B2B eCommerce is growing at a phenomenal rate. By 2027, the global industry will be worth $19 trillion, just short of the United States’ total annual economic output. With over four-fifths of B2B buyers now saying they prefer ordering through digital channels, it’s clear that online buying is now the standard option for enterprise procurement.
For online business sellers, this explosive expansion is a double-edged sword. On the one hand, they can reach vast numbers of new customers. But on the other, so can the rival merchants now jostling for market share. In the digital era, in other words, the B2B space is growing far more competitive — and staying ahead requires, among other things, a commitment to delivering a powerful but frictionless sales process.
Many B2B operators use a standalone Configure Price Quote (CPQ) solution to support customers, believing it’s the best way to move beyond spreadsheet-based systems and flexibly and scalably deliver the customized, configurable, and robust purchase experience that customers now demand. There’s no question that CPQ apps can be a powerful option — but in a world of constant digital innovation, it’s important to recognize that CPQ isn’t the whole story. If digital commerce is a forest, CPQ is just one tree — and it’s important to make sure you don’t focus on that one tree and miss everything else that’s going on around you.
What is CPQ?
To see the full picture, let’s start by asking: what is CPQ? Essentially, it’s business software that sits between the back office and front office to support the sales process for highly configurable products. Originally designed to help manufacturers of extremely complex products, a CPQ system can shorten the sales cycle by giving customers accurate prices and quotes according to their own specific needs.
That’s an appealing proposition, and it’s easy to see how CPQ solutions can help B2B companies as they move sales operations online. A manufacturer of bespoke office equipment, for instance, might have to handle hundreds of different items, prices, and quote configurations within a single order. Done manually, that’s a laborious and time-consuming task, and potentially a source of serious missteps. Small errors such as incorrect dates or SKUs can be compounded over time, potentially costing the seller large sums to correct.
This is the challenge CPQ applications seek to address. They do so by automatically calculating customizations, quantities, and discounts, alleviating the administrative burden on sales reps. Implemented intelligently, such systems empower staff to create quotes quickly and accurately, increasing conversion rates and boosting deal sizes.
CPQ vs. B2B eCommerce
So far, so good. But problems arise when B2B operators get confused about the difference between CPQ apps and B2B eCommerce solutions. There’s a significant degree of overlap between CPQ software and B2B eCommerce platforms, so it’s vital to understand exactly what you’re trying to achieve — and which solutions are right for your growing business.
Typically, both CPQ and B2B eCommerce solutions can manage key capabilities such as quote generation, contract management, pricing, personalization, and managing complex products. They should both also integrate seamlessly into enterprise resource planning (ERP), product information management (PIM), and customer relationship management (CRM) systems.
With B2B eCommerce, however, you’ll also typically get support for your product marketing needs, order placement and fulfillment, and revenue connection. In this way, a good B2B solution can be thought of as CPQ-plus — it offers most of the early-stage sales support covered by CPQ, but also provides support over the entire buying journey.
So what’s right for you? That depends on the nature of your business. Some large enterprises may find that while they need a robust B2B eCommerce solution, there’s also a valid use case for a separate CPQ tool as part of their sales strategy. That can be especially true if sales reps have grown to depend upon specific features — such as AI-powered industry-specific price forecasting — offered by a given CPQ solution.
Other businesses may find they can meet virtually all of their CPQ needs from within a unified B2B eCommerce platform, with no need to incorporate additional tools into their sales process. That kind of streamlining can make it easier to build out a scalable and robust digital sales function, with more agility and less scope for incompatibilities or glitches.
Streamline everything
For a B2B merchant to really stand out in 2022, it needs to provide a seamless and fully integrated sales experience from start to finish. That means building out infrastructure that lets you manage complex orders, provide personalization and configurability for customers, and operate in efficient and scalable ways across multiple markets.
That’s where CPQ tools sometimes cause more problems than they solve — because the more moving pieces you add into your sales pipeline, and the more discrete software products you bring into that process, the harder it is to keep everything working the way it should.
Standalone CPQ solutions expose you to potential drawbacks including higher costs associated with combining different vendors’ products in your technology stack, issues around interoperability (or lack thereof) with existing systems, and the limitations of relying on external data. At worst, that can lead to a buying scenario that is fragmented and frustrating for sellers and customers alike.
Again, this isn’t to say that CPQ solutions aren’t effective at addressing the challenges for which they’re designed. But when you’re trying to streamline the buyer experience, it’s important to zoom out and look at the bigger picture. For specialized use cases, CPQ solutions can be powerful tools. But it’s important to recognize that a standalone CPQ likely won’t serve all your B2B eCommerce needs — and it might bring increased complexity and more points of failure across the customer purchase journey.
Finding a solution
With the B2B market undergoing turbocharged growth, enterprise buyers have more options than ever. For sellers, there is no room for sub-par sales experiences that are lethargic, riddled with errors, and lacking in the customization that clients crave.
With this in mind, more than four-fifths of B2B companies are now planning to accelerate their digital transformation, investing in technologies that simplify the customer journey and provide a high degree of personalization. What will set companies apart, though, is how carefully they plan their digital investments.
CPQ systems are an obvious place to start for B2B digitization. But don’t mistake one tree for the entire forest. For many operators, a solid B2B eCommerce platform can offer virtually all the features of a standalone CPQ product, while also offering end-to-end support for customers and sales teams alike. So be smart, shop around — and be sure to look at the whole B2B eCommerce landscape before you make a decision.
About the Author
Yoav Kutner is the CEO and co-founder of Oro, Inc, which has created OroCommerce, the No.1 open-source eCommerce platform built for distributors, wholesalers, brands, and manufacturers. Yoav previously co-founded and served as the CTO of Magento.
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