How firms-to-consumer ties have evolved over the years

Although growth and challenges of business-to-consumer (B2C) tend to generate the most headlines, business-to-business (B2B) is also experiencing significant development.

While most of this growth has become obvious, and necessary, as firms adapt to pandemic needs, it has been gradually happening for years.

At the heart of it is the many ways in which simple technologies such as the mobile phone have changed the way we transact. Trading was a mostly physical, tasking project just two decades ago.

For example, if you ran a retail store, your relationship with wholesalers would be built mainly on physical visits by either the owner or a trusted messenger. If you didn’t have your own car to transport goods, you hired someone and either sat with your inventory all the way back, or trusted them to deliver it in full and without damage.

Some companies, a good example being beverages, had this stage somewhat figured out, but once the inventory got into your shop or bar, then it would need a few more people not only to move the inventory into storage/display, but also to monitor how fast it was going so you would know when exactly to repeat the cycle.

Then there was the issue of money, the underlying currency of all these transactions. Do you carry all that cash to pay the wholesaler, transport teams, and incidentals on you or use other means?

For the wholesaler, of course, similar problems existed. Among the biggest were not just how your B2B customers paid, but when. This is one of the reasons why some wholesalers would also go to supplement cash flow problems that arose when your clientele could only pay in say, 60 to 90 days after you’ve delivered their orders.

All this is strenuous not to mention time-consuming. Some things have, since changed making B2B interactions easier, and are contributing to rapid growth today.

The most obvious is M-Pesa and other cashless payment options which reduce the need to carry hard cash.

Many of these options, such as Paybill-to-Bank deposits, make it easier to track your money while reducing the transaction and other costs that would spring up if you had to pile all that money in your mobile money account.

There are also multiple trade financing options now, so purchasing businesses do not necessarily need to hold payment for stock received for 60 to 90 days.

A small but illuminating example is the story, told years ago by a prominent journalist on Facebook, of data from a short-term loan facility offered by Kenya’s leading telco that showed that a large tranche of credit (a third of total loans at the time) would be borrowed between 3 a.m and 5 a.m, used to settle debts with the wholesaler and handcart guy, and then repaid by the end of the day.

This example is illustrative of the realities of many small businesses, which face critical trade financing challenges on an almost daily basis.

Customers also now know that they can demand traceable logistics from service providers. This particular solution has eased uncertainties B2B commerce faced with informal logistics solutions, which wouldn’t allow for enough time to prepare for the many things that could go wrong.

Logistics networks are also making sure that such things do not affect delivery times, and retailers can rest easy knowing that their goods are on the way, and they can not only track them, but also know the when, where, and who is supposed to deliver them.

There are other things that are spurring this growth. A good example is the evolution of workplace communications from just in-person and phone calls.

You can now communicate to just about any business on Whatsapp and other social messaging apps, as well as slightly more formal channels such as e-mail. This possibility has reduced the time it takes to find what you need at the right price.

This has been further driven by the fact that more and more inventory is coming online, and the digital marketplace now looks like a physical market, driven by both high demand and high supply.

In B2B commerce, nearly every usable online space is playing a role in online inventory; if you are shopping for your business online, you could find what you need listed anywhere from Facebook, Instagram, Google Docs, Whatsapp, Ms Excel, and many other online platforms.

These platforms have not only solved the basic issue of finding what you need for your inventory fast and readily, but it is also encouraging cross-border trade between and among small businesses.

Combined with a litany of ready delivery options, from long-distance buses, logistics companies, and even your neighbourhood bodaboda, running a business is easier now, at least as far as inventory is concerned.

There is, of course, still a long way to go. B2B commerce is a complex system that needs to continually evolve and solve many existing and emerging challenges, but the progress so far is impressive.

Mesh Alloys is the Founder and CEO of Sendy