StarStock on eB2B marketplaces

Not much had changed in the traditional supply and distribution landscape for 50 or 60 years. Innovation was long overdue. But then came along digital business-to-business (eB2B) to revolutionise the way things are done.

An eB2B marketplace allows brands/producers to trade directly with multiple end customers or outlets, saving margin, simplifying the purchasing experience, speeding up the process, creating cost efficiencies and adding value.

For former sales rep Sam Ulph, now founder and CEO of StarStock, eB2B was an obvious solution to fragmented practices. “I’d walk into pubs, talk through the products but couldn’t conclude a sale because the publican had to go via a wholesaler rather than direct. It struck me as an incredibly inefficient use of time and cost.” And that was when the concept of StarStock — a platform that allows licensees to order food and drink stock directly from the brands that create them — was born. Today, businesses trade off the StarStock platform or set up their own platform using a StarStock ‘white label’ web shop.

Duncan Knight, partner in Digital and Customer Consulting at KPMG, says eB2B has gained momentum in the past five years or so. When manufacturers struggled to grow their field salesforce, digital engagement models took up the slack. “And then, through the COVID-19 pandemic, digital became the principal engagement model. And people who weren’t digital natives became digitally immersed and enjoyed the experience. So, eB2B evolved from a cost-to-serve engine to a growth engine. And now it’s a new revenue stream, with options for value-add services and data monetisation.”

“eB2B evolved from a cost-to-serve engine to a growth engine. And now it’s a new revenue stream, with options for value-add services and data monetisation.”
Duncan Knight, Partner
Digital and Customer Consulting, KPMG

Some businesses that come to the eB2B marketplace are digitally mature. They have advanced payment capabilities and inhouse data and artificial intelligence competencies. But they must work on their relationships with both manufacturers and suppliers to establish themselves as credible players.

Others — the traditional consumer packaged goods (CPG) businesses — have robust customer and trade relationships but may lack digital and online payment capabilities. They’re conflicted about whether to buy in these capabilities or to outsource them. They eye up acquisition opportunities, not just for their revenue streams but for the digital capabilities that sit behind the brands.

Ultimately, according to Sam, it is the “hunger” to get eB2B platforms up and running, to test and learn, to bring other stakeholders along on the journey that determines how well eB2B fits with corporate strategy. “If you just dip your toe into the eB2B water to see what happens, expect to fall in the middle,” he explains. “Without commitment, producers won’t discover what an eB2B platform can do that a traditional channel cannot.”

“If you just dip your toe into the eB2B water to see what happens, expect to fall in the middle. Without commitment, producers won’t discover that an eB2B platform can do what a traditional channel cannot.”
Sam Ulph, Founder and CEO,
StarStock

Moving to an eB2B platform is, warns Duncan, like building new muscle and will have implications for the operating model. It might entail changes to customer incentives, contractual terms or the way in which traffic is directed to this new channel. There will be tax and legal implications too, especially across borders. And, of course, there is data and content to manage. These are not afterthoughts but critical to building, running and scaling an eB2B platform.

Key takeaway: When adopting eB2B, stakeholder alignment is essential. Take the business along on the journey with you, understand your capabilities and deficiencies, and don’t delay in addressing operational priorities that will accompany a shift to a new channel.

As eB2B moves into the mainstream, it will certainly disrupt and facilitate market-share growth for brands.

For Sam at StarStock, it takes only three or four major producers to say eB2B is the future. “It’s not about ‘if’ eB2B happens, but ‘when’,” he says. “One producer gets the flywheel going, moving more outlets onto the platform, which means more automation and more activation, which encourages more producers, and that drives better engagement with customers.”

And outlets, particularly pubs, restaurants and hotels, are ready to embrace the benefits that come with eB2B. They are more willing than ever to switch suppliers, simplify their purchasing experience, reduce reliance on face-to-face sales interactions and tap into value-add services.

Adoption is already happening. As more players enter the space, Hugh Ayling, director, M&A, Strategy and Value Creation at KPMG expects a switch from a producer and outlet-based relationship to business partnering. Cost efficiencies in the value chain will be passed onto outlets through competitive pricing, helping these businesses to thrive.

Even so, the days of the sales reps are not numbered. They will continue to exist and provide face-to-face contact, but their role will shift into business development, with greater emphasis on delivering an experience, convenience and personalisation.

Key takeaway: Inevitably, eB2B will create disruption. But it will transform. Brands will trade directly with outlets, enabling growth in market share. Outlets will benefit from competitive pricing due to cost efficiencies in the value chain. And sales reps will switch to business development roles and become part of the value-add equation.

eB2B platforms flow live data back to producers and outlets to use as they choose. Data analytics can help with envisioning value-add services that will help them to grow their businesses.

However, Hugh warns that businesses should play to their strengths in the first instance. “You can’t launch everything on day one: that’s a high-investment and high-risk strategy.” Instead, he encourages producers to “get their core product propositions and pricing right, before focusing on the value-add services that are most important to outlets. That will encourage repeat business and, in turn, drive incremental revenue.”

Expect to see fundamentals that we, as online consumers, take for granted, translated into the eB2B environment. Users can certainly anticipate greater self-service and enhanced processes. A click of a button, for instance, will prompt an automated email to tell the outlet that an order is on its way. Another click at the receiving end will confirm it’s been delivered.

And while a B2C platform might advocate the perfect outfit, in the eB2B space it’s more likely to be guidance for independent outlets on how to create the perfect bar or manage merchandising or enhance their footprint on digital channels.

On the StarStock platform, CPGs receive their live data segmented into active/regular/lost/lapsed/ reactivated customers. “It helps them to pinpoint the actions needed to win back outlets,” explains Sam. “That could mean a bespoke promotion, or a targeted mail shot or a visit from a field sales rep to understand what’s going on. That, at its most basic level, is a game changer.”

Though Sam expected the number one value-add from eB2B to be the release of margin, he was wrong. “Within months of every eB2B platform going live, producers tell us that the number one benefit is getting closer to customers, understanding them and using the data to serve them better.”

“Within months of every eB2B platform going live, producers tell us that the number one benefit is getting closer to customers, understanding them and using the data to serve them better.”
Sam Ulph, Founder and CEO,
StarStock

Key takeaway: Innovation is happening quickly. Many of the fundamentals we expect from a B2C service will translate into the eB2B model. Data analytics will define value-add capabilities that transform the relationship with the end-user.

We’re at the beginning of an evolution in the sales and distribution channels in the drinks and hospitality industries. So, how do you transition successfully?

For Duncan, it starts with funding. And that, in his view, hinges on a compelling business case and a belief that eB2B is a viable channel for profitable growth.

Having clear key performance indicators is essential in Hugh’s opinion. Define what success looks like; test and learn as you go through eB2B adoption; track performance rigorously against your success criteria.

And finally, for StarStock CEO Sam, eB2B is an opportunity to know your customer better. “And that, whether you’re a CPG, a producer or a pure play focused on one specific product, should be your ultimate focus.”