What is B2B eCommerce? Models & Benefits Explained

Digital commerce is experiencing rapid growth, expanding into various channels, devices, markets, and industries.

Typically, when discussing B2B eCommerce models and benefits, we think of transactions between a business and an individual purchasing goods or services over the Internet. But that’s just one part; e-commerce is much larger than that. 

The other side of e-commerce is business transactions, taking place between two or more businesses by considering their needs and wants. This side of e-commerce is known as B2B e-commerce.

The fact is that B2B businesses have been slow to adopt e-commerce.  Prior to the COVID-19 pandemic, a report stated that only 9% of all B2B product sales in the U.S. took place on an e-commerce website.

However, since the pandemic, the B2B e-commerce models have undergone a significant transformation.  More millennials are entering the B2B e-commerce world, which previously hesitated. This adoption of online business transactions is increasing buyers’ demands and expectations more than ever, and B2B companies must keep pace.

In 2020, global B2B e-commerce hit $14.9 trillion, and Forrester predicts it will be 17% of the U.S. B2B sales by 2023, reaching $1.8 trillion. 

The statistics depict the importance of the growing industry. So, let’s explore more about what B2B e-commerce is. 

B2B eCommerce Models and Benefits

To understand it well, let’s first split the terms into “B2B” and “E-commerce” and what they actually mean.

Have you ever wondered about how things you order online arrive at your door with just a few clicks? That’s e-commerce! In simpler words, “a process of selling and buying things on the internet”.

On the other hand, B2B (business-to-business) refers to a type of business transaction that occurs between two or more businesses, where one business sells products or services to another.

Now, what is B2B e-commerce? The question is still here.

By definition, “B2B e-commerce is an electronic trade between two or more businesses. Also known as business-to-business e-commerce, it is the sale of goods or services among companies through online channels.”

In B2B, businesses buy or sell things or services online from other businesses without leaving their offices. It’s all like shopping online or doing business on the web.

Read Also: Introduction to B2B eCommerce on BigCommerce

The Goal of B2B E-commerce

Everything has a primary goal, so what is the main goal of B2B e-commerce?

The goal is straightforward and clear: to expand customer reach and minimize operational costs, thereby driving more revenue for any type of online business.

To better understand, let’s break down the goal into more digestible parts:

1. Expanding Customer Reach

In B2B e-commerce, expanding customer reach means utilizing online platforms to connect with a broader range of businesses. Imagine being able to reach companies across different regions and industries that you weren’t previously able to access.

By approaching the essentials like using digital marketing tools, such as SEO and social media, to make your business more visible and attractive to these new audiences on a global scale, around the clock.

Also, check out our article on A-Z of eCommerce SEO to Easily Rank and Increase Sales in 3 Months

2. Reducing Cost-to-Serve

Reducing the cost-to-serve is like making your buying and selling process more efficient. And here, B2B e-commerce brings a money-saving advantage – it’s super cost-effective.

When you automate sales tasks, such as processing orders and managing inventory, you reduce the amount of manual work. That will not only lead to significant savings in time and operational costs but also speed up your service, making customers happier.

3. Driving More Revenue

Finally, the ultimate goal is to increase your business’s revenue, but how? Well, this is achieved through a combination of the first two goals. By reaching more customers and running things very smoothly and efficiently, your business can sell more and grow faster.

Moreover, the top B2B eCommerce models and its benefits provides you with insight into what your customers want and how to better serve them. This will help you to make informed decisions to meet market demands better and optimize revenue generation.

Read Also: Factors to Consider When Choosing a B2b eCommerce Platform

Key Benefits of B2B eCommerce Model

B2B e-commerce stands as one of the fastest-growing sales models. The B2B ecommerce market is expected to expand at a CAGR of 8.5% during the years of 2021-2027. 

Come here to see its key benefits:

1. Enhanced Accuracy through Automated Sales Processes: Automated transactions between businesses, suppliers, and distributors contribute to increased precision and reliability.

2. Financial Efficiency with Reduced Overheads: The streamlined nature of B2B e-commerce results in decreased infrastructure and overhead costs, enabling more cost-effective operations.

3. Direct Connectivity for Higher Growth: By minimizing reliance on intermediaries, B2B e-commerce enables direct connections, thereby fostering higher growth prospects for businesses.

4. Broad Market Reach: The ability to access a mass market at scale enables B2B e-commerce enterprises to achieve extensive market reach and foster potential customer engagement.

5. Omnichannel Branded Presence: Maintaining a 24/7 omnichannel branded presence ensures constant accessibility, reinforcing brand visibility and availability to potential clients.

Companies with robust omnichannel marketing strategies retain, on average, 89% of their existing customers, while those lacking such strategies retain only 33% of their existing customers.

6. Better Collaborative Partnerships: B2B e-commerce fosters stronger relationships with partners, creating a collaborative ecosystem that contributes to mutual success.

7. High Workforce Productivity: The efficiency gains from automated processes and reduced complexities contribute to high levels of employee productivity within a B2B e-commerce framework.

How B2B eCommerce Model Works?

B2B, as a business model, differs significantly from B2C. In B2C, businesses sell things or services straight to customers. However, B2B e-commerce involves transactions between entities, such as a manufacturer and a wholesaler, or a wholesaler and a retailer, facilitated through an online sales portal.

B2B e-commerce works more like a relay race. For example, a manufacturer passes the baton to a wholesaler, who then hands it over to a retailer – all happening on an online sales platform in between businesses, not directly with customers. That’s the B2B story!

B2B e-commerce sellers work with:

1.    Large Retailers

2.    Wholesalers

3.    Resellers

4.    Organizations like schools or nonprofits

In one digital home, both buyers and sellers can now convene, smoothly placing and handling orders using their mobile phones. This digital junction presents new opportunities for businesses to establish connections with suppliers and distributors.

“Automating the wholesale process changes how we build our team. It prevents us from missing 2 a.m. orders and keeps our customers from waiting to place an order until we’re in the office. It just solves so many problems.”

Paul Hodge, CEO of Laird Superfood

In reality, it is not wrong to say that B2B e-commerce is more complicated. This is because, in addition to online selling, businesses must closely monitor all their operations and control each step. This complexity needs specialized software. Beyond these internal intricacies, B2B e-commerce businesses essentially shape the entire e-commerce market. They mold the environment in which other business models, such as B2C will also operate.

B2B vs. B2C e-commerce: What’s the Main Difference?

Here are the detailed differences that will highlight the unique characteristics and requirements of B2B and B2C e-commerce, telling the diverse nature of transactions and the tailored approaches needed for successful business operations in each model. Let’s look:

Feature	B2B E-commerce	B2C E-commerce
Transaction Participants	Businesses trade with each other.	Businesses sell to individual consumers.
Order Volume	Focuses on a simple, user-friendly experience and accommodating individual preferences.	A few items or single purchases by individuals.
Technology Systems	Typically includes hundreds of items with a large cost value.	Easy systems for individual preferences and ease of use.
Pricing Structure	Requires specialized systems to consistently and efficiently support bulk purchases.	Companies like Thomasnet, MSCdirect, and Quill sell like Company A (B2B) sells biscuits to Company B (B2C supermarket).
Order Complexity	Orders can range from a few items to extensive product lists, requiring advanced management systems.	Simple orders, one or a few items per purchase.
E-commerce Platform Needs	Demands platforms with tools for managing complex orders, allowing customization for each buyer.	Fixed prices are directly accessible to consumers.
Personalization	Prices are often negotiated and set by a sales rep.	Focuses on easy-to-use websites and experiences that fit each person’s preferences.
Examples	Companies like Thomasnet, Mscdirect, and Quill sell like Company A (B2B) sells biscuits to Company B (B2C supermarket).	Stores like Walmart and Amazon (B2C) sell directly to individual customers.

Types of B2B eCommerce Models and Benefits

Beyond the standard B2B e-commerce model, where businesses typically trade with each other, there are also various types of online business transactions. Let’s check them out below.

1.    B2B2C (business-to-business-to-customer)

B2B2C, or business-to-business-to-consumer, is like a mix of two worlds – business-to-business (B2B) and business-to-consumer (B2C). It’s a teamwork approach where businesses join forces to benefit everyone. In this model, companies in B2B2C reach new markets by teaming up with businesses that deal directly with consumers. For instance, a company might create a software solution and sell it to another business, which then sells it to individual customers.

Examples of B2B2C include Nespresso Professional, which sells coffee to restaurants, and the restaurants then sell it to end customers.

Another notable example of B2B2C retail is Amazon, and a B2B2C service example is Instacart.

2.    B2B2B (business-to-business-to-business)

B2B2B, also known as business-to-business-to-business trade, is like a B2B teamwork model. This model is rather common because products often go through several steps before reaching the final customer, like from a maker to a distributor, then a retailer, and even another middleman or wholesaler. It’s like a chain of businesses working together to get things to the end customer.

Example of B2B2B: A website like bill.com is a great example of B2B2B, where big companies manage payments to their vendors. Now, these vendors also create accounts on the same website to bill their customers later.

3.    B2M (Business to many)

B2M, or business-to-many, is a marketplace model that focuses on multi-channel selling. In B2M, the company sells products or services to both businesses and regular consumers  

4.    B2E (Business to employee)

B2E, or business to employee, also known as D2C (direct to consumer) is a business model where a company sells its products or services to its employees, by eliminating the middleman.

An online app for managing insurance policies within an organization can be an excellent example of a B2E model. It’s like an organization providing services specifically for its workers.

5.    B2G (Business to government)

B2G, or business-to-government, is a business model where a company sells things or services directly to governmental organizations.

Example of B2G: A country’s government auditing service could use a CRM system or purchase statistical software for analyzing census data. The government itself is the customer, making direct purchases from businesses.

Marketing Tactics of B2B E-commerce

According to Statista, over 70% of US B2B companies have a formal marketing plan, with 76% using it to implement strategies across multiple channels effectively.

1. Targeted ads for Growth

Paid ads are still a great way to get attention, even though many people use social media for advertising. They work well, especially when a business is just starting, but you need money to do it.

Example: Bravo Sierra, a personal care brand for men, used paid ads on Facebook to get more customers. After a year, they no longer needed ads as much because they had grown by selling to other stores and letting Amazon handle their orders.

2. Leverage Partnerships

One smart way for a business to grow is by partnering up with other companies. The trick is to make a deal where both companies benefit and feel satisfied. 

Example: Beis, a travel brand started by Shay Mitchell, partnered with Beach House Group. Shay used her online presence to promote the travel brand, and Beach House Group brought in industry knowledge and connections. It was a win-win situation for both!

3. Buy Now, Pay Later

In the business world, there’s a concept known as “Buy now, pay later,” similar to what Klarna does for personal shopping but tailored for business-to-business transactions. This means companies can make arrangements with each other without the need for large upfront payments.

Consider buyer-supplier relationships that offer flexible payment terms, such as buy now, pay later, early payment discounts, buyer loyalty programs, or even a percentage of sales as payment. It will all find ways to make the payment process more flexible and beneficial for both parties involved.

Read Also: Buy Now Pay Later – How It’s Helping eCommerce Stores Grow Their Conversions by 10x

4. Provide Speedy Service

Providing speedy service is a winning strategy for any business. If you can manage to do it well, it’s one of the most effective ways to boost your sales and maintain a strong customer base.

Example: Instacart—they’ve created a specialized part of their business that works with large stores or retailers. They deliver large items, such as electronics and furniture, on the same day you order them. It will make you happy to receive your new TV or sofa quickly.

5. Remove Minimum Orders

Consider eliminating order minimums if possible. When dealing with other businesses, being flexible is crucial for growth and sustaining good buyer relationships. By eliminating order minimums, you create room for smaller businesses and startups to place smaller orders as they build momentum on a limited budget.

Example: Printful allows businesses to fulfill merchandise orders without requiring a minimum order quantity.

6. Implement Omnichannel Experiences

Make your business stand out by creating a seamless experience across different channels. This includes utilizing content, optimizing for search engines (SEO), running paid advertisements, and maintaining a strong presence on social media, thereby forming a powerful omnichannel experience.

The goal is to consistently engage with businesses and stay top of mind when they’re searching for what you provide. Whether it’s about quicker supply chains, large discounted orders, or personalized fulfillment, an omnichannel approach helps your business connect with others effectively.

7. Optimize Costs with Distributor for Order Fulfillment

It’s becoming more expensive for businesses to sell directly to consumers due to rising costs. To tackle the high expenses associated with order fulfillment and maintain a lean budget, consider using a middleman, such as a distributor, to handle the process.

Example: Swoon, a beverage company, decided to utilize Amazon’s fulfillment services to reduce shipping costs and streamline its operations more efficiently.

8. Streamline Checkout by Improving User Experience

While you may no longer need face-to-face meetings for substantial transactions, B2B companies should focus on ensuring a seamless buyer experience to facilitate online deals.

As highlighted by McKinsey, successful B2B businesses prioritize their website’s user experience, incorporating essential features such as personalized recommendations, enhanced service availability, improved warranty deals, and flexible shipping and delivery options.

9. Facilitate Small Business Transactions

If possible, make it easier for smaller businesses to buy from you, as it will give you plenty of revenue potential. Stand out by offering deals and accessibility that many other digital B2B companies don’t provide. When refining your B2B e-commerce strategies, consider facilitating the participation of startup or growing businesses by offering affordable deals.

Example: viaGlamour enables small businesses to launch their makeup lines with features such as payment plans and a free startup option. Additionally, it offers custom packaging design without involving a third party.

Top B2B eCommerce Models and Benefits

1.    Alibaba

Launched in 1999, Alibaba is the world’s largest global e-commerce platform for small businesses, connecting B2B sellers and buyers worldwide. With over 1.24 billion active users, it offers a free platform for trade, making profits through commissions and advertising. It’s a go-to platform for cross-border trade and market expansion.

2.    Made-In-China

Serving as a comprehensive service platform for foreign trade, Made-In-China connects Chinese suppliers with overseas buyers. With 40 million products, 6 million suppliers, and 14 million buyers, it ensures credibility through verifications and audit reports, enhancing the sourcing possibilities for various industries.

3.    ThomasNet

ThomasNet, originating from the 19th century, is North America’s leading industrial sourcing platform, serving over 950,000 active users. With 500,000+ supplier profiles and a focus on the US and Canadian markets, it attracts global engineers, facility managers, and purchasing agents, offering a vast array of products.

4.    Tradekey

Established in 2006, TradeKey is a rapidly growing B2B marketplace that connects small and medium-sized businesses internationally. Although it targets the Asia-Pacific market, it offers various service packages to facilitate faster deal closure. Despite its modest size, it offers a diverse range of products across nearly 40 categories.

5.    MSC Direct

MSC, founded in 1941, is a major North American distributor of metalworking and MRO products. With nearly 2 million products and next-day delivery for over 500,000 items, MSC emphasizes a user-friendly website featuring optimized search functions.

6.    Grainger

Founded in 1927, Grainger is a Fortune 500 industrial supply company with a revenue of almost $12 billion. Listing over 1.5 million products, Grainger not only provides tangible goods but also offers consultative services, product expertise, and a premium digital experience.

7.    Quill

Established in 1956 and owned by Staples, Quill.com is a prominent B2B e-commerce platform for office supplies. With a user-friendly interface, a wide product range, and customer benefits such as coupons and fast, free shipping, Quill is recognized for its outstanding customer service.

8.    Ferguson

As the largest US distributor of plumbing supplies and industrial products, Ferguson, established in 1953, has grown into a $22.8 billion company. Beyond plumbing, it offers expert advice, services, and a top-notch website for a seamless customer experience.

9.    Medline

Medline, established in 1966, is the largest privately held manufacturer and distributor of medical supplies in the US. With a modern website design, comprehensive structure, and educational materials, Medline serves healthcare across the continuum of care.

10. Thermo Fisher Scientific

Thermo Fisher Scientific, founded in 1956, is a global supplier of scientific instruments and services, offering over 600,000 products. Valued in the biotechnological and pharmaceutical sectors, it operates in more than 150 countries, providing products under various brand names.

11. DHgate

DHgate is a Chinese B2B and B2C cross-border e-commerce marketplace facilitating the sale of manufactured products globally. With over 30 million products, secure payment services, and a user-friendly website similar to Alibaba, DHgate serves millions of enterprises and customers.

12. Global Sources

A Hong Kong-based B2B marketplace since 1971, Global Sources connects over 10 million registered international buyers with verified suppliers globally. Offering a well-organized website, virtual summits, and trade shows enhances digital experiences for online shows.

13. Tradewheel

Tradewheel is a B2B marketplace connecting global manufacturers, suppliers, buyers, and traders. With over 7 million buyers, 6 million suppliers, and 20 million products, Tradewheel provides dedicated sales managers, marketing services, and a user-friendly website for seamless transactions.

Final Words

I trust this guide has equipped you with the essential insights for navigating the realm of B2B e-commerce. Whether you are a seasoned professional or just beginning your journey, the diverse platforms and strategies outlined here offer a range of opportunities for growth and success in the B2B landscape. Thank you for taking the time to read and explore these valuable resources.

Connect with experts at CODUP for top-notch B2B eCommerce website development services.

Read Also:

• B2B eCommerce Food and Beverage – Industry Trends, Opportunities, Challenges, and Solutions
• 15 Ways to Improve B2B Ecommerce Conversion Rates
• How eCommerce Adoption Benefits B2B Healthcare Providers and Device Makers

Contributors

• 

  Fahad Sheikh

  writer

  Head of Growth and Product