What is B2B or business-to-business? Definition and examples
B2B, which stands for business-to-business, is a way of doing commerce, specifically companies doing business with other companies. It refers to the exchange of products or services among companies. We can use this term to describe both traditional and online commerce. However, we more commonly use it for e-commerce.
E-commerce is a business model that focuses on doing business online, i.e., on the Internet. ‘E-commerce’ stands for ‘electronic commerce.’
The National Association of Sales Professionals has the following definition of the term:
“B2B is short for business-to-business. It refers to companies – or salespeople – who sell products chiefly to other businesses, rather than selling them to consumers.”
“B2B sales are often more complex than B2C (business to consumer) sales.”
It is important to remember that in its short form – B2B – the number ‘2‘ represents the word ‘to‘ in ‘business-to-business.’ Therefore, when you write the long form, don’t write it as ‘business-two-business.’ That is wrong!
B2B takes longer
When a company focuses on a B2B model, their marketing targets other companies. Therefore, the sales process may be longer and more intricate than a business-to-consumer model, i.e., B2C model.
It also takes much longer than in a C2C model. C2C stands for consumer-to-consumer.
To get a sale, the seller must usually deal with multiple departments within the target company.
Some companies sell both B2B and B2C, i.e., business-to-business and business-to-consumer. In this image, Avis is a car rental company, a business customer. The woman who just bought a car, on the other hand, is an individual consumer.
The decision-making process is often more complicated when companies purchase something. Perhaps the idea to buy goes first, for example, from the sales agent to the sales manager.
The sales manager may subsequently have to get the OK from the financial or legal department. Perhaps one of the directors also has to sign if it is a large order.
Unlike other business models, such as B2C, i.e., business-to-consumer, in B2B, companies are often selling raw materials.
The seller may also be selling services or parts that the customers needs from manufacturers.
For example, a car manufacturer will depend on a parts company to complete the assembly of a car. It may also need to purchase the software to automatize the assembly process.
B2B e-commerce has been increasing ever since the advent of the internet.
More companies are taking their business to online platforms. They are partly doing so because of the benefits and also because they have no choice.
E-commerce is no longer an option for most businesses; it is now a basic requirement if they want to survive.
The top three categories of B2B commerce are:
More and more companies have decided to migrate to the digital world. Subsequently, more companies are looking for other businesses that specialize in web development, web design, and SEO.
They are also looking for businesses that specialize in site building software and databases.
Supply and procurement exchanges
Companies pay to have access to a site or portal that has information on different supplies.
They also pay to have access to price listings, forums about a specific industry, and other features.
These are sites that gather and provide specialized data on certain industries or commerce to companies.
Usually, this type of company acts as an intermediary between companies that provide the information and companies that get it.
A company can focus on just one model, or it can mix its strategy, i.e., B2C, B2G, etc. It all depends on the needs of the market and what it is selling. B2G means business-to–government.
One example of a business that focuses on the B2B model is International Business Machines Corporation or IBM. The technology multinational giant offers a range of services to companies, such as cloud computing for enterprises.
With cloud computing, remote computers rather than the user’s hard drive store files and other data.
Organizations can add this service to their internal structure. They then have data available for their employees in real time 24/7.
IBM can also create an extranet service that the customer can access at all times.
Video – Digital B2B Marketing
This Survival of the Fastest video is all about B2B marketing in the digital world. Richard Robinson, Google UK’s Head of Business Markets, presents an animation about how business is changing. Specifically, how it is changing in a new digital age.