How Treasurers Are Guiding Firms Through The eCommerce Revolution

The eCommerce landscape is shifting on multiple fronts, with sellers embracing digital channels and adjusting their business models to a new reality of customer demands.

Disruption is hitting both the B2C and B2B arenas, and while it would seem they are two opposite ends of the spectrum, these ecosystems share commonalities in the kinds of trends that force sellers to modernize their market strategies.

While the migration of sales workflows from in-store to online hasn’t historically relied on guidance or input from the treasury department for a successful shift, in today’s demanding market, treasurers are in a position to play a far more strategic role in guiding their organizations as they manage new and changing payment flows.

Speaking with Karen Webster, Anupam Sinha, managing director, global head of domestic payments and receivables at Citi, described how two of the most dramatic innovations in the eCommerce sales model stand to benefit from the expertise of corporate treasurers.

Getting Closer To The Consumer

For merchants and retailers, selling products and services online has shifted from a digitization feat to the bare minimum for satisfying customers. No longer is it enough to simply offer an online storefront or embrace eMarketplaces: Online shoppers want immediacy, price competitiveness and a frictionless experience — demands that are leading companies to shorten their supply chains and embrace the direct-to-consumer (DTC) business model.

This creates new challenges and paradigms for payment flows. Regardless of where an organization or industry might be in that shift, Sinha said corporate treasurers need to be involved in their firms’ strategies and planning processes far earlier than they have historically been.

“There are many requirements that are initially overlooked, and that’s where treasury teams can play a very important role,” he said, highlighting processes like establishing new bank accounts, securing new card acquirer and payment service provider relationships, and managing foreign exchange exposure – all of which occur in the DTC migration. “Treasury is very well-positioned to handle all of these activities,” added Sinha.

This may be a challenge for organizations that already have experience with eCommerce. In that initial online sales shift, merchants traditionally wouldn’t involve their treasurers until later in the process, forcing treasurers to take a retroactive vantage point with little opportunity to help optimize processes that were already in place.

The result, in some industries, has been a fragmented shopping experience. In the consumer-packaged goods (CPG) arena, for instance, the market is relatively early in its DTC journey, leading online shoppers to often have a fragmented experience if the same brand sells in different geographic markets. It’s just one example Sinha provided of how treasurers have the opportunity to streamline and standardize the experience by guiding their firms in developing the payments experience for shoppers, while simultaneously mitigating financial risk for their organizations.

In response to the growing demand for DTC payment acceptance, Citi has introduced a new consumer payments proposition for institutional clients, Spring by Citi, which delivers payments ubiquity. According to Sinha, Spring by Citi will allow customer-centric institutions to accept credit cards, eWallets, open banking payment solutions or other forms of payment, regardless of geographic location.

Meeting Corporate Buyer Demands

On the other side of the eCommerce ecosystem is the business-to-business model. B2B eCommerce sales in the U.S. alone are expected to hit $1.2 trillion by 2021. Similar to B2C eCommerce’s shift toward a direct-to-consumer model, the B2B space is seeing disruption fueled by buyers’ need for immediacy and a streamlined experience. This, too, has profound implications on payment flows for B2B organizations.

“From a B2B standpoint, it’s about personal engagement that a buyer and supplier share in the B2B space,” explained Sinha. “It’s not as much of a one-on-one relationship that you would see from a C2B perspective. There is a negotiated price, and each client has a specific price and specific payment terms.”

The B2B eCommerce evolution is also facing pressure from a shift in buyer behavior. Whereas digital channels had once been reserved for one-off purchases, indirect spend and small-value buys, the online channel is increasingly key to strategic spend and procurement activity.

This, combined with the need for customizable payment experiences for buyers, may mean that the traditional ACH and wire rails are no longer suited to the B2B space, as payment flows move away from a batch model to meet customers’ need for immediacy.

“The world has completely changed, toward a more real-time fulfillment expectation,” noted Sinha.

As more B2B sellers embrace the eMarketplace model to reach buyers, Sinha noted that organizations will also need to provide more integrated payment experiences. Technologies like APIs and QR codes can be useful tools to achieve this, creating yet another area in which corporate treasurers can provide strategic guidance.

“That’s where the treasury team can add a lot of value,” he explained. “With the experience they’ve had, they can look at how they can use their existing bank relationships to provide a more integrated payment proposition to their own proprietary marketplaces.”

As an example of how clients can leverage their banking partners, Spring by Citi is bridging an existing gap in treasury management by tying payment acceptance services into the bank’s cash management offerings. This solution ensures that the collection process is in harmony with broader cash and treasury management strategies.

While the migration toward a DTC model and the growing sophistication of customer demands in the B2B eCommerce arena are two trends that have been evolving in recent years, the pandemic largely accelerated these roadmaps in a new world where anything other than digital simply won’t cut it. And while treasurer participation may have once been an afterthought for some firms’ eCommerce strategies, Sinha said, today it presents an opportunity to mitigate financial risk and promote business growth for their firms along this journey.