What is B2B e-commerce?
B2B e-commerce, short for business-to-business electronic commerce is the sale of goods or services between businesses via an e-commerce portal. Because orders are processed digitally, buying efficiency is improved for wholesalers, manufacturers, distributors and other types of B2B sellers.
Businesses often buy goods in bulk for a lower price and turn around to sell them at retail value. The goods are usually purchased directly from the manufacturer or distributors. This is wholesale, and is a popular form of B2B.
Manufacturers produce finished goods on a large scale by utilizing parts and raw materials in combination with manual labor and machines. In a B2B model, the finished goods are sold to other manufacturers or wholesalers.
A distributor is a person who works closely with manufacturers in an effort to bring visibility to the goods they are producing, with the goal of increasing sales. In an e-commerce model, the logistics of the sale happen online, often through an e-commerce platform. Many manufacturers work with distributors, and taking things digital creates a greater opportunity for growth. Just like other B2B models, distributors are working to shorten the lead time from sale to delivery and create a customer experience that beats customer expectations.
B2B and B2C e-commerce may look the same, but they are quite different. Business buyers and retail consumers have different purchasing needs. Here are some differences:
- Buying Impulsively vs. Buying Rationally – B2C buyers will buy on impulse and make one-off purchases, B2B buyers plan for purchases and make recurring purchases
- Single Decision Maker vs. Multiple Decision Makers – B2C purchases are decided upon by the buyer, B2B purchases often involve several layers of approval and may involve different departments
- Short-term Customer Relationship vs. Long-term Customer Relationship – B2C purchases are often one-off purchases, B2B purchases are based on long-term and on-going relationships
Why should you have a B2B e-commerce website?
- You can reduce the overall cost of selling your product to customers, and B2B can even allow you to also move into B2C to sell directly to retail customers.
- Your sales will increase tremendously. According to nChannel, B2B eCommerce is predicted to reach $1.8 trillion and account for 17% of all B2B sales in the US by 2023. The industry is twice as big as B2C. And just like B2C, more sales continue to shift from in-person to online.
- B2B also increases order values and higher conversion rates. Since they buy in bulk, an average order value of a B2B transaction is around $491, opposed to $147 for B2C. And, conversion rates are higher. B2B websites report average conversion rates at 10%, while B2C experiences are around 3%.
- You can grow your customer experience. With an entire catalog of products online, customers have access to more diverse product options than they did before. This also makes it easier to compare and contrast products and provides them access to earlier versions of products to test and trial before purchasing.
- Lastly, you have the ability to sell to a lower margin, which allows you to gain smaller clients, and reach more customers.
What to look for in a B2B e-commerce platform
- Price lists: Provide “members only” pricing, manage lists of pricing at SKU level, and give wholesale customers a discount when buying in bulk.
- Group pricing: Apply discounts only to select groups across categories and certain products.
- Manage your customers by location, behavior, etc.
- Faceted search: Allows merchants to refine product searches based on multiple attributes like price, color, size and reviews.
- Restricting users from being able to access certain content, which will help prevent competitors from seeing the pricing.
- Allow customers to quickly reorder when they need to.
B2B e-commerce is still a small part of the overall B2B market but is fast growing. If you don’t set up at B2B website your competitors eventually will. Now is the time to move and be first or early to market.
Ventura Web Design & Marketing has been offering e-commerce and digital marketing services since 1997. Along the way, we have learned a thing or two about how to sell items online. Our dedicated design, development and marketing team would love to work with you.
Contact us online or by phone to find out how your business can take advantage of B2B e-commerce. The phone number for our Tampa office is (813) 556-7990 and the number for the Las Vegas office is (702) 515-2057.