What do brands like Levi’s, Apple, and Nike have in common? They run cross-border ecommerce platforms to market and sell products directly to online shoppers, which means they follow a business-to-consumer (B2C) sales model. But, there are many types of ecommerce, and online marketplaces don’t always sell directly to consumers.
Several ecommerce businesses follow a business-to-business (B2B) sales model, which means they market and sell products or services to other companies.
Typically, B2B ecommerce transactions occur between manufacturers and wholesalers or wholesalers and retailers via an online sales portal. These transactions are often used to fulfill supply chain requirements.
For example, when a manufacturer requires raw materials to produce their products, they can look to B2B ecommerce businesses to purchase these materials. B2B ecommerce is currently one of the fastest-growing sales models and is projected to reach $1.8 trillion by 2023.
As B2B ecommerce continues to grow, understanding how this online sales model works is essential — especially for those interested in selling B2B online. In this guide, we will discuss:
- Differences between B2B and B2C
- Types of B2B ecommerce
- B2B ecommerce misconceptions
- Advantages of B2B ecommerce
- Disadvantages of B2B ecommerce
- B2B ecommerce examples
- The future of B2B ecommerce
Differences Between B2B and B2C
The critical difference between B2B and B2C sales models lies with who businesses are marketing and selling to. While B2C focuses on selling goods or services to the general public, B2B focuses on selling goods or services to other businesses. To better understand this difference, let’s look at an example.
Suppose a clothing brand creates a new collection of garments. If they choose a B2B sales model, they will need to create a B2B ecommerce website or conduct other outreach programs to find a clothing retailer (think Nordstrom, Macy’s, or Saks Fifth Avenue) to purchase their garments, typically at a discounted price. The clothing retailer will then sell these garments directly to consumers, generally with a price markup.
If the clothing brand chooses a B2C sales model, they will need to set up their store (either a brick-and-mortar storefront or an ecommerce store) to sell their goods directly to consumers. This process takes more time, but it typically enables the clothing brand to sell their garments at a higher price. In many cases, businesses will lean on both B2C and B2B sales models at the same time to maximize brand reach and profits.
Outside of who businesses are marketing and selling to, there are a few other differentiating factors involved in the B2B sales model:
Customer partnerships: B2C sales typically involve shorter-term customer partnerships and one-time transactions. On the other hand, B2B sales often involve longer-term alliances that lead to several transactions and longer buying cycles. B2B partnerships, in many cases, enable both businesses to generate revenue — making their relationship interdependent.
Personalization: B2B sales often require more personalization than B2C sales, especially regarding product catalogs, price lists, quotes, contracts, and payment and shipping options. Personalization is becoming increasingly important with B2B ecommerce, as businesses are looking for online suppliers that understand them and their unique needs and offer personalized websites or dashboards to accommodate their order requests.
Complex decision making: B2C sales often consist of independent shoppers making more spontaneous purchase decisions. B2B sales consist of more complex decision-making from business customers. B2B sales are typically larger in scale, which means more business stakeholders are involved in the transaction approval process, business relationship, and workflow implementation.
Types of Business-to-Business Ecommerce
B2B ecommerce typically falls into three main categories, but businesses can operate in multiple categories at once:
1. Supplier-focused: Several suppliers list their products or services in an ecommerce marketplace that sells to several businesses. In this model, suppliers can set product prices based on the buyers’ needs. Buyers can search for specific suppliers, products, or services within the marketplace. An example of a supplier-focused ecommerce marketplace is Connection.com. This global IT solutions provider sells products and services to small- and medium-sized businesses (SMBs), enterprise businesses, and public sector markets from 500 suppliers.
2. Buyer-focused: This model is based on individual buyers’ needs and is commonly used by enterprise-level organizations that have greater buying power and conduct large-volume purchases. Typically, the business that needs to buy products or raw materials sets up a B2B ecommerce store or online portal and invites sellers to provide quotes. As the company receives these quotes, they can carefully review them to find which best suits their needs and budget.
3. Intermediary-focused: B2B ecommerce marketplaces that bring together buyers and sellers to build relationships and transact with one another. Within these intermediary marketplaces, product catalogs and information are controlled by the marketplace provider, which means sellers must adhere to specific guidelines. What’s more, these marketplaces mediate buyer-seller relationships, product orders, and contact information. An example of an intermediary-focused ecommerce marketplace is Alibaba.com, a B2B ecommerce portal that brings together Chinese manufacturers and overseas buyers.
Ecommerce B2B Model Misconceptions
There are several B2B ecommerce misconceptions, especially for those who are new to the concept. Let’s break down a few so you can better understand how B2B ecommerce operates.
“I’m not selling B2B.”
Many businesses claim they are not selling B2B, but they aren’t aware they are already doing so. B2B ecommerce spans a wide variety of industries, including wholesale, distribution, selling to organizations like schools or non-profits, and suppliers selling to resellers. It’s important to remember that businesses do not have to be a supplier or require a separate website to conduct B2B ecommerce sales. Just like the clothing brand example we mentioned earlier, businesses can follow both B2C and B2B sales simultaneously.
“B2B customers prefer to order offline.”
Younger generations that have grown up with B2C ecommerce are becoming leaders in the B2B ecommerce industry. Current research shows that 73% of millennials hold integral roles in B2B purchasing decisions. With this data point in mind, it’s easy to infer that the ebusiness model is trickling over to the B2B space. Millennials are now the current market makers. They expect the same levels of B2C sales convenience — such as personalized online sales portals, mobile ordering, and self-service functionality — from B2B marketplaces.
Note: Unsure of the difference between ecommerce and ebusiness? While ecommerce refers to the process of buying and selling goods online, ebusiness refers to performing all types of business activities or processes online. This includes purchasing raw materials from suppliers, maintaining customer relationships, buying and selling goods, and more. Ecommerce is a crucial aspect of running an ebusiness.
“The B2B buying experience online is obsolete.”
Much like B2C ecommerce websites, B2B sites have become powerful engines for driving sales, fulfilling product orders, and creating unique experiences for individual customers. Robust B2B ecommerce platforms don’t just act as a catalog for products and a way to accept payments; they act as a customizable dashboard where customers can access things like:
- Custom prices and discounts, based on negotiated terms.
- Flexible payment methods, such as accepting several payment types or plans.
- Options to purchase, track, and repurchase products seamlessly.
- Custom user interfaces, such as customer-oriented website navigation.
- Personalized content and marketing experiences.
- Real-time support, such as live chat functionality or assistance finding products.
“B2B ecommerce exposes product prices.”
The B2B industry is competitive, and many brands don’t want to expose their prices to the public for fear of being underbid. Fortunately, several B2B ecommerce platforms can hide product pricing until a customer logs in to a website or sales portal. Not only does this enable businesses to keep their prices hidden from the general public, but it gives them even more opportunities to create a personalized pricing experience for each of their customers. It’s important to note that B2B ecommerce platforms that enable price shielding still allow potential customers or prospects to view products. If these groups are interested in purchasing products, they can call to get prices.
Advantages of B2B Ecommerce
As B2B ecommerce continues to boom, businesses realize several advantages that enable them to streamline operations and reach more customers. Below you’ll find a few of the most notable benefits of B2B ecommerce.
Increase Brand Awareness
B2B ecommerce platforms enable businesses to supercharge brand awareness and scalability with omnichannel digital marketing campaigns. This can be done via digital marketing tactics like search engine optimized (SEO) content and online advertising channels. Because more businesses are searching for products and raw materials online, you’ll be able to get your product catalog in front of more potential customers.
Enhance Data Analysis and Management
When B2B sales shift online, businesses can deploy ecommerce software solutions that streamline data analysis and management. These solutions can help you collect, measure, and evaluate data about digital marketing campaigns, the buyer’s journey, inventory changes, and customer engagement. And, with data about your customers at your fingertips, it’s easier to create personalized online shopping experiences, build stronger partnerships, and reach new customers.
Automate the Sales Process
B2B ecommerce platforms enable business owners to automate several aspects of the sales process between businesses, suppliers, and distributors. This includes providing self-service functionality within their marketplace, which allows business customers to check inventory, submit orders, and set up payment and shipping plans without speaking to a business representative.
Reduce Overhead Costs
Moving to an online B2B ecommerce platform enables businesses to reduce overhead and infrastructure costs. For example, the automated nature of B2B ecommerce websites mitigates the need for brick-and-mortar storefronts and business representatives to check inventory or process customer payments. Because employees can save time, they can focus on more value-driven work like enhancing business relationships or ideating new products.
Disadvantages of B2B Ecommerce
B2B ecommerce also has inherent disadvantages, especially for SMBs who are trying to break into a market.
Difficulty Building a Customer Base
As more businesses explore the B2B ecommerce space, online markets can become saturated with competitors. This can make it challenging to attract customers, build a client base, and establish a solid brand reputation. A critical factor in running a successful B2B ecommerce business is long-term customer relationships, which can take time to find, acquire, and nurture.
Inability for Customers to be Hands-on
Many business customers still want to hold, touch, and feel products or materials before purchasing them, especially if they make large-volume purchases. The B2B ecommerce space does not allow customers to be hands-on with products or materials offered, which could deter some buyers. What’s more, if a buyer is unhappy with products or materials they purchase, they could dispute the purchase after the fact — which could harm a business’s reputation.
Complex Customer Negotiations
While B2B ecommerce platforms inherently streamline the buying and selling process, customer negotiations can become more complex. This is especially true for long-term customers who expect price discounts, as the automated nature of ecommerce websites might not consider these factors. If customer negotiations consist of lengthy email chains and back-and-forth online communication, some of the convenience of the B2B ecommerce platform is negated.
Cybercriminals continue to become more sophisticated, and online security breaches are commonplace. This means that B2B ecommerce platforms must have the proper security protocols in place (such as data encryption) to protect sensitive business and customer data from being exposed to attackers.
B2B Ecommerce Examples
Earlier, we mentioned Connection.com and Alibaba.com as real-world examples of B2B ecommerce platforms. Here are two more examples, one of which you might be familiar with.
While Amazon sells directly to consumers through both B2C (selling their Amazon Essentials brand directly to consumers) and business-to-business-to-consumer (B2B2C) sales models (Amazon provides the ecommerce platform for businesses to sell their products, charging them a fee for each sale they make), Amazon Business is strictly geared towards organizations and companies. This platform helps them digitize and streamline the buying and selling process. Not only does it feature hundreds of millions of business-oriented products, but it provides buyer discounts, account management features, multiple payment methods, and access to business analytics.
Poly is another example of a B2B ecommerce platform. Their online marketplace enables businesses to purchase audio and video equipment — such as headsets, business phones, conference phones, and video conferencing solutions — to facilitate communication inside and outside the office. Their website offers several resources for customer support, such as an in-depth knowledge base, a community discussion board, and multiple options to contact Poly support teams. They also provide a variety of special offers and promotions for customers.
What Does the Future of B2B in Ecommerce Look Like?
As more millennials step into leadership roles in the B2B sales space, more businesses will naturally begin to venture into the world of B2B ecommerce. Companies selling their products or services to other companies online can introduce automation, personalization, and streamlined data collection into the traditional B2B sales process.
Not only does this help them attract more B2B customers and increase sales, but it helps them improve inventory management, reduce infrastructure costs, and stay competitive in our ecommerce-driven economy.
If you’re interested in breaking into the B2B ecommerce space and need to build a website, StoreBuilder by Nexcess is ready to help. As the fastest and easiest way to create an online store with WordPress, our online store builder enables you to create a fully customized B2B ecommerce site with preconfigured Woo + premium plugins.