THE PROS AND CONS OF B2B E-COMMERCE YOU NEED TO KNOW ABOUT
The following is a guest post from Sean Dudayev from 3Dcart.com:
Wanting to learn more about B2B eCommerce? Well, the best place to get started is a solid grasp of what it is exactly. B2B eCommerce is a huge category that includes all products and services that are sold online from one company to another. B2C businesses, on the other hand, sell products directly to consumers, which means that they are selling to individual customers – not businesses.
B2C models have the beauty of being simple, the transactions giving one, singular person what they need. B2B eCommerce models, on the other hand, manage much more complicated transactions because prices vary and the number of products (or amount of products or volume of services) also vary (although typically they skew towards being much, much larger).
Because of this, B2B eCommerce businesses have a lot more to manage in every aspect of their business – from customer service and tax requirements to shipping logistics and regulations. Yes, there is a lot of potential in B2B eCommerce businesses, but it’s important to know what you’re getting into before you jump in with both feet.
So, what exactly is B2B eCommerce?
Even with a basic understanding of B2B eCommerce models, there’s still a lot of questions about what qualifies for this category. Part of the problem is simply that the category really is enormous, consisting of so many diverse and seemingly unrelated businesses that it can’t possibly seem right.
Well, it is.
The one and only thing tying all of the B2B eCommerce models together is the simple fact that every business is selling to another business (not an individual) and they’re doing it using an online portal. B2B eCommerce, which stands for “business to business electronic commerce”, typically consists of relationships where wholesale distributors sell products to retail buyers. But, that really is only the beginning. Digital eCommerce services offered by a business to another business are also technically B2B eCommerce, which means in most cases that no products were ever actually physically shipped or received.
The most important thing to remember when thinking about B2B eCommerce is that these businesses are providing items or services other businesses need to operate successfully and scale. The B2B eCommerce model is all about providing value to other businesses, helping them generate a profit, whether it is providing physical products to sell, products needed for the infrastructure of a business, or services necessary for operation.
And, with everything you need for your business to succeed at your fingertips, it’s no wonder that B2B eCommerce companies are booming. In fact, B2B eCommerce companies have become so prevalent in the world of business that they are single-handedly reshaping how businesses look and work. By leveraging the digital revolution, B2B eCommerce companies are fulfilling a need that has always existed – just in a more streamlined, efficient and convenient way.
What are the Pros of B2B eCommerce?
- The magnitude of the B2B industry.
While B2C models are still profitable, they are nothing when compared with the behemoth that has become B2B companies. As more and more business consumers look for experiences that are mainly (or completely) online, B2B eCommerce is capitalizing on an almost limitless opportunity.
- Bigger orders and higher conversions with B2B eCommerce models.
For the value of each B2C order, every single B2B order is likely twice that – if not more thanks to bulk orders. It’s not improbable that certain B2B eCommerce businesses handle transactions that move thousands of items at once, something that is unheard of in the B2C world. B2B companies also benefit from working with customers who are quicker to buy, which means less money needing to be spent on marketing in order to get the conversions you want.
- Younger consumers with more tech skills.
Many of the biggest and most successful B2B eCommerce companies understand that millennials are the target audience. Not only are they the ones with businesses interested in the majority of these products and services, but they are the ones online. For businesses looking to leverage the latest technology and marketing trends, B2B eCommerce is the best bet for incredible ROI.
- B2B eCommerce is more secure.
Being digital, these types of eCommerce businesses can use savvy digital marketers to track every inch of their business. Because of this, it’s unlikely that much gets wasted. And, when a business gets off track, this type of tracking makes sure to get everything going back in the right direction. By knowing your numbers and collecting the right data, B2B eCommerce stores can avoid the rollercoaster most B2C businesses end up on. Not to mention, huge long-term contracts with big industry players make it easier to know where your next sale is coming from.
What are the Cons of B2B eCommerce?
- A limited number of customers.
Depending on your niche or industry, selling only to businesses means that you have significantly decreased your customer pool. Yes, you need fewer customers with B2B models because of the ongoing relationships and volume of sales, but, for companies just getting started, finding those customers can be a huge burden. So much so, that many B2B businesses with great ideas don’t last.
- Completely different online experience.
If you’re coming from a B2C business, even if it’s an eCommerce one, it’s important to remember that the online experience you need to create for your customers is completely different. In today’s world, B2B buyers want all of the information upfronts – and fast. One-on-one attention and live salespeople aren’t necessary and, in some cases, are even considered a bother to B2B buyers.
- Product + brains + flexibility = success.
To really succeed in the B2B world, you need to understand this equation. B2B buyers want a great product created by someone with incredible skill and talent. They also want tremendous flexibility so that they can scale their business, getting deals as they buy more. If you want your B2B customers to say yes and give you their money, then you need to prove that you and your business are keen industry leaders.
- Complex setups and constant chasing.
Getting started with a B2B business means navigating your way through a lot of intricate setups. Each customer is going to need something unique and they’re going to want it as fast and easy as possible. Until you’ve built up your repeat customer base, it’s likely you’ll find yourself chasing clients, bending over backward to get the deal just so that you can keep your business afloat.
But, Are B2B Models Still Better Than B2C Models?
As expected, the answer is that it depends. Depending on your background, your business, and how you want to operate, it’s likely that either the B2B eCommerce or the B2C eCommerce model will stand out as the clear winner. Of course, if you’re stuck between a rock and a business idea, then it’s good to remember that both models can be equally as successful. No matter which model you choose, your number one priority is to make sure that you are speaking clearly to the customer, giving them personalized attention, valuable information, and incredible customer service.
One thing to keep in mind is that many eCommerce businesses today operate under multiple business models. You don’t always have to pick one to do so.
In the end, all eCommerce business models have their lists of pros and cons. But, as long as you have a great product, a great process, and great marketing, you will be successful – whether you’re selling B2B or B2C.
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