The differences between business-to-consumer (B2C) and business-to-business (B2B)
B2B and B2C e-commerce may look the same, they are quite different. Business buyers and retail consumers have different purchasing needs.The differences can be:
B2B buyer characteristics
Supply chains are more important to B2B transactions. Manufacturing companies obtain components or raw materials from other companies and then sell to a wholesaler, distributor, or retail customer. For example, an automobile manufacturer makes several B2B transactions such as buying tires, glass for windscreens, and rubber hoses for its vehicles. The final transaction, a finished vehicle sold to the consumer, is a single B2C transaction. Wholesalers and distributors still have a supply chain, but their chain consists of finished products.
Generally, B2B and B2C web stores both have search, navigation, detailed product information and personal account history pages. However, in some ways B2B greatly differs from B2C. Most B2B businesses have complex ordering processes, large collections of attributes and elaborate back-end systems. Moreover, in a B2B scenario, buying is part the customers’ job. He needs to make sure he buys all necessary products or components for keeping his company up and running. Thirdly, since organizations can be very large, they need a lot of products or components to keep their business going. Therefore, B2B buyers often place large orders. B2B purchases are also characterized by recurring orders instead of single purchases. Because of that, companies make deals based on their monthly or even yearly demand. They closely collaborate with each other, and each B2B customer can have its specific prices for certain products. Lastly, multiple people are involved in B2B purchases. For instance, a company can have multiple buyers or buying centers. They are responsible for finding the right products and making the right deal with resellers. Because multiple people are involved in a single deal, B2B is more fact based instead of based on emotions. It's not about the nicest packaging, but the best deal for the company. In general, ratio is leading.
The characteristics mentioned above can be summarized as follows:
The differences between B2B e-commerce and EDI
B2B transactions can be processed online in various ways, of which Electronic Data Interchange (EDI) and B2B e-commerce are most often used. Although EDI and B2B e-commerce both have their own, distinctive features, they are frequently confused.
EDI is the electronic transfer of purchasing information between the buyer and seller. EDI transmits the information from the buyers purchase order to the seller's sales or customer service department for conversion to a sales order. EDI is well suited for placing large, recurring orders to supplying raw materials to manufacturers. For instance, following the example above, an automobile manufacturer regularly needs to order a specific brand and size of tires for a certain car model. When manufacturing a certain number of that type of car, the buyers can use EDI to place an order for the number of tires needed. So, the seller need not worry about providing product information – like a description, images or pricing –for reordering purposes.
Although, like EDI, sales orders are processed online, with B2B e-commerce it is possible for customers to order occasionally and in irregular order quantities. Also, B2B e-commerce enables the display of many different types of detailed figures and images. It is possible to exhibit a full range of products or parts. Therefore, a web store provides the opportunity to cross- and upsell.
Market development and trends
The B2B e-commerce market is changing fast. There is an increasing number of companies adding an online sales channel to their business. In 2014, 63% of industrial supplies buyers purchased their products online (UPC, 2014). It is expected that in the USA, the B2B e-commerce market will even grow from $780B in 2015 to $1.1T in 2020 it is an objective of European Union Enterprise policy to "enhance trust and confidence" in B2B electronic markets.
Integrated B2B e-commerce versus interfaced e-commerce
With integrated e-commerce, part of the software solution is installed inside the ERP back-end system. This means that the connection between the business logic and database of a back-end system is configured automatically. Information that is available in the back-end system, for example article numbers, prices and current stock availability of products, is leveraged, without being copied to another system, and displayed in the front/back end of the e-commerce system. An integrated e-commerce software solution thus does not require investments in recreating and maintaining a separate database or business logic. Instead, it re-uses those of the back-end system, so all data are stored in one, single place. This can prevent input redundancy, errors and synchronization time.
In most cases, integrated e-commerce is in one way or another acknowledged by the supplier of the back-end system, such as SAP ERP or Microsoft Dynamics. Although many B2B e-commerce suppliers claim to be integrated, most web stores are interfaced. With interfaced e-commerce, the software solution is installed on top of the back-end system. This means that the connection between the business logic and database of a back-end system is set up manually. Information that is available in the back-end system is being duplicated into the e-commerce software. An interfaced e-commerce software product thus has their own database and business logic that are being synchronized constantly through a connection to a certain back-end system.
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