The Death of the Salesmen? Effect of B2B Online Channel Introduction on Offline Sales Performance

Abstract

B2B markets are increasingly shifting toward online channels, but online transactions still only represent only a small fraction of total sales. This creates a hybrid channel, where some products exist in a multi-channel environment and others do not (i.e., offline exclusive, mixed channel, online exclusive). The implication of these hybrid environments on the sales transactions that remain offline is unknown and important strategic question for B2B firms. This paper explores this phenomenon by leveraging a unique market shock where a focal firm introduced an online sales channel for one of its two major product categories. One product category existed in a multi-channel environment whereas the other product category remained exclusively offline. The results demonstrate a critically important B2B phenomenon in regard to transactions; customers exposed to online product category were able to capture key pricing knowledge that allowed them to negotiate lower prices in the offline product category. This effect was exacerbated by customers with more product knowledge. However, the firm was able to win-back a portion of the margin loss by through stronger salesforce capabilities.