B2B and B2C e-commerce - what’s the difference?
When choosing a B2B e-commerce solution, it’s essential to identify the key differences between B2B and B2C e-commerce in order to make sure your platform of choice meets the specific requirements of your business. There are currently quite a few platforms on the market, and choosing the right one out of the spectrum may prove to be quite challenging. Having developed the Virto Commerce platform with a heavy focus on B2B in mind we have come across a number of specific needs the sector has, that are hard to meet with a standard e-commerce solution.
1. The size
One of the key differences between the two sectors is the volume of sales and money flow. B2B e-commerce is currently about twice the size of B2C in terms of money spent for online purchasing. Forbes.com predicts that by 2020 B2B e-commerce market will be worth 6.7 trillion dollars!
So, volumes and transactions in B2B are significantly larger than in B2C, and an e-commerce platform used by this sector has to be able to handle that.
2. Customer relations
The key question we need to ask when defining the differences between B2B and B2C is why we do e-commerce to begin with. What’s the main goal? The answer to that will be different for each sector.
B2C is heavily focused on the acquisition aspect. The main goal is to acquire customers and sell as much as possible. You have your number of items that you market to as many potential buyers as you can.
In B2B on the other hand you sell high volumes of product to the same buyer. So, the main priority is to retain that buyer - to build and maintain long-term partnerships. In that regard it’s also important to remember that the buyer in B2B is often not the end consumer, but a purchasing agent – a specially trained person who makes buying decisions.
Based on this difference, the priorities when choosing the right e-commerce solution will be different, too. B2B e-commerce requires easy and convenient tools, which may include
- Flexible catalog taxonomy (ability to create master and virtual catalogs while assigning them to different storefronts),
- Scope based security for catalogs to only manage your specific external catalog and allow for quick integration to enable complex B2B scenarios...
...And a number of other B2B-specific functions - as opposed to the B2C sector that prioritizes having a flashy and catchy website.
3. The middle link
Setting its priorities on building strong partner relations, B2B sector has another specific factor that is not really present in B2C e-commerce these days – having actual sales people, who work directly with the customer.
Now, here it’s fairly safe to assume that whichever sector of commerce we look at, these days most people prefer to order online rather than through a sales person. That’s why in B2C e-commerce direct sales professionals are pretty much extinct. No wonder sales people see e-commerce as a threat. The truth is, however, that in B2B sector, given its specifics, sales representatives are still essential for building and maintaining partner relations. In this set-up on-line purchasing options are extremely useful for getting routine orders out of the way. For complex transactions or bigger orders however B2B buyers would still want to talk to a sales person. So, now your field sales can focus on their main goal – relationships, rather than be order-takers; and if they still get compensated for their customer base, they no longer feel threatened by the new technology, and it’s still net-positive for the sales person and the company.
In order to make routine orders fast and easy for your clients, while not taking away from your sales reps, your e-commerce solution needs to accommodate both – convenient on-line ordering system and a way to track and bind the orders to specific sales people within the company. Plus, it needs to be able to accommodate more complicated interactions, when there is a sales person involved.
4. Type of sale and logistics
As we have previously determined, the sale types and customer relations systems are among the key points when defining the main differences between B2B and B2C sectors of commerce. While in B2C you’re selling the same few items to a huge pool of customers, in B2B you’re selling products to the same 1 customer by pallet-load. That requires different logistics and a different way of organizing shipping processes.
Quick example; you’re a sales manager; you ordered the list of products from the distributor. You already know the delivery date, so you can start selling even before delivery - process backorders. Upon entering your estimated/required delivery date the products can now be published in the catalog automatically with specific delivery terms.
Thus your e-commerce solution needs to be able to handle that difference. It’s essential for B2B e-commerce to have a well-structured system, where returns, concerns, etc. could come through a measurable channel, and metrics and analytics can be applied. Shipping and tracking would need to accommodate higher volumes within fewer order entries as well.
5. Product assortment and catalogues
This one is pretty straight forward. Let’s look at Amazon or eBay for example – some of the most well-known B2C e-commerce platforms. Everyone, who enters the website to shop, gets the same assortment of products for the same price. No matter how long you’ve been using Amazon for your day-to- day shopping or how many items you’ve purchased, the products displayed will still be the same.
In B2B you may want to make buying experience customizable and unique for every partner. Besides, one given customer is often not buying directly from the seller. Sometimes a buyer will use their terms with your company and their procurement system for their buyers. So, unlike B2C, where you can control every step of the end-user experience, in B2B it’s often impossible.
As a B2B vendor you also often need accommodate a number of selling and buying partners within the same system and offer multi-vendor catalogues, where all the data about all available products or services by every vendor you work with is stored in one place and can be easily accessed, updated and shared in a matter of a few clicks.
Plus, you may want to offer proprietary kits or bundles or different tiers of product for different retailers based on the relationship you have with them. In this case each buyer’s experience will need to be locked down to them specifically, and you would need to have a technology system that enables that.
6. Terms and pricing
As have been mentioned before, Amazon-like experience works perfectly for B2C. Everyone is getting the same range of products and the same price for every item, then pays for the order with a credit card and is pretty much set at that point.
B2B however needs to be able to reflect customer relationships not only in product assortment, but also in partnership terms and pricing, as well as support additional ordering and payment options, credit checks, credit account status, etc.
Working with customers who order high volumes of product, naturally a B2B vendor negotiates different pricing with different buyers based on a number of factors, like purchase volumes, custom orders, customer loyalty programs, etc. So, unlike B2C e-commerce software, where you simply set a price that applies to everyone, your B2B e-commerce solution needs to be able to work with negotiated quotes (pre-determined options you might want to offer) and contract based price adjustments - specific terms agreed upon with your customer.
7. Order approvals and ownership within the organization
Unlike B2C that works directly with end-buyers and does not require any order approvals, B2B often deals with a whole chain of negotiations and approval processes. So, your e-commerce platform needs to be able to support approval process by often as many as 10 different roles with order trail being accessible by some or all of those roles.
Let’s look at another example here. The distribution company’s manager orders product from a huge vendor and requests a quote. The end price in the quote is based on the number of products in the order and also on possible promotions held by the vendor during that current week/month/etc. So the price varies and you need to approve/decline it. It gets even more complicated when this needs to be done on a multi-vendor level (orders from separate vendors with different quotes and approvals). B2C focused software doesn’t often face those challenges and might not have a quick solution for situations like this.
The ownership of sales processes within the organization differs between B2B and B2C as well. B2C sales are typically managed by Marketing with a little involvement from IT and Operations. In B2B Operations and IT are the main process owners; which, again brings us to the key difference of building relationships with the buyer.
To sum it up, transactions and shipping volumes, customer relations and sale types are all drastically different in B2B and B2C commerce. And those differences create a number of unique requirements for B2B making it hard, if not impossible to comfortably adapt B2C-focused e-commerce solutions to B2B needs through customization. B2B requires its own set of tools and set-ups to be able to use e-commerce solutions conveniently.