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Dictionary
Debitoor's accounting dictionary
B2B

B2B - What is B2B?

B2B refers to ‘Business-to-business’, more specifically the process of businesses selling to other businesses, typically in an online setting

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Although ‘B2B’ can be used to refer to any transactions between two businesses (such as a business and a supplier), it is primarily used in the context of online businesses (e-commerce).

B2B is associated with its counterpart B2C, or ‘business-to-consumer’ wherein a business sells directly to the end consumer. B2B on the other hand, involves businesses such as a wholesale business and manufacturer, or a manufacturer and retailer, for example.

B2B sales are a basic part of the business supply chain, meaning that it is typical for businesses to purchase materials (such as raw materials) or products from other business that they in turn can then sell to consumers.

How to determine if it’s B2B

Although it may seem fairly obvious when a transaction is B2B (rather than B2C), there are a couple of factors that also set these sales apart from direct to consumer sales. One of the major indicators is the dollar amount.

B2B sales are typically a significantly higher value because sales between businesses often involve a larger quantity of goods and/or higher priced goods. For example, a retailer might place a large order with a supplier, or a new bakery will purchase an industrial-grade oven. These both would result in higher dollar value purchases.

More ways B2B can differ

When a sale is B2B, there are a number of different forms that the sale can take (often that are not used in B2C sales). These mainly involved differences in the sales process or in marketing, such as:

A bidding process can be used. This allows different businesses to make offers for a certain sale through the use of requests for proposals. This can also appear in a B2C sale, such as shopping around for the best offer on a certain product. The amount of time. In B2B sales, it’s not uncommon for the process to continue over the course of days, weeks, or even months. Who makes the decision to buy. When a business makes a purchase, this decision is not usually made by one person but by a management group or committee.

The main types of B2B

B2B sales typically fall under one of three main categories. These include:

Web Development B2Bs

The continuing growth of e-commerce and online business means that not only are there new businesses starting their journey in digital space, but previously bricks-and-mortar businesses are transitioning to a stronger digital presence.

This has caused an increased demand for businesses that provide services involving web development, such as SEO, community management, web design, etc. These businesses serve other businesses building their websites and more.

Supply & procurement B2Bs

There is also a demand for information. This is where databases store details about certain products. Other businesses can pay a fee to gain access to these details, including pricing as well as forums and other features offered. This can vary depending on industry.

Intermediary B2Bs

Information can also take forms other than product information (of course), and there are plenty of businesses that gather information and provide it to other businesses. This data usually centres around consumer, market, or industry, for example.

Other businesses would then pay for this information in order to gain a better understanding of their industry or target audience.

Working as B2B

When you’re operating with B2B sales, the relationship that is established between your business and another business is an important one that should be fostered even if the sale will be a one-off. This interaction can have an impact on the success of a particular sale, but also on the reputation of your business in the industry.