B2B e-commerce refers to the sale of goods or services between businesses via an online sales portal.[2] While sometimes the buyer is the end user, often the buyer resells to the consumer.[3] This type of e-commerce typically applies to the relationship between producers and wholesalers; it may additionally remain applied to the relationship between the producers or the wholesalers and the retailers themselves.[2] However, the same relationship can also occur between service providers and business organizations.[4] B2B typically requires more venture capital and a longer sales cycle, but results in higher order value and more recurring purchases.[3][5]
As newer generations become decision makers in business, B2B ecommerce will become more important. In 2015, Google found that close to half of B2B buyers were millennials—nearly double the amount reported in 2012.[3]
Convenience: While companies can sell through physical storefronts or take transactions by phone, B2B commerce often takes place online, where companies advertise their products and services, allow for demonstrations and make it easy to place bulk orders. Sellers also benefit from efficient order processing thanks to this digital transaction model.
Higher profits: B2B companies often sell their items in wholesale quantities, allowing buyers to receive a good deal and restock less often. Larger order numbers lead to higher potential sales and additional profits for B2B sellers. At the same time, the ease of advertising to other businesses through B2B websites can help cut marketing costs and boost conversion rates.
Huge market potential: From business software and consulting services to bulk materials and specialized machinery, B2B sellers can target a large market of companies across industries. At the same time, they have the flexibility of specializing in an area like technology to become a leader in the field.
Improved security: Since contracts are a common part of B2B commerce, there's some security for both buyers and sellers in that there's less concern that one will pay and the other will deliver goods as promised. Since sales usually get tracked digitally, it's also more secure in that B2B sellers can track and monitor their financial results.
More complex setup process: Getting started as a B2B retailer takes work to figure out how to get customers who stay dedicated and make large-enough orders. This often requires thorough research to advertise to potential businesses, set up a custom ordering system and adapt quickly when sales are underwhelming;
Limits to sales: While B2B companies can sell a lot, they do miss out on potential sales to individual customers. The smaller pool of business buyers and the need to negotiate contracts can put some limits on profits, especially when the company loses key buyers to other competitors;
Need for B2B sellers to stand out: At the same time, the B2B market has many companies competing and selling similar products and services. Sellers often need to cut prices and find special ways to grab companies' attention to succeed in the market;
Special ordering experience needed: B2B companies selling online need to put much effort into designing a website and ordering system that buyers find easy to use. This means presenting product and service information clearly, offering online demos or consultations and using order forms with appropriate options for quantities and any special customization needed.
Complex payment process: B2B online payment solutions are both time-consuming and expensive for both parties. The buyer has to be credit checked, they'll often negotiate payment terms and trade discounts and the business will manually have to create a custom invoice.[7]
Business-to-consumer (B2C), or direct-to-consumer, is the most common e-commerce model. It deals in electronic business relationships between businesses—both producers and service providers—with end consumers. Many people like this method of e-commerce as it allows them to shop around for the best prices, read customer reviews, and often find different products that they would not otherwise be exposed to in the physical retail world. This e-commerce category also enables businesses to develop a more personalized relationship with their customers.[2]
Anything one buys online as a consumer is done as part of a B2C transaction. The decision-making process for a B2C purchase is much shorter than a business-to-business (B2B) purchase, especially for items that have a lower value, thus having a shorter sales cycle. B2C businesses therefore typically spend less marketing dollars to make a sale but also have a lower average order value and less recurring orders than their B2B counterparts. B2C innovators have leveraged technology like mobile apps, native advertising and re-marketing to market directly to their customers and make their lives easier in the process.[3]
Unlimited marketplace: The marketplace is unlimited, enabling the customers to explore and shop at their convenience. We can check on the desired product from home, offices and anywhere else without any time restrictions. Products can be purchased from around the world. It represents the breaking of international barriers, giving people the opportunity to purchase products virtually;
Lower costs of doing business: B2C has reduced several business components including employees, purchasing cost, mailing confirmations, phone calls, data entry and the requirement for opening stores with physical existence. This has reduced transaction costs for customers;
Business administration made easier: It has made it easier to record store inventory, shipment, logs and overall business transactions compared with traditional methods of business administration. These calculations are now occurring automatically. Moreover, real-time updates can be provided, through which any issues can be flagged;
More efficient business relationships: Building new and improved associations with the dealers and suppliers;
Workflow automation: This process enables the shipping of products in a timely manner. Furthermore, it automatically adjusts stock levels and figures out location availability. It includes highly reliable security systems, with step by step verification, account entry and admiration mode to look after business transactions. The third-party direct sales are backed up with familiar banking and accounting features that enable businesses to reach out to vendors and perform internal business transactions accordingly.
Infrastructure: Even though the internet enables reaching a huge, international pool of customers, many still do not have access to the internet;
Competition: Competition is severe. There are certain companies that have managed to maintain sizeable market shares giving them a chance to survive in the long run. New and improved products must be rolled out consistently to secure customers;
Limited product exposure: Despite rewarding the customers with ease-of-access and a unique level of flexibility for choosing products, e-commerce has restricted product exposure for buyers over the internet. Most websites would not allow customers to go beyond the glamorous product images and their descriptions at the time of purchasing the product. It gives consumers the idea that e-commerce supports ‘limited product exposure', which is why some products disappoint customers at the time of shipment and are sent back to companies immediately.
Consumer-to-business (C2B) e-commerce is when a consumer makes their services or products available for companies to purchase.[2] The competitive edge of the C2B e-commerce model is in its pricing for goods and services. This approach includes reverse auctions, in which customers name the price for a product or service they wish to buy. Another form of C2B occurs when a consumer provides a business with a fee-based opportunity to market the business's products on the consumer's blog.[9]
For instance, food companies may ask food bloggers to include a new product in a recipe and review it for readers of their blogs. YouTube reviews may be incentivized by free products or direct payment. This could also include paid advertisement space on the consumer website. Google Adwords/Adsense has enabled this kind of relationship by simplifying the process in which bloggers can be paid for ads. Services such as Amazon Affiliates allow website owners to earn money by linking to a product for sale on Amazon. Examples of C2B include: a graphic designer customizing a company logo, or a photographer taking photos for an e-commerce website.[2]
The C2B model has flourished in the internet age because of ready access to consumers who are "plugged in" to brands. Where the business relationship was once strictly one-directional, with companies pushing services and goods to consumers, the new bi-directional network has allowed consumers to become their own businesses. Reductions in the cost of technologies such as video cameras, high-quality printers, and Web development services give consumers access to tools for promotion and communication that were once limited to large companies. As a result, both consumers and businesses can benefit from the C2B model.[9]
The disadvantages of C2B transactions are that one must be well-versed in web design to create such a website and the amount of money earned is far less than what could be earned by selling the mortgage directly to the consumer instead.[10] The advantages of C2B can be expressed through an example: The C2B website thefreemortgagecalculator.com offers a LendingTree advertisement at the top of the page. The advantage of this website is that the owner does not have to sell mortgages, meet with customers, or pay for everyday business operation expenses in order to make money. If the LendingTree advertisement is used by a visitor, the website owner gets paid a commission from LendingTree for the lead.[10]
Consumer-to-consumer (C2C), or customer-to-customer, represents a market environment where one customer purchases goods from another customer using a third-party business or platform to facilitate the transaction.
In this case, the third-party platform typically earns their money by charging transaction or listing fees.[11][3] These businesses benefit from self-propelled growth by motivated buyers and sellers, but face a key challenge in quality control and technology maintenance.[3] Another customers’ benefit is the competition for products. Customers may often find items that are difficult to locate elsewhere. Also, margins can be higher than traditional pricing methods for sellers as there are minimal costs due to the absence of retailers or wholesalers.[11]
Opening a C2C site takes careful planning.[5] Examples of C2C include Craigslist and eBay, who pioneered this model in the early days of the internet.[3] Generally, transactions in this model occur via online platforms (such as PayPal), but often are conducted using social-media networks (e.g., Facebook marketplace) and websites (Craigslist).[2]
Business-to-administration (B2A), also known as business-to-government (B2G), refers to all transactions between companies and public administrations or government agencies. Government agencies use central websites to trade and exchange information with various business organizations.[1] This is an area that involves many services, particularly in areas such as social security, employment, and legal documents.[2]
Businesses that are accustomed to interacting with other businesses or directly with consumers often encounter unexpected hurdles when working with government agencies. Layers of regulation can harm the overall efficiency of the contracting process, and thus, governments tend to take more time than private companies to approve and begin work on a given project.[12]
While businesses may find that government contracts involve additional paperwork, time, and vetting, there are advantages to providing goods and services to the public sector. Government contracts are often large and more stable than analogous private-sector work. A company with a history of successful government contracting usually finds it easier to get the next contract.[12] One example of a B2A model is Accela, a software company that provides government software solutions and public access to government services for permitting, planning, licensing, public health, and so on.[1]
Consumer-to-administration (C2A)
Consumer-to-administration (C2A) e-commerce encompasses all electronic transactions between individuals and public administration. The C2A e-commerce model helps the consumer post their queries and request information regarding the public sector directly from their local governments/authorities. It provides an easy way to establish communication between the consumers and the government.[1]
Examples of C2A include taxes (filing tax returns), health (scheduling an appointment using an online service), and paying tuition for higher education.[2]
E-commerce is the activity of electronically buying or selling products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. E-commerce is the largest sector of the electronics industry and is in turn driven by the technological advances of the semiconductor industry.
Marketing is the act of satisfying and retaining customers. It is one of the primary components of business management and commerce.
Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. A period during which goods are sold for a reduced price may also be referred to as a "sale".
Distribution is the process of making a product or service available for the consumer or business user who needs it, and a distributor is a business involved in the distribution stage of the value chain. Distribution can be done directly by the producer or service provider or by using indirect channels with distributors or intermediaries. Distribution is one of the four elements of the marketing mix: the other three elements being product, pricing, and promotion.
Disintermediation is the removal of intermediaries in economics from a supply chain, or "cutting out the middlemen" in connection with a transaction or a series of transactions. Instead of going through traditional distribution channels, which had some type of intermediary, companies may now deal with customers directly, for example via the Internet.
Database marketing is a form of direct marketing that uses databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes. The method of communication can be any addressable medium, as in direct marketing.
An online auction is an auction held over the internet and accessed by internet connected devices. Similar to in-person auctions, online auctions come in a variety of types, with different bidding and selling rules.
Business-to-business is a situation where one business makes a commercial transaction with another. This typically occurs when:
A business can use a variety of pricing strategies when selling a product or service. To determine the most effective pricing strategy for a company, senior executives need to first identify the company's pricing position, pricing segment, pricing capability and their competitive pricing reaction strategy. Pricing strategies and tactics vary from company to company, and also differ across countries, cultures, industries and over time, with the maturing of industries and markets and changes in wider economic conditions.
B2B e-commerce, short for business-to-business electronic commerce, is the sale of goods or services between businesses via an online sales portal. In general, it is used to improve the efficiency and effectiveness of a company's sales efforts. Instead of receiving orders using human assets manually – by telephone or e-mail – orders are received digitally, reducing overhead costs.
Business marketing is a marketing practice of individuals or organizations. It allows them to sell products or services to other companies or organizations, who either resell them, use them in their products or services, or use them to support their work.
An online marketplace is a type of e-commerce website where product or service information is provided by multiple third parties. Online marketplaces are the primary type of multichannel ecommerce and can be a way to streamline the production process.
Value-based price, also called value-optimized pricing or charging what the market will bear, is a market-driven pricing strategy which sets the price of a good or service according to its perceived or estimated value. The value that a consumer gives to a good or service, can then be defined as their willingness to pay for it or the amount of time and resources they would be willing to give up for it. For example, a painting may be priced at a higher cost than the price of a canvas and paints. If set using the value-based approach, its price will reflect factors such as age, cultural significance, and, most importantly, how much benefit the buyer is deriving. Owning an original Dalí or Picasso painting elevates the self-esteem of the buyer and hence elevates the perceived benefits of ownership.
Guided selling is a process that helps potential buyers of products or services to choose the product best fulfilling their needs and hopefully guides the buyer to buy. It also helps vendors of products to actively guide their customers to a buying decision and thus increases their conversion rate.
Consumer-to-business (C2B) is a business model in which consumers (individuals) create value and businesses consume that value. For example, when a consumer writes reviews or when a consumer gives a useful idea for new product development then that consumer is creating value for the business if the business adopts the input. In the C2B model, a reverse auction or demand collection model, enables buyers to name or demand their own price, which is often binding, for a specific good or service. Inside of a consumer to business market the roles involved in the transaction must be established and the consumer must offer something of value to the business.
Business-to-employee (B2E) electronic commerce uses an intrabusiness network which allows companies to provide products and/or services to their employees. Typically, companies use B2E networks to automate employee-related corporate processes. B2E portals have to be compelling to the people who use them. Companies are competing for eyeballs of their employees with eBay, Yahoo and thousands of other web sites. A huge percentage of traffic to consumer web sites comes from people who are connecting to the net at the office.
In a supply chain, a vendor, supplier, provider or a seller, is an enterprise that contributes goods or services. Generally, a supply chain vendor manufactures inventory/stock items and sells them to the next link in the chain. Today, these terms refer to a supplier of any goods or service. In property sales, the vendor is the name given to the seller of the property.
Customer to customer markets provide a way to allow customers to interact with each other. Traditional markets require business to customer relationships, in which a customer goes to the business in order to purchase a product or service. In customer to customer markets, the business facilitates an environment where customers can sell goods or services to each other. Other types of markets include business to business (B2B) and business to customer (B2C).
Tmall, formerly Taobao Mall, is a Chinese-language website for business-to-consumer (B2C) online retail, spun off from Taobao, operated in China by Alibaba Group. It is a platform for local Chinese and international businesses to sell brand-name goods to consumers in Greater China. It has over 500 million monthly active users, as of February 2018. In the last few years, it has opened its features to brands, not only for online sales but also for developing brand awareness. According to Alexa Rank, it is the third most visited website globally in 2021.
Business-to-many or B2M is a marketing term for a business that sells their goods or services to other businesses as well as to consumers. Unlike B2B firms that only engage themselves with other businesses or retail firms (B2C) that only contact consumers or the end users of the product, B2M firms do both. It is important to understand that just because an organization does B2M marketing, this does not mean that they target their products and services to everyone. B2M companies, like any other type of company, have a more specific target audience.
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