COVID-19 has posed many issues over the past year and a half for much of the world. Unfortunately, many B2B small and medium-sized enterprises (SMEs) have experienced halts or disruptions due to the pandemic.
As a result, many of these businesses turned to new systems and methods in an attempt to increase their business’s chances of survival. Going digital with the help of an online B2B marketplace, like Alibaba.com, was one tactic that led to success.
In this post, we are going to take a look at how B2B trade has fared through COVID-19. We’ll also discuss some of the challenges that B2B SMEs have faced because of COVID-19 and take a look at a few features that Alibaba.com offers to support SMEs through this time.
Table of Contents
- B2B trade through COVID-19: an overview
- 4 challenges B2B businesses faced during the pandemic
- 6 ways Alibaba.com supports B2B SMEs
- Final thoughts
B2B trade through COVID-19: an overview
B2B trade took a hit at the hands of COVID-19. Shutdowns and shortages caused several issues, and B2B distributors were forced to get creative in order to keep things moving.
Here’s a snapshot of COVID-related shifts and changes in the B2B space since the start of 2020:
- Lockdowns around the world that were forced by the spread of COVID-19 caused supply chain disruptions and shortages
- Digitalization was an essential force for keeping B2B trade afloat
- B2B eCommerce platforms, like Alibaba.com, have become essential for B2B trade in the wake of COVID-19
- The majority of B2B SMEs find digital sales processes as effective or more effective than the previous processes1
- India, one of the world’s top manufacturing countries, has recently experienced a deadly spike in cases that have caused new supply chain disruptions2
- Today, over 80% of B2B buyers make online purchases on a weekly or monthly basis3
- Supply chain optimization is now more important than ever4
- Despite COVID-19 related challenges, more than 85% of B2B SMEs are confident about the futures of their businesses5
It is also worth noting that shifts in consumers’ income have been significant in many cases. Also, the way that many people spend their money has changed. This affects B2C businesses directly, and many B2B industries have felt it as a result.
For example, many people have shifted spending to home improvement projects. Furniture wholesalers have felt the effect since they need to keep up with the retailers’ demands. This domino effect has touched other industries, as well.
4 challenges B2B businesses faced during the pandemic
COVID-19 posed many challenges for B2B businesses, but there are a few root issues that there are worth pointing out. Some of these issues have been resolved to an extent, but we’re still seeing the effects of them today.
That said, let’s take a look at four challenges that B2B businesses faced during the pandemic.
1. In-person interactions halted
Although it is possible to do business over the internet, a lot of B2B trade was previously conducted in-person at trade shows and other similar events. Before the pandemic, eCommerce was still used primarily in the B2C space, so B2B systems were not generally set up for online selling.
Since the coronavirus is such a contagious disease, lockdowns were one of the first measures put in place to slow the spread and “flatten the curve.” In-person events were canceled, and B2B buyers and sellers who were used to making connections and forming partnerships at in-person events were put in a tight spot.
If it wasn’t for the internet, this challenge could’ve been much more of an issue. However, B2B SMEs were able to dive into eCommerce to keep things running.
2. Supply chain disruptions
Since COVID-19 began to spread, many factories were forced to halt operations in order to slow the spread and keep their workers safe. Some factories shut down for weeks or months. Naturally, this hiccup in the manufacturing left many manufacturers backed up in their operations and created major disruptions in supply chains.
Although much of the world is back to some semblance of normal, we are not in the clear.
In fact, a recent spike in COVID-19 cases in India has created new supply chain disruptions. Some Indian states imposed strict shutdowns that forced factories to shut their downs for the time being.6 These shutdowns affect more than just India since this country is one of the top manufacturing countries in the world.
There isn’t a simple fix for these supply chain issues. In fact, many industries will need to ride it out until it’s safe for everyone to go back to work.
3. Raw material prices increased
Raw material shortages led to price increases that affected wholesalers, manufacturers, and buyers across the board.7 These shortages were caused by shutdowns.
Some of the most significant shortages were in paints, coatings, polyurethane, foams, adhesives, glues, epoxy resins, and other similar materials. The decreased supply and stable demand caused the equilibrium prices of these materials to rise.
Many of the shortages involved materials that were related to packaging. This was particularly unfortunate since most products require packaging, so it affected both buyers and distributors in just about every industry.
4. Increased freight rates
Another notable challenge presented by COVID-19 is increased freight rates. This again boils down to an unprecedented shift in supply and demand.
Air and ocean are the two most popular types of freight in international trade, and both of these faced issues as a result of COVID-19.
The majority of air freight is carried on passenger planes, so when travel restrictions were set in place and the number of commercial flights decreased significantly, there became a shortage.
During the pandemic, consumer spending shifts caused retailers to plan their inventory accordingly. They sourced more units than usual, and there was a significant increase in trade between Asia and North America. Boats that routinely carry cargo on this route couldn’t get back to pick up more loads fast enough, thus creating another shortage.
The limited supply and increased demand caused freight costs to increase. This put distributors and retailers in a tight spot since they would either need to absorb the costs or raise prices in the middle of a global crisis. Each business was left to make the choice that made the most sense for their individual situation.
It is also worth pointing out that buying and freight trends remained consistent beyond the normal “holiday rush” at the end of 2020, and it will be interesting to see how the peak season ends up in 2021.
6 ways Alibaba.com supports B2B SMEs
Alibaba.com has stepped up to the plate to provide added support to B2B SMEs throughout the pandemic. In addition to our regular feature offerings, we’ve amped up the tools designed to facilitate online trade to accommodate the rapid need for digitalization in the B2B space.
Let’s take a look at six features that were available to sellers on Alibaba.com to help them through (and beyond) the pandemic. For more details, you can check out Alibaba.com’s upcoming event for more information.
1. Frequent online trade shows and expos
Since the start of the pandemic, we have made an effort to host online trade shows and expos as frequently as possible. This creates a space for buyers and sellers to connect, network, and make deals.
Alibaba.com offers some general events for buyers and sellers in all sorts of industries, as well as some industry-specific events. Some events are export-specific which means they are geared towards sellers who want to tap into foreign markets.
This year, in additional March Expo and Super September, the annual promotional exhibitions, Alibaba.com will hold 10 extra holistic or category-specific online trade shows of leading categories including Apparel, Home & Garden, Beauty and Personal Care etc.,
In fact, Alibaba.com saw a significant increase in transactions at a tradeshow in March. Sales were up by a whopping 50%.
Alibaba.com curates these events by offering perks for high-quality sellers and professional buyers. There are breakout rooms for more close-knit interactions for qualifying members. This helps to streamline the process of finding great products for both the buyers and sellers.
2. Enhanced Global Gold Suppliers (GGS) membership
Alibaba.com has rolled out additional perks for Global Gold Supplier (GGS) members. Qualifying, highly rated sellers have access to enhanced features to grow and propel their businesses.
This rollout includes an enhanced onboarding process that gives sellers access to posting and a smart tool setup. It also includes post boosting that is meant to increase product exposure and conversions by as much as 15%.
The enhanced membership also comes with resources and educational materials meant to help sellers streamline and optimize their responses to inquiries to help them close deals.
3. Localized team support
As we’ve demonstrated, COVID-19 has led to a very trying time. The past year and a half have been a roller coaster for many B2B SME owners and operators as they’ve had to navigate totally unprecedented circumstances with very little guidance.
That’s why Alibaba.com has amped up the available support. Our team is educated and trained to help owners and operators make the best choices for their companies. We stay up to date on current happenings to help you navigate through confusing situations.
This rollout of advanced team support includes over 200 training materials to help you enhance your selling experience.
4. Supply chain and payment service
Alibaba.com has formed many partnerships with local institutions (and continues to build more) to improve supply chain functions. These partnerships are with local banks, local logistics service providers, and other valuable business partners.
The main benefit of these partnerships is secure payment on Alibaba.com. This helps us to provide a wide variety of payment options that work for every buyer and seller.
As part of this effort, we are reinforcing our Trade Assurance program to back every transaction made through our platform to provide a risk-free buying and selling experience.
*Only available in selected markets. Speak to an Alibaba.com consultant for details.
5. Customized service in key sectors
Alibaba.com is currently making efforts to increase patronage of specific markets to ensure that our sellers are being connected with qualified buyers. For example, we are investing in specialized teams to attract buyers in Italian Apparel, Health products from the US, Korean Beauty, Vietnamese Food, and more.
These efforts and investments should help more sellers find buyers in their niche.
6. Cross-border trade support
Alibaba.com is known as a key resource for cross-border trade. Businesses that want to expand into foreign markets find it easy to do so with the help of our platform. Alibaba.com’s tools for exporting became even more significant during the pandemic when businesses couldn’t travel to solidify partnerships.
Some of the top tools from Alibaba.com for cross-border trade include auto-translate, auto-conversion, and local partner development. These features make it easy to connect with foreign buyers while overcoming language barriers and other roadblocks.
Although it is not specific or limited to international transactions, Alibaba.com offers Trade Assurance that ensures that every transaction carried out on the platform is done so to completion. This means that buyers are entitled to a refund if their delivery comes and it does not meet their expectations if their delivery does not arrive in the promised timeframe.
This makes it easy for buyers to trust the buying experience on Alibaba.com. This is also quite valuable for sellers because it makes it easier to sell to a trusting audience. Sellers also don’t need to worry about being ripped off in a deal, so that is certainly a plus.
COVID-19 has taken a major toll on many facets of life, and unfortunately, business was one of them. Some businesses have struggled more than others, but many of those that we’re able to leverage the support of Alibaba.com and other similar resources pulled through.
Are you ready to take your business to the next level, despite the challenges posed by the pandemic? Alibaba.com is here to help. Create an account and indicate “Seller” as your trade role to get up and running in no time.