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B2B (business to business)

By Cameron Hashemi-Pour

What is B2B (business to business)?

B2B (business-to-business) is a type of commerce involving the exchange of products, services or information between businesses, rather than from a business to consumer (B2C). A B2B transaction is conducted between two companies, such as a wholesaler and an online retailer. In most B2B commerce, each organization benefits in some way and typically has similar negotiating powers.

The U.S. Department of Commerce's International Trade Administration forecasts that global B2B e-commerce will reach $36 trillion by 2026, representing a compound annual growth rate of 14.5% over a 10-year period.

Nearly all B2B commerce occurs on the internet as e-commerce. Transactions are conducted via different categories of websites, including the following:

Many B2B sites fall into more than one of these groups, and the models for B2B sites are continually evolving. In fact, the B2B market includes companies that sell software for building B2B websites, including tools, templates, databases, methodologies and transaction software.

How does B2B work?

In a B2B transaction, one business, often referred to as a vendor, sells products or services to another business. Typically, a sales team or department conducts these transactions, rather than the entire enterprise or a single person. Occasionally, one person on the buyer side makes a transaction in support of the company's business goals. Conversely, some B2B transactions involve the entire company's use of a product, such as office furniture, computers and software licenses.

For larger or more complex purchasing decisions, a buying committee handles the B2B product selection and decision-making process. These committees typically include the following personnel:

Large purchases might involve an RFP, in which the buyer invites prospective vendors to submit proposals detailing their products, contractual terms of service and pricing.

Why is B2B important?

Every business needs to purchase products and services from other businesses to launch, operate and grow. B2B commerce supports these activities. A company uses B2B suppliers to procure products and services, such as the raw materials they need for production, office space, office furniture, computer hardware and software. The food that companies stock in their kitchens and the signs displayed on their office buildings are also examples of products and services purchased from suppliers.

B2B suppliers are more likely to engage in long-term business relationships with their customers compared to B2C companies. B2C transactions often involve ad hoc purchases from individual consumers, whereas B2B suppliers can expect more frequent and predictable purchases from businesses for goods and services. Many B2B suppliers sell specialized and customized products tailored to businesses' specific needs.

Examples of B2B marketing strategies

B2B companies have various methods for reaching their target audiences. Digital communications has enabled these strategies to increasingly go online and let companies expand their reach. These strategies include the following:

Types of B2B companies

There are several types of B2B companies, including the following:

B2B industries

B2B companies operate in many industries and markets. The following are a few notable examples:

From caterers to construction companies, B2B commerce is prevalent throughout many other industries, including retail, telecommunications, insurance, healthcare, education, real estate, construction, engineering, and food and beverage services.

Benefits of B2B

The B2B market has many benefits compared to B2C, including the following:

B2B challenges

B2B e-commerce has some challenges, such as the following:

Examples of B2B companies

B2B companies conduct business either online or at physical stores and distributors. They are some of the largest companies in the world, but many small businesses are also B2B companies. These companies work across practically every industry, and a lot of B2B businesses, such as Amazon and Apple, are also B2C businesses.

According to Wrk Technologies, a provider of workforce management software and consulting services, the largest B2B vendors include several information technology (IT) companies, such as Microsoft, IBM and Adobe. Some of the largest non-IT B2B companies are UPS, Wells Fargo and General Electric.

Learn how customer communications management, facilitated by generative AI and other technologies, is key to improving customer experience success for B2B and B2C businesses alike.

15 Mar 2024

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