Last Updated on January 18, 2021 by Dan Christoffersen
Have you heard the term B2B? Do you know what it means? Fear not. We are going to explain it to you in this blog post!
Specifically, we are going to cover the following topics:
- What is B2B
- What is the difference between B2B and wholesale
- What is a B2B platform
- The difference between B2C and B2B online sales
What is B2B
B2B is an abbreviation of “Business-to-Business”. So essentially it means from one business to another and is used to describe the transaction of goods and services from one company to another.
In comparison, B2C is an abbreviation of “Business-to-Consumer”, and is when a business sells to a consumer. So that would be a transaction from a company to a private person.
The difference between Business-to-Business and wholesale
Right about now you might be thinking “What is the difference between B2B and wholesale?” – because isn’t wholesale also sales from one company to another? From a producer or wholesaler to a retailer.
Well, you are somewhat correct; Business-to-Business and wholesale are to a certain degree related. In this section, however, we will describe what sets them apart. But first, we will briefly describe what wholesale is.
Wholesale is defined as the activity of buying and selling goods in large quantities and therefore often at cheaper unit prices. So this would, for example, be a supplier of raw materials selling a truckload to a manufacturing company, and the manufacturing company selling a pallet of their products to a retailer.
It is the fact that the buying and selling of the goods are in large quantities which means that wholesale often takes place between two businesses. So therefore per definition is business-to-business. It would be a rare occasion that a private consumer would purchase 5,000 units of the same product! Let’s say, 5,000 rubber ducks for example!
B2B, however, does not necessarily need to be wholesale. The reason is that a company easily can purchase something from another company, without it having to be a large quantity. Also, all services which are sold and bought between companies are not wholesale, since they are not “goods” in the traditional sense.
While wholesale is almost always B2B, B2B is not necessarily wholesale.
What is a B2B platform
The next topic of this blog post is B2B platforms. It might seem strange to some, that we’ve decided to include the topic in this blog post. The reason is, that many of those who want to know what B2B is, originally got familiar with the term after learning about B2B platforms.
To best explain what a B2B platform is, we are gonna bring back B2C which we briefly touched upon in the first section. As you might remember B2C is when a business is selling goods or services to a private person. And as you most likely know a lot of this selling and buying is taking place online.
The purpose of a B2B platform is in principle – just like B2C – to enable companies to sell to other companies online. That is, to sell Business-to-Business in an online webshop instead of the more traditional emails, phone calls, and order sheets.
So why not just use a traditional B2C webshop instead of a B2B platform, you might ask?
The difference between B2B and B2C online sales
Using a B2C webshop to handle your online sales to other companies is often a bad idea. A B2C solution simply isn’t designed or geared to handle that type of sales. The reason is that there is a large difference in the level of complexity between selling to a consumer and selling to a business. Using a B2C solution will simply result in a bad experience for the customer.
This difference in complexity has also resulted in the price of business-to-business solutions to be several times higher than that of comparable business-to-consumer solutions. Something that has dramatically slowed down the implementation of digital solutions for businesses selling to companies instead of consumers.
This slow implementation is a shame, considering all the benefits of digitizing business-to-business sales. Both for the seller and the buyer. You can read more about the 5 greatest benefits right here of digitizing B2B sales here.
Luckily it seems that businesses are slowly realizing the potential of online sales not only to consumers but also to other businesses. The reason? The emergence of new, more user-friendly, and affordable platforms. And while eCommerce in the business-to-business sector is only slowly starting to gain traction, it is expected to grow tremendously in the coming years.
That’s it. A relatively short introduction to the concepts of B2B and online platforms. If you have any questions about the blog post you are more than welcome to contact us.
If you are interested in learning more specifically about B2B platforms, we recommend you to read this blog post: The definitive guide to B2B eCommerce platforms or some of our many other blog posts on the topic.