Business-to-business - 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’s primarily used in the context of online businesses (i.e., e-commerce). 

B2B is associated with its counterpart B2C, or ‘business-to-consumer’, wherein a business sells directly to the end consumer. B2B, however, involves businesses such as wholesale businesses and manufacturers, or manufacturers and retailers, for example.

B2B sales are a basic part of the business supply chain, meaning that it’s typical for businesses to purchase materials (such as raw materials) or products from other businesses 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 high value of the sale.

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.

How can B2B sales differ from B2C?

When a sale is B2B, there are a number of different forms that the sale can take which are commonly not seen in B2C sales. Differences commonly concern the sales process or marketing approaches. 

Sometimes, for example, a bidding process can be used. The buying business may make a request for proposals, allowing different businesses to make offers for the sale, offering the best deals and prices to secure the bid. At times, this can also appear in B2C sales, such as when customers shop around for the best offer on a certain product or service. 

Time is another important factor. In B2B sales, it’s not uncommon for the sales process to continue over the course of days, weeks, or even months. 

In B2B sales, deciding whether to proceed with purchase can be more complicated.  When a business makes a purchase, this decision is not usually made by one person but by a management group or committee.

Working as B2B

When you’re operating with B2B sales, the relationship that is established between your business and another 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.

Therefore, it’s important to communicate with the purchasing business clearly throughout the sale. Invoicing software can support you in this process by providing compliant online invoice templates so you can invoice your customers with ease, certain that all of the necessary information is included so the sale can go ahead.