11. PunchOut: What It Is, How It Works, And How Distributors Can Deploy It For Success

Shiva: You’re listening to Driven: Ecommerce at Work, the digital transformation podcast for your online business.

Hey, what’s up, everybody. Welcome back to another episode of Driven: Ecommerce at Work. Each week we’re bringing in conversations with the business owners and industry experts. So we’re talking about B2B and B2C, and this week it’s going to be all about the PunchOut catalogs. We’re going to discuss more on, the punchout catalog eProcurement system, purchase order automation.

And. When I thought about PunchOut. If you even, you know, Google PunchOut right now. So this is the company that you’re going to see in the first page. I know him very well for the past, at least like a couple of months. I’m going to bring in Brady Behrman, CEO, and Founding partner of PunchOut2Go welcome to the show, Brady.

How’s it going?

Brady: Doing very well. Thank you so much for having me today.

Shiva: Cool. So how’s your morning so far?

Brady: It’s going well, you know, my second cup of coffee. I’m moving over to water now. And I’ve got an action packed day at a punch out to go here every day.

Shiva: Cool. Perfect. So, you’ve been in the business since 2011, I guess, right? How’s the business going so far this year.

Brady: You know, we just about triple every single year, in terms of obviously resources, customers and so forth. We’re very fortunate to be in the business that we are in, right. We’re perfecting the journey between commerce and procurement activities.

You know, very blessed to be in the position we are, and, have a great team, that does fantastic work that delivers unprecedented solutions day in and day out, PunchOut2Go for our customers around the world, 45 countries now,

Shiva: Just for giving an idea about the eProcurement and the punchout catalogs to the listeners. So just tell us you know, what is eProcurement and what is a punchout catalog for the B2B.

Brady: So e-procurement systems are leveraged by B2B buying organizations around the world. They may be banks, universities, the government, just about every type of company out there that you can imagine that you see in your day to day are leveraging some form of procurement technologies.

Now, these procurement systems e-procurement systems are really bolt ons to larger ERP’s just as our listeners today that are commerce practitioners are leveraging the likes of Magento and BigCommerce and Shopify and so forth. These obviously don’t replace ERP, right? So what’s happening is there’s a lot of e-procurement systems on the market.

Now that buyers, the buying organizations can leverage these systems or systems such as Coupa, Ariba, Jaggaer, BirchStreet, and the list goes on, right? So we have PunchOut2Go connected to over 200 different e-procurement systems around the world. And e-procurement systems provide, if you will, a marketplace experience, it handles everything from sourcing to contracts to compliance, and it provides an intuitive shopping experience, for organizations to do their internal purchases, whether it’s indirect or direct spend.

So this is again, eProcurement system I think the easiest way to think about it is it’s kind of like an internal marketplace, right? So we, we all kind of hear and see the buzz words around marketplaces today. Yeah, these private marketplaces, if you will, the e-procurement systems provide that, provide a great experience, and make sure that the end users from within an organization are purchasing goods and services from approved vendors at approved pricing.

Shiva: Okay. So if we had to compare, I think punchout vs hosted catalogs. So hosted is more of a, the static one, right, whereas punchout is more of a, the dynamic content catalog. Is that right?

Brady: Yeah. So these e-procurement systems are quite inundated if you will, with, their abilities to transact.

So they generally offer two different options, hosted catalog and punchout catalogs. There’s also level two that we can talk about later. Yeah. So hosted catalogs are unglorified Excel spreadsheets that a supplier will either upload into a procurement portal or send off into their buyer system.

It’s a manual process, you know, you’re limited to five or six columns of data. It obviously is not an enriched experience. Hosted catalogs don’t provide any ability to configure products, whether it’s simple as small, medium, or large, or obviously highly complex configurable products. So, hosted catalogs, you know, provide that marketplace type of experience with PunchOut catalogs there’s hosted kind of concepts with it, where vendors that have punch-out catalogs do come up and search for particular products but it’s really allowing a merchant, right? we call it vendors in our world and that’s what the B2B buyers call up. It allows these organizations to leverage the likes of Magento or Shopify BigCommerce or

you know, Salesforce Commerce cloud, Oracle Commerce cloud, whatever best suits that organization that’s selling goods and services from a commerce perspective, it allows them to leverage that investment. And provide a real intuitive experience to their end users. Right.

Shiva: So, just to understand this a little better. So what percentage of the B2B distributors are currently using the e-procurement software?

Brady: Yeah, so e-procurement related transactions, consists of about 10% of the US B2B market distributor and manufacturer business. I think it’s, it looks like, I think 17 trillion or so is the makeup of distributor manufacturers, total business, right.

Of which maybe 15% is through www through commerce. So it’s a huge addressable market and you know, I think that organizations have been very much reactive rather than proactive up until the last couple of years, you know, when we first started PunchOut2Go every prospect that came to us, every customer was responding to a customer’s demands, right?

They said, you need to be able to provide punchout, or we’re not going to be able to do business with you. It’s as simple as that. So obviously PunchOut2Go is in a right position to help these companies, you know, be able to support punchout integrations, but the e-procurement market’s actually growing faster than even the direct B2B market.

Now, the other part of the makeup, you know, so I mentioned, you know, 10% approximately for e-procurement you know, 15% through www, it might be a little bit on the high end,

but then you have like 40% they call EDI, and that’s kind of the makeup and then everything else has manual transactions. I don’t totally agree with the 40% EDI, numbers that are presented because I think a lot of procurement systems are also supporting EDI and EDI gets lumped.

We were actually working with a large a massive global company today with hundreds of these types of integrations. And they’d said every one of their orders, what are components with these customers were EDI come to find out 95% of them were actually see XML. So, you know, obviously EDI, it’s the XML, there’s confusion within internal organizations to figure it out.

But when your CXMO we know it’s e-procurement so, it’s a huge addressable market and just as you know, I think the B2B vendors, suppliers of the world, merchants of the world are doing more to digitize their efforts. We’re finding the same patterns for buying professionals, right? These buying organizations need to digitize.

They need to do more with those procurement systems so that they can ensure that, you know, pricing is right and there’s compliance and so forth. So massive efforts are being taken on both the, how companies buy and how companies sell.

Shiva: Yeah. Yeah. And talking about the B2B sales channel. I think I saw your stats as well on one of your articles.

So e-procurement is also the fastest growing B2B sales channel, up by 37% year on year, right? Compared to the direct B2B commerce.

Brady: Yeah. 37% year over year. That’s right. And the new reports are just coming in now. I’ll be very excited to see what things will look like come the end of the year or early next year, centering everything that’s going on these days with COVID.

Shiva: So is this like a two separate channels? I mean e-commerce and e-procurement so how does this actually works for, someone, you know, just teach me, so I’m like new to this e-procurement or the punchout catalog right. So if I’m new, I’m a B2B distributor I’m new to this, or how do you want me to get started?

Is this like a two separate sales channel?

Brady: Yeah. Well, I think it’s a channel, right? In the past, I think many companies it’s been a silo channel owned by IT to solve a problem, right. They’ve kind of lumped e-procurement related customers into this big EDI world where, you know, kind of EDI professionals have taken it.

The companies that are doing really well today have built a very much cross-functional, you know, e-business team, right? This e-business team consists of sales, marketing, customer service and so forth. Right? So building out proactive strategies, but leveraging that investment in commerce, right? So commerce for a distributor manufacturer magento or whatever is a modular component.

Again, that sits on top of the ERP, right? So when orders are placed outside of procurement, the orders should be flowing through CLORAS or other technologies that drive the orders back into any ERP, acknowledgement, ship notice, and so forth going back to commerce. Right. So companies that can, that are investing in commerce that have proper channel strategies will find, they can take that industry average of 15% that may be going through WWW and actually turn that into 40 or 50%.

And drive all types of electronic orders back through commerce as a hub, whether those commerce transactions derived through the catalog experience or what have you, but it’s doing more with commerce, it’s doing more, you know, as a company with the tools and technology you have in place. Right?

So it is a channel strategy and it takes very methodical approaches to deal with it. Right. So we talked a little bit about hosted catalogs. Yeah, any B2B distributor manufacturer that’s sending any of their customers, spreadsheets of products are the first customer they should be talking to about punchout.

Right? We have a great wealth of resources on our website, that helps B2B distributors, manufacturers navigate and procurement. Right? So now there’s tremendous opportunities for distributors and manufacturers today to do more with their commerce investment, right? Drive more automation with their customers.

And build out proper channel strategies to not only attack, you know, obviously e-procurement but marketplaces and so forth. Right? So a lot of different channel strategies, but it really takes this e-business team. Do not put it in a siloed bucket. It doesn’t belong there. It belongs in a business bucket, a business bucket e-business bucket.

Now that consists of kind of all the multichannel that commerce experiences can help.

Shiva: So it’s good to, even if someone is getting started, it’s always good to have both the channels, correct?

Brady: yeah, well, they need all the channels, right? You have, you know, you have a distributor manufacturer with a Magento website, for instance, a store, and they have potentially B2C customers.

They have organic B2B buyers that, you know, once you choose you found a product, then they have relationship driven B2B channels, right? These relationship maybe channels may not be procurement, which means that Magento or whatever the commerce platform might need to have approvals and budgets and so forth.

And then you have the B2B e-procurement bucket, right? So you have many facets of customers. One of our customers identified, they have nine kind of unique personas of customers, right? So understanding the personas of your customers is very important and it’s very important in identifying the channel strategies that you’ll have across the.

Individual personas of customers that you sell to.

Shiva: Okay. So, let’s pull in some real time example for the listeners you know, maybe we can even talk about, Moody Price, LLC. So, Moody Price is one of the largest providers of instrumentation and high pressure products in the United States. Right?

So for the front end they have, this Magento 2 and, Epicor Prophet 21 as the backend – the ERP. Right? So how does the e-procurement works for a distributor you know, like this and what, you know, what does punch-out catalog integration mean to their B2B business?

Brady: All right. Let’s talk about like Moody Price and Magento.

So Moody Price may have 10,000 unique SKU’s. I don’t know what the exact number is. Maybe it’s a name. I don’t know their particular procurement customers probably have negotiated pricing and offering meaning that Moody Price may not be able to sell a hundred percent of their products to the particular customer.

Right. So the way that they can leverage Magento to do that is I always say by customer groups and segments and so forth native functions that already exist in Magento. So for Moody Price’s perspective, you know, prior to Magento, They’re obviously very much reactive. Right. They were trying to respond to their customers’ requirements and probably when they heard the word punchout or when they heard the phrase punchout, PunchOut2Go and, DCKAP in Magento, they’re probably like, Oh no, we gotta do another PunchOut integration now.

But they, found that e-procurement was a very important piece of their business. Right. So by leveraging Magento, Yeah, the end users, the organizations that they sell to procurement are immediately authenticated from within those procurement systems. It’s almost like it looks like a kind of hyperlink experience, but there’s a lot of data moving behind the scenes.

Uh, and that data gets used to, again, authenticate the user into Magento. Once the end user is on Magento and are shopping. Obviously you can see the negotiated pricing negotiated offering. And so forth, they can build their cart or, and Moody Price’s example, they do a lot with quotes, kind of custom quotes and quoting is a very important piece of e-commerce strategies.

So the end user gets to Magento they’re shopping. Maybe they’re picking up a quote, they’re building a shopping cart, rather than proceeding through a normal checkout experience what our technology does is PunchOut2Go. It actually takes those line items on the, on the user submission. And again, we’re not checking out, it transfers those line item details back into the respective procurement system.

Again, it might be a Ariba, it might be Coupa, whatever the case may be. Now, once it gets back into the system, no manual entry needs to happen, submit for approval on the buy side. And that’s when a purchase order gets generated, right. That purchase order then can flow back into Magento and use Magento’s workflow and everything that you guys have done DCKAP to facilitate the orders, getting down into their ERP.

And of course, and ultimately fulfill the, you know, the actual experience, right? Fulfill the actual products that you order. But hopefully that gives you a good summary of the actual process.

Shiva: Yeah. Yeah. So, you’re in the industry for quite a while, you know, there is no better person to ask. So how is this a manufacturing and distribution industry right now?

You know, not all the factories are running and we still have the supply chain challenges. Right? So unlike B2C, where at least you should be able to handle it in a couple of days or maybe weeks, but in B2B distribution, you know, that’s completely opposite. Right. So how things are going right now, or maybe, you know, how things are going to change maybe in the next couple of months until like maybe end of 2020.

So what distributors can do to, you know, come up with different sales volume or revenue, the numbers?

Brady: Well, I think a lot of companies that pivoted, right, we’ve seen it in the news where like, for instance, a customer of ours is GE healthcare. They partnered with Ford to build respirators and so forth.

So, you know, I think that, you know, in a case like that they needed help to kind of quickly address some of their supply chain activities, actually. So we were able to step in and help. We’ve seen a lot of our customers maybe in promotional products, that have gone and built and doing mask and so forth.

IT obviously there’s a lot going on in IT right now because people need more equipment at home. There’s a lot of pivoting going on. Right. And I think that there’s a larger digitization effort, right. We’re actually seeing an influx more integrations now than ever before, and the volume may not be as high, but the actual transaction counts might be actually higher.

It may be even more mission critical. So I think the ability for companies to pivot, we saw it again with like Honeywell and other one of our customers. Um, you know, building, you know, more things obviously to combat the COVID stuff.

But you know, I think the ability to pivot the ability to do more with technology, right?

So obviously if you don’t have people, you know, in the office answering phones and there’s gaps there, technology’s not quite right within an organization, but they need to digitize. Right. So making sure that orders are flowing now, if there’s supply chain distributions, you know, obviously we can’t all have at least have our eggs in one basket.

Right. And I think a lot of companies are finding that out, you know, the hard way that they did not maybe establish backup plans or redundancy plans, related to supply chain. Right. So, I think companies are going to come out of this virus situation, in a better position. I think that, you know, I think that, you know, digitization strategies.

Are even more important now than they were ever before, right. Companies that did not have commerce four months ago, are in bad shape. Right. You know, companies that embraced commerce, you know, several years ago and have perfected and have identified the personas and that have pivot plans and can accelerate are very well, you know, doing very well now and other customers Lowe’s right.

Lowe’s is a large obviously company here in the US. I’m hitting on all cylinders from B2C to B2B, to B2B procurement, and, doing more to integrate with our customers to, you know, make their lives easier to increase efficiency and automation. So, you know, I think there’s a lot of factors there and it’s, we work in every vertical, right.

So, you know, we see what’s going on, you know, I think that, you know, even the first month of all this madness that surround us, You know, our, we didn’t see a significant drop in transactions. We saw some like bio research companies that did more. Some bio research company may have done less because of the types of research components and products that they may be selling and labs may be closed, but, everything is really kind of balanced out.

You know, I think that, you know, businesses getting back to back to normal now and tomorrow, and you know, the weeks to come. And, companies are, you know, I think on a right position that, you know, have digital efforts, to make sure that they can appease the various customer customers they have.

Shiva: So, what’s the typical timeline of a punchout integration is gonna look like, how long is that going to take?

And, let’s say if someone is not into this, punchout catalog integration, so what do you, what do you want to tell them? I think what are they missing?

Brady: Yeah. They’re missing opportunity, obviously. So punchout. I mean, e-procurement integrations are very sticky. I could probably count. And all these 10 years of being a business on two hands, how many integrations I seem seen get turned off?

It’s very much relationship. I always think of it as kind of a good old boy, good old girl network, you know, I think it’s a, the relationships really matter. So it’s a very sticky channel, and in terms of time, we measure our integrations in hours, 2.3, two hours to be exact which is pretty mind blowing.

Does it happen at 2.3, two hours in one sitting? No. On average, I think we’re at about 15 business days per integration, because what happens is we provide the credentials and all of our services are white gloves. So we manage the integration from start to finish and imagine any integration involves, you know, a kickoff call to align on making sure that you know, where everybody’s doing, what they need to be doing.

Now there’s a testing phase, you know, making sure the offering and pricing is correct, making sure, you know, works in various browsers and then when you start talking about purchase orders and sales order automation and invoicing, there’s a number of testing procedures that each buyer will want to do, whether it’s a line item, substitutions dropping items, quantity changes and the procurement system rather than commerce.

So there’s a number of processes, but generally speaking, each integration is about 2.3, two hours, generally over the course of 15 business days.

Shiva: So, one final question. So, what kind of features does PunchOut2Go offers and how does it differentiate from the competition? Or let’s say if I’m a, B2B merchant, a Distributor, if I want to choose PunchOut2Go.

so just tell the listeners, you know, couple of features.

Brady: Well, I think it’s very important to know that PunchOut2Go sits since inception has been laser focused on mitigating the gaps between procurement and commerce, right? We didn’t come to market as an eCommerce provider that also offered PunchOut.

We’re actually, you know, we’re kind of a unicorn in our space. We don’t really have direct competitors. A couple of other players, being that our technology is purpose built to help companies leverage their own commerce technology to connect and to visit with their procurement systems, customers, and being purpose built, we provide also tools and technology that help companies be successful, right?

So we provide real time visibility into every movement going to and from systems, provide enriched analytics that help measure conversions, you know, trading partners, strategies, making sure and identifying how sales are in particular, you know, individual integrations. All those things are really important and mission critical for the customer company’s success and doing easy procurement integrations.

The last and generally speaking e-procurement customers are generally going to be your largest customers, right? So you don’t want to send them down daunting process of doing an integration nor be able to provide them with the ability to troubleshoot and deal with things quickly. Right? So, You know, things that we can do at PunchOut2Go in minutes or an hour or something would take a company, you know, weeks or months to address a deal with.

So, you know, we, I think we’ve come a long way, as a company, I think that from a size perspective or five to 10 times larger than any of the other little players that are working in the, punchout e-procurement space and we’re expecting actually about double this year in terms of resources.

So. I think again, purpose-built you can leverage PunchOut2Go for life. Whether today you’re on Shopify and tomorrow you’re on Magento and you grow and now you’re in the Salesforce or Oracle or SAP or whatever the case may be PunchOut2Go goes right with you. We already worked with all the different e-commerce technologies that exist in the market.

Shiva: Cool. Perfect Brady and I think a, it doesn’t matter which platform they’re on you’re a platform, agnostic solution, where they can be any eCommerce platform. They can use any procurement system. Right.

Brady: That’s right. I mean, we have tens of thousands of integrations of, you know, different commerce to procurement technologies.

Today. We support 50 different packaged platforms. When I say packaged flat platform name platforms like Magento we have many home grown systems as well that we support, and we have probably a dozen in our hopper right now of new eCommerce platforms that are coming to market that leverage PunchOut2Go.

I think John Bruno said it best. He says, if you’re going to do punchout, you’re going to do punchout with PunchOut2Go.

Shiva: Cool. That’s good to hear. And for listeners, if you want to take a look at the website, just go to a punchout2go.com and I’ll mention that in the podcast description as well.

Cool. Thanks for your time Brady. It was great talking to you.

Brady: You as well. It’s good to see that you’re doing very well and when you’re safe and sound and. Maybe next year, I’ll see you on the road again.

Shiva: Yeah, for sure, for sure Brady. Cool. You have a good day. Take care.

Brady: Thank you very much.

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