Business-to-business (B2B or, in some countries, BtoB) refers to a situation where one business makes a commercial transaction with another. This typically occurs when:
- A business is sourcing materials for their production process (e.g. a food manufacturer purchasing salt).
- A business needs the services of another for operational reasons (e.g. a food manufacturer employing an accountancy firm to audit their finances).
- A business re-sells goods and services produced by others (e.g. a retailer buying the end product from the food manufacturer).
B2B is often contrasted with business-to-consumer (B2C). In B2B commerce, it is often the case that the parties to the relationship have comparable negotiating power, and even when they do not, each party typically involves professional staff and legal counsel in the negotiation of terms, whereas B2C is shaped to a far greater degree by economic implications of information asymmetry. However, within a B2B context, large companies may have many commercial, resource and information advantages over smaller businesses. The United Kingdom government, for example, created the post of Small Business Commissioner under the Enterprise Act 2016 to "enable small businesses to resolve disputes" and "consider complaints by small business suppliers about payment issues with larger businesses that they supply".
Video Business-to-business
Comparison with B2C
In most cases, the overall volume of B2B (business-to-business) transactions is much higher than the volume of B2C transactions. The primary reason for this is that in a typical supply chain there will be many B2B transactions involving subcomponents or raw materials, and only one B2C transaction, specifically sale of the finished product to the end 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.
Maps Business-to-business
Matesourcing
"Matesourcing" refers to the phenomenon where businesses seek business support from family and friends rather than obtaining business services from other businesses on a commercial basis. In 2011, UK business PC World published research commissioned from Trends Research which found that British SME's are increasingly asking family and friends for IT problem-solving and purchasing advice services.
Business to business model
Vertical B2B model
Vertical B2B is generally oriented to manufacturing or business. It can be divided into two directions which is an upstream and downstream company. Producers or commercial retailers can have a supply relationship with upstream suppliers. For example, Dell company is working with chips and computer PCB from upstream supplier in this way. Manufactures and franchiser can form a sales relationship. Simply speaking, this B2B website is similar to the enterprise's online store. Through the website, the company can promote their products vigorously and they can use more efficiently and comprehensively method to let customers understanding their products well and enriching the transactions. Or it can be a website created for business. These business companies advertise their products on the website. The purpose of this online website is to promote and expand transactions in an intuitive and convenient way.
Horizontal B2B model
Horizontal B2B model is the transaction pattern for the intermediate trading market. It concentrates the similar transactions of various industries in one place. This platform provides a trading opportunity for the purchaser and supplier. And this kind of company does not own the products and does not sell products. It only provides a platform to bring sellers and purchasers doing business through online website. The buyers can easily find information about the sellers and the relevant information about the products on the website such as Alibaba.
The development trend of Business to business
Along the way, B2B has become more and more mature. Despite B2B market has the good momentum, it still has an immature side. The majority of the immaturity side expression in online price negotiation and online collaboration has not been fully developed.
Boston Consulting Group (BCG) took the survey based on in-depth interviews with online traders. BCG believes that in recently, B2B trading model cannot completely simulate the traditional business model. almost half of the survey group indicated online transactions need coordinate with traditional off-line communication to complete the whole transaction process.
The report pointed out that with the maturity of the B2B and the improvement of the price comparison mechanism, the seller's pressure will be increased. The survey found that some of the sellers already felt the big pressure brought by the price comparison.
This report presents another valuable analysis, the development trend of the B2B market. It pointed out that each party in the B2B market expect the simplification in each trading fields. They do not expect the diversification of the trading platform. It has the same perspective as the trading platform. The trading platform hopes to integrate instead of too many competitors.
See also
- Business-to-consumer
- Business-to-government
- Customer to customer
References
Source of article : Wikipedia
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