TL;DR
- B2B e-commerce works differently than B2C: longer sales cycles, multiple decision-makers, and customized pricing.
- Anyone who builds a B2B store like a retail store is bound to fail.
- We explain the definition, advantages, and success factors of successful B2B stores.
- Benefits: more efficient procurement and broader reach for your business.
In a nutshell:
- E-commerce in the B2B sector works differently than in B2C—longer decision-making processes, multiple stakeholders, and customized pricing models.
- Anyone who sets up B2B e-commerce like a retail store for end customers is bound to fail.
- We explain the definition, specific advantages, and the factors that determine the success of B2B stores.
Today, many companies face the challenge of <adata-wpil href="https://waterproof-web-wizard.de/blog/prozessdigitalisierung-so-gelingt-die-optimale-digitalisierung/" data-type="post" data-id="2144" class="lnk">navigating digital changes and market trends. One of these digital trends is B2B e-commerce, which is a key component of digital transformation for many companies. </adata-wpil>
In this article, we’ll take a look at the definition and also discuss the benefits of B2B e-commerce as well as the difference between B2B and B2C e-commerce. Furthermore, we’ll explore the potential of e-commerce for B2B.
| By the way: The e-commerce market is growing steadily and reaching new heights every year. It generates global revenue of over $3.5 trillion. Thanks to increasing accessibility, it is easier for companies to get involved in this sector. |
E-commerce for B2B – a definition
The term “B2B e-commerce” (business-to-business) refers to electronic commerce between two companies, while B2C (business-to-consumer) refers to electronic commerce between a company and the end consumer.
Synonyms for the term “B2B e-commerce” include: B2B e-commerce, e-procurement, e-process management, electronic procurement, or B2B e-commerce technology. These are areas of electronic commerce that support companies in managing their transactions.
Good to know: The B2B market is much larger and more complex than the B2C market because many companies are involved in it. Therefore, companies seek to expand in the B2B market by establishing a strong presence in e-commerce. This approach helps them reach a broader customer base, as purchasing options for limited and select products can be offered.
An important aspect of B2B e-commerce is the use of software systems that simplify the purchasing process for businesses and increase efficiency. Some of these systems include inventory management systems, which simplify the purchasing process by providing a unified product catalog system.
| In short: Business-to-Business (B2B) e-commerce refers to the electronic trade of goods or services in which a company (business customer) sells its products or services to other companies (business customers). |
The Benefits of B2B E-Commerce
B2B e-commerce offers companies a range of benefits that not only improve competitiveness but also save costs and increase revenue. B2B e-commerce can, in particular, help optimize processes and strengthen customer loyalty by enabling quick and easy online ordering.
- Cost savings: The first benefit offered by B2B e-commerce is cost savings. By leveraging digital technologies, companies can reduce the costs associated with manual processes by cutting paper expenses and the labor costs involved in manually processing orders. In addition, companies can reduce logistics costs with B2B e-commerce by shipping their orders directly to the customer.
- Customer Processing: The second advantage of B2B e-commerce is faster and more efficient customer processing. With automated ordering systems, companies can process orders faster by using a single platform for all orders, invoices, and payments. This allows customers to receive their orders more quickly, which in turn strengthens customer loyalty.
- Increased Revenue: The third advantage of B2B e-commerce is increased revenue. Thanks to automated ordering systems, companies can process orders faster by serving more customers. This gives them a competitive advantage.
- Simplified communication: The fourth benefit of B2B e-commerce is the simplification of communication between companies, which in turn streamlines the entire business process.
- Customer feedback: The fifth benefit involves customer feedback, which is easier to collect and track. This is because customers can easily leave ratings and reviews on the company’s website, which other customers can view.
E-commerce platforms can also set up automated customer surveys and/or contact customers directly via social media to gather feedback.
Furthermore, e-commerce platforms have analytical tools that enable companies to collect and analyze feedback in real time. Overall, these features help companies gather feedback faster and more easily than with traditional survey methods.
- Customer follow-up: The sixth benefit is automated follow-up systems (email, ads, etc.) that are set up to offer customers additional deals or special discounts after their purchases.
- Tapping into business opportunities: The seventh advantage is that e-commerce offers businesses a wide range of opportunities to tap into new business opportunities.
This is because online retail allows businesses to reach customers worldwide, rather than being limited to a local audience. Websites are available 24/7, enabling customers to make purchases at any time and from anywhere.
- Customer Data Analysis: The eighth advantage lies in the analysis of customer data. Through this analysis, e-commerce platforms can develop personalized marketing campaigns to target specific audiences.
- Upselling and cross-selling: The ninth advantage lies in the sale of additional services. E-commerce platforms can set up automated upselling and cross-selling systems to guide customers toward more purchasing options. This, in turn, increases revenue opportunities for businesses.
What are the disadvantages of e-commerce?
In addition to the B2B e-commerce advantages, there are, of course, also disadvantages in the B2B market. These include:
1. High competition: E-commerce companies must hold their own among many other providers.
2. Development and maintenance costs: Launching an e-commerce business is expensive and can be time-consuming.
3. Customer service: Customer service is a vital part of any business, but it can be difficult to provide online.
4. Shipping costs: You have to charge for shipping, which can eat into your profits.
5. Security concerns: Customers often worry about the security of their data when shopping online.
6. Returns: When customers return an item, you have to pay for the return shipping and make the product ready for resale. This can be expensive.
What is the difference between B2B, B2B e-commerce, and B2C e-commerce?
To avoid confusion, let’s first clarify the differences between B2B, B2B e-commerce, and B2C:
| B2B – Business-to-Business | B2B e-commerce | B2C – Business-to-Consumer / Customer | B2C e-commerce |
|---|---|---|---|
| B2B, or Business-to-Business, is the general term for transactions between businesses. | B2B e-commerce specifically refers to electronic commerce between businesses and can include websites, online auctions, and other forms of electronic sales. B2B e-commerce can also be referred to as B2B online commerce. | B2C, or Business-to-Consumer, refers to transactions between businesses and consumers. | B2C e-commerce refers to the sale of products or services directly to end consumers via an online platform. |
B2B (business-to-business) and B2C (business-to-consumer) refer to two different types of e-commerce models in which companies sell products or services. The term B2B (Business-to-Business) describes the buying and selling of products and services between two or more companies.
Since its inception, commerce has been driven by a series of new forces, with e-commerce being one of the most significant today. Simply put, B2B e-commerce emerged to improve interaction between companies and simplify business transactions.
B2B e-commerce differs from B2C e-commerce in that products and services are sold directly to other businesses. An example of B2C e-commerce is an online store where consumers can purchase goods.
| In short: The difference between B2B and B2C e-commerce is that B2B e-commerce was developed specifically for business customers, while B2C e-commerce is intended for end consumers. In B2B e-commerce, companies focus on optimizing business processes and logistics. B2C e-commerce, on the other hand, focuses more on the consumer and their experience. |
B2B e-commerce (business-to-business):
- Sales to other businesses.
- Often larger order quantities and higher average order values.
- More complex ordering processes and contract terms.
- Longer sales cycles.
- Requires greater integration with the customer’s business processes
B2C E-commerce (Business-to-Consumer):
- Sales to end consumers.
- Smaller order quantities and lower average order values.
- Simpler and faster ordering processes.
- Focus on an attractive customer experience and marketing.
- Should be easy to use and user-friendly.
| Good to know: B2B e-commerce has grown significantly in recent years and now has a major impact on the B2B market. This is because online commerce enables companies to operate more cost-effectively and ensure that all business processes run smoothly. |
What are the specific differences between B2B and B2C e-commerce?
Now that you understand the importance of B2B e-commerce, it’s important to take a closer look at the differences between B2B and B2C e-commerce. At first glance, there seem to be only minor differences between B2C and B2B. After all, both are essentially about selling products online, right?
Yes, that’s true, but the reality is more complex: The most important distinguishing feature between B2B and B2C is the target audience. The basic requirements that an online store must meet for end customers (C) and for professional buyers (B), however, are the same: an online sales channel that is available around the clock.
But that’s where the similarities end. Professional buyers have additional needs for the platform to be considered a viable alternative to ordering by phone, email, or fax. These include the following three points:
- Customized pricing
To be considered a valuable alternative to traditional ordering by phone, email, or fax, B2B web shops must meet certain needs of professional buyers:
Unlike consumer web shops, which offer a standard price for each product—often with volume or membership discounts—B2B companies must negotiate individual pricing agreements with their customers.
These specific prices must then be visible on their online channel. Additionally, in the B2B sector, net prices excluding VAT are used, which is standard practice in Europe.
- Individual Purchases & Decision-Making Units
Consumers often make their purchasing decisions independently or together with one or two other people. In contrast, professional procurement can be very complex, and this complexity cannot be easily replicated in B2C online stores.
B2B e-commerce platforms are specifically designed to provide various features to support your customers’ procurement processes and decision-making unit (DMU).
| Definition of DMU – Decision Making UnitDMU stands for Decision Making Unit and refers to a group of people involved in decision-making (within a company). It is a marketing term that describes the decision-making process regarding the selection of the right product, the right price, and the right distribution channels. |
- Product Search
Consumer purchasing decisions are often made independently or in collaboration with one or two other people, whereas professional procurement is generally far more complex.
This complexity can be difficult for B2C web shops to manage. For this reason, B2B e-commerce platforms offer support for various stakeholders to ensure their customers’ procurement processes and decision-making unit (DMU) structure.
Electronic Data Interchange (EDI) and Webshops
Unlike online retail for end consumers, the transportation industry in the U.S. was far ahead of e-commerce. In the 1960s, this industry developed what is known as Electronic Data Interchange, or EDI for short.
EDI is the electronic exchange of business data between companies, enabling them to automate business processes that are typically conducted on paper. This includes, for example, invoices, orders, and delivery notes.
It uses a standardized format that allows companies to exchange data securely and efficiently without the need for manual verification or transfer. This can lead to faster business processing, a reduced error rate, and improved efficiency.
EDI and B2B web shops thus share the same goal: to simplify the online purchase of goods. The difference: B2B e-commerce enables companies to buy and sell via the internet, while EDI (Electronic Data Interchange) facilitates the exchange of transaction messages between companies.
Integrated e-commerce software
Implementing the relevant features of a B2B e-commerce web shop can be a challenge. And although launching an e-commerce platform for professional buyers is more complex than for consumer web shops, an integrated
e-commerce solution save time, money, and stress for you and your customers.
Integrated e-commerce software helps facilitate the sale of products and services over the internet. It includes features such as a shopping cart, a product database, payment processing, and shipping integration.
Furthermore, many integrated e-commerce software packages also offer a built-in website builder that allows users to create a complete e-commerce website without requiring any programming knowledge. The data from your ERP system (and other systems, if applicable) is used as the foundation for your online store.
This enables seamless communication between your business systems and your online store, allowing you to respond quickly and efficiently to customer inquiries. Automating and synchronizing your data helps you optimize processes and reduce costs. The advantage of this:
- Customer-specific pricing in the online store.
- Reduction of human errors when processing orders.
- A product catalog that updates automatically.
The use of integrated e-commerce offers you many advantages: The business logic and data from your ERP system (as well as other systems, if applicable) are used as the foundation for your online store.
| Definition of ERP: Enterprise Resource Planning (ERP) is a software solution that supports businesses by simplifying and unifying all key business processes. This software provides an integrated solution for managing finance, production, logistics, procurement, marketing, sales, and customer service. ERP systems enable companies to track, automate, and optimize all their business processes. |
Definition of PIM and Webshop
PIM stands for “Product Information Management” and refers to a system or software used to centrally manage and organize product information.
A web shop, on the other hand, is an online store where customers can order goods or services directly over the internet. A PIM system can be used here to ensure that the product information displayed on the web shop platform is up-to-date and consistent.
Which is better: open-source software or closed-source software?
Whether open-source software or closed-source software is better depends on individual requirements and preferences. Here are some advantages of both options:
Open-source software:
- Available free of charge
- The community can fix bugs and add new features
- Transparency regarding the code and how it works
- May require in-house resources or hiring developers for maintenance and support
Closed source:
- May offer proprietary features and tools
- Support and maintenance are typically provided by the manufacturer
- Often more user-friendly and intuitive to use
- May require a fee
B2B E-Commerce KPIs
How can you assess the efficiency of your B2B online platform? An important metric is the revenue generated online. But there are other key performance indicators (KPIs) that provide insight into whether you’re on the right track.
Return traffic to your web store
One way to evaluate the performance of your B2B e-commerce platform is by tracking the return rate of your visitors. A high percentage of returning visitors indicates that your customers are satisfied with the shopping experience in your web shop and use it as their preferred ordering channel.
A low return rate, on the other hand, could mean that your customers prefer other ways to place orders, such as by phone or email.
Online or Offline
This metric tells you whether you’re missing out on cross-selling or up-selling opportunities in your online store. Since B2B companies are able to compare a customer’s average online spending with their offline spending, this KPI is of particular interest to them. If customers more often prefer to place larger orders online rather than offline, your online store is fulfilling its purpose.
What is the potential of e-commerce for B2B?
The potential of e-commerce for B2B is enormous. Acquiring new customers and driving growth are just two of the many benefits companies can achieve by using B2B e-commerce solutions.
B2B e-commerce provides a unique platform for companies looking to promote their brands on a global, digital stage and attract new customers. With an e-commerce solution, companies have the opportunity to establish direct contact with their customers.
In addition, they can sell their products and services through e-commerce marketplaces and networks such as Amazon, eBay, or Alibaba to tap into new customer segments.
Furthermore, e-commerce also enables companies to achieve improved customer segmentation. When companies can identify customers using technologies like artificial intelligence (AI), they can develop and offer suitable products and services based on customer needs. This can help enhance the overall value of the customer experience and increase customer loyalty.
In addition, companies strengthen their online presence through B2B e-commerce by promoting and selling their products on multiple platforms. This enables them to further increase revenue by reaching a broader customer base.
Through e-commerce, companies can also improve the efficiency and speed of business processes by implementing automated ordering and delivery processes. In summary, e-commerce can help companies increase their revenue and accelerate their growth.
Upcoming Trends for B2B E-Commerce
The B2B market is not particularly trendy or fast-paced, but rather evolves steadily. Its goal is to support, improve, and optimize existing sales processes, and these processes do not change overnight.
Existing contracts, established workflows, personnel, longer-term investment and decision-making cycles, as well as a focus on security rather than business risk, mean that companies are unable to react quickly to trends. It is therefore better to speak of developments rather than trends.
Which developments will be important in the future?
- Omnichannel strategies and centralized service portals enable companies to provide comprehensive support to business customers in a cost-effective manner. Buyers are increasingly demanding these approaches.
- With the headless commerce approach, a company can better meet its customers’ needs in an omnichannel model, as it provides e-commerce functions independently of the output or communication channel. As a result, this technology is also gaining importance in the B2B sector.
- The Internet of Things (IoT) helps improve understanding of customers by providing data on their usage. Furthermore, it also serves to increase efficiency in procurement and sales by automating orders for so-called “C-parts.”
C-parts are components (e.g., screws, nuts, springs) that are regularly required in large quantities by manufacturing companies. These are standard parts that are not designed for a specific product but are generally available. C-parts are therefore an important component of industrial production.
- The use of Progressive Web Apps (PWA) facilitates the integration of smartphones into sales and service processes. This results in easier operation and, at the same time, lower costs.
Conclusion – B2B E-Commerce with Waterproof Web Wizard
In summary, B2B e-commerce can be a valuable tool in the age of digital transformation. It can help companies increase revenue, reduce costs, and build stronger customer loyalty.
It is important to recognize that B2B e-commerce offers a completely different shopping experience than B2C e-commerce. B2B e-commerce is not only useful for businesses but also for customers.
Thanks to the significant benefits of B2B e-commerce, it can enable companies to attract new customers, adapt to the dynamic conditions of the market, and, above all, achieve better market results.
For this reason, B2B e-commerce is an indispensable component for companies looking to take their business concept to the next level. However, you may also be thinking that this is exactly the point where you’d like to work with an experienced agency to receive professional guidance.
We at Waterproof Web Wizard are happy to support you. Be sure to read our client testimonials first to get a better sense of who we are.
Apart from that, we are specialists in SEO strategies, which are a crucial part of marketing. We cover the following areas:
- Search Engine Optimization – SEO
- Local SEO
- Technical SEO
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