B2B, short for “business to business” is a business model in which products and services are created for other businesses rather than individual consumers.
For example, wholesalers are typically B2B retailers as they sell products in bulk at a discounted rate to retailers, who then sell on the products individually to consumers.
However, products are not necessarily always offered for resale. A cleaning product company or an office furniture company is likely to offer products that are targeted for the needs of businesses.
B2B service businesses can also be very profitable. CRM, cloud backup, accounting, fulfillment, and training are all examples of services that are commonly in demand by other businesses.
The B2B eCommerce market is actually more than double the size of the B2C market. While there are fewer businesses in the world than individual consumers, businesses tend to spend a lot more money on products and consumers.
B2B eCommerce sell products and services to other businesses including:
- Distribution through large retailers
- Direct relationships with organizations
- Suppliers for resellers
Many businesses combine B2B and B2C models, selling both directly to consumers and to other businesses.
Types of B2B eCommerce
- Wholesale – Wholesale businesses provide products for retail businesses in bulk, which they then sell to customers at a marked up price. Wholesale businesses traditionally sold over the phone or direct from a warehouse, but eCommerce technology has made an easier and more efficient experience for both businesses.
- B2B2C – In the B2B2C model, company 1 sells products or services in partnership with company 2, direct to the consumer. An example of B2B2C eCommerce would be Instacart, which partners with grocery stores to provide a service for customers.
- Manufacturers – Manufacturers produce products, which are then sold to other manufacturers or retailers. Again, eCommerce has streamlined the way in which these different businesses can work together.
The Benefits of Using a B2B eCommerce Model
Some B2B companies have been slower to adapt to new technologies than B2C companies. While competition and expectations from customers have meant that B2C companies have had to rapidly evolve, many B2B businesses have stuck to their traditional processes.
However, B2B customers are now expecting their buying experiences to be as streamlined as when they’re shopping for products and services for personal use.
Today’s B2B buyers are also much more likely to be from the Millenial generation, who are known for embracing technology more than their Baby Boomer and Generation X counterparts.
Some of the advantages of using an eCommerce platform for selling to other businesses include:
- Better marketing opportunities and easier to reach new customers.
- More streamlined and efficient supplier and customer management
- More opportunities for cross-selling and up-selling to increase customer lifetime value
- The opportunity to collect more data and better analytics and reporting
- Improved customer experience
- New technologies such as AR and VR allow customers to inspect and try out products virtually.
The impact of the COVID-19 pandemic forced many businesses to temporarily close their physical premises and move to online operations. While many B2B businesses struggled with the transition, there’s no doubt it encouraged a move towards more companies embracing digital systems and processes. Because of this, we can expect to see a boom in B2B eCommerce services and technology over the next few years.