Business to Business: What Is B2B?
If you often read business publications or frequent professional forums online, you’ve likely come across the abbreviation “B2B.” What is B2B, exactly? It simply means “business to business,” which refers to any company primarily focused on selling products and services to other businesses rather than to consumers.
What is a B2B company?
B2B companies are supportive enterprises that offer the things other businesses need to operate and grow. These include businesses like payroll processors, for example, or industrial suppliers. This is in contrast to business-to-consumer (B2C) models, which sell directly to individual customers, and consumer-to-business (C2B) models, in which an end user creates a product or service for a business. Instead, B2B companies offer the raw materials, finished parts, services or consultation that other businesses need to operate, grow and profit.
Where can B2B companies be found?
B2B companies can be found in every industry, from manufacturing to retail. Wherever business is done, you can be sure a host of B2B suppliers and advisory firms are active as well. Every B2C company requires certain products, services and professional counsel, and so every B2C company generates B2B activity.
One example of a traditional B2B market can be found in automobile manufacturing. Everyone knows some of the biggest consumer-facing brands, but in every model of car or truck they produce are dozens of other companies’ products. These include the tires, hoses, batteries and electronics that are essential for the final consumer product – the vehicle – to operate properly. The manufacturer purchases these products from its various suppliers and then finishes them into the final product. When you buy a car from one company, you’re really purchasing parts that were created by dozens, if not hundreds, of other businesses from all around the world.
Examples of real-world B2B activity are plentiful and more visible than you might guess. For example, the cloud-based document storage company Dropbox services businesses as well as individuals. General Electric makes plenty of consumer goods, but also provides parts for other enterprises. Perhaps you’ve worked at a company where the paychecks were stamped by ADP, a company that provides payroll and financial services for businesses. Xerox is a household name but makes billions on providing paper and print services to businesses.
Like any other company, a B2B model requires some careful planning, said Brent Walker, vice president and chief marketing officer at healthcare marketing firm C2B Solutions.
“B2B typically relies on its sales function and account management team to establish and strengthen customer/client relationships,” Walker said. “Marketing may include advertising in trade journals, having a presence at conventions and trade conferences, digital marketing (online presence, SEO, email outreach), and other traditional awareness efforts.”
Digital B2B companies
The rise of B2B e-commerce companies has redefined the relationship between businesses and suppliers. A product of the digital revolution, these businesses sell products directly to other companies using online platforms as well as share data and updates about products and services. There are many types of B2B ecommerce companies, but three of the most common include web development, supply and procurement exchanges, and infomediaries.
Every business needs a website, but few business owners have the time or skillset to build an optimized site from scratch. Web development companies (and, more generally, digital marketers) are B2B services that handle the creation and maintenance of company websites plus other digital advertising services like content creation and search engine optimization. These services are indispensable in the ever-expanding digital environment that dominates the modern business landscape. Despite the fact that web development companies didn’t exist until a few decades ago, they’ve become essential partners for any business that wants to really get off the ground.
Supply and procurement exchanges
Otherwise known as e-procurement sites, these sites serve a range of industries and often focus on a niche market. A company purchasing agent can shop for supplies from vendors, request proposals and even make bids for purchases at specific prices. These B2B websites enable the exchange of product supplies and procurement.
Specialized or vertical industry portals provide a subweb of information for a specific industry or vertical, such as healthcare, construction, education or other specific markets. These sites provide product listings, discussion groups and other features. Vertical portal sites have a broader purpose than procurement sites, though they may also support purchasing.
Brokering sites fulfill companies’ supply and procurement needs in another way. These sites act as an intermediary between service providers and a potential business customer. For example, a construction company may need to lease equipment. A broker site can help the construction company find an equipment manufacturer that is willing to lease out the needed equipment. Brokering sites and services include Neostratus’ B2B Cloud Brokerage Platform and Axway B2Bi.
There are also information sites, or “infomediaries,” which provide specialized information on specific industries for companies and their employees. These specialized search sites are often used as trade and industry standards organization sites.
One Size Does Not Fit All
Though B2B is critical to the success of many industries, when considering your company’s potential, do not limit yourself to one model. B2B, C2B and B2C models need not be mutually exclusive, and combining their particular strengths can generate new opportunities for your business.
“A business can package consumer insights and consumer-centric solutions to sell or provide as a value-add to its business customers/clients,” Walker said. “In a consumer-driven marketplace, such a service can be extremely valuable to a business.”
If you want to get into the B2B market but don’t know where to start, visit our list of suggestions for B2B business ideas.
Additional reporting by Katherine Arline and Elaine J. Hom. Some source interviews were conducted for a previous version of this article.