From marketing to customers to accepting payments and shipping goods, digital systems and solutions have revolutionized how organizations attract and interact with their customers.
Although much of the focus when it comes to ecommerce usually falls on B2C (that’s business-to-customer) sales, there’s plenty of opportunity in the space for B2B enterprises. With global B2B ecommerce set to be valued at $20.9 trillion by 2027, it’s no surprise that many B2B business owners want to learn more about selling their goods online.
This all-inclusive guide will give you a deeper understanding of B2B ecommerce, from what it is and how it works to the types of B2B ecommerce and how you can set up an organization in the space. We’ll even give you some examples of successful B2B ecommerce businesses and show you how they made their mark.
What Is B2B Ecommerce and How Does It Work?
Business-to-business electronic commerce, or B2B ecommerce for short, is the online sale of goods and services between businesses. Let’s break that down a bit further to get a better understanding of the concept.
As the name suggests, B2B refers to transactions that involve two businesses rather than an organization and an end customer. Those entities could be manufacturers, wholesalers, retailers, or other institutions (e.g. schools or nonprofits). Ecommerce, sometimes referred to as internet commerce or even ecom, is the trading of goods or services via the internet.
The easiest way to understand B2B is to think about the supply chain. Manufacturers purchase raw materials from producers, then wholesale businesses buy products from manufacturers, and retailers source goods from wholesalers.
Before ecommerce, that process would have required a bunch of sales visits or calls to potential customers, piles of paperwork to process purchases, and manually following up with clients to secure future orders.
Now, B2B transactions can be carried out online. Using the B2B ecommerce model to sell products to customers drastically reduces the costs associated with acquiring new customers, plus it can help to increase customer retention and order values.
Digitization has also opened up the market to new types of services that can be sold by the provider directly to the businesses that require them, such as software-as-a-service and payments-as-a-service.
These cloud-based services are delivered and managed over the internet by the provider, reducing the time and effort it would usually take for a business to administer its systems. The growth in this sector has also driven an increase in the number of B2B ecommerce enterprises that use the subscription business model.
Although the uptake of ecommerce by B2B organizations was relatively slow to start, the benefits it brings have meant that this sector has seen significant growth in recent years.
In 2022, approximately 65% of B2B enterprises worldwide transacted solely online, making it the fastest growing sales channel. The average annual rate of growth in the industry is projected to reach 18.3% by 2027, which will see the channel valued at approximately $21 trillion. So there’s still plenty of opportunity in the B2B ecommerce space.
The 4 Types of B2B Ecommerce
The types of B2B ecommerce are categorized according to the category of business involved as well as the audience that organization sells to. We’ll explore the four most popular kinds of B2B ecommerce.
In the B2B model, manufacturers source raw materials and use them to produce goods that are then sold to other entities in the supply chain. These are usually other manufacturers, wholesalers, and suppliers.
Traditionally, the sale of goods would have taken place in person or over the phone. With B2B ecommerce, the manufacturer makes their products available for purchase via an online portal (e.g. a website) where customers can view pricing, lead times, product specifications, and monitor the status of their orders.
Manufacturers grew ecommerce by 18.4% in 2021, driving just over $543 billion in sales via their websites and apps in the same year. This increase outstripped the growth in traditional manufacturing sales by 45%, indicating that B2B ecommerce should certainly be a priority for manufacturers going forward.
Once the goods have been produced, the manufacturer has two options. They can either sell directly to the end customer (more on that later) or they can partner with a distributor to sell the product on their behalf.
Selling directly to the end customer gives the manufacturer more control over the distribution process. It also requires a lot more logistical work, including managing orders, packaging goods, and marketing the products. For this reason, manufacturers usually rely on intermediaries – i.e. distributors – to sell products on their behalf.
In the B2B ecommerce environment, manufacturers and distributors can establish relationships online and take advantage of the more streamlined processes that digitization allows to quickly move goods along the supply chain.
By setting up their own B2B ecommerce systems that work in tandem with manufacturers’, distributors can automate much of the supply process to improve the customer experience, increase sales, and enhance their reputation as an online seller.
Although some manufacturers and distributors sell directly to retailers or end customers, most will supply their goods to wholesalers. These entities usually purchase products in bulk, following which retailers and small businesses can buy from wholesalers.
B2B wholesale happens in a variety of sectors. The automotive, construction, and food service industries are all great examples. In each of these fields, wholesalers buy large quantities of products at a relatively low cost and sell them on to smaller entities at a profit.
As with distribution, B2B ecommerce platforms can streamline wholesalers’ sales and purchase processes. These sellers can use online portals (also known as B2B marketplaces) to display products as well as facilitate orders and payments. They can also implement automations that trigger orders from manufacturers or distributors when their stock is depleted.
Short for business-to-business-to-consumer, B2B2C ecommerce shortens the supply chain and brings businesses that produce goods into closer contact with end consumers. For example, kitchen supply wholesalers that sell appliances and equipment to consumers via food blogs or recipe websites.
Products are sold by the manufacturer or wholesalers via an intermediary (this is the B2B transaction) to the consumer (B2C). In the ecommerce space, these transactions take place online, usually by means of virtual storefronts, ecommerce websites, or apps.
This setup benefits all parties involved. Manufacturers and wholesalers gain access to a wider market with which the intermediary has an established relationship. The intermediary profits from facilitating the flow of products along the supply chain. And the customer often gets the goods for a better price than they would from brick-and-mortar retailers.
Examples of B2B Ecommerce Businesses
Operating in the B2B ecommerce space comes with a variety of benefits and challenges. Fortunately, there are plenty of B2B organizations that are hitting the mark when it comes to trading online.
Let’s take a look at a few of the enterprises that are excelling in this market to get a better idea of what it takes to make a success of B2B ecommerce.
We’d be remiss to talk about ecommerce businesses and not mention Amazon. The online retail giant launched its B2B service, Amazon Business, in 2015.
The platform was designed to simplify business purchasing by reshaping how businesses plan, find, and track purchases to help them save time, costs, and effort. Their solutions are aimed at helping businesses grow by freeing up resources that would otherwise have been focused on procurement.
The online retail giant has created fit-for-purpose procurement and wholesale buying solutions that incorporate cloud storage, virtual workspaces, built-in approval workflows, and real-time spend visibility to streamline processes.
Amazon Business’s simplicity and functionality saw it move $15 billion in merchandise in 2019 alone. This is expected to reach $80 billion by 2025.
2. General Electric
Multinational corporation General Electric (GE) is involved in the development and manufacture of a plethora of products that serve businesses in the aviation, renewable energy, healthcare, mining, and other industries.
With a massive product offering, creating an easy-to-use B2B ecommerce platform was a major challenge for the company. To overcome this, GE created an alphabetical product catalog with powerful search capabilities. This allows users to search the company’s sales inventory with ease.
By creating multiple sleek and simple indexes for each business division, GE has been able to ensure that buyers are able to browse products relevant to their business. What’s more, the search capabilities reduce the need for endless scrolling to locate goods.
Vidyard is a video production platform that businesses can use to create personalized videos for their clients.
Using the statistics it’s gathered from its existing clients, Vidyard produces custom videos that it knows will grab the attention of the target audience and move buyers towards a purchase. While their marketing strategy does highlight the importance of using video for promotions, the key to Vidyard’s success comes from personalization.
Building strong client relationships through understanding what your customers need and want is key for any B2B business, especially in the ecommerce space. To accomplish this, Vidyard has used data and past client actions to help them make each client experience unique, driving sales and success.
How to Start a B2B Ecommerce Business
Stepping into the B2B ecommerce space will introduce efficiencies into your organization that can help you to increase sales and retain more customers. With so much to do, it can be difficult to know where to start. Follow these 5 simple steps to start selling online.
Step 1: Outline Your Goals
Although your business goals will depend on the maturity of your enterprise, the industry you’re in, and a variety of other factors, there are a few common outcomes that you may want to consider. These include:
- Acquiring new customers
- Retaining existing customers
- Increasing revenue
- Reducing costs
- Improving the customer experience
- Automating tasks to increase efficiencies
Once you know what you want to achieve, you can create specific key performance indicators (KPIs) to measure your success.
Your customer retention and churn rate will give you an idea of how many of your customers purchase from your company on an ongoing basis. Conversion and cart abandonment rates will indicate how effective your marketing campaigns are as well as the efficiency of your checkout process.
Step 2: Define Your Target Market
Whether your goals revolve around acquiring or retaining customers (or both), you’ll need to understand and cater to your clients’ needs if you want to make a success of your B2B ecommerce business.
The first step here is to identify your target market. Use data you have on hand and perform research to get an idea of the types of businesses that will likely buy your products. This could involve evaluating your historical sales data, sending out surveys to existing clients, or looking at the businesses your competitors sell to.
When you have a good idea of who your customers will be, you can explore the challenges these businesses face – and the goods or services you can or do offer to help them overcome these issues.
Step 3: Identify Essential Ecommerce Features
Next up, you’ll want to use the insights you’ve gained about your target audience as well as your goals to determine the functions and features your ecommerce store needs.
Less is generally more when you’re starting out with your B2B ecommerce store. Pin down elements that are absolutely essential for satisfying your business’s and customer’s needs. This will give you an idea of your minimum viable product (MVP) or basic framework for your system.
You can figure out what your MVP looks like using your customer journeys. Building your ecommerce platform around your customer’s expected behavior (e.g. placing orders, paying online, or tracking shipping) will ensure that you meet user needs.
Step 4: Set Up Your Payment System
The payment solution you use on your B2B ecommerce website can make or break your business. However, these systems are complex and it can be difficult to accurately assess whether their features will bring any actual benefits for your business. To make the comparison easier, there are five points you can use to measure these solutions:
- Ease of configuration: Your payment solution should be easy to set up. It should have the ability to integrate with your current system and allow you to tailor the checkout process, including a customizable checkout page.
- Available payment methods: Look for payment systems that will give you the ability to accept not only debit and credit cards, but also a range of alternative payment methods like bank transfers, digital wallets, and others.
- Security features: Appropriate security measures will protect your organization and your clients from fraud. High levels of PCI DSS compliance, 3D Secure 2.0, and tokenization are just a few features to look out for.
- Global payment network: Ensure that the system you choose offers global payment processing. This will allow you to sell your products or services worldwide and accept a variety of currencies as payment while reducing currency conversion and realization costs.
- Fee structure: A payment system with a flat-rate, per-transaction fee structure is best. This model ensures that you can easily track the charges associated with your transactions so that you know exactly what you’ll pay at the end of the month.
With Pay.com, you can easily accept a wide variety of payment methods from customers across the world. We use a completely transparent flat-rate per-transaction fee structure, so that you don’t have to worry about any nasty surprises at the end of the month.
Step 5: Launch and Market Your Ecommerce Business
When the basic infrastructure for your B2B ecommerce business has been set up, it’s time to launch and market your new sales channel.
If you’ve already been operating in the B2B space for a while, the easiest way to get customers to use your platform is to ask them. Contact your customers – an email usually works best – and direct them to your new online portal for future purchases, highlighting how the system will make their procurement process easier and more streamlined.
For those who are just starting out, you can use a combination of on-site optimization, social media marketing, and paid advertising to attract the interest of potential customers.
The Challenges of Starting a B2B Ecommerce Business
1. Nurturing Customer Relationships
Buyers are more likely to continue to work with suppliers with whom they have great relationships, something that’s especially important when you consider the lifetime value of these customers.
One of the best ways to ensure a good customer relationship is by providing an excellent customer experience. This can be done by creating an intuitive ecommerce store that has all of the functionality necessary for customers to place, track, and pay for orders with ease.
If you’re pivoting from a traditional B2B business to an ecommerce model, you’ll also want to provide support to ensure your customers can seamlessly transition to using your new digital system.
2. Catering to Clients’ Payment Needs
The nature of the B2B environment means that most of your customers will have multi-step procurement processes that involve a variety of players to approve purchases. Many considerations will be made before a business decides to enter an agreement with a supplier.
Payment terms and options are extremely important here. A recent survey indicated that nearly 75% of B2B buyers would switch suppliers if they were offered better payment terms or options by a competitor.
Offering flexible payment terms (e.g. buy now, pay later or a 30-day payment policy) as well as a variety of ways to pay (like bank transfers or direct pay links) will help you to keep your existing customers happy and can also attract new buyers.
3. Keeping Customer Information Safe
Data and security are a big concern for B2B ecommerce businesses. When your clients buy online, they’ll provide information that you’ll need to store in order to serve them efficiently in the future. This includes details like their contact details, payment methods, and purchase history.
Here, you’ll need to develop a robust data storage plan that meets global data handling standards and requirements (e.g. those set out in the EU’s Global Data Protection Regulation or GDPR). Setting protocols for handling breaches is also helpful.
You’ll also want to ensure that you have cybersecurity measures in place that ensure both you and your customers are protected from online fraud. For example, your payment system should tokenize credit and debit card details in transit. Authentication measures like 3D Secure 2.0 are also essential for minimizing the chances of fraudulent transactions.
The Best Way for a B2B Ecommerce Business to Accept Payments
Pay.com is a full-service payment infrastructure that gives you everything you need to accept payments online.
Our flexible, expansive infrastructure gives you the power to offer your customers a wide variety of payment methods, from credit and debit cards to ACH transfers and digital wallets. All of these can be added to your customizable checkout page in just a few clicks via the Pay Dashboard.
Better still, Pay.com offers the highest levels of security for payment processing. All of our credit card transactions are tokenized in transit, so your client’s information can’t be intercepted by cyber criminals.
With PCI DSS Level 1 compliance, you’re able to display the PCI logo on your checkout page to give your customers a sense of confidence when buying from you. What’s more, 3D Secure 2.0 authentication reduces the likelihood that your business will fall prey to fraudsters.
The Bottom Line
Whether you’ve been in the B2B space for a while or you’re just thinking of starting an enterprise that sells products and services to other businesses, investing in ecommerce is the best way to ensure the longevity of your organization.
When you’re strategizing how best to take advantage of selling online, you’ll want to be sure to keep your customers top of mind. Creating a B2B ecommerce platform that’s user friendly, allows you to cater to users’ needs, and keep in touch with your buyers will help you to establish and nurture the customer relationships that spell business success.
While there are loads of considerations you’ll have to keep in mind, it’s important to ensure that your system is easy to set up, enables you to accept a variety of payment methods and global currencies, offers the highest level of security, and reasonable fees.
One of the most important steps for building a thriving B2B ecommerce business is choosing the right payment service provider. Pay.com allows you to easily accept multiple payment methods and facilitate secure transactions for your clients so that they can buy from your business with confidence and convenience.