What is B2B eCommerce and How Does It Work?

What is B2B ecommerce

The rise of eCommerce is upon us! 

It’s a rapidly expanding phenomenon that’s expanded to numerous sectors, channels, and markets. 

But here’s the thing: when most people think about eCommerce, they usually think about the glitz and glamor of consumer-facing stores like Amazon, where people can buy all sorts of products for consumption.

In the midst of all this, we often forget, or don’t know, about another powerful player in the market: B2B eCommerce. 

Yes, business-to-business (B2B) transactions are as much a part of the eCommerce industry as B2C (Business to Consumer) eCommerce. In fact, it’s a trillion-dollar industry that’s seen rapid growth and healthy projections for the years on end. 

To us, the industry’s net-worth is self-explanatory. To the general reader, however, it prompts an important question in the mind of the interested reader: What is B2B eCommerce? 

Well, in this article, we’ll try to answer that question in insignificant detail. 

Explaining B2B Ecommerce 

“An online transaction wherein two business entities are involved in trade activities with one another.”

That’s a difficult definition. In simple terms, B2B eCommerce is all about eCommerce activities between two companies. If one company is selling a particular product to another company online, they are engaging in B2B eCommerce. 

Being an industry, B2B eCommerce varies depending on the niche of operations. The business models vary from company to company and sector to sector. You can see the differences in terms of products/services, accounting, legal, digital, and many other practices.

Some B2B businesses are so diverse that they resemble B2C more than B2B. This begs the question, “where do we draw the line between the two”? The next section attempts to explain this. 

B2B and B2C: The Differences 

To fully understand the differences between the two, we need to look at the sellers involved in both the industries. 

Stores like Walmart and Amazon are run by B2C sellers. Since their target is the general public, they have to tailor their online experience similar to the in-store, real-life experience of said outlets. 

In contrast, the B2B selling experience isn’t as contemporary. The niche and business dynamics vary from business to business – with each industry having its own set of best practices. 

In general, the B2B selling experience goes something likes this: 

Company A is a biscuit manufacturer. Company B runs a chain of B2C style supermarkets. To fill their shelves with products, Company B purchases from manufacturers like Company A, and others who produce a variety of consumer products. 

Here’s a diagrammatic representation of what we’re trying to explain: 

Again, the industry dynamics dictate the trade activities – making this linear process a lot more complex. In this flowchart, we’ve removed the supply chain process, and the fact that Company A is just one of the many suppliers supplying goods to company B. From the consumer’s end, we’ve also eliminated logistics and third-party retailers, and whether or not the type of business entity Company B is. 

Even with the differences in the selling process, B2B and B2C do share some similarities with each other. Personalization, technological changes, changes in shipping practices, customer convenience, and cross channel mobility are just at the tip of the iceberg. 

To elaborate, here’s how B2B differs from its counterparts: 

The Buying Cycles Are Longer 

The nature of B2B transactions is complex and time-consuming. 

Unlike B2C – where you can simply click on the “Add to Cart” button and the product is eventually shipped to you – B2B eCommerce consists of smaller lead pools, bulk orders, quotations, and contracts. 

Similarly, B2B buyers look for long-term relationship building, trustworthy suppliers, and ease of purchase from the seller’s end. 

Formal Relationship Building 

B2B relationships are based on long-term commitments as opposed to one-shot purchases. In B2C, consumers purchase to fulfill an immediate hedonic or utilitarian need. 

B2B businesses create products and services that help other business organizations succeed while making a profit themselves. 

You don’t have to go farther than HubSpot to see how a B2B business has helped companies from all sorts of industries succeed in their own line of work through HubSpot’s CRM

Products are Personalized 

Personalization, while being slightly important in B2C, holds serious value in B2B purchases. 

A smooth and tailored customer experience designed for each individual buying party gives your store more legitimacy. From our observations, here are some of the most common areas for personalization: 

  • Custom quote management 
  • Custom product catalogs 
  • Customized pricing 
  • Custom payment and shipping methods 
  • Custom contracts 
  • Custom product discounts 

…and more. 

Unlike the fixed prices (with the often discount) of B2C, B2B prices are based on external factors. Here’s how the flow goes: 

A seller sets the prices. The prices are then altered depending on the type of buyers, their geographical location, the product volumes, and negotiations. 

Buying Parties and Decision Makers 

Read the second sentence of the previous section. Notice something? We talked about buying parties in place of the word “buyer.” 

Why is that so? 

Generally, the term is used in B2C, where you have a single buyer purchasing product for personal use. In B2B, however, the “buyer” morphs into a buying party on behalf of an organization. These parties include procurement, supply chain, budgeting officers, stakeholders, and more. 

With so many individuals involved in a single purchase, the decision-making process is bound to be complex. There are so many people involved because, at its core, B2B is an organizational process where the stakes are high, and the product is purchased in large quantities. 

Corporate Accounts Management 

Taking a cue from the previous step, let’s elaborate further on the decision-makers themselves. 

As a B2B eCommerce store owner, with so many people involved in a single purchase, you would ideally want to give them some level of management for their operations on your store. 

This is where corporate account management comes in. B2B stores need to give companies their own special in-store account where they can set users and their permissions – creating an emulation of the real-world hierarchy within the store. 

Complexities of Payments 

Consumers (B2C purchasers) have a set amount of payment options: with the primary ones being credit cards, and payment gateways. That’s about it. 

In business, however, the payments can be made through different channels, which include a line of credit (LOC), invoicing, credits, bank transfers, pay orders, checks, and terms. 

The last one is rather interesting since it constitutes a major part of the relationship-building process. A buyer can come to payment terms if the relationship between them is good. The terms can be from anywhere from net-30 to net-90. Again, the terms set for a purchase depend entirely upon the relationship between the two parties. 

Why Choose B2B Ecommerce?

B2B eCommerce isn’t just about manufacturing and selling heavy equipment to anyone willing to buy. It’s a goldmine of market opportunities that let’s previously traditional companies go beyond borders to compete both locally and internationally.

In this era of globalization and rapid transfer of information, B2B gives enterprises the opportunity to scale their businesses. It has spawned a range of companies selling B2B eCommerce solutions to help businesses set up their B2B stores and compete online. 

The breadth of the industry is indeed staggering. Let’s look at some of the ways B2B eCommerce benefits businesses the world over. 

Scale and Future Proof Your Business With B2B Ecommerce 

Besides the benefits of lowered cost, faster operations, and efficiencies in internal processes, B2B gives sellers serious benefits when it comes to:

Multi-Channel Selling

As touched upon before, B2B eCommerce lets sellers expand their reach to international markets. Through SEO, and having a mobile-responsive store experience, that is made possible and better. But that’s not all. 

When selling on multiple channels, you can even go so far as to give your store a look and feel based on the region of operations. This means that you can add currency, language, and the color palette that is in-tune with that region.

The best part? You can have all of that while keeping the style, language, and currency of your local country. 

Personalized Web Experiences

Seamless ordering processes, self-service, personalized catalogs, shipping, and pricing are part and parcel of a B2B experience that promises conversions and sales. 

With B2B having multiple stakeholders, it makes sense to include these processes because besides improving sales, they lead to brand loyalty and customer satisfaction, two important metrics in commerce in general. 

Automation and Efficiency

The eCommerce sales process usually revolves around searching for leads and entering their data. While that is effective to a degree, it removes the opportunity to gather top priority (aka hot) leads. 

Taking your internal process digital can remove these hurdles by allowing you to automate the lead generation process, pricing, ordering, and checkouts. Moreover, automation brings with it fewer opportunities for mistakes and follies. 

“Lands of Opportunity” Await You

With B2B eCommerce, you’re ensuring that your store operations aren’t limited to a particular location. With access to markets the world over, you can make a profit even if you’re not performing well locally. 

If your store’s performance is below par both inside and outside borders, you can even try the marketplace model to gain sales and leads for your business. 

Build a Sturdy Business

You don’t have to worry about scaling or growing pains when you have a stable and scalable B2B eCommerce solution. 

It’s important to note that to avoid re-platforming, you need to invest in a good solution beforehand. There are plenty of great platforms out there, but use one that fills your needs best. 

Centralize data with integrations

You can create a hybrid version of your B2B store, mixing up the digital with the traditional. However, integrating your eCommerce store with ERP, WHMS, PIM, and CRM systems can prove even better in improving your overall store operations. Such integrations are essential tools of the trade and a must-have for your store. 

The Many Faces of B2B Ecommerce 

To say that B2B eCommerce is diverse would be an understatement. B2B is supremely diverse! 

You might have seen that within a particular industry, you have sub-industries in which companies operate through a variety of business models. The B2B industry is no different in that regard.

Depending on what product or service you’re selling you could be operating under one, or a combination of the following business models: 

Business to Business to Business (B2B2B) Ecommerce

This model adds another layer to the B2B sales process through additional layers of business buying. 

This model is rather prevalent, given the fact that a product usually flows through a manufacturer, distributor, retailer, sub-distributor, and wholesaler. 

Business to Business to Consumer (B2B2C) Ecommerce

This is the general flow we discussed a few sections ago. From manufacturer to wholesaler to consumer, B2B2C is the reason why you can pick out a product directly from the shelves in a supermarket. 

This chain helps businesses gain useful customer insights, which can then be used to create better offerings and discounts.

Direct to Consumer (D2C) Ecommerce

Cutting out the B2B middle man, this model is used by companies who manufacture and sell their products directly to customers. This allows the seller to gain more market share with regards to their product value, brand awareness, and overall customer loyalty. It’s B2B, just without the contemporary workflow. 

Business to Many (B2M) Ecommerce

This model focuses on multi-channel selling. This is the marketplace model, and it allows businesses to sell to consumers while also creating brand awareness and reach for their own business. 

Business to Government (B2G) Ecommerce

This business model involves businesses selling directly to governments. This could include a CRM system that’s used by a country’s governmental auditing service or a statistical software purchased by a government for analyzing census data. The government is the one conducting purchases directly from the business. 

Conclusion:

This article went into length regarding the phenomenon that is B2B. We took you from the beginning to the end with as much detail as we can possibly muster up. Hopefully, after reading this article, you will have working knowledge on how to start up your eCommerce store. 

Think you’re ready for a startup? If you’re looking for an all-in-one solution to your B2B needs on WooCommerce, then you should definitely try out B2BWoo

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