What is B2B eCommerce and how is it different from B2C eCommerce?
When a business uses an eCommerce platform to sell to another business, this is B2B eCommerce. Globally the B2B eCommerce market size was valued at USD 5.7 trillion in 2019. It is expected to grow at a CAGR of 17.5% from 2020 to 2027. Businesses have realized that there is immense growth opportunity in the online space. In this blog we will explore B2B eCommerce in greater detail, the various B2B models, how it is different from B2C eCommerce, and a few features that are a must in B2B eCommerce platforms.
Why is the B2B sector witnessing such rapid growth?
Today a large percentage of employees in the B2B sector are millennials. They have grown up with technology and are very comfortable making purchases online for all their needs. They expect the same convenience and options when it comes to purchases done professionally. When they need a product, they start the search online, similar to the process they would follow if they were buying shoes or a watch for themselves. They identify different brands, compare product specifications, price and then decide to purchase. In short, the B2B buying process now largely mirrors a B2C eCommerce buying process. It is amply clear that to stay competitive and relevant, businesses need to have a presence online.
Sales Models within B2B eCommerce
- Manufacturers set up eCommerce sites to sell directly to other businesses. A good example is the auto part manufacturers that manufacture various vehicle parts, which they sell to the original equipment manufacturers. Their customers are automotive companies who manufacture vehicles and sell to end consumers.
- Wholesalers and Distributors who source products in bulk and sell to small retailers and end consumers. In this B2B eCommerce model, instead of selling your products individually to consumers, the business sells them in bulk and at a discount to other businesses. These are the intermediaries between manufacturers and retailers.
Advantages of B2B eCommerce
Increased reach: The established B2B eCommerce portals enable businesses to expand their reach and target potential customers effortlessly. Large product catalogs, low prices and fast shipping are a few reasons why B2B buyers are flocking to these marketplaces.
Manage suppliers more efficiently: Manufacturing firms often have to deal with multiple suppliers. Keeping track of orders, maintaining the inventory, reordering products, etc. can be time-consuming and a drain on the resources. Managing suppliers becomes easy with B2B eCommerce platforms. A lot of the supplier interactions can be automated, helping you save time and costs.
Accelerate order fulfilment: Order fulfilment is critical for the success of an eCommerce business. You can automate the entire order fulfilment process and do away with errors that creep in during manual data entry of orders, customers and shipping details.
Better customer engagement: Having an eCommerce portal can increase the efficiency of sales representatives. They can have access to customer details at their fingertips. Client’s order history, the price quoted previously and order delivery status are all readily available, enabling reps to engage with customers more effectively.
How is B2B eCommerce different from B2C eCommerce
Target Audience: In B2C eCommerce the target audience is individual consumers who buy products for their personal use. Also, the market for B2C eCommerce is much larger – B2B eCommerce caters to a niche audience and the customers are not individuals but businesses of all sizes and shapes.
Buying decision: In B2C eCommerce, the decision to buy rests with one person, which is not the case in B2B purchases. Studies show that in B2B the average number of stakeholders involved in a purchase decision is 5.4. It is a collective decision-making process based on price, specifications, etc.
Purchase is not impulsive: The shopping behavior in B2C is very different from B2B. B2C is known for impulse purchases, while in B2B the decision to purchase comes after a lot of deliberation. Brands are shortlisted, prices and technical specifications compared, price negotiations happen and delivery modalities finalized before the purchase decision is taken.
Fixed Pricing vs Customized: In B2C eCommerce, the products have a fixed price. There is no scope for negotiations. Even discounts offered are prefixed by the seller and apply to all customers who visit the site. It’s not the case in B2B where pricing is customized based on the order quantity, relationship with the customers, payment terms, etc.
Lifetime value of customers: The average purchase value of products in B2B is much higher compared to B2C products. Also, B2B purchases are often made in bulk and appropriate shipping and insurance arrangements have to be made. Once a business finds a reliable supplier, they tend to stick with them and make repeat purchases. In short, the lifetime value of B2B customers is higher than B2C, so it makes sense to invest in personalized services and marketing and develop a good relationship with them.
Must-have features in B2B eCommerce platforms
B2B eCommerce platforms are a little different from B2C eCommerce because they need to cater to the complex selling process of B2B businesses. We have listed a few of the features that are a must in B2B eCommerce platforms that will enable companies to sell effectively in the online space.
- Request for Quote
- Access Restriction Options
- Customer Specific Catalog and Pricing
- Volume purchase and bulk discounts
- Quick order option
- Content delivery
- Self-service account management tools
In the next blog we will be discussing in detail each of these features, so stay tuned.
Meanwhile, if you are looking to develop a B2B eCommerce site, connect with us at firstname.lastname@example.org or call +359 898 707 570 / +1 877 787 2248