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 a 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.
Business-to-business transactions are expected in a typical supply chain, as companies purchase components and products such as other raw materials for use in the manufacturing processes. Finished products can then be sold to individuals via business-to-consumer transactions.
Vertical B2B is generally oriented to manufacturing or business. It can be divided into two directions: upstream and downstream. Producers or commercial retailers can supply relationships with upstream suppliers, including manufacturers, and form a sales relationship. For example, Dell is working with upstream suppliers of integrated circuit microchips and computer printed circuit boards (PCBs).
A vertical B2B website can be similar to the enterprise’s online store. Through the website, the company can promote its products vigorously and comprehensively, which enriches transactions as they help their customers understand their products well. The website can be created for business, where the seller advertises their products to promote and expand transactions intuitively and conveniently.
Horizontal B2B is the transaction pattern for the intermediate trading market. It concentrates similar transactions of various industries into one place, as it provides a trading opportunity for the purchaser and supplier, typically involving companies that do not own the products and do not sell the products. It is merely a platform to bring sellers and purchasers together online. The better platforms help buyers quickly find information about the sellers and the relevant information about the products via the website.
Late in 2018, Forrester said the B2B e-commerce market topped $1.134 trillion—above the $954 billion it had projected for 2018 in a forecast released in 2017. That’s roughly 12% of the total $9 trillion in total US B2B sales for the year. They expect this percentage to climb to 17% by 2023. The internet provides a robust environment where businesses can find out about products and services and lay the groundwork for future business-to-business transactions.
Company websites allow interested parties to learn about a business’s products and services and initiate contact. Online product and supply exchange websites allow businesses to search for products and services and initiate procurement through e-procurement interfaces. Specialized online directories providing information about particular industries, companies, and the products and services they provide also facilitate B2B transactions.
Business-to-business transactions require planning to be successful. Such transactions rely on a company’s account management personnel to establish business client relationships. Business-to-business relationships must also be nurtured, typically through professional interactions before sales, for successful transactions to take place.
Traditional marketing practices also help businesses connect with business clients. Trade publications aid in this effort, offering businesses opportunities to advertise in print and online. A business’s presence at conferences and trade shows also builds awareness of the products and services to other businesses.
Business-to-business transactions and large corporate accounts are commonplace for firms in manufacturing. Samsung, for example, is one of Apple’s largest suppliers in the production of the iPhone. Apple also holds B2B relationships with firms like Intel, Panasonic, and semiconductor producer Micron Technology.
B2B transactions are also the backbone of the automobile industry. Many vehicle components are manufactured independently, and auto manufacturers purchase these parts to assemble automobiles. Tires, batteries, electronics, hoses, and door locks, for example, are usually manufactured by various companies and sold directly to automobile manufacturers.
Service providers also engage in B2B transactions. Companies specializing in property management, housekeeping, and industrial cleanup, for example, often sell these services exclusively to other businesses rather than individual consumers.
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