Business-to-business direct sales grew 9 percent last year, according to the Abacus 2006 Business-to-Business Industry Insights Report, which was released Sept. 14.
The two data sources used to compile the report include Abacus Alliance, the company’s cooperative database, and industry groupings enhanced with third party data. While the data housed in Abacus’ B2B Alliance database does not include all merchandise transactions conducted in the United States, the company believes it provides a representative view of the applicable industries.
Based on information from a sample set of 0-12 month multibuyers from the Abacus Alliance, 6.2 million BTB contacts made 14 million purchases last year, resulting in $2.8 billion in sales. This is a 13 percent increase in the number of transactions and a 2 percent increase in the number of buyers. However, sales rose only 9 percent because of a 3 percent decrease in the average sale value, which dipped to $200 in 2005 from $207 in 2004.
The largest sector for direct marketers continues to be small businesses, which claimed 81 percent of 2005’s revenue, an 11 percent increase from the previous year. More than 1 million contacts at small businesses made a BTB purchase last year, spending a total of $566 million. However, small businesses spent an average of 32 percent less per contact than large businesses. Large business spent $77 million last year, the second biggest sector for direct marketers. Medium businesses spent $52 million.
Web sales continue to grow, with 40 percent of BTB sales in 2005 occurring via the Web, a 16 percent increase from the previous year. In fact, BTB customers purchase online nearly 10 percent more than business-to-consumer customers, who made their purchases online 31 percent of the time in 2005.
Consistent with the Abacus 2004 Industry Insight Report, heavy industry, a broad grouping of industrial, manufacturing and transportation, accounted for the highest spending, representing 39 percent of total sales. The remaining top groups in terms of sales are: business & legal with19 percent; retail and restaurant with 14 percent; finance with13 percent; health with10 percent; education with 4 percent; and government with 2 percent.
The furniture category showed the greatest jump in revenue in 2005, which increased 116 percent compared to 2004. Institutional educational and telecommunications followed, with 56 percent and 55 percent growth, respectively. Cards & stationery and agriculture were the only categories to experience a decline in revenue.
Other key trends include:
* Business and legal buying contacts spent almost $102 million in 2005, up 10 percent from 2004. The average sale in this category dropped 3 percent, but revenue grew because of a 12 percent increase in transactions.
* Finance buying contacts generated a 20 percent increase in total sales because of a 13 percent increase in transactions per contact, a 3 percent increase in average order size and a 3 percent increase in count of contacts.
* Transactions per buying contact were up 22 percent for government contacts. Though government has the second lowest frequency of purchase compared with other industries, it has the highest average sale.
* Revenue in heavy industry rose 12 percent in 2005 thanks to a 15 percent increase in transactions per buying contact.
* Because of a 14 percent increase in transactions per contact, revenue for health companies increased 7 percent in 2005, despite a 5 percent lower average transaction per buying contact.
* Retail and restaurant buying contacts spent 11 percent more in 2005 than in 2004. This revenue gain is associated with a 10 percent increase in transactions per contact and a 2 percent higher average sale.