What is B2B eCommerce?
Digital commerce is experiencing rapid growth, expanding into various channels, devices, markets, and industries.
Usually, when talking about e-commerce, we think of online transactions between a business and an individual buying things off the Internet. But that’s just one part; e-commerce is much larger than that.
The other wide 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, B2B businesses have been sluggish to adopt e-commerce. Right before the COVID-19 pandemic, a report stated that only 9% of all B2B product sales in the U.S. occurred on an e-commerce website.
But ever since the pandemic, the B2B e-commerce industry has undergone a massive change. More millennials are entering the B2B e-commerce world that previously hesitated. This adoption of online business transactions is increasing buyers’ demands and expectations more than ever, and B2B companies must keep pace.
The statistics depict the importance of the growing industry. So, let’s explore more about What B2B e-commerce is.
What is B2B eCommerce?
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 side, B2B (business-to-business) is the type of business transaction that occurs between 2 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 a 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 through 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 very simple and clear: expand customer reach and minimize operational costs to drive 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 eCommerce, expanding customer reach means using online platforms to connect with more businesses. Imagine you can reach companies across different regions and industries that you weren’t able to access before.
By approaching the essentials like using digital marketing tools, like SEO and social media, to make your business more visible and attractive to these new audiences on a global scale, round 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 stuff, like processing orders and managing inventory, you move away from a lot 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, an effective B2B e-commerce platform provides you with an understanding of what your customers want and how to serve them better. This will help you to make informed decisions to better meet market demands and optimize revenue generation.
Key Benefits of B2B e-commerce
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 leads to decreased infrastructure and overhead costs, allowing for more cost-effective operations.
3. Direct Connectivity for Higher Growth: By minimizing the reliance on intermediaries, B2B e-commerce paves the way for direct connections, fostering higher growth prospects for businesses.
4. Broad Market Reach: The ability to access a mass market at scale provides B2B e-commerce enterprises with extensive market reach and potential customer engagement.
5. Omnichannel Branded Presence: Maintaining an omnichannel branded presence 24/7 ensures constant accessibility, reinforcing brand visibility and availability to potential clients.
6. Better Collaborative Partnerships: B2B e-commerce facilitates better relationships with partners, creating a collaborative ecosystem that can contribute 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 e-commerce 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 like a manufacturer and 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
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 opens up new opportunities for businesses to build 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, besides just online selling, businesses must strictly monitor all their operations and control each little 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:
|Businesses trade with each other.
|Businesses sell to individual consumers.
|Typically includes hundreds of items with large cost value.
|A few items or single purchases by individuals.
|Requires specialized systems to support bulk purchases consistently and efficiently.
|Easy systems for individual preferences and ease of use.
|Prices often negotiated, set by a sales rep.
|Fixed prices directly accessible to consumers.
|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.
|Focuses on simple, user-friendly experience and accommodating individual preferences.
|Makes special online shops for each buyer, so buying feels unique.
|Focuses on easy-to-use websites and experiences that fit each person’s preferences.
|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 E-commerce
Beyond the standard B2B e-commerce model, where businesses usually trade with each other, there are also many different types of online business trading. 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: Nespresso Professional, which sells coffee to restaurants, and the restaurants then sell it to the end customers.
Another great B2B2C retail example 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: 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.
Example of B2E: An online app for insurance policy management 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 Ecommerce
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 didn’t need ads as much because they grew 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 get benefits and feel happy.
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.
Think about buyer-supplier relationships that allow flexible payment terms, such as buy now, pay later, early payment discounts, buyer loyalty programs, or even earning a percentage of sales as payment. It will all find ways to make the payment process more flexible and beneficial for both parties involved.
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 keep your customer base strong.
Example: Instacart—they’ve made a special part of their business that works with big stores or retailers. They deliver large items like electronics and furniture on the same day you order them. It will make you happy to get your new TV or sofa really fast.
5. Remove Minimum Orders
Consider getting rid of order minimums if you can. 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 using content, optimizing for search engines (SEO), paid advertisements, and having a strong presence on social media, forming a powerful omnichannel experience.
The goal is to engage with businesses consistently and stay in their minds 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 getting pricier for businesses to sell directly to consumers due to rising costs. To tackle the high expenses tied to order fulfillment and maintain a lean budget, think about using a middleman, like a distributor, to handle the process.
Example: Swoon, a beverage company, decided to use Amazon’s fulfillment services to cut down on shipping costs and manage their operations more efficiently.
8. Streamline Checkout by Improving User Experience
While you may not need face-to-face meetings for substantial transactions anymore, 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, think about facilitating startup or growing businesses to join in by offering affordable deals.
Example: viaGlamour allows small businesses to launch their makeup line with features like payment plans and a free startup option. Additionally, it offers custom packaging design without involving a third party.
Top B2B E-commerce Examples
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.
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.
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.
Established in 2006, Tradekey is a rapidly growing B2B marketplace connecting small and medium businesses internationally. Although it targets the Asia-Pacific market, it provides various service packages for 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 close to 2 million products and next-day delivery for 500,000 items, MSC emphasizes a user-friendly website with optimized search functions.
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.
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 like coupons and fast, free shipping, Quill is recognized for outstanding customer service.
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.
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 instrumentation and services with over 600,000 products. Valued in the biotechnological and pharmaceutical sectors, it operates in more than 150 countries, providing products under various brand names.
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.
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.
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.