eProcurement & Procure-to-Pay Resources

eProcurement and the Role of Punchout Sites

Published 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.

First, Let's  talk about the top 5 reasons why Suppliers embrace PunchOut sites.
 

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.

Why Traditional eProcurement Solution Providers Embrace Punchouts

Why do most modern eProcurement solutions also embrace and promote PunchOut sites? Let's discuss the circumstances and conditions that give rise to this unholy alliance. 

Born of ERP

eProcurement solutions were born out of the ERP systems. In fact, all of the most popular ERP systems (Oracle, SAP, PeopleSoft, JDE, Workday) have developed or acquired varying degrees of eProcurement functionality today. These eProcurement solutions are typically clunky, not fun to use, and difficult to scale.

It is precisely these conditions that actually led to the rise in adoption of PunchOut sites for eProcurement.   Suppliers built eCommerce websites that were built for scale, built for usability, and supported PunchOut connectivity. The eProcurement industry embraced them because it pushed the content management and eCommerce management problem onto their suppliers.

Or so they thought...

Punchouts are not a Scalable Solution

The truth is, while the usability of a singular PunchOut site may be phenomenal, having to navigate 50 different PunchOut sites (all hanging off the eProcurement solution) results in a terrible user experience and a broken shopping process. It stifles end user adoption and thoroughly confuses the user base.

Everybody talks about wanting an Amazon experience for eProcurement.

Does Amazon use a PunchOut approach?

No.

The B2C eCommerce users always remain within a SINGLE interface and can search across ALL content in one place.

BuyerQuest is a True eCommerce Framework

BuyerQuest always understood the value and importance of a single instance and interface for all goods and services.   That is why we architected our solution using a true eCommerce framework. This gives BuyerQuest customers the ability to ingest, govern, manage, and display millions of catalog line items for goods and services in an easy to use,  fully searchable,  eProcurement solution.

There is a place for PunchOuts in the modern eProcurement world. But, if history has taught us anything, it's that the PunchOut site approach to eProcurement is not a strategy that solves the user adoption problem nor the broken processes that result.

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

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