Online transactions are commonplace these days. People use them to buy clothes, electronics and even order their groceries. These types of transactions are considered business-to-consumer, or B2C. This type of eCommerce caters directly to the end-consumer and the transaction is between the company and the consumer. The other division of eCommerce is business-to-business, otherwise known as B2B. This eCommerce model focuses on the commerce carried out electronically between businesses.
Traditional B2B Process
When businesses are looking to buy from other businesses, the B2B model comes into play. Let’s say there is a large-scale food manufacturer that requires salt for their products. Therefore, a key component of their manufacturing inventory is salt and they need to procure it from a wholesale distributor. A wholesale distributor can provide competitive prices for bulk orders, or a contract of monthly orders to help secure the food company’s manufacturing inventory.
Historically, sales representatives would be an integral component of a B2B transaction. The salt wholesale representative would physically meet with the large-scale food manufacturer. The sales rep would try to assess what the manufacturer needed to stock their manufacturing inventory. A business relationship would be formed and rapport would be a fundamental part of the transaction.
As you can imagine, a food company would have a large supply chain to get all the raw materials and food products it would need to produce large-scale food products. Just think of how many businesses the food manufacturing company would have to engage with just to make a certain type of frozen pizza – there would be flour, salt, cheese, tomatoes, sugar, and a variety of toppings!
How has eCommerce changed traditional B2B?
eCommerce comes into play with the internet being the basis for these transactions. Instead of building relationships with hundreds of sales reps and setting up regular meetings, eCommerce portals have brought this process online. There are several different types of eCommerce platforms that allow for these types of transactions. Some are password protected and only let businesses who have been granted access view their products online. Other open online marketplaces allow anyone to access them and still allow bulk business purchases. A good example of an open marketplace is Alibaba.
There are huge advantages to using eCommerce portals. There is around-the-clock access to sales channels. If your buyer is in another country, they don’t need to have a phone conversation or wait for a sales rep to take a flight to their warehouse. A company can gauge what manufacturing inventory they need and shop for it at their own convenience. Although there are fees to developing and running an eCommerce portal, there will be other cost-saving factors, like reduced costs of printing catalogues.
A website yields so much more functionality than a catalogue too. You can provide 360º images, videos, and a variety of other multi-media options to showcase your products. It is an efficient and modern way to streamline your B2B transactions.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.