Business-to-Business

GLOSSARY

B2B (Business-to-Business)

Business-to-business (B2B), also called B-to-B, is a form of transaction between businesses, such as one involving a manufacturer and wholesaler, or a wholesaler and a retailer. Business-to-business refers to business that is conducted between companies, rather than between a company and individual consumer. Business-to-business stands in contrast to business-to-consumer (B2C) and business-to-government (B2G) transactions. B2B companies can include software as a service (SaaS), marketing firms, and businesses that create and sell various supplies.

What is B2B(Business-to-Business)?

Business-to-business (B2B), also called B-to-B, is a form of transaction between businesses, such as one involving a manufacturer and wholesaler, or a wholesaler and a retailer. Business-to-business refers to business that is conducted between companies, rather than between a company and individual consumer. Business-to-business stands in contrast to business-to-consumer (B2C) and business-to-government (B2G) transactions. B2B companies can include software as a service (SaaS), marketing firms, and businesses that create and sell various supplies.

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Key takeaways:

B2B companies create products and services for other businesses, organizations and charities.

No matter your business’s size, at some point you’ll need to purchase products or services from B2B companies.

Consumers aren’t a direct factor in B2B transactions, but they’re a critical component of why B2B companies work together.

B2B isn’t the only business model involved in the supply chain.

B2B sales are complex, large, and require multiple people who serve in different roles across a longer sales cycle.

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How Business-to-Business Selling is Different?

Selling to a business is different from selling to an individual consumer. Key sales and marketing differences for business-to-business transactions include:

Selling sometimes requires participating in a bidding process by responding to a purchaser’s request for proposals. On the business-to-consumer side, this compares to asking various auto dealers to provide their best offer on a specific make and model.

The decision-making process on a purchase can take days, weeks, or months, depending on how the purchasing company works and the size and nature of the order.

Purchasing decisions are often made by committees, so each member needs to be educated and “sold.”

The dollar value of goods or services sold is much higher than on the consumer or retail level, so the buyer needs to take steps to minimize risk. That sometimes involves requesting a product prototype or customization.

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The difference between B2B and B2C:

B2B stands for ‘business to business’ while B2C is ‘business to consumer’. B2B ecommerce utilises online platforms to sell products or services to other businesses. B2C ecommerce targets personal consumers. A company that sells office furniture, software, or paper to other businesses would be an example of a B2B company.

B2B ecommerce tends to be more complex than B2C ecommerce. It involves heavier research, more needs-based purchasing, and less marketing-driven buying. Many B2B buyers have very tight parameters around the purchases they can make. This means that traditional revenue drivers like add-ons don’t have the same impact. B2B organisations didn’t have much of an incentive to optimise their customer journey but this is changing in the current climate.

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Notes:

B2B buyers have to consult with multiple departments before purchasing, while B2C consumers only have to consider themselves.

B2B buyers look at the long term, which means they spend more time researching and sourcing recommendations. The B2C customer is more prone to impulse buying or emotionally driven purchases.

B2B buyers deal in high-value purchases, so any misstep is magnified. Small-value B2C purchasing errors are much less impactful.

B2B buyers are generally repeat purchasers, so organisations have to consider the long-buyer lifecycle. B2C consumers will often only buy a product once.

Since B2B buyers are making buying decisions for entire companies, they have a tighter remit than B2C customers.

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Related Terms:

B2C(Business-to-Consumer)