Perspectives

B2B eCommerce Definition: What is B2B eCommerce?

Gaurav Singh Rana
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B2B eCommerce Definition: What is B2B eCommerce?

B2B commerce definition by Investopedia is, “a type of commerce transaction that exists between businesses, such as those involving a manufacturer and wholesaler, or a wholesaler and a retailer.” Let's look at B2B eCommerce definition:

B2B eCommerce stands for business to business electronic commerce and refers to online transactions between businesses, often involving brand, distributors selling products to wholesale customers or retailers rather than individual customers.

Transactions at the wholesale level are usually business-to-business while those at the retail level are most often business-to-consumer (B2C). B2B commerce is quite different from B2C commerce. It functions in a layered system where a business is doing transactions with many other businesses. It is not just about selling the product, but far more than that. Selling the product is a very small part, as most of the sales happen with the existing customers.

Getting to a Good B2B eCommerce Definition

To get a handle on what B2B eCommerce is, it’s helpful to break the concept down into its two component parts: the B2B or business-to-business component, and the eCommerce or online transaction component. When you think of it this way, the definition of B2B eCommerce can be quite broad.

The automotive industry is a great example of an ecosystem of complex B2B relationships. Within automotive, there is a huge supply chain that represents companies that do everything from supply the initial raw materials (metals, glass, rubber, etc.), to the manufacturing of not just the car itself but all the components of the car, from radios to headlamps, computer systems and more.

The supply chain can include hundreds of businesses and B2B customer relationships to produce a single car that will then be sold to the end consumer. The eCommerce component speaks to how all these different types of businesses may use the Internet to transact and manage relationships with one another.

B2C vs. B2B eCommerce

A B2B eCommerce platform is quite different from B2C one. Some reasons that make B2B eCommerce different from B2C are:

  • Number of people involved: When a business buys, a lot of people are involved in deciding the right seller, right products, right price, etc. Whereas, when an individual buys, which is the case in B2C, only one person is involved without taking too many factors into consideration. Also, B2C buying is quite instant and B2B buying is a lengthy process taking a lot of factors into consideration before making a decision.
  • Payments: B2B payments are quite slow, as they happen in bulk. Usually, the payment is made after a few days (usually 30 days) of the services or goods delivered. On the other hand, in B2C, the buyer pays before receiving the product.
  • Pricing: B2C prices are usually fixed. B2B pricing is negotiable as per the quantity or other factors. Pricing are very personalised depending on the relationship with the customers.
  • Product Options: In B2C, usually the buyer picks up a product among few other options. But B2B buyers look properly for each and every detail, they need a huge catalogue including several variations of each product. Sometimes, they may also request for customisation.

There are many other factors involved that make B2B commerce far more complex than B2C. Both ways are good, having their own advantages as well as disadvantages. If you are a small business, registering on an eCommerce marketplace like Amazon is a good idea. This saves the resources invested on handling an entire website of your own. On the other hand, having your own B2B ordering portal for your wholesale customers ensures that whosoever visits your online portal will buy only what you want to sell and you get own the customers to build long lasting relationship.

3 Basic Models of B2B eCommerce

  1. Supplier Oriented (e-distribution): Cisco is a successful example of this model. Their online marketplace is called Cisco Connection Online. They started online business in 1991, launched their website in 1994, and by 1998, the website was accessed 1 million times a month for technical support, order status, and downloading software. Launching applications online saved them USD 363 million per year. Additionally, save USD 180 million per year in duplication, packaging, and distribution; as well as USD 50 million per year saved because printing and distribution of catalogues was not required anymore.
  2. Buyer Oriented (e-procurement): GE’s bidding site is the successful example of this model. It is known as GE TPN Post. Here, buyers pay a nominal fee to post information about their project. Potential suppliers bid on it and the buyers chose the best bid.
  3. Intermediary Oriented (e-exchange): The best example here is Alibaba. Started in 1999, Alibaba connected Chinese manufacturers with buyers overseas. Since 2015, the profit and sales of Alibaba has surpassed that of all US retailers including Amazon, eBay, and Walmart combined!

How does B2B eCommerce fit into your business?

52% of the B2B buyers research about the product on their mobile devices and then proceed with further purchasing as well as other related steps, according to Forrester. Mobile phones have made the process far easier, fast, and convenient. Buyers also expect omni-channel engagement and sales strategy. They want the experience equivalent to any B2C eCommerce. From the sleek design to ease of scrolling down the products to seamless customer service and many more.

50% of the B2B buyers expressed that they would prefer a seller who can provide more customised and personalised service. Furthermore, 40% of the buyers expressed that better back-end integration with accounting, finance, OMS (Order Management Systems), ERP (Enterprise Resource Planning) will be preferred.

In short, buyers expect more comfort, ease, and convenience.

Believe it or not, B2B eCommerce is growing at pace that it will soon dwarf the B2C market. B2B eCommerce solutions are comparatively complex, but offer a great deal of benefits over offline. So, if you are into B2B business, bring your distribution online as soon as possible. There is always an advantage of staying ahead of your competitors. The earlier you will make your presence, the earlier you will build your reputation online.

Last Updated :
April 2, 2021
Published :
25/7/2020

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