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eCommerce and eProcurement: two sides of the same coin?

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Yoav Kutner, CEO and Co-Founder, Oro.Inc, analyses if there really is a difference between eCommerce and eProcurement, or are we just talking semantics? 

As technology in all its forms is helping us streamline many back-office operations, we’re witnessing new concepts and models emerge in the digital era. The prevalence of digital tools is making procurement more convenient than ever, and over the past few decades, the way we conduct sales has changed radically - leading to the rise of eCommerce and eProcurement. 

Before Covid-19, eProcurement sales were already growing by 17.6%, surpassing the $700million mark; and in the US, eProcurement remains the fastest-growing B2B selling channel. Like eCommerce, eProcurement is the process of buying and selling goods or services online, but the difference is that only registered users are allowed to use the supplier’s system. 

Companies can utilise a cloud-based procurement management system to automate lengthy processes freeing up capital and staff for other purposes. In addition to improving procurement workflow by decentralisation and user self-service, businesses can continuously monitor their purchasing behaviour to prevent maverick spending, consolidate suppliers and connect with external supply chains.

eCommerce and eProcurement: two sides of the same coin?

Both eProcurement and eCommerce systems are routinely used in B2B commerce. Medium to large size companies and supply chain participants use them for sales, marketing and purchasing. However, in B2B, relationships aren’t so cut-and-dry. For every sale by one party, there is a purchase by another, often a very different party. These are the two sides (buyer and seller) of the same coin (the purchase/sale transaction).

Aside from having some similarities, both eProcurement and B2B eCommerce systems have differences. Both have features and capabilities that make them unique. All B2B eCommerce platforms can handle online transactions and some eProcurement systems do this too. Some eCommerce systems, such as OroCommerce, can handle requests for quotation workflows, but all eProcurement systems have this functionality built into them. The same is true for handling credit limits.

But this is where the similarities end. In a nutshell, eCommerce platforms are designed around the business needs of the seller and the eProcurement platform is developed for the purchaser.

Building efficiency through eProcurement

Essentially, eProcurement encompasses all corporate buying and selling activities over the internet. Whereas a typical business would require faxing physical order forms or rummaging through paper catalogues and price lists, eProcurement digitises these activities. Today, businesses are relying on eProcurement software to help them make the research, shopping, and purchasing process more efficient.

Manufacturers may use eProcurement to facilitate purchasing of direct goods for the production process. There’s more transparency and accountability. Information can be shared with the right individuals.  The risk of fraud is reduced by duty separation. Errors during the contract administration and the quoting processes are minimised. Lastly, employees have access to a pre-approved catalogue of the goods and services they need at set pricing. As a result, purchasing, accounting, and all other related functions operate more efficiently.

Since they have numerous moving parts, it’s essential that eProcurement systems and the buyer’s purchasing process work together perfectly. To save time and costs, they must offer the right permission management, accurate inventory, pricing, and quality product information.

The difference between eCommerce and eProcurement

That’s one difference between eCommerce and eProcurement: an eCommerce platform will have this information from the outset.

Digital commerce systems are used by manufacturers, distributors, and other B2B businesses to market and sell goods and services. Where eProcurement systems are built around the needs of the buyer, eCommerce systems are built around the needs of the seller. It can be confusing because sellers are all about giving buyers what they want. 

In short, eCommerce enables companies to achieve operational, marketing, order management and sales effectiveness. There are many B2B eCommerce platforms on the market that are repurposed for B2B applications. However, systems like OroCommerce are built from the ground up for the special needs of B2B eCommerce. 

In any business transaction, the buyers and the sellers work towards a common goal - to ensure sales while their needs are different. If there is more complexity in the transaction process, the difference between the needs of the buyers and sellers increases even more.

Hence, they integrate two different systems to manage and digitise their workflow. eProcurement systems are designed with the buyer in mind and eCommerce systems are designed to meet the needs of sellers. The two systems are not interchangeable and any attempt to do so is a recipe for disaster.

eCommerce and eProcurement diagram

The importance of integrating eCommerce and eProcurement

By integrating B2B eCommerce and eProcurement systems, both B2B buyers and sellers can reach their desired objectives without affecting the other. The purchaser can utilise their eProcurement system to make the purchase from the supplier’s eCommerce website. The seller utilises their own system they understand and know how to use.

Therefore, a seamless exchange of procurement data between B2B eCommerce, eProcurement, ERP, and other systems is necessary to maintain consistency and transparency of inventory data, purchase orders, payment, shipping, and invoicing information.

Does the eProcurement vs eCommerce debate even make sense? Well, it’s obvious to me that as long as different buyer and seller needs exist, there will be a need for integration. Integration of the data between the eCommerce solution and eProcurement system that allows for consistent and transparent purchase orders, inventory data, shipping, payment, and invoicing information.

It’s not surprising that many B2B buyers evaluate B2B sellers by their eCommerce experience and the ability to integrate with their eProcurement system of choice. It’s important to realise that many eProcurement users are invested in their systems, and businesses that have flexible eCommerce solutions with the ability to integrate with them have a competitive advantage.

At Oro, we are often asked to participate in the eProcurement vs eCommerce debate, or, more specifically, if OroCommerce is an eProcurement system. An integrated eCommerce and eProcurement system consists of procurement software for the buyer and eCommerce platform for the seller. 

OroCommerce is a flexible B2B eCommerce platform that is partnered with Punchout technology  and punchout catalogue providers such as Vurbis and Greenwing Technology. Furthermore, Oro’s robust open-source architecture and scalable front-end and back-end APIs can be set up to integrate with other, third-party eProcurement systems.

eCommerce and eProcurement building blocks

Does the difference between eCommerce and eProcurement matter?

The continuous expansion of the digital world has radically changed our way of doing business. The growing popularity of cloud-based procurement platforms has helped many businesses free up their resources and avoid costly errors.

So What Is eCommerce? What is eProcurement? For me, both the solutions are two sides of the same coin. The former is perfect for the functioning of the sellers, while the latter caters to the needs of the B2B buyer. An integration of both platforms helps businesses to automate the process of purchasing efficiently.

Like a rose by any other name is still a rose, whether you put the word Commerce or Procurement after the lower case "e", for all intents and practical purposes they are ultimately one and the same. Unique, yet fully interchangeable, components of a single reality.

This synergy between eCommerce and eProcurement has bridged the disconnecting definition chasm between the two. The result, simply, is a more efficient and effective purchasing or procurement process.

TAGS: News Retail
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