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eProcurement & Procure-to-Pay Resources

eProcurement and the Role of Punchout Sites

Posted by Dan Utyuzh on December 20, 2016 at 2:00 PM

In the early days of eProcurement, the only type of catalogs were ‘static catalogs’. With static catalogs, suppliers would send a MS Excel (.xls) or .csv file to their customer. The customer would manipulate, format, and eventually load the static catalog into their respective eProcurement system. At this time, the ERP solutions (and Ariba) were really the only solutions that supported internal catalogs.

Beginning in the early 2000’s, the B2B eCommerce world was introduced to ‘PunchOut Catalogs’ (or ‘RoundTrip Catalogs’ if you talked with SAP). PunchOut catalogs enable a company (supplier) to extend their existing B2C eCommerce experience to their large buyers (via a PunchOut connection). Since B2C eCommerce moves at a much faster pace than B2B eCommerce, the PunchOut enabled catalogs presented a MUCH better shopping experience for enterprise eProcurement users than the ERP (or Ariba) shopping experience.

Since PunchOut Catalogs were introduced (over 15 years ago), they have steadily increased in popularity. We know this well as our sister company, www.PunchOutCatalogs.com, has been helping companies to embrace B2B eCommerce for decades. In many ways we feel like we wrote the book on PunchOut Catalogs.

nullIn Part 1 of this blogpost, we’ll talk about the top 5 reasons why Suppliers embrace PunchOut sites.
 
  • Branding - Suppliers want to best display their products & services to their customers. To that end, companies have incurred major investments in their B2C (or .com) websites. In doing so, companies have strived to best present their goods / services to their B2C customers. Through a PunchOut enabled website, suppliers can present a nearly identical buying experience to B2B customers.
  • Upselling – When a corporate buyer has ‘punched out’ to a supplier’s PunchOut catalog, the supplier controls the buying experience. Much like we’re accustomed to on Amazon or Zappos, when a shopper adds an item to the shopping cart, the eCommerce platform will serve up additional (very relative) goods (or services) that might be enticing to the buyer. This ability to up-sell the customer is only applicable when a supplier controls the buying experience via the PunchOut site.
  • Data Mining – eCommerce platforms place massive value on the data related to their respective sites. This eCommerce data includes shopping behavior, search terms, buying patterns, cart abandonment %’s, conversion rates, time on site, page views, etc. All of these metrics are ‘gold’ to suppliers who are constantly looking for ways to drive more revenue, increase margins, and capture more market share. If buyers are using the supplier’s PunchOut site, all of this data is captured, analyzed, and put to use.
  • Margin improvement – when a buyer punches out and shops on a PunchOut sites, the buyer should see ‘buyer negotiated pricing’. Over the years, we’ve found that some suppliers don’t always limit the content to ‘on contract’ goods / services…however, that’s a topic for another blogpost. When a buyer is shopping on the PunchOut site, the supplier can (and does) present the highest margin products / services available. For this reason, it’s real money for suppliers to ensure their PunchOut sites remain as the buying channel for their customer. In fact, many suppliers will quickly offer rebates to buyers if the buyer talks about ‘switching from a PunchOut catalog to a static catalog’. Suppliers do NOT want to give up the control of the buyer. Suppliers also want to drive higher margins whenever possible.
  • Remove Market forces – when a shopper is buying a good or service on a supplier’s PunchOut site, the ONLY content available for browsing / buying is the supplier’s content. So, in many ways, the buyer is ‘captive’ and the supplier knows it. The supplier wants to keep control of the shopper & enable the shopper to find everything he / she needs within the supplier’s PunchOut catalog.

For these reasons (and others), suppliers have embraced PunchOut enabled catalogs and will battle fiercely to ensure that PunchOut catalogs remain within enterprise eProcurement.

In Part 2 of this series, we’ll discuss why traditional eProcurement solution providers also embrace PunchOut sites.

What has been your experience with PunchOut sites?  Join the conversation below and let us know!

Topics: Vendor identification and selection, Supplier Enablement, Procure-to-Pay, Marketplace, e-Procurement

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