What is B2B?

What is B2B?

For many first-time entrepreneurs or startups, the question of B2B comes up frequently. What is B2B? What relevance does it have to businesses and startups? Can be it beneficial to an owner’s brand, or is it something that should be approached judiciously?

The B2B acronym stands for business-to-business, which means a business’s model is based on selling products or services to other companies rather than individual consumers. Some may argue that businesses can also be consumers, but for the sake of this discussion, other businesses are separate from individual consumers that have no intent of selling or distribution post-sales. Unlike B2C (business-to-consumers), B2B encourages transferring raw materials, components, and parts through industrialization or final sales to consumers.

One example of conventional B2B markets is computer manufacturing. Computer components are typically manufactured by different companies, and the manufacturer selling the final product purchases these parts independently. For example, Apple computers are sold by Apple Inc, but the CPU may be manufactured by Intel, the internal hard drive by Hitachi, the RAM by Nanya, and the list goes on. The individual products do not end up with the consumer, but the final product that integrates these separate products does. Because there are so many minute transactions that result in large business-to-consumer sales, B2B companies tend to be high volume.

The illustrated example demonstrates a real-world answer to the question of what is B2B. But B2B necessitates careful planning in order to be used successfully, as with all business models. B2B heavily depends on management teams and sales functions to institute and fortify customer relationships.  For many B2B companies, it is important to have a presence in publications such as trade journals, make appearances at conventions and business conferences, to efficiently market digitally (SEO, outreach through email, social media, etc) and other established awareness endeavors.

 

E-commerce Using B2B

A more advanced form of commerce is e-commerce, also known in many areas as e-biz. E-commerce is the exchange of documents and services/products among business through electronic means. The Electronic Data Interchange (EDI) started this practice in the 1960s. Trading allies within supply-chain networks are classic contributors that barter electronic documents to declare official purchases of goods and services. E-commerce within B2B is used for contract assembling, global trade observance, customs affirmations, order administration, and supply-chain logistics. Using B2B e-commerce helps facilitate clearer communication and improves the purchasing experience from one company to another.

So, what is B2B, and how does it specifically apply to e-commerce? B2B can be categorized into several aspects, the first being company websites. A website is impertinent to any B2B company, since this is very likely the majority of where business transactions will be facilitated or take place. A website can serve as an intranet only intended for internal use, or it can be the entrance to an exclusive extranet built for customers and other users. There are even B2B companies that develop software for creating B2B websites, and consequentially becoming a B2B for B2Bs. Typically this type of software include tools for building sites, templates, procedures for best practices, database qualities, and transaction software.

 

Product Supply and Attainment

Another category that e-commerce fits B2B into is product supply and attainment exchanges, usually known as e-procurement sites. Such sites function for a variety of industries and often emphasize niche markets. Companies can shop for supplies from merchants, entreat propositions, and sometimes make bids if they have enough clout. This exchange of product supplies and procurement are enabled by e-commerce.

Vertical portal sites can also support purchasing, though not as directly as procurement sites. Industry portals typically provide subwebs of information for a vertical, or specific industry, namely education, healthcare, construction, etc. Portals can assist with chat groups, product descriptions and lists, and other features.

There are also brokering sites that act as an intercessor between potential business consumers and service providers. For example, a broker site can help companies like construction businesses find equipment manufacturers that are willing to lease out the desired tools needed by the company.

 

Infomediaries

The final category to answer the underlying question (What is B2B?) and how it applies to e-commerce is infomediaries, also called information sites, which provide specialized information to niche industries for both their companies and employees. They are essentially specialized searching websites that serve as industry standards organizations sites. They are logical tiers of the internet composed of algorithms and software that allow interaction between people and computers. It is ultimately connecting information supply with information demand, and benefiting both parties involved to determine how much value this said information has.

Some more popular examples of infomediaries could include Facebook, and individual company websites. In the case of social media outlets such as Facebook, infomediaries can serve not only as platforms for interaction between supply and demand, but can also help determine demand based on user feedback and suggestions.

 

Summing It Up

So, what is B2B to the reader? Though the entire concept of B2B can sound complex in this context, there are many globally known companies most are familiar with that are B2Bs. The Dropbox storage service is one example, and even though it is used dominantly by consumers, businesses also make use of it frequently. GE (general electric) makes several consumer goods that are sold direct as B2C, but they also provide many parts for enterprises and serve as B2B as well. Many people have been employed by companies that used ADP Inc. (Automatic Data Processing), a company that employs financial and payroll services to other businesses, and rarely used by the average consumer. There are also countless software B2B companies in the world, from giant corporations like Microsoft that serve a diversity of software programs to smaller niche businesses like Wolfepak Software that provide specific software to oil and gas companies.

As seen in the above examples, B2B and B2C are not mutually exclusive from one another, and many businesses employ practices that take advantage of both business models. It is important not to limit one’s business to only one practice and not be open to engaging other practices that could be critical to the success of the brand.

Are you still asking “What is B2B” or how it relates to e-commerce? Check out our article How to Get E-Commerce Featured in Publications.

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