As the global B2B eCommerce market continues to flourish, it’s important to get a grasp of what it really means for your business. Wholesalers, manufacturers, distributors, and other B2B organizations are all directly impacted by this shift in buying behavior and now is the time to consider taking your business online.
Business-to-business (B2B) eCommerce is the sale of goods or services between businesses via an online portal. Instead of a retailer selling products to an end consumer, like in the traditional B2C eCommerce sense, companies are selling directly to other businesses and retailers. Let’s take a deeper look at how this exchange really works, with a few B2B eCommerce examples that have proven to triumph over the rest.
How Does B2B eCommerce Work?
B2B eCommerce is different from your standard B2C eCommerce because instead of selling directly to the consumer, you are selling to other businesses. This could mean that manufacturers are selling to wholesalers, or even wholesalers are selling to retailers via an online sales portal.
While this may not seem like a completely revolutionary concept, B2B eCommerce is a rapidly growing market now valued over 5 times that of the B2C eCommerce market (Statista). It’s big business and there is a lot of opportunity still on the table for B2B companies. Fueled by the pandemic and online buying expectations, B2B eCommerce is predicted to make up 17% of all B2B sales in the U.S. by 2023 (Forrester). As one of the fastest-growing sales models, there is a lot to learn before taking your B2B business online, and we’re here to help.
4 Different Types of B2B eCommerce
In 2018, we found out that 48% of companies were making between 50% and 74% of their company purchases online. That’s a large percentage that has only increased since the recent pandemic.
As technology progresses, it has allowed eCommerce stores that were once catering to a B2C market, to now tackle B2B as well. With this, lines have been blurred and we now see stores in a wider niche called B2C2B, with businesses now selling both directly to the consumer and to other businesses.
Here is a quick overview of the 4 different types of B2B eCommerce stores on the market:
- B2B2C (Business-to-Business-to-Consumer)
B2B2C is a recent and interesting business model that enables companies to cut out the middleman, often enjoying higher profit margins. B2B2C eCommerce stores are reached generally through an affiliate link on another site. Sometimes they partner with other businesses in order to drive traffic to their site, and other times they act alone, acting as the manufacturer and as the distributor. Often these companies create the product and rebrand the product for a particular business before sending the product to the customer. This means that another business may not have even touched the product, but their brand name is on it. This is becoming more and more popular as consumers and other businesses become more comfortable and trusting when it comes to purchasing online.
Wholesale B2B eCommerce include manufacturers or distributors that have an online platform dedicated to selling the product to retailers (generally in bulk). Because the product is sold in bulk, the wholesaler is able to sell the product for a better price, allowing the retailer to add their desired mark-up. While in the past, wholesalers generally made their sales via phone or email, having an eCommerce store makes it that much more convenient. It allows the retailer to browse through options online, making purchasing decisions without so much as a phone call. Of course, these sorts of operations are the future of sales in general, but they are increasing in the B2B sector rapidly.
Manufacturers create products by combining parts, raw materials, labor, and machines. A manufacturer typically creates individual parts and sells them to another company who assembles the finished good. These companies now want to be able to select those parts from a catalog, view personalized pricing, and purchase what they need online. On the other side of the coin, manufacturers are now expanding even further and selling their parts directly to consumers. It’s a fast-paced industry to be in and it’s the manufacturers who are adapting to the digital buying experience that are thriving.
Distributors work closely with manufacturers to advertise and bring awareness to the product among the target audience. This often happens when a manufacturer doesn’t have the time, capacity, or interest in marketing their own product to the consumer. Because ‘distributing’ is the distributor’s only goal, they have the infrastructure and supply chains to get it done efficiently. Think about online marketplaces like Amazon and eBay. Instead of worrying about the products, they are focused on creating a seamless customer experience and shortening the time from sale to delivery.
Examples of B2B eCommerce
Now that we’ve been through the main types of B2B eCommerce, let’s take a look at some of the best examples of B2B eCommerce niches and stores.
Auto Parts Distributors and Manufacturers
Auto parts distributors and manufacturers are huge players in the B2B eCommerce game. These B2B organizations supply car brands all over the world with the parts they need to make cars. They can also supply repair businesses with the parts they need to fix cars or make improvements to them. Either way, these distributors and manufacturers don’t sell to clients directly because they don’t have the time to do the consulting and installation of their own products.
We’ve worked with many of these companies ourselves, one of which is Arnold Auto Glass. They supply auto glass companies across Canada with the glass parts they need for a range of different vehicles and brands of cars. Arnold Auto Glass ensures that the businesses they supply have access to unlimited stock and that their deliveries take place in a timely manner. The rest of the service delivery is left up to the business they are supplying.
Health and Beauty Suppliers
The health and beauty industry is a B2B niche market that is on the rise. These stores sell to health and beauty such as make-up stores, beauticians, spas, and health shops. They often offer exclusive products that aren’t available to the public other than through a specialist and offer their buyers discounts for purchasing in bulk.
One client that we have had the pleasure of working with is L’ANZA. L’ANZA is a B2B2C eCommerce store where stylists and clients can shop for hair color and care products from the comfort of their own home. They offer their buyers bulk discounts and direct clients can pay full price for one-off purchases.
Agricultural companies very rarely sell to individual customers as they hope to sell their products in masse scale to farming companies. There are suppliers that sell to gardeners and other individuals, but it is on a much smaller scale than those working in the agricultural industry.
Anderson Pump House Ltd. is one of the B2B eCommerce stores that we have worked with in the industry. They aim to sell the following on a large scale to their agricultural clients via their online portal:
- Pumps and Water Systems
- Water Treatment
- Wastewater Systems
- Plumbing, PVF, Waterworks
- Hydronics and HVAC
- Turf Irrigation Supplies
- Wildfire Suppression
Medical supplies, specifically in the dental industry, are another sector that relies entirely on the B2B business model. Manufacturers create the product and send it to distributors or set up a B2B eCommerce store where they can acquire new dental businesses to supply.
One of these companies that we’ve worked with in the past is Orthodontic Supply Canada (OSC). They supply orthodontists with the tools and materials they need to do their job correctly. Of course, this type of business could only be B2B because the general public would never buy their dental supplies directly from the manufacturer (in fact they wouldn’t know where to start).
8 Advantages of B2B eCommerce
Now that you have a better understanding of B2B eCommerce with a couple of examples in mind, you can now start thinking about your own B2B eCommerce strategy. Let’s take a look at some of the major advantages that come with using this sales model:
1. Opportunity to Reach New Customers
In the past, B2B businesses worked predominantly offline, over the phone or via email. But in today’s global marketplace, your current and prospective customers are online. Having an online portal where your customers can browse through your products at their leisure will open your door to a much larger audience. You can also implement marketing strategies like SEO and PPC to extend your geographical scope and expand into new markets much more easily than before.
2. Manage Suppliers and Customers More Effectively
Making use of a B2B eCommerce website means you can make use of software that allows you to monitor how users interact with your site more carefully. This can show you valuable information about your customers and how they navigate your shopping experience, allowing you to optimize the user experience to sell more and increase your bottom line.
3. Sell Larger Amounts to Existing Clients
B2B eCommerce stores give you the ability to both up-sell and cross-sell to clients that are already purchasing items from your store, allowing you to make more revenue per sale. And with all the back-end data your site will be collecting, you’ll be able to implement remarketing to clients who have purchased from you before.
4. Improved Data Analytics
Strategic business decisions start with a solid view of your performance metrics and analytics. Most B2B companies use an ERP system to manage these insights, which is why it’s important to consider selecting an eCommerce solution that integrates with your existing infrastructure. An ERP-integrated eCommerce system can give you valuable insights into the back-end and front-end of your business, providing real-time access into your users are interacting with your site and what they are buying. This, in turn, allows you to make better purchasing decisions and decisions that are integral to the future of your company.
5. Implementing Just In Time (JIT) Manufacturing
Just in time manufacturing (JIT) is a process that companies implement to prevent a large build-up of inventory sitting in their storage units, as this creates extra costs. So when they know precisely how much raw materials they need, they can order stock as needed in the supply chain. This prevents having to pay for a build-up of raw materials to be stored before it can actually be used. While this is a risky system, as someone ordering late can cause a delay in manufacturing, it causes a decrease in costs. If orders are placed automatically, this process can be a huge step forward for your business as it starts to run like a well-oiled machine.
6. Low Overhead Costs
Conventional B2B businesses often spend a lot of money on sales and marketing. While the same is true for B2B eCommerce stores, their marketing stretch is much further, reaching a diverse global audience. Online stores also have the ability to analyze their target audience and spend money on very targeted advertising. This means with the same money spent, you are bringing in a lot more business, which makes it a far better ROI.
7. Easy Payments and Invoicing
B2B eCommerce stores have the ability to integrate with online accounting software and ERP systems that handle the payment process for you. They can automatically invoice clients and track payments, ensuring no goods and services are received until the payment has been received. This also means that nobody has to be paid to track the movement of money for you or consolidate data from separate systems. Instead, all of this is handled automatically in the back-end, which saves you both time and money.
8. Having a Bigger Scope
Conventional B2B businesses make use of sales reps, cold calling, and trade shows to make business-to-business connections, which means the reach of their business can only go as far as their travel budget. For this reason, most businesses didn’t expand past regional sales. But with the introduction of B2B eCommerce, companies can easily have a national or even global reach. They can target their advertising to people who need their products and find new clients all over the world. This means that their business can expand worldwide without ever having a physical location.
5 Best Practices for Running a B2B eCommerce Website
With so many advantages to having a B2B eCommerce store, it’s easy to see how crucial it is to have an online portal in this day and age. If you’re considering taking your B2B business online, here are some best practices for running a successful, profitable B2B eCommerce website:
- Implement ERP-Integrated eCommerce Software
Having a B2B eCommerce store gives you the ability to integrate other kinds of software into your business processes. This means that software can keep track of your inventory and accounting so that you have time to do other important tasks. This also means that you’ll always have a handle on the data about your business, allowing you to make more informed business decisions.
- Offer a Wide Range of Payment Options
The reason many of your clients shop online is that it is incredibly convenient. In order to make the process even more convenient, offer them a wide variety of payment options. This means that they can pay with whatever payment form they have available to them. If you give users a wider variety of payment options, you are likely to see a decrease in the number of items left in people’s carts without being checked out.
- Make Sure Your Business Can be Found Easily Online
When your business moves online, it will likely save on all kinds of costs. But it’s important to put those savings to good use, furthering your business in the long run. One of the marketing tactics you should focus on is search engine optimization (SEO). Getting your website to rank organically for important product-related keywords can help you to make much more revenue well into the future. While making SEO changes on your website won’t yield immediate effects, it’s still guaranteed to pay off in the long run.
- Improve Your Website Speed and Engagement
Once you have taken a look at the data provided to you by back-end software, you can make informed business decisions that improve the user experience and makes your website easier to use. You can also make sure that each of your product descriptions provides detailed information about the product to ensure users aren’t confused at any point throughout the process.
- Focus on Customer Satisfaction and Retention
While having a B2B eCommerce website can make it far easier to acquire new clients, it also means that it is easier for them to move to one of your competitors. That’s why you need to focus on providing a personalized customer experience with tailored pricing and product recommendations.
Start Building Your B2B eCommerce Business Plan
B2B eCommerce is an expanding sales model that has grown in leaps and bounds over the past couple of years. As we move toward a more digitized world, it only makes sense that your business moves with it. If you’re ready to transition into the digital space and offer your customers and partners a unified online experience, commercebuild can help you make your B2B eCommerce website a success!
To get started, our talented team of eCommerce and ERP experts have put together a template on how to create a B2B eCommerce business plan. The purpose of this template is to guide you through the process of selling your products online. With helpful questions and important information on the implementation process, it will get you thinking about your business goals and better prepare you for your digital journey.