The Distribution Blog

The Exciting Future of AI in B2B eCommerce

May 10, 2023

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Imagine a world where your ecommerce platform knows what your customers want before they do. It’s not science fiction—it’s the future of B2B ecommerce.  

eCommerce in the B2B space is growing quickly. According to DSG, 19.7% of distributors’ sales came through digital channels in 2022. Compare that to 14.5% in 2021 and only 11.6% in 2020. And according to Gartner, by 2024, 15% of B2B organizations will use digital commerce platforms to support both customers and sales reps in all sales activities. In a digital-first world, ecommerce may eventually become the primary channel for distribution sales. That’s why every distributor should start thinking about ways to optimize ecommerce.

One of the best ways to optimize ecommerce is by embracing artificial intelligence (AI). According to IDC, global spending on AI is predicted to grow from $50.1 billion in 2020 to $110 billion in 2024. And the investment will be worth it: By 2025, organizations offering a unified commerce experience by frictionlessly moving customers through journeys will see at least a 20% uplift in total revenue, according to Gartner.

Why Use AI in B2B eCommerce?

High-level AI enables a level of personalization and customer experience that was previously impossible in ecommerce. Wholesale distributors can use AI to give every customer the equivalent of a very experienced and knowledgeable sales rep but at a fraction of the cost and available 24/7. At Proton, we have found that distributors who use ecommerce AI grow sales by over 10%.

What is AI?

Artificial intelligence is a broad term for any computer system that can consume and process information to make intelligent decisions. Primitive AI systems have existed since the 1950s, but recent hardware innovations have led to a boom in truly smart AI. The odds are that you’ve already encountered AI today, whether you’re listening to a song suggested by Spotify’s Discover Weekly, watching a new drama proposed by Netflix, or added an item to your Amazon cart via “Frequently Bought Together” recommendations. AI has the potential to learn and grow exponentially, which is why it’s already popular in B2C business and proliferating in B2B.

Use Cases of AI in B2B eCommerce

The list of possible applications of AI is endless, especially in B2B ecommerce. Here’s a rundown of how B2B companies can use AI in ecommerce:

Sell more with personalization  

Amazon is the most dominant retailer in history, and AI is a big reason why. In fact, up to 35% of their customers purchase items recommended to them by Amazon’s AI engine. B2B businesses can follow Amazon’s lead by using AI to offer an Amazon-like experience online.  

On average, distributors who enhance their ecommerce stores with product recommendations (powered by AI) grow digital revenue by 10% or more. Some distributors have seen an 18% uplift in sales after launching Proton eCommerce AI. Distributors like R.S. Hughes, RelaDyne, and Hill & Markes use Proton’s eCommerce AI to recommend suitable add-on products, suggest new items customers should be buying to close wallet share gaps, remind online buyers about products they’re due to reorder, and prompt customers to complete their cart when they’re missing key items.

Dental supply distributor Benco Dental increased average cart value after implementing Proton’s eCommerce AI personalization tools such as “Customers Who Purchased This Item Also Purchased.”  Benco attributed an incremental $2.7 million ecommerce revenue to Proton’s “similar products” artificial intelligence model alone. Today, 90% of Benco’s sales come from their online store.

Save the sale with timely substitutes

Distributors know better than anyone that if customers can’t find what they’re looking for because it’s out of stock, they’ll take their business elsewhere. Across all industries that use ecommerce, 70% of potential customers abandon their carts, so the last thing you need to do is give them another reason to leave.

When a product is out of stock, AI can identify relevant substitutes (or similar items) and recommend them to customers, keeping them happy while maintaining sales momentum. With AI, a human doesn’t need to map product relationships and affinities. Distributors often worried their eCommerce Manager (if they even had one) wouldn’t have the capacity to complete this daunting mapping task. Distributors with millions of products previously would have spent months (or years!) pairing items, but now they can relax while AI finds suitable substitutes on their behalf.

Using Proton’s production recommendation AI model, distributor Hill & Markes makes it easy for customers to shop on its ecommerce site by showing them additional products in this “similar items” carousel.

Help customers find what they need

Traditional keyword-based search engines are inherently limited. If the user doesn’t use one of the keywords associated with a search result, they probably won’t find it. AI-powered semantic search, on the other hand, can understand what the user is going for via context clues. If a person types in wood decking, semantic search understands that composite wood would also be relevant. This is a powerful technology for B2B distributors with massive catalogs to help customers find what they need. A platform with AI-powered semantic search can help drive more sales by giving customers what they’re looking for, even if they use non-keywords to look for it.  

Target ads and offers to the right customers

It’s harder for customers to ignore ads when they’re for something they’ve already been thinking about. In fact, according to Forbes, 91% of consumers are more likely to make a purchase when a company has delivered personalized advertising to them. AI solutions such as IBM’s Watson Advertising can pull from data about customer behaviors, including product searches, to deliver targeted ads and even tailored discount offers.  

Improve catalogs

AI services like Scale can improve an ecommerce store’s catalog by aggregating and enriching product data from seller feeds and the Internet. More accurate catalog taxonomies make them easier to navigate, which is essential for a typical distributor’s extensive and varied offerings. Plus, more comprehensive product info gives customers what they need to make purchasing decisions confidently. This is also vital in the B2B space, where customers typically make purchases in large quantities and need to be confident that they’re buying the right thing.  

Optimize pricing to squeeze more profit

Distributors have tons of products to keep track of, so it’s impossible for humans to analyze everything that goes into optimizing the prices for every product. As Forbes reports, AI can automatically review all the data for every product and learn how to set optimal prices by SKU, product portfolio, channel, point of sale, and even by customer. Solutions like ProfitOptics can continuously recommend optimal prices based on volume incentives, special pricing agreements, time of day, location, demand, and a customer’s purchase history.  

Prevent fraud  

eCommerce stores are common fraud targets, and Juniper predicts that total losses to fraud in that space will exceed $343 billion between now and 2027. Services like SEON can prevent payment fraud by analyzing a suspicious user’s social media, IP address (to see if they’re hiding behind a VPN, proxy, or emulator), email address, and phone number. If the AI determines that the customer is too fishy to trust, you can confidently reject the purchase.  

Manage inventory

Distributors can use AI to monitor customer storerooms and optimize stock levels remotely. Specially designed apps and “Internet of Things” weight sensors streamline inventory management and drive automated reordering. AI is revolutionizing demand forecasting using real-time data to spot demand patterns and inventory needs instantly. By optimizing inventory management, AI reduces storing and shipping costs for distributors.  

Remind customers what they left in their cart

AI solutions like Proton notice when a customer has abandoned their cart without making a purchase. When a rep uses the Proton app (desktop or mobile) they see a 360-degree customer view all from one screen. When the app shows a customer left an item behind in their cart, the sales rep can follow-up and close the deal.

How is AI Impacting eCommerce?

Online shoppers are already changing their behaviors because of AI’s ability to personalize the customer journey. According to Instapage, 74% of customers feel frustrated when an ecommerce store doesn’t offer personalized content. As AI continues to make shopping experiences smoother across industries, customer expectations will rise. B2B customers will start to wonder why their journeys aren’t as smooth as the ones they experience as B2C customers in their personal lives. The sooner distributors jump on the AI train, the more they’ll be able to take advantage of the benefits.  

Examples of Distributors Using AI in eCommerce

Forward-thinking distributors are already using AI in their ecommerce efforts.  

As a family-owned distributor of candy, ice cream, janitorial, food service disposables and office supplies, Hill & Markes wanted a simple way to increase ecommerce revenue by helping customers find relevant products to increase wallet share. Before implementing Proton’s AI-powered recommendations, their ecommerce manager hand-coded recommendations and only barely scratched the surface on 50,000 products. Today, Hill & Markes customers receive AI-powered recommendations on product carousels. With Proton’s AI-powered product recommendations, Hill & Markes’ website saw a 43% increase in average revenue per customer.  

RelaDyne, one of the nation’s largest distributors of bulk oil, fuel, and lubricants, used AI to increase their ecommerce portal usage by 67%. Their site now provides relevant suggestions to customers based on all historical purchases – not just their online orders.  

Industrial and construction products distributor Fastenal hit $1B in ecommerce sales in 2022, thanks in large part to AI.  

“We don’t often think of ecommerce as our primary go-to-market strategy, but it’s become a vital part of our ‘digital footprint’ – the technology we provide to streamline and illuminate the supply chain,” said Dan Florness, Fastenal’s President and CEO.

Frequently Asked Questions About AI for eCommerce

How does AI help distributors sell?

AI’s ability to learn and grow means it can absorb loads of data about customer preferences and behaviors and use it to deliver personalized product recommendations that are specific and accurate enough to drive more sales. It can automatically suggest add-on products based on what products are frequently purchased together, and it can find shoppers who are more likely to buy long-tail items, thus giving ROI on slow-moving inventory. Plus, it can boost conversion rates by noticing when carts are abandoned and giving those potential customers the nudge they need to finish the purchase.

What is the future of AI in B2B ecommerce?

As AI continues to get better at understanding conversational language, customers can use voice search to find the products they need, even if they only vaguely remember what product they’re looking for and need to talk through it a bit. Augmented reality (AR) apps could help customers learn more about products just by looking at them and getting overlays of useful information, and sales reps could even give customers virtual showroom tours that give them a better sense of what they’re buying. And while distributors haven’t yet found an AI chatbot that can handle the complexity of distribution sales, we predict that distributors will eventually be able to offload many of their customer support queries to specially built chatbots. We’re already seeing specialized chatbots pop up for various industries, like Posh for banking.

Will AI change online businesses?

Certainly. AI will continue to deliver personalized, frictionless customer journeys at a fraction of the cost of old sales methods. eCommerce businesses that don’t leverage data to give customers exactly what they’re looking for quickly, will stick out like sore thumbs. As AI continues to learn and grow, B2B distributors will be expected to personalize just as well as B2C retailers do.

How will AI help your ecommerce business sell?

AI can identify wallet share gaps, recommend long-tail items to customers most likely to buy them, and encourage people who abandoned their carts to finish shopping. A lot of potential revenue usually slips through the cracks—but AI can catch it before it does.  

How is AI revolutionizing online retail marketing?

As mentioned above, 91% of consumers are more likely to make a purchase based on personalized advertising. People are starting to expect shopping experiences that are tailored to them and their exact preferences. AI leverages large amounts of data to do just that.  

What are some positive ways AI is changing ecommerce?

AI is making it easier for customers to find what they need, discover what they want, and have an equally (if not more) consultative rep-free experience online. It’s also making it easier for businesses to manage their inventories, prevent fraud, and squeeze revenue out of slow-moving products. The most exciting part? This is just the beginning. AI will continue to expand its capabilities, and bold B2B businesses will reap the rewards.  

AI-Based Software Boosts eCommerce Businesses

The future of B2B digital commerce includes the personalized experiences sought by customers and enabled by machine learning technologies. Proton’s personalized product recommendations give distributors’ customers an Amazon-like experience.  

Ready to see what Proton can do for your business? Schedule a demo today.

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