eCommerce has a significant presence in the business world. The digital commerce space is rapidly going up and is broadening into abundant channels, campaigns, devices, industries, brands, and markets. Likewise, buyers are also having great expectations from it. When we consider discussing eCommerce, we habitually think of B2C transactions only, i.e., business commerce that is traded to the common public or consumers. People are well-known with many big names of B2C eCommerce companies like Amazon, Walmart, eBay, etc.
But the growth of eCommerce will not halt at B2C transactions only since there are plenty of B2B eCommerce businesses that are developing in this space. This B2B eCommerce engages business-to-business transactions, considers the obligations of the consumers, and also tracks the global B2B eCommerce movements. Currently, B2Bs are focusing on their digital transformation and data suggests that 65% of B2B businesses across industries will be fully transacting online by the end of 2022.
Understanding B2B E-Commerce? And Its Benefits
If you’re still wondering what B2Bs are, how they work, their significance, types, benefits, and future, then you’ve come to the right place.
What is B2B eCommerce?
Business-to-Business Electronic Commerce (or B2B eCommerce) is one form of transaction that involves the online buying and selling of products or services. It refers to all sorts of business deals that take place between two entities electronically. The transaction engages two businesses such as a manufacturer and a wholesaler, or a wholesaler and a retailer. B2B transactions usually take place in the supply chain, where a company buys raw materials from another company. The raw materials are then utilized in the manufacturing process. After manufacturing, the products are sold to other companies through social media. The B2B transactions are widespread in the automotive industry, which has a massive contribution to the global economy. Around 76% of automotive companies exchange B2B transactions digitally. These transactions are also common in property management, housekeeping works, and industrial cleanup companies.
How does B2B eCommerce Work?
A Business-to-Business (or B2B) eCommerce refers to a transaction that involves the selling of products or services between two businesses. Generally, the products and services of the vendors are used by a group of people or a department. Rarely, an individual user makes a transaction to sustain the business goal of the company. While some of the transactions involve products and services of the entire company.
For bigger or composite product purchases, the selection procedure of the B2B product is managed by a trading committee that involves:
- A business administrator – someone who is in charge of the budget;
- A technical administrator – someone who assesses the competency of the future products; and
- Business influences – individuals who supply input on the verdict.
Large trading may also necessitate a proposal request, wherein the buyer asks potential vendors to propose tenders featuring their products, services, policies, and pricing.
B2B eCommerce is one of the swiftly developing sales models. Some data suggests that B2B values at over $12 trillion in the global market. Modernization, expertise, ideas, and technology have helped B2B to flourish in the digital market. Traditionally, B2B businesses were labor-intensive and the sales processes were done manually. The marketing process also required higher expenditure. The preamble of digital commerce and the introduction of innovative technology have helped these businesses to reduce expenditures and develop their effectiveness through automation.
A B2B seller works with the following people or organizations:
- Manufacturers
- Wholesalers
- Retailers
- Non-Profit Organizations
- Resellers
Buyers and sellers can now carry forward their dealings in the digital home through their mobile phones.
Significance of B2B eCommerce
B2B eCommerce has a great significance in the digital space since every business acquires products and services from other businesses to initiate, run and develop. If any company neglects to spend capital on the digital platform in this century, it will soon face the crisis of faltering behind in the competition. Currently, people are more enthusiastic to purchase everything online than from any offline outlet. Therefore, an investment in the B2B platform is a clever idea if companies want to procure a lot of money in return. Moreover, B2B eCommerce has witnessed exponential growth in recent years with a market value of 8,523.3 billion USD in 2022. According to reports, the global B2B eCommerce market is anticipated to reach up to 18,771.4 billion USD by 2027. So, if you assume that B2B e-Commerce cannot affect your business, then you are fully misguided.
Also, these days, B2B buyers are seeking a “B2C-like” purchasing experience, which obliges a faster checkout process, super-fast delivery, easy and automotive repeat orders, and enhanced tracking. To cope with all of these necessities, a commanding B2B e-Commerce website is fundamental to any business model as it takes the customer experience to a great extent, which can further enhance the conversations in the long term to achieve prosperity.
Types of B2B eCommerce Companies
B2B eCommerce has seen several types of transactions and relationships that take place digitally. Here are some of the familiar types of B2B eCommerce companies:
1. Manufacturing: Manufacturing is one of the fundamental elements for any business that deals with physical goods. Due to its high processing cost, most companies import their manufacturing goods from third-party countries like China where the labor charge is quite low.
2. Wholesaling: Wholesaling refers to the process of purchasing products in large volume from another business and then selling those products to the customers at market price. Several countries sell products in large volumes at a discount price. There are even some eCommerce companies like Alibaba Group Holding Limited that help unite resellers with wholesalers.
3. Distribution: Distribution is another key element for any business model and its functioning is entirely done through online platforms since the web has developed as one of the leading marketing channels. The distributors of B2B eCommerce influence online channels such as Search Engine Optimization and other social media platforms to endorse products and services in place of their business clients.
4. Software-as-a-Service (SaaS): Initiated by Salesforce, an American cloud-based software company, Software-as-a-Service is one of the fastest developing business-to-business software models for eCommerce. It allows businesses to provide licenses and access to the software. The software is then made available to other businesses and those businesses need to pay a monthly or annual fee to continue access to the software.
Benefits of B2B eCommerce
Here are the key benefits of B2B eCommerce:
1. Scalability – An efficient and useful B2B eCommerce platform will help your company to develop and scale easily to meet the client’s demand, by introducing new sales networks and incessantly meeting new market segments. To develop in the digital space, a B2B company takes a fewer number of high-value deals than a B2B company.
2. More Efficiency & Productivity – B2B eCommerce companies offer noticeable efficiencies to their organizations through the amalgamation of Enterprise Resource Planning (ERP) and various back-end business structures. As every customer can order digitally at their ease, businesses can completely focus on authentic customer service operations rather than just being order takers.
Additionally, automated ordering and workflows have removed the necessity to reform data in autonomous systems; in that way, it also lessens the chance of committing errors. This further enhances the effectiveness of transport processes and raises order throughput.
3. Improved Brand Awareness – A B2B eCommerce system gives you an online presence throughout, consequently giving you the power to command your brand. This enables you to endorse, produce and reinforce your brand both regionally and internationally.
Even though various external B2B networks can create supplementary brand awareness reimbursement, your branded eCommerce website is the chief marketing tool for a persistent online existence and clarity.
4. More Customers – The public-facing directory pages of a B2B eCommerce website play a huge role to attract new B2B customers. If you can generate a responsive B2B eCommerce site that has good SEO-friendly content, then you can easily locate new visitors to your site and turn them into customers.
5. Increased Sales – A B2B portal not only helps you gain new consumers to your site but also enables you to effortlessly employ a mechanized cross-sell and up-sell advice curriculum. By doing so, you can enhance sales by providing relevant proposals to customers and persuading them to purchase related products with additional features and functionalities.
6. In-built Order Management – B2B comes with an in-built order management technicality. It helps cloud-based eCommerce platforms to effortlessly amalgamate with back-end systems or order management platforms. This allows B2B traders to coordinate their order records and client data across every network.
What Challenges does a B2B eCommerce have?
B2B eCommerce has some challenges as well. Here are they:
1. Customer Retention: B2B companies often face tough challenges to persuade their buyers to repeat their purchases. Retaining a customer to your site, in the long run, is an issue for B2B eCommerce.
2. Limited Market: Even though B2Bs can aim for various organizations across many industries, their business market is still restricted to a small size. Thus, B2B is particularly quite dicey for small and mid-size associations.
3. Competitiveness: As the B2B market is still not that big, it faces more competition in the market.
4. Longer Decision-Making: Since a lot of stakeholders get involved in the process; B2B takes too much time to make any decisions in business.
5. Price Negotiation: As mentioned earlier, B2B buyers purchase products in large volumes, hence they usually bargain for better prices, inquire for discounts, or insist on additional services.
6. Complicated Supply Chain Management: Since multiple partners get caught up in the supply chain, the supply chain management of B2B eCommerce can get complex. Every partner asks to get access to similar data and thus misunderstanding and confusion at any point can delay the entire process.
Successful B2B eCommerce Brands
Below are a few examples of successful B2B eCommerce brands:
1. Amazon: Besides its B2C commerce, Amazon also provides a marketplace for B2B business that is transacted online. Amazon Web Services (AWS) allows its cloud-based software businesses to deploy their cloud architecture.
2. eBay: Based in California, USA, eBay is an e-commerce company that has a significant B2B offering through wholesale deals, spot buying, and the Business & Industrial category.
3. Alibaba: Based in China, Alibaba is one of the leading e-commerce and retail sites which exclusively focuses on B2B commerce. The site provides a B2B commerce market where businesses can go and find out their preferred wholesalers who trade items in large volumes or connect with other manufacturers in China for scheming custom products.
4. McKesson: Based in the United States of America, McKesson is the largest distributor of health care products and drugs in the world. The supply facilities of McKesson are provided to various pharmaceutical and medical companies with appropriate care that is desired for responsive medical apparatus.
5. Google: Just like Amazon, Google also offers B2B eCommerce services along with B2C software services. Google GSuite provides various cloud-based services like word docs, spreadsheets, slides, and calendaring to businesses. The Google 360 marketing suite from Google comprises some critical tools for digital sellers. It also offers a core income stream through advertising.
6. Facebook: Invented by Mark Zuckerberg, Facebook is yet another B2C brand that provides B2B services. Facebook along with its other subsidiary social media networks monetize its services by charging sellers for running ads on their platforms.
7. Microsoft: Besides the consumer-level office suite, Microsoft also offers several B2B services. It allows business licensing for many software products like Office and Windows. Hardware products like marketing technology and cloud hosting services are also treated by them.
8. Salesforce: Salesforce is a Software-as-a-Service (SaaS) that is arguably one of the biggest B2B software service providers in the universe. It provides customer relationship management software that trades representatives can utilize to track their prospects as well as their customers via extended sales cycles and trade journeys.
9. Oracle: It is considered one of the giants of the B2B eCommerce industry and offers enterprise resource planning (ERP) software to its consumers. This software aids businesses to smoothen their venture workflows such as accounting, acquisition, executive works, safety measures, observance, supply chains, and more.
Conclusion
The rise of B2B eCommerce is obvious. They are a major sales network in the digital space. The last two years were all about turning online for B2B businesses. Forecasts suggest that the upcoming years will be about improving your online experience to sustain developing buyer expectations.
Keeping all these in mind, B2Bs now should mainly focus on enduring trends. The transactions of B2B eCommerce are expected to exceed $1.8 trillion by 2023, according to Forrester forecasts. This is big news for the B2B sellers as buyers are constantly changing. A new generation who grew up around science and technology has greatly engaged themselves in the B2B buying system. They anticipate convenience and significance more than anything else. B2B platforms could facilitate cost-effective and reachable selling opportunities through personalized sales portals, AR tours, and self-service operations.
The rise of B2B eCommerce can’t be regarded as a pandemic trend completely. Buyers and sellers are getting involved as it streamlines operations and enhances efficiency.
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Simran works as a technical writer. The graduate in MS Computer Science from the well known CS hub, aka Silicon Valley, is also an editor of the website. She enjoys writing about any tech topic, including programming, algorithms, cloud, data science, and AI. Traveling, sketching, and gardening are the hobbies that interest her.
