better ecommerce success. We give specialized advice, then make sure our partners have all the adequate SEO, social media, CRM, Amazon multi-channel fulfillment services, and ecommerce outsourcing services they need.

Interested in ecommerce consulting services? Set up a call here to learn what Pattern can do for your brand on global marketplaces.

Sept 15, 2022

The 3 Tmall Metrics That Every Brand Needs to Know

If you’re interested in expanding your brand internationally, you’re probably familiar with Tmall. Tmall is Asia-Pacific’s (APAC) largest marketplace, and indisputably the biggest ecommerce powerhouse in the world. It represents a huge opportunity for many brands, but entering the space is also a big challenge to take on.

At Pattern, we recommend brands looking to enter international markets should first focus on dialing in their domestic presence. Once you’re satisfied that your brand is well-represented and optimized locally, you’re ready to think about tackling new regions, like APAC, and launching on marketplaces like Tmall. Our top advice for entering Tmall is to understand and strategize around its three most important metrics: service, delivery, and content.

What is Tmall’s Detailed Seller Rating (DSR)?

Service, delivery, and content ratings are the three elements that make up Tmall’s Detailed Seller Rating (DSR) score. Each component is scored on a scale of 1-5 that is displayed publicly on your brand’s Tmall flagship store page. This is meant to help consumers decide whether or not to purchase your products.

Why DSR Determines Success on Tmall

DSR scores are important because they’re highly influential in driving conversions—customers see DSRs as a way to quickly understand if a brand is trustworthy and worth buying from. They also matter quite a bit to Tmall itself—they monitor these scores and will take action to close flagship stores with low scores.

Let’s go over each element of the DSR score and some steps you’ll need to take to achieve high ratings.

DSR Score Elements

1. Service

Service is a huge ecommerce component in APAC marketplaces. In most other regions, product listings are static, and consumers use content and reviews to make a decision about what to purchase. On Tmall, consumers want to interact with your brand and test its validity before buying—each transaction takes at least one human interaction to convert.

So, to get a great service rating, you’ll need to have a large, established customer service team dedicated to Tmall sales that can offer real, human touchpoints and very fast response times. To get an idea of the speed your agents should be capable of producing, in our Tmall benchmarking exercise, 92.5% of brands’ customer service agents replied to queries via live chat within 30 seconds, 5% replied within one minute and the remaining 2.5% of brands took longer than a minute. So, look for a Trade Partner (TP) that has enough resources to compete with those numbers, support your sales, and maintain a good DSR score.

2. Delivery

Another thing you’ll really want to focus on is a high-quality delivery experience for consumers. As in other regions around the world, Tmall consumers have high expectations for their delivery experience. In our Chinese consumer polling report that targeted consumers buying from Tmall Global, we found that 6% expected same-day delivery, 15% expected next-day delivery, and 46% expected 2-5 day delivery.They want to receive their products fast and they want the products to be undamaged and pristine upon arrival.

So, to achieve a high score for your delivery capabilities, we highly recommend partnering with a TP or ecommerce accelerator like Pattern (which serves as a TP) who has the ability to facilitate your distribution. Make sure your TP has the right infrastructure in place to support high-quality logistics experiences for all of your consumers—they should have an established, well-oiled delivery process in place and the capability to fluidly add you to their current fulfillment system.

3. Content

As in every digital marketplace, content is a huge component of the decision-making process for consumers on Tmall—they can’t touch your product with their hands or see it in person before buying, so it’s important they’re empowered to make a good decision on whether or not to purchase based on the videos, images, and copy.

The goal is to make all of the content and relevant information on your flagship site easily-accessible—consumers should be able to visit your page and make a decision about whether or not to buy without navigating to a new site/page and taking their conversions with them. Images with text and extensive product details are a great way to do this, as well as making sure your service team can speak to all aspects of your product with any consumers (via text or chat).

Expand Internationally With Pattern

As the world’s foremost brand partner for ecommerce acceleration, Pattern truly understands the significance of international expansion. With regional offices around the world, Pattern knows how to successfully launch and grow brands on Tmall and other marketplaces, with the data, insights, and marketplace intelligence to build the metrics that matter. 

It’s important to have a fantastic brand presence, a knowledgeable guide, and a clear go-forward strategy for your best chance at success. With our in-country resources, expert teams, and extensive experience in growing brands around the globe, Pattern can help you get there.

Set up a call to get your international expansion strategy in motion.