What are the results of market research on e-commerce? Why will the B2B EC market continue to expand?
The market for BtoB EC is still growing annually. Why is there such a great need for BtoB EC?
This article illustrates how the size of the B-to-B EC market has changed based on the e-commerce market survey released in August 2023 by the Ministry of Economy, Trade, and Industry. We will also go over the factors that led to the BtoB EC market’s growth, the difficulties that come with it, and the advantages of implementing BtoB EC. Business managers and executives interested in EC in BtoB are advised to read this article.
The BtoB EC market is growing significantly
- The percentage of domestic enterprises adopting EC is increasing.
- Electronic commerce to consumers, or BtoC EC, is a growing market.
BtoB EC market size and EC conversion rate by industry
- Production: Food
- Manufacturing: Precision instruments and industrial machinery
- Production: Metals, both ferrous and non-ferrous
- In bulk
Recent issues with EDI, which has long been used as a tool for business-to-business transactions
- Getting rid of outdated systems
- Evaluation of EDI after ISDN was discontinued
- NTT offers complementary methods to help cover EDI.
- EDI Coverage: Making the Switch to Web-EDI
- EDI Coverage: Shift to B2B E-Commerce
Benefits of Introducing BtoB EC
- Increasing ordering operations’ efficiency
- Decrease the number of questions about the product.
- Get new clients
- It is feasible to upsell and cross-sell to current clients.
The EC adoption rate of domestic companies is on the rise
The Ministry of Economy, Trade and Industry’s “2022 Market Survey on Electronic Commerce” estimates that the business-to-business (B2B) EC (business-to-business) electronic commerce market in Japan will be worth 420.2 trillion yen in 2022. It was 372.7 trillion yen the year before and 334.9 trillion yen the year before that, and it is still growing. It goes without saying that domestic enterprises’ EC conversion rate is rising annually as well, rising to 37.5% in 2022 (up 1.9 points from the year before).
The COVID-19 pandemic’s effects, changes in work practices, and the encouragement of digital transformation provide context for this. Many B2B organisations are switching from analogue ordering and receiving operations to B2B EC systems as commercial transactions become more electronic.
Nevertheless, EDI (Electronic Data Interchange) is included in this figure. EDI is a system that allows businesses to electronically communicate and receive document data pertaining to ordering, purchasing, invoicing, payment, and other related activities. The digitalization of ordering and receiving processes has been greatly aided by EDI; however, ISDN lines, which have been extensively utilised for communication, will be phased out in 2024. As a result, users of EDI that make use of ISDN lines will need to switch to an alternative system.
The market size of BtoC EC (electronic commerce to consumers) is also expanding
The scale of the BtoC and BtoB EC markets is growing as well. (Total of three fields: merchandise sales, services, and digital) The size of the domestic BtoC EC market is predicted to be 22.7 trillion yen in 2022, and it is growing yearly. At 9.13%, the EC conversion rate is likewise rising, up 0.35 percentage points from the prior year.
Compared to the COVID-19 pandemic-affected 2020 figure of 19.2779 trillion yen, this represents a substantial recovery and is predicted to rise further in the coming years.
Manufacturing: Food
The Ministry of Economy, Trade, and business issued corporate statistics data for 2022, which shows that total sales for the “food manufacturing industry” climbed to 41.9226 trillion yen in 2022 from 40.3496 trillion yen in 2021.
As the COVID-19 epidemic abated in 2022, more people had the opportunity to travel, which raised demand for hotels and dining establishments. The commercial food market grew as a result, and it is believed that the commercial trading sector also grew in size.
Additionally, the BtoB EC market size is expected to reach 29.6443 trillion yen (up 9.4% year-over-year) in 2022, with the EC conversion rate expected to rise by 3.5 percentage points to 70.7%. It is anticipated that this tendency will quicken the conversion of food manufacturing from B to B.
Manufacturing: Industrial equipment and precision instruments
Total sales climbed by 1.0%, 15.7%, and 6.7%, respectively, over the prior year for the printing machinery and equipment manufacturing industry, production machinery and equipment manufacturing industry, and commercial machinery and equipment manufacturing industry.
Manufacturing: Overall sales are predicted to increase gradually as well, with total sales of precision and industrial-related equipment totaling 41.7194 trillion yen in 2020, 44.5789 trillion yen in 2021, and 49.4254 trillion yen in 2022.
With an EC rate of 42.0%, the BtoB EC market is projected to reach a size of 20.7734 trillion yen in 2022, representing a 14.6% increase from the previous year.The EC rate is increasing considerably even though it is not as fast as that of food.
Manufacturing: Ferrous and non-ferrous metals
In comparison to the previous year, total sales for the manufacturing of ceramic and stone products, iron and steel, non-ferrous metal, and metal products were down 1.3%, up 18.4%, up 10.6%, and up 6.6%, respectively. All other industries saw increases, with the exception of the ceramic and stone product manufacturing industry.
An estimated 50.408 trillion yen will be sold in 2020, 59.1045 trillion in 2021, and 64.9856 trillion yen in 2022, representing the total sales for the whole ferrous and nonferrous metals business.
Additionally, the size of the BtoB EC market was 28.662 trillion yen, up 13.5% from the previous year, and the EC conversion rate was 44.1%. The construction industry is another sector where the EC market size and EC conversion rate are increasing.
Wholesale
The total amount sold at wholesale continues to rise annually, with 2020 seeing 301.091 trillion yen, 2021 seeing 311.3656 trillion yen, and 2022 seeing 323.654 trillion yen. The percentage increased by 3.9% in 2022 over the prior year.
The BtoB EC market has grown dramatically in tandem with the rise in sales, reaching 112.8794 trillion yen (up 12.2% from the previous year), with an EC conversion rate of 34.9%.
In the wholesale sector, big GMS and SM (supermarkets) are leading the way in the standardisation of EDI, as represented by distribution BMS. The increase in the EC conversion rate is believed to be related to the growing use of EDI.
Even though the wholesale sector has a lower rate of e-commerce than other industries—less than 40%—the manufacturing sector is rapidly moving toward e-commerce, and because the wholesale sector is involved in the supply chain, the introduction of B2B e-commerce is anticipated to continue accelerating. One may argue that there is strong impetus in this business to move toward e-commerce in the future.
Development of IT infrastructure and spread of devices
The world of today is one where e-commerce is easily adopted due to the rapid advancement of IT and the increasing popularity of gadgets like computers and smartphones.
Because B2B EC may be utilised with mobile devices without requiring significant system expenditures, the market is growing.
Workload of analog order placement and receipt work
E-commerce is required to bring B2B transactions online as analog means dominated the market for a long time. Specifically, the drawback of placing orders and receiving work via phone, fax, email, and other means is that workers must manually enter inventory and unit prices into the system, which can be laborious and prone to error, adding to an already heavy task.
Ordering and invoicing are two areas that require significant streamlining. These tasks can be easily burdensome when completed by hand, but many of these problems can be avoided by converting to online shopping. This will assist in lowering labor expenses in addition to raising the caliber of your service.
