8 Key Differences Between B2B and B2C Ecommerce
The ecommerce industry has seen a rapid growth rate over the past few years owing to several factors like technological advancements, wider reach, user-friendly tech, higher internet literacy rates, etc. And ever since the pandemic hit the global economy in 2020, bringing the world to a near standstill, the rate of development and expansion has furthered even more.
According to a study by Digital Commerce 360, there was a 44% rise in online spending noticed in the US alone in 2020 when compared to 2019. The study also suggests that if not for the Covid-19 crisis and its resultant bump in online sales, reaching the whopping figure of $861.12 billion in ecommerce sales would not have happened until 2022.
But this study talks about the entire ecommerce industry and not about specific ecommerce business models — B2B and B2C — that exist within. So, let's talk about them.
A B2B or Business-to-Business market is just as its name suggests — it caters to all the commercial transactions that take place between two business entities, be it manufacturers, wholesalers, or retailers. Some leading examples of this type of marketplace include Alibaba, EWorldTrade, ThomasNet, Global Sources, etc.
A B2C or Business-to-Consumer model is the trade relationship between a seller and their end-customer and focuses primarily on the purchase of goods or services via an online platform. For instance, Amazon, eBay, and Etsy are ecommerce websites that the masses like to frequent when looking for finished products like shoes or electronics.
While the B2B market grew by 9.6% in 2020, the B2C market also recorded a share of 62% of all web sales.
Both business models have quite a few features that distinguish them from the other, and that is exactly what we are here to discuss. But before we do that, let us look at a few similarities between them.
Similarities Between B2B and B2C Ecommerce
For both B2B and B2C:
- Multiple marketing channels such as email and social media are important to effectively reach target audiences.
- People-oriented sales and marketing strategies work well.
- Convenient self-service, mobile, and omnichannel shopping experiences are crucial.
- Great customer service is a must for continued, long-run success.
- It is important to find the right influencer and partner up to create content that drives people towards a purchase and also to amplify your overall marketing efforts.
Just like two sides of a coin, along with similarities also exist some differences. Let’s explore the features that set these two business models apart.
8 Major Differences Between B2B and B2C Ecommerce
Here are eight notable differences between B2B and B2C ecommerce.
1. Buyer Decision Making
The process and amount of time it takes to make a shopping decision can vastly differ in the two models.
In B2C ecommerce, the responsibility of taking the call usually lies on one person’s shoulders and is thus relatively quick. You can also see people often indulging in impulse buying behavior. Often, a consumer may purchase a product on a momentary urge, which is ultimately beneficial to the business as their sales rise.
But such order placements are standalone and frequently a result of the discounts, offers, and marketing campaigns that are run by the business.
In B2B ecommerce, however, there can be multiple stakeholders involved in the decision-making, which can prolong the entire transaction process. Alongside, there is no such thing as “impulse shopping” in B2B transactions. All negotiations and agreements are backed by rationale and meticulous planning.
2. Transaction Volume
The size of a B2B consignment can always be distinguished from one that is meant for personal use based on the sheer volume of goods being transported.
Shipments meant for B2B trading are much larger than the typical single-courier package that is meant for a direct consumer. Also, the delivery of B2B goods can happen over a stretched-out period that could last for months.
The same isn’t true for the items shopped by the end customer, as they have a fixed delivery date and if not delivered in the stipulated time, the products may automatically be returned to the seller.
Furthermore, B2C customers are usually limited to a maximum order quantity, whereas the B2B businesses often mandate a minimum order quantity in order to optimize their production and selling processes.
3. Customer Assurance
As the quantity of products transacted in B2B is much higher than in B2C, the monetary value of the transaction is also high. And so, the companies involved in B2B ecommerce look for a surety that the vendor they are entering an agreement with is genuine and reputable.
For instance, if you browse Alibaba, you will notice detailed vendor information with each product cataloged on the site. These details include not just the name and product details, but also detailed contact information and company profile. You can find the means to get in touch with the business to have a word before you go ahead with placing the order.
Such assurances are usually not sought after in B2C purchases because the product quantity and transaction amount in question are much lower. Impulsive buying is also an element that factors in here as while trying to fulfill an impromptu desire, the buyer does not go looking for the vendor’s information.
4. Pricing, Payment Terms and Modes
When the pricing for any product is decided, one of the most important questions is knowing who the recipient is. If it's the end consumer, the selling price is fixed based upon the various costs that go in its making alongside the profit margin the seller wishes to keep.
On the contrary, when the goods are being sold to other commercial houses for further processing or trade activities, the set amount is flexible and depends on several factors like relationship with the company, payment terms, and the quantity being purchased. Here, a base price is fixed, but the final price is often personalized and negotiations may take place in the profit-making zone.
The terms and conditions of payment alongside the accepted modes are different in both business models. In B2C, immediate or upfront payment is required, like when placing or receiving an order. Whereas in B2B, the payment is frequently divided into multiple installments for the buyer’s ease and is charged over a decided time period. The available modes of payment (credit cards, cheques, cash, etc.) are also typically more in B2B.
5. Order Fulfillment
Of course, both ecommerce models employ logistics services to move their products on a timely and secure basis.
In B2B transactions, however, the need for safety and tracking increases multifold since the product quantity and transaction amount are much higher. By using a data logging platform like Logmore, it’s easy for all the stakeholders of a shipment to monitor the location as well as the condition of their cargo at all times.
In B2C, such an additional layer of safety may not be necessary as the volume and value of the consignment are much lower.
6. Checkout Process
While the end result for each type of business is a successful sale, the checkout steps are usually different.
In the case of B2C sales, the platform should have as few steps as possible without eliminating the necessary ones — the ability to modify the cart (add/delete items), option to view and apply a coupon, and choice of payment gateway (COD, cards, wallets).
The B2B platforms, however, include additional checkout features like opting for a demo, chat, or video call, along with more payment options like pay on credit, ACH, etc., and the ease to repeat a past order with just one click.
7. Support for Sales Reps in B2B Ecommerce
Sales representatives are a valuable asset who can help facilitate the transaction for both parties and help build long-term business relationships.
However, experienced sales reps who are used to offline sales often feel out of place when it comes to handling online sales. And so, on-the-job training is necessary to make the sales team digitally competent.
This way, B2B sales reps can help create a better buying experience by assisting prospective customers in acquiring samples, checking inventory for them, providing them with detailed product specs, and even placing orders on their behalf.
On the other hand, in B2C ecommerce transactions, sales reps aren’t usually needed and a conventional customer service team is enough to resolve queries during the transaction and tackle complaints post-purchase.
8. User Roles and Permissions
As touched upon earlier, B2B decision-making often involves multiple stakeholders and the prospective business may have a dedicated buying team with different roles. The team can be composed of individuals where some may research items and compare prices, some may look into the legal aspects, while only the leadership may take the final decision.
So, after the registration and account creation process, B2B ecommerce platforms must have a feature that allows company accounts to create user roles and manage permissions so their internal buying process is smoother.
Whereas in B2C ecommerce, allowing customers to create an individual profile with basic details is sufficient, and a guest checkout option can also be incorporated for added customer convenience.
The B2B and B2C ecommerce models have some similarities but as you can see, there are some notable differences as well. Nevertheless, a business, at the end of the day, is just that — a business, a trading activity undertaken for the purpose of profit-making and value addition. And both business models are just as essential to the global ecommerce growth which we discussed at the beginning of the post.