Understanding B2B ecommerce

Digital applications are permeating every aspect of our lives. From mobile apps to commercial applications, the digital experience is driving the way we interact with the world. As an enterprising business owner, you will want leverage in your business processes, which is why this guide on B2B ecommerce will be relevant to you. To meet your enterprise goals, it is vital for you to understand the B2B ecommerce ecosystem, the various types of ecommerce models, and how you can optimise your transactions with the right business payment service provider.

What is B2B ecommerce?
In simple terms, B2B ecommerce — or business-to-business electronic commerce in full — can be described as the online sales of products and services between businesses. This term should not be confused with its more familiar B2C cousin, which refers to the buying and selling of goods and services among businesses and consumers.

If you were to look at traditional sales channels, a B2B order requires a lot more time to process, compared to using an online or electronic platform. Vendors need to manually check their inventory for sufficient stock to fulfil the order, before the product can be delivered to the customer. This process is further delayed if they are required to restock. Without digitising any of these routines, the entire business transaction can take a painfully long time to complete. On the contrary, utilising an online ordering system, enables businesses to check their vendor’s stock instantly without the need to wait for someone to attend to their request. When orders are processed digitally, buying efficiency can be enhanced across the supply chain for manufacturers, distributors and wholesalers.

Additionally, traditional sales processes do not offer B2B buyers too many modes of payment; they are often limited to cash and cheques. Hence, B2B sellers may receive late payments. With ecommerce, buyers have the option of paying with various digital payment modes, from wire transfers to mobile payments. By integrating a global payment solution such as PayPal Checkout in your website, buyers can enjoy even greater flexibility with a choice of paying through PayPal, credit/debit cards and alternative payment methods; all via a single application.

B2B ecommerce market size and expected growth
Businesses, as we know them, can come in all forms and various degrees of complexity. Likewise, B2B enterprises are no different. They span across multiple business sectors; from the less tangible such as legal and accounting, to physical items such as electronic equipment, machinery and consumer goods. Interestingly, did you know that the global B2B ecommerce market, valued at US$12.2 trillion in 2019, is six times that of the B2C market?¹ This figure is expected to rise as both local and international businesses turn to online solutions to accelerate and simplify the purchasing experience, and as result, spur a wider demand for B2B ecommerce platforms.

All things considered, digital commerce is expected to grow at a rapid pace across different channels and industries. Judging by recent market reports, sales on B2B ecommerce sites in the US jumped by 10 percent from US$1.26 trillion in 2019 to US$1.39 trillion in 2021. Just as encouragingly, B2B digital sales channels — which include electronic data interchange (EDI), e-procurement and other channels — have grown to US$9.92 trillion in 2020 from US$9.06 trillion in 2019.² The pandemic, of course, has also played a significant part in driving digital commerce transactions from B2B buyers, as traditional sales routes such as distribution branches begin to fold.


5 common models of B2B ecommerce
B2B ecommerce involves online transactions between two companies. Moving the buying and selling process online enables businesses to dramatically modify the way they conduct corporate purchases and sales. Before we take a look at the benefits of ecommerce in greater detail, let’s explore the different types of B2B ecommerce models.³

• Wholesalers
  The term ‘wholesale’ simply means the business of selling goods in large quantities at low prices. Wholesalers would often purchase goods in bulk from a manufacturer or distributor and sell these products to a third-party business. This form of sales is a popular B2B model, cutting across many industries from retail to construction. The availability of wholesale ecommerce now gives businesses the opportunity to tap on the convenience of B2B ecommerce platforms to provide a seamless buying experience.
• Manufacturers
  Manufacturers produce goods from raw materials on a large scale through the use of tools, human labour, chemical processing and machinery. In the B2B context, the completed products are typically sold to other manufacturers or wholesalers. The smartphone industry is a good example. Electronic component manufacturers would produce the phone’s parts — from memory chips to batteries to integrated cameras — before selling them to a smartphone company to engineer the final product.
• Distributors
  Unlike wholesalers, distributors purchase goods from manufacturers and sell them to retailers, resellers or directly to consumers. Some even provide storage and logistical support to manufacturers. As an intermediary entity, this working relationship between distributors and manufacturers is vital to the B2B ecosystem and supply chain as a whole. In today’s world, the logistics of sale often take place online, such as through a B2B ecommerce platform to shorten lead time from sale to delivery.
• B2B2C
  B2B2C (business-to-business-to-consumer) ecommerce removes the middleman — often the distributor, but not always — from the commercial equation. As the term implies, B2B2C is a business model where Company A sells their product or service to Company B, who in turn sells it to the end customer. Unlike white-labelled products, the consumer understands that they are purchasing a product or using a service from Company A, the original manufacturer. For instance, customers may acquire a pair of shoes from an affiliate influencer. However, the product is still branded and dispatched by the manufacturer.
• Converting from B2C to B2B
  Many business owners often must choose between two paths: B2B or B2C. One of the reasons why the B2B ecommerce market is expanding is the result of B2C entities making the transition to B2B. It can be a daunting process as you are dealing with a different audience, market and business dynamics. Nevertheless, emerging B2B ecommerce technologies are helping to reduce this barrier to entry.

Key benefits of B2B ecommerce
The B2B ecommerce business model involves the supply of goods or services between two enterprises, hence, commercial transactions are more calculated and thoroughly planned compared to B2C exchanges. In a business-to-business transaction, order volumes are notably in larger quantities while delivery processes are more complicated.

The pandemic has catalysed a massive digital transformation in the B2B space as well. According to a McKinsey report, the COVID-19 crisis has compelled many B2B buyers and sellers to go digital. In fact, more than 75% of buyers and sellers say they now prefer digital self-serve and remote human interaction over in-person sales.⁴ If you are still caught in two minds about whether to shift your business online, here are some of the benefits you can use to your advantage by developing an all-inclusive B2B ecommerce platform for your business or organisation.⁵

• Scalability
  Properly executed, a digital ecommerce platform enables your business to scale easily to meet your customers’ needs and market demands. Combining this online ecommerce platform with your website also enables you to create more engaging content and deliver greater value to your B2B buyers. Furthermore, you’ll also have the option and flexibility of incorporating B2B cloud solutions and innovative payment services such as PayPal to ramp up your merchandising and billing capabilities.
• Increased reach
  Increasingly, many buyers are depending on online searches to locate a suitable B2B provider. Taking your B2B business online means that your ecommerce platform has a bigger potential of reaching new customers. As more buyers begin to transit online to find the best products and prices, leveraging the power of search engine optimisation (SEO) is an effective way of boosting your webstore’s visibility. For example, building a responsive and accessible B2B ecommerce site with rich SEO-centric content gives you the opportunity to engage new visitors and potentially convert them into customers.
• Boost sales
  Besides increasing your site’s conversion rates, an ecommerce platform allows you to integrate an automated cross-sell programme as well. Let’s use the automotive industry to illustrate this. Say you are a B2B seller marketing a range of car parts, you can offer relevant suggestions for customers to consider purchasing a related item when they are buying a wheel hub assembly from you. A digital commerce platform also enables buyers to reorder or increase their order volume with ease, increasing sales as a result. Additionally, an automated inventory system allows you to provide buyers with more timely, transparent and accurate updates to improve the customer experience.
• Analytics capability
  Another important benefit of an ecommerce platform is its built-in reporting feature to help you analyse your online store’s performance. There are performance metrics which measure the percentage of return visits, order frequency and client retention rate. They help to answer questions such as, is your webstore meeting your clients’ needs? Or which buyer demographic is purchasing more frequently? These indicators not only help to inform your marketing strategies but enable you to launch targeted campaigns too.

Getting started
Migrating your business online can be a daunting experience and you might encounter technical challenges along the way. Nevertheless, managing your inventory well is a critical step. Here are a few tips to help you overcome these challenges and improve your webstore’s inventory management.⁶

• Real-time tracking
  Updating your inventory becomes a little tricky when buyers have the option of placing orders either online or through your sales personnel. One way to address this is to utilise an ERP (enterprise resource planning) system to achieve real-time inventory tracking, so that buyers can tell immediately if there are sufficient units available when they visit your ecommerce site. By analysing both online and offline purchases, the ERP system will synchronise and update the inventory’s availability so that the actual amount is shown.
• Convert to online order forms
  Using manual order forms is not only tedious and time consuming, but they can also mess up your inventory when orders are not submitted in time by your sales team. Think of the amount of work required if your sales representatives must write the order or call it in. Incorporating an online order form into your webstore enables your sales staff to submit an order immediately, while allowing the ERP system to update the inventory. This provides for more efficient and accurate order processing.
• Bulk purchase
  Unlike B2C transactions where consumers may just purchase one or two items, B2B buyers are enterprises who often buy in large quantities to fulfil their business requirements. To this end, your ecommerce store should cater for bulk ordering such that customers can order in bigger amounts. This feature needs to be agile enough for buyers to customise their orders, which may involve different parts or products. For example, the capability to define the size, colour and exact quantities for each item.

Choosing a B2B ecommerce platform
Selecting an ideal B2B ecommerce platform for your business requires careful research and a comprehensive understanding of your products or services. Deciding on one isn’t easy but do remember that the right application should complement and enhance your business operations. To ensure it helps you achieve your business goals, the ecommerce platform you select should conform to how you do business, not the other way around.⁷

• Deployment: on-premise versus cloud-based
  There are two ways you can implement your ecommerce portal — either within your own premises (on-premise) or rely on a cloud-based deployment. An on-premise solution means that the ecommerce application is installed on a server located within your company’s facilities, and it’s protected by your firewall. Like most software, you’ll either have to purchase it or buy a licence to use it. How secure the platform is largely depends on the internal security measures implemented by your IT personnel. On the whole, an on-premise solution provides you with greater levels of customisation and control. However, they can be more expensive to implement, depending on the ecommerce platform’s hardware and software requirements.
  
  Cloud-based solutions, on the other hand, reside on a remote server and are usually managed by a third-party provider. As its name suggests, you’ll need an internet connection to access and customise the application. When it comes to scalability, cloud-based software is preferred as you can easily scale up (or down) the storage or computing capacity to meet your business needs. Long term overheads, however, can be higher as its monthly premiums may exceed that of a one-off deployment.
• Source code: Open type versus proprietary
  The source code for your ecommerce platform can be categorised under open-source or proprietary. Open-source codes are freely available and you can customise the codes to suit your enterprise’s needs. While open-source options are typically cheaper, the security risks are higher if the vendor is less established. You’ll also require a skilled developer to incorporate the codes into your B2B website.
  
  On the flip side, proprietary code is not available to the public and customisability can be limited, depending on personalisation options provided by the vendor. However, proprietary applications are more stable than open-source alternatives, while their user interfaces are usually more intuitive as well.
  
  


• Other important considerations
  Unlike B2C transactions, B2B prices may vary depending on who the buyer is. Therefore, your B2B ecommerce platform should provide you with the agility to list varying prices for different customers across different regions. In addition, buyers use a myriad of devices these days to access your B2B online store — from smartphones to notebooks. As such, your site’s digital content should be able to render properly across multiple devices and screen sizes. Finally, your platform needs to provide buyers with flexible payment choices to simplify the ecommerce business process, like the ability to pay through different invoices or monthly instalments.⁸ This is where PayPal comes in.

How PayPal can help
As a reliable and familiar brand trusted by over 400 million customers worldwide, PayPal can help set up your online payment channels with ease.⁹ For instance, our B2B solutions are designed to provide you with flexible payment options to suit your transactional needs. As a business-to-business seller, we understand it is critical for you to receive pay-outs with minimal delays, which is why our payment solutions are faster and easier than wire transfers. Whether you prefer to get paid by email invoice, your ecommerce website or even a link sent through social channels, PayPal makes it easy for your customers across the globe to fulfil their payments.

• PayPal Complete Payments
  Did you know that more than 75% of all PayPal invoice payments are made within 1 day from the time the invoice is sent out? Faster payments mean you spend less time and effort chasing for payments too.¹⁰

PayPal Invoicing enables you to send your buyers a professional invoice through our easy-to-customise templates. Featuring both mobile and desktop capabilities, you can conveniently create an invoice on your smart device or laptop and send it via email or by using a shareable link. What’s more, setting up recurring billing is a breeze — simply create scheduled or recurring invoices to be delivered to your customers and PayPal invoicing will do the rest.

That convenience doesn’t end there. You can further streamline the payment process with PayPal Checkout. Easily integrated into your webstore, PayPal Checkout accepts more than 10 local payment methods in over 100 currencies from more than 200 countries around the world, as well as credit or debit cards, PayPal or PayPal Credit. Your business’ security is our priority, which is why you have the option to set up your own risk tolerance filters through our fraud protection tools too.

PayPal.Me is a great way for your buyers to remember your brand. Just create your unique PayPal.Me link with your preferred username and photo to help customers identify you. Share this link with your buyers through email, text or social channels to enable them to pay you. All they have to do is to click on the link, fill up the payment amount, and voila, you are paid. It’s a mobile-friendly and more personal way to collect your payments, compared to old-fashioned payment forms.

Summing up
Managing a B2B ecommerce business can be overwhelming but it doesn’t have to be complicated. For starters, it pays to do your research before making any hasty decisions. Consider your own products or services as well as business goals before reviewing the various ecommerce platforms available out there. A successful ecommerce ecosystem is one which is secure, customisable, efficient and scalable. To complete it, marry your ecommerce site with a robust and nimble payment system. If you continue to focus on adding value to your buyers, not only will you enhance the customer experience, but discover rewarding growth in your B2B initiatives for years to come.