Advantages & Disadvantages of B2B

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Unlike business-to-consumer commerce where companies cater their products to typical individuals, business-to-business commerce involves companies selling just to other companies. In addition to selling finished goods that companies can resell or use for their operations, B2B enterprises will offer parts, materials and even services that businesses need.

TL;DR (Too Long; Didn't Read)

Some B2B advantages include larger orders and more security during the sales process, while B2B disadvantages involve the limitations of excluding individual consumers and the need for features like customization to appeal to a broad variety of businesses.

Benefits and Opportunities in B2B

Some benefits of B2B for buyers and sellers include the following:

  • Convenience: While companies can sell through physical storefronts or take transactions by phone, B2B commerce often takes place online, wherecompanies advertise their products and services, allow fordemonstrations and make it easy to place bulk orders. Sellers also benefit from efficient order processing thanks to this digital transaction model.

  • Higher profits: B2B companies often sell their items in wholesale quantities so that buyers can get a good deal and need to restock less often. Larger order numbers lead to higher potential sales and more cash coming in for B2B sellers. At the same time, the ease of advertising to other businesses through B2B websites can help cut marketing costs and boost conversion rates.

  • Huge market potential: From business software and consulting services to bulk materials and specialized machinery, B2B sellers can target a large market of companies across industries. At the same time, they have the flexibility of specializing in an area like technology to become a leader in the field.

  • Improved security: Since contracts are a common part of B2B commerce, there's some security for both buyers and sellers in that there's less concern that one will pay and the other will deliver goods as promised. Since sales usually get tracked digitally, it's also more secure in that B2B sellers can track and monitor their financial results.

Challenges and Risks of B2B

Some important B2B disadvantages that buyers and sellers should know include:

  • More complex setup process: Getting started as a B2B retailer takes work to figure out how to get customers who stay dedicated and make large-enough orders. This often requires thorough research to advertise to potential businesses, set up a custom ordering system and adapt quickly when sales are underwhelming.

  • Limits to sales: While B2B companies can sell a lot, they do miss out on potential sales to individual customers. The smaller pool of business buyers and the need to negotiate contracts can put some limits on profits, especially when the company loses key buyers to other competitors.

  • Need for B2B sellers to stand out: At the same time, the B2B market has many companies competing and selling similar products and services. Sellers often need to cut prices and find special ways to grab companies' attention to succeed in the market.

  • Special ordering experience needed: B2B companies selling online need to put much effort into designing a website and ordering system that buyers find easy to use. This means presenting product and service information clearly, offering online demos or consultations and using order forms with appropriate options for quantities and any special customization needed.

Using B2B Best Practices

To succeed as a B2B retailer, you can take some steps to find the best business customers and keep them coming back to you. For example, you should consider both warm and cold leads, get back to them quickly and avoid giving up entirely on leads that seem not entirely confident yet.

When you do start getting interested leads, meet with your marketing and sales teams to discuss how to improve the chance of closing. You should also encourage your happy business customers to recommend you to others and request testimonials you can use on your website and social media pages.

References

About the Author

Ashley Donohoe started writing professionally about business topics in 2010. Having eight years experience running all aspects of her small business, she is knowledgeable about the daily issues and decisions that business owners face. She also has earned a Master of Business Administration degree with a leadership and strategy concentration from Western Governors University. Some other places featuring her business writing include JobHero, LoveToKnow, PocketSense, Chron and Study.com.

Photo Credits

  • Cameron Whitman/iStock/Getty Images