B2B eCommerce Explained: A Comprehensive Guide with Real-World Examples
What is B2B ecommerce? It seems clear. It sells from one business to another and works online. In reality, B2B ecommerce is more complicated: besides just selling online, businesses have to track all their processes and control every little step. This is why they need specific software. Besides this internal peculiarity, B2B ecommerce businesses basically affect the whole ecommerce market, designing the environment where other businesses like B2C will also work.
B2B ecommerce has been gathering pace recently. In 2023, the global B2B ecommerce market size was valued at USD 9,209.33 billion (compared to USD 7,907.07 billion the year before). By 2030, analytics believe, it can reach USD 33,317.37 billion. These are huge numbers! And everyone who enters this market now will definitely profit in the future. But what are the B2B ecommerce building principles, and how to understand which kind of B2B ecommerce company is right for me? Let's discover what is B2B commerce and how to build it now.
- BUSINESS TO BUSINESS ECOMMERCE VS. BUSINESS TO CONSUMER ECOMMERCE
- EXPLAINING THE B2B ECOMMERCE BUSINESS MODEL RANGE
- EXPLORING B2B ECOMMERCE MODELS
- DIFFERENT B2B ECOMMERCE MODELS EXPLAINED
- CORE PRINCIPLES AND STRATEGIES FOR SUCCESS
- B2B BUSINESS STAGES
- KEY COMPONENTS OF B2B ECOMMERCE
- HOW B2B ECOMMERCE WORKS
- B2B ECOMMERCE: BENEFITS AND CHALLENGES
- B2B ECOMMERCE IN THE DIGITAL AGE
Business to Business eCommerce vs. Business to Consumer eCommerce
Both ecommerce businesses are conducted online. The difference is that B2C ecommerce is targeted to the end consumer, who is an individual. B2B digital commerce businesses sell to other companies who further use these products or services by themselves or sell to the end customer.
To decide on what kind of business you need, you have to realize who your target audience is and how much you are going to sell (if you want to sell in bulk, it's hardly possible to realize in B2C). Another sign you must choose B2B ecommerce is your product complexity (do individuals use them?). Analyze the market to understand if B2B or B2C segments have a higher demand for your product.
Now, if you are sure your product is B2B, let's move on to understand the segment better.
Explaining the B2B eCommerce Business Model Range
eCommerce for B2B businesses is represented in various types and models. However, whatever business model you choose, all B2B ecommerce businesses share the same values: customer-centric approach, personalization, scalability, and customizability. Let’s see what kinds of types and models can be found among successful B2B businesses.
Exploring B2B eCommerce Models
Types of B2B ecommerce
Apart from the standard ecommerce B2B model, where a business directly trades with other businesses, there are many other types of B2B digital commerce, which we’ll look at below.
B2B2C (business to business to customer)
B2B2C, or business to business to consumer, is an ecommerce B2B model that combines a bit of both worlds, that is — business to business (B2B) and business to consumer (B2C), and represents a collaborative effort in creating mutually beneficial service and product delivery channels. In a typical ecommerce scenario, companies practicing a B2B2C model reach new markets and customers by partnering with consumer-oriented businesses. For example, an enterprise service provider might buy and assemble a software solution to later resell it to consumers.
One of the good B2B2C ecommerce examples is Nespresso Professional. The company sells to restaurants that resell the product to the end customers.
B2B2B (business to business to business)
B2B2B, or business to business to business, is a B2B sub-agent model. To better understand how B2B2B works, consider bill.com, the website for enterprises to manage their payments to vendors. To use the platform, vendors also create accounts that they can use later for billing their future customers.
B2M (Business to many)
B2M, or business to many, is a business model where a company sells products or services to both businesses and consumers.
At this point, Virto Commerce has helped B2M business Lavazza by Bluespresso to establish their ecommerce platform. The company sells both in B2B and B2C segments.
B2E (Business to employee)
B2E, or business to employee, is a business model where a company sells its products or services to its employees. An online insurance policy management application within an organization can be a good example of a B2E model.
B2G (Business to government)
B2G, or business to government, is a business model where a company provides goods or services to governmental organizations. An example of B2G is the U.S. General Services Administration, or GSA, which provides the US federal agencies with an online portal to manage the procurement of goods and services they need for their jobs.
Different B2B ecommerce models explained
Marketplaces and trading platforms
Such platforms gather many sellers and a huge audience of buyers. While we easily imagine a B2C marketplace, the B2B one works almost the same. The customers have to choose from all the vendors, and the vendors compete for customers’ attention.
This business model supposes that the platform is integrated with the company’s ERP and helps businesses source products, request quotes, place orders, and more.
Direct selling (from manufacturer to retailer/wholesaler)
This B2B model in ecommerce is sometimes called D2C (direct-to-customer). Here, we mean the model where manufacturers do not use any intermediary to sell products directly to the businesses that will use them. A good example is a tech company that sells their machines directly to plants.
Distributor/wholesaler to retailer
This is a classic B2B2B/B2B2C type of ecommerce when the wholesaler sells large volumes to the retailers through a distributor B2B ecommerce platform that further sells them in individual units to end buyers. Many large corporations use this model to avoid processing all the details related to direct sales and B2B ecommerce marketing.
Subscription-based models of B2B ecommerce
This model is about providing the same level of services or amount of goods periodically, paid by subscription payments. In the digital world, we can name SaaS companies like Salesforce that sell their services on a monthly basis. As for the physical product, imagine a wholesaler who delivers cups in the cafeteria through their B2B wholesale ecommerce platform every month and charges this buyer every month.
Managed services and outsourcing
This happens when businesses prefer to outsource particular services to the vendor. Many IT companies would make a great example: e.g., when the business outsources hardware but builds software, this can be called managed services.
Manufacturing supply chain (Supplier to manufacturer)
This is the model where the supplier of some raw materials provides their product to the manufacturer.
Customization and configure-to-order
The customization model helps businesses to get exactly what they need. They purchase from a core seller and then the specific supplier adapts the product to the buyer’s needs.
Group purchasing organizations (GPOs)
GPOs might be the most interesting model to learn about. Several businesses come together to purchase some product cheaper and use them together or somehow split the goods. A nice example is medical clinics that buy equipment at a cheaper price together.
Core principles and strategies for success
All these types and models are different. However, they all share the same values of caring about the customer. This is why here are some general core principles B2B electronic commerce businesses can use to achieve their success:
- Understanding the buyer's needs. The company should always analyze its target audience and consider its customers' needs.
- Sellers should offer personalized experiences based on the business type, size, and purchasing history.
- B2B buyers require convenience. They need detailed technical specifications, product manuals, and other in-depth information before making a purchase.
- Mobile Optimization. With many business decisions being made on the go, having a mobile-optimized platform is crucial.
- Multi-channel Sales. B2B ecommerce shouldn't be restricted to a website. Consider integrating with marketplaces, direct sales, and more.
- Customer Support. Robust customer service and dedicated account managers are crucial.
- Integrations. B2B buyers have to be ready to integrate with customers' CMS, ERPs, and other business systems.
- Readiness for innovation. All customers develop, and their demands grow. Businesses should be ready to grow with them and offer new B2B ecommerce features continuously.
B2B Business Stages
Generally, like any other business, B2B ecommerce goes through the four stages of building a robust business: startup, growth, expansion, and maturity. Let’s look at each in detail.
In the startup phase of B2B ecommerce, the company focuses on establishing its online presence and defining its niche in the digital marketplace. Challenges include developing a user-friendly platform, ensuring secure payment gateways, and creating initial traction. However, businesses can identify underserved market segments and offer them unique products.
B2B ecommerce businesses experience increasing online traffic, bigger sales, and more repeat customers at this stage. The main challenge is to scale seamlessly and affordably. This is a moment when companies can expand their product or service range.
Now, it’s time to move to the expansion phase. Businesses can diversify their offerings, target international markets, and navigate to new ones. Entering new markets horizontally and vertically can be challenging, but this is the moment when business has a chance to grow rapidly as never before.
At the maturity stage, the business has a robust ecommerce platform and a stable customer base with consistent revenues. The challenge is staying innovative and relevant and avoiding disruption. Opportunities, in turn, may arise in growing revenues or pivoting into new areas of B2B commerce.
Key Components of B2B eCommerce
B2B ecommerce is built of particular modules. Best B2B ecommerce platforms ensure the company can create new modules and close the ones they never use. For example, Virto Atomic Architecture™ provides the capability to turn any minor feature into a separate module. Let’s see what features are usually included in B2B ecommerce.
How B2B eCommerce Works
Step-by-step process of B2B ecommerce
- Research step. Businesses start by researching potential vendors online. They assess them, visit demos, and compare them. At this step, companies should prepare everything for customers to choose them.
- Request for quotation. In the B2B world, prices can differ significantly depending on the niche, volume, and customer. This is why it is essential to provide reasons for your prices. Be ready to reply to frequently asked questions.
- Negotiation. There's often a negotiation phase on prices, delivery terms, and other contractual details.
- Purchase step. Once terms are agreed upon, businesses proceed with the purchase.
- Order processing. To ensure you consider all the details, read about how to choose the ecommerce platform that controls most of the processes.
- Shipping & Logistics. Tracking and timely delivery are crucial. This is why you will need a logistics control app.
- After-sales support. Customers crave help. Ensure you organized this step well.
Integrating B2B ecommerce into existing business operations
Modern B2B ecommerce platforms, for example, ERPs, should be easily integrated with any existing business system. Most of the solutions offer API services. Virto Commerce provides a seamless integration of all the existing systems on the same platform.
Modular architecture and an API-first approach are the keys to ensuring that the integration will be seamless and that all data are exchanged correctly.
B2B eCommerce: Benefits and Challenges
Advantages of B2B ecommerce for businesses
Reaching new customers
B2B ecommerce offers plenty of possibilities for broadening your company’s market outreach, testing new geographies, and expanding operations to other states and countries with minimal effort and expense. Leveraging the power of Search Engine Optimization (SEO) and investing in marketing campaigns, including paid advertisements, you’ll be able to increase your search rankings, thus improving your company’s brand awareness and getting the attention of new customers who might look for similar products or companies.
Better management of suppliers and customers
eCommerce is the key to increasing sales and profit margins, improving both customer and supplier relationships. Some of the crucial areas that ecommerce can address and that can make a real difference in customer experience include easier checkout process, easier repeat ordering, quick delivery, and efficient tracking. eCommerce also enables better and more effective supply management through such things as maintaining better contact between suppliers, planning and forecasting demand surges and plunges, automating business processes, enabling smarter inventory management, and reducing human-prone errors that can either make or break a deal.
Scalability and growth
As ecommerce strengthens your business, wards off lagging competitors, and attracts new customers, it allows your business to grow and scale accordingly. Investing in an easily scalable and headless solution allows you to open up as many front-end stores as you want while connecting them to one back office.
Better data analytics
eCommerce solutions provide better data analytics and reporting. With a B2B ecommerce platform, you can generate different types of reports for different KPIs, track sales effectiveness, site engagement analytics, cart abandonment rate, etc. Armed with those reports, you can better predict your future growth and understand how your business is progressing in general.
Challenges businesses can encounter starting B2B ecommerce
- Control over all processes.
B2B ecommerce implies many various processes. Controlling all of them manually can be devastating. To improve your operations, all you need is a robust ecommerce platform like Virto Commerce that would allow you to constantly develop and innovate while keeping all your processes in order.
- Regulatory and compliance issues.
Specific industries face strict regulations concerning online sales and data handling. To avoid these issues, ensure you have a good layer who knows your niche and all the regulations, and ensure your B2B ecommerce platform vendor guarantees security and data protection. The vendor can be certified; for example, Virto Commerce has a SOC certification. Another option is to provide real-life cases of data protection.
- Challenging choice and implementation of B2B platforms.
We have already discussed how to choose a B2B ecommerce platform based on your needs, risks, and ecommerce capabilities. With a great variety of platforms on the market, all you have to do is to base your choice on analytics.
B2B eCommerce in the Digital Age
We believe that the future for B2B ecommerce is very bright. Before the pandemic, only 48% of B2B companies were conducting purchasing online, something that had changed dramatically during the quarantine. With little chance to avoid digital, B2B companies have been streamlining their digital adoptions at an unprecedented pace, challenging the old assumptions of the industry being slow to adopt new media and channels. To prepare your company for the upcoming changes and avoid future disruptions akin to those that happened in the first months of the pandemic, you need to put yourself on the frontline of change in your company, adopting new technology, improving your ecommerce platform, investing in integrations, and advocating for the change in mentality.
B2B ecommerce is evolving, and now is the perfect moment to jump on this train and join successful B2B sellers. All you need to do is analyze your business's aims, assess your risks, decide on the type and model of B2B business, and purchase a modern B2B ecommerce platform that will support your sales. If you are still unsure where to start and how to realize which platform will fit the best, you can always visit our B2B ecommerce blog, reach the Virto Commerce team to learn more about the solution, or get a personal demo.