B2B companies 2023: Appraisals of the economic situation

It all started with the pandemic and continued in 2022 with war, energy crisis, and strong inflation. The global economy is shaken and has to move forward beyond expectations. And how does it look specifically in Germany? What are the prospects for B2B companies this year?

To find out, ECC KÖLN surveyed B2B manufacturers and wholesalers in Germany as part of our joint study “B2B Commerce — caught between economic stress test and digital efficiency” — with some very surprising results.

Challenges are perceived differently

There has already been plenty of coverage of the tightened situation of business enterprises in recent months. Most of them are burdened by the same problems:

• Energy costs
• Supply constraints
• Increased purchasing prices
• Shortage of skilled workers

However, if you take a closer look, different business sectors assess these factors differently. While wholesalers can switch to other brands to deal with excessively high purchase prices or supply bottlenecks, manufacturers struggle a lot with them. On the other hand, manufacturers are less likely to expect a drop in sales than wholesalers.

Both have in common the threat to corporate security (cybersecurity) and the new way of dealing with Big Data due to the data explosion. Finally, online commerce has also grown significantly in B2B in recent years. For manufacturers, this is compounded by the fact that more and more are switching to direct-to-consumer (D2C) sales, where the amount of customer data increases massively. Suddenly, they need to be able to analyze, store, consolidate, and manage this data correctly. An intensive consideration of the topics of master data management (MDM), data quality, and data governance will become inevitable.

 

The crisis from the retail sector (continued consumer restraint) is gradually having a negative impact on wholesale and industry in 2023.

Across all B2B companies surveyed, 49% recorded fewer new customers last year. In some cases, existing customers are also breaking away. Wholesalers in particular are expecting a drop in sales in 2023. Add to this the high prices, and it comes as no surprise that companies urgently want to increase their efficiency. The larger the company, the more aware they are of the need to invest in modern technologies that will enable them to do just that (see the blog post “IT investment projections for 2023”).

Everything is getting more expensive

As consumers, we have been feeling the price increases for months. Of course, this also affects B2B customers. 46% of B2B companies increased their prices by up to 10% last year, and 26% even went up to 15%. Only 2% said they had not increased their prices. The increases were accepted by most customers.

To avoid straining business relationships, 69% of respondents did not fully pass on their price increases to their customers and instead reduced their profit margin.

In the automotive industry, 59% of companies expect prices to rise by 10-20%.

First countermeasures

Instead of helplessly surrendering to their fate, most B2B companies have already taken countermeasures or at least made concrete plans.

High costs

Increased prices have prompted companies to cut energy consumption. This has continued in other areas such as office and personnel costs and marketing expenses. At the same time, 83% have raised prices for their customers.

Supply bottlenecks

Local suppliers are becoming more popular. They are either being requested in addition or completely replacing previous suppliers. 74% are even prepared to increase their inventories. Interestingly, most B2B companies are focusing on better monitoring of the supply chain or increasing transparency. There seems to be a lot of optimization potential here. An issue that some large companies are trying to solve via blockchain.

Shortage of skilled employees

Hardly any other topic has been as heatedly debated for years as the shortage of skilled employees. Many sectors have already been hit by the pandemic. But what can be done about it? With 82%, training your own employees is in the first place. The second place is shared by increased investment in employee retention — definitely a far-sighted plan — and increased recruitment via social media with 76%.

Data explosion

Of course, data is one of a company’s most valuable assets. Yet more and more companies are realizing that they are not yet getting the most out of their data. In addition, many have been “surprised” by the increased flood of data. In any case, there is a great need for action here, which 85% of the B2B companies surveyed have recognized. They are focusing heavily on optimizing their data management and consolidation. (Read also how data governance and MDM help here).

Three-quarters of B2B companies are in the process of hiring more data management specialists and overhauling their system landscape.

What’s new in e-commerce?

B2B manufacturers and wholesalers alike value their own online stores and marketplaces. The majority even expect sales via these channels to increase by 1% to less than 10% this year. Only 4% expect it to fall.

This raises the question of how the whole thing will affect sales via the classic analog channels. 76% are convinced that e-commerce will cannibalize the classic channels. While 66% expect a significant distribution of sales in favor of online channels in the amount of 30-50%, 18% expect that even over 50% or more of sales via classic channels will be made online in 2023.

Conclusion

Something is happening in the B2B market — no question about it. Those who adapt to the new challenges in good time will probably get off cheap, if not emerge stronger from the crisis. In any case, the opportunities are there. Experts are also available — whether externally, on the applicant market, or as dormant potential in their own company.

Graphics on the above-mentioned topics as well as further insights from the B2B market can be found in the 1st part of our study “B2B Commerce — caught between economic stress test and digital efficiency,” which you can download free of charge. There you will also find information on the most popular e-commerce features.

DON’T MISS OUT:

Part 2 focusing on “Digitization Projects” will be published on April 17, 2023.