7 Types of B2B eCommerce Explained

Digital buying habits have changed rapidly over the last few years, particularly in the years since the COVID pandemic. With UK retail spend at over £135 billion, and digital accounting for almost a third of all retail transactions, eCommerce is no longer just an "alternative channel", it's becoming the default for many businesses.

While B2C initially set the standard, B2B e-commerce has caught up rapidly. B2B buyer demographics have seen a fundamental shift, with increasing numbers of digital native professionals now in decision-making roles. These buyers expect instant, friction-free self-service experiences: in fact, according to research from Gartner, over 60% of modern B2B buyers now prefer buying directly through digital platforms rather than scheduling calls with sales reps.

In other words, if you’re not yet doing business online, you’re at risk of falling dangerously behind the curve.

What Is B2B eCommerce?

B2B eCommerce is the practice of making business-to-business transactions online. B2B eCommerce suppliers are typically wholesalers selling to retailers, but the market is rapidly diversifying. It now encompasses manufacturers and all kinds of digital and professional service providers. B2B eCommerce deals largely in the sale of physical goods (e.g. raw materials for manufacturing, ingredients for cafes and restaurants, office supplies, machinery and plant etc.). However, digital services such as SaaS form an increasingly important part of the B2B eCommerce landscape.

As the sector grows, diversifies and expands, our definition of B2B eCommerce gets broader. Here, we explore seven types of B2B eCommerce, and how this channel can benefit both your business and your customers.

How Is B2B eCommerce Different from B2C eCommerce?

In many ways, it isn’t. Many buyers use the same online marketplaces and platforms for both their business and personal purchases. The key difference is that B2B eCommerce requires the sale of goods and services from businesses to other businesses. Even if merchants sell the same products to the consumer. However, there are a number of other key differences:

For instance:

• B2B sales tend to be much higher in value, often in the thousands or millions of pounds rather than the tens or hundreds
• prices are tailored to individual customers based on volume and Customer Lifetime Value
• transactions are usually multiple-step rather than single-step
• there are often multiple decision makers involved in the buying process
• the purchase process is longer and more complex, with no room for impulse purchasing
• purchases are motivated by business needs rather than individual needs and emotions

What are the Benefits of B2B eCommerce?

Although the B2B eCommerce market has a much higher value than its B2C counterpart, the B2B sector has been slow to embrace eCommerce. There are a number of potential reasons for this:

• Decision makers have historically been of an older demographic that favours sales reps and trade conventions over eCommerce
• Sellers mistakenly believe that eCommerce won’t be able to provide the level of customisation and flexible pricing necessary for B2B sales
• Sellers don’t understand the scope for custom quoting and ordering that eCommerce offers
• There’s a misconception that it’s not possible to deliver an outstanding customer experience through eCommerce

However, when B2B merchants let go of their preconceptions, they come to realise that B2B eCommerce can have a host of benefits. These include:

Increased sales

Your eCommerce site has the potential to outshine even your best sales professional. B2B eCommerce platforms allow customers to help themselves based on rates that are tailored to them either from previous quotes or rates that your team has negotiated with them. Automation can make reordering effortless, and can even help with upselling, cross-selling and making product recommendations. All of this lets you not only reach more customers but also improve retention and increase your transaction value. With a B2B platform (like those we develop here at The Digital Maze!), you can also deliver each of your customers their own personalised online sales portal.

Greater reach

As awesome as your sales team are, they can only make so many calls and chase up so many leads in a day. With a little investment in eCommerce Search Engine Optimisation (SEO) and responsive web design, your eCommerce website can engage a much broader range of highly motivated business buyers.

Your B2B eCommerce website can also create fantastic opportunities for lead generation. By using lead magnets you can generate highly motivated leads from prospective buyers even if they don’t buy from you right away. These are opportunities that your physical teams can capitalise upon.

By delivering an omnichannel customer experience, prospects can engage with you from their favourite social platforms with conversion optimisation strategies tailored to each.

Reduced overheads

Businesses and households alike are always looking for ways they can cut costs, particularly in the current climate. So now is as good a time as any to look at ways to reduce operational spending. The good news is that embracing B2B eCommerce can help you keep overheads low.

The AI, automation and machine learning offered by eCommerce platforms enable B2B companies to streamline procedures, increase efficiency and reduce personnel needs.

Improved productivity

By allowing you to automate many of your business processes, B2B eCommerce doesn’t just enable you to keep your personnel costs low. It also allows your team to be more productive by reducing their administrative burden.

Automated processes and a suite of self-service capabilities mean that teams spend less time on administration and correcting mistakes. This leaves your team with more time to do more of the stuff that can’t be done by software. Like answering more complex queries and providing the personal touch to leads and clients that you've built your brand upon.

Insights and agility

The business-to-business landscape is changing rapidly. In order to sustain growth, you need to be able to scale your business operations seamlessly as demand increases. Without the right infrastructure in place, this can take a great toll on your team. The automation afforded by B2B eCommerce platforms can allow you to scale their operations in line with demand without needing to invest in a larger team or more physical overheads.

What’s more, platforms provide eCommerce businesses with access to detailed analytics that can be mined for actionable insights. When paired with your existing IT infrastructure, like your CRM, ERP and PIM software, you can get a clear idea of which products customers may be most interested in, figure out whether they’re using desktop or mobile devices, identify potential bottleneck issues and employ cross-selling to help liquidate stock that’s selling slowly.

Transforming B2B Order Processing

See how we took a national workwear supplier from phone orders to an ERP-connected B2B platform processing 90% of their transactions

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What Are the Different Types of B2B eCommerce?

B2B e-commerce markets generally fall into two broad market categories:

• Vertical markets - focused on a specific niche like pharmaceuticals or construction

• Horizontal markets - selling broad-use items like office supplies across multiple sectors

Within these markets, businesses operate under seven primary eCommerce delivery models:

Wholesaling

Wholesaling is the most common form of B2B eCommerce, and what typically comes to mind when we think about the business model. Wholesale eCommerce is essentially an online equivalent of a cash & carry. Merchants sell supplies in bulk at a discounted rate to retailers, restaurants, bars, etc.

There was a time when this was exclusively done in huge physical stores, but more and more of this activity takes place in the online realm where customers can enjoy even better prices along with increased convenience and time-savings.

As with physical cash and carry stores, wholesale suppliers have slowly opened up to the B2C market online too. So  economically-minded households can enjoy the same savings on essentials as local businesses.

Subscription

The subscription model has boomed substantially over the past 15 years. From streaming services to Netflix to recipe boxes like Hello Fresh and nutrition supplement services like Huel, there's a subscription for almost everything! Yet, while these have proven a big hit within the B2C market, the subscription model is also important for B2B eCommerce.

The most obvious example is the Software as a Service (SaaS) business model. These cloud-based services require an ongoing subscription for software to facilitate business operations. So, order to achieve success in SaaS, or any subscription-based model, businesses need to keep a close eye on their churn rate. This is the number of customers who unsubscribe from or leave the service. Finding ways to keep the churn rate low while also taking active steps to engage new subscribers (e.g. incentives for customer referrals) is the key to success when running a B2B subscription-based service.

Dropshipping

Dropshipping, or direct shipping, is one of the fastest-growing forms of e-commerce. And while it primarily focuses on the B2C market, there are also ample opportunities within the B2B space to utilise dropshipping.

Here, businesses market and sell products that are fulfilled by a third-party supplier. This means that there are no costs incurred from warehousing or transportation. As such, the barrier to entry is extremely low. And with the right B2B eCommerce platform, retailers can coordinate supplies from vendors all over the world under a single branded store page.

Dropshipping is popular for products with a fast turnover where supply is constant (e.g. sanitary products, food, drink, paper etc.). Alternatively, it’s also good for large or heavy items like machinery, where transportation costs would put a substantial dent in your profit margins.

The only caveat with dropshipping is that you have no control over the fulfilment process. So if an item arrives late, damaged, or not as advertised, it may impact negatively on your brand even though the logistical blame does not lie with you.

White label

White label is a term for when you apply your name and brand to a product that is generic in nature. This means that you do not manufacture it, nor is it manufactured for you. Instead, it is supplied by a third party and sold by you.

Dropshipping is a good example of a white-label B2B eCommerce business model. White labelling is a good way to keep your product design and production costs low, while responding quickly to changes in consumer demand. However, white-label B2B companies have no real control over the quality of the products they sell, and so have to choose their suppliers extremely carefully.

Private label

Private labelling is where an online or physical retailer commissions a manufacturer to make a product that is unique to them. Unlike white labelling, this provides businesses with an opportunity to exert a greater degree of control over the product. However, it still enables them to keep production and design costs low by outsourcing them to a third party.

Professional services

As we can see, most of the B2B eCommerce market is geared towards the sale of products, even if those products are not tangible e.g. SaaS. But there’s also substantial room for professional services within this B2B eCommerce market. Businesses are often as reliant on professional services as they are on products to facilitate business operations. Outsourced accounting, HR support, bookkeeping, IT services and legal support are all common examples of the services that SMEs rely on to keep their operations running optimally.

Wherever these services are bought and sold through an online store, this falls under the umbrella of B2B eCommerce.

Hybrid marketplaces

As previously stated, many online brands cater to both the B2B and the B2C market. Indeed, many brands do business exclusively through hybrid marketplaces with which their customers are already familiar. Ubiquitous names like Amazon and eBay are commonly used by B2B buyers in their personal lives. Naturally, they’re also among the first names that spring to mind when they need something for work. As well as servicing both the B2B and B2C markets, these marketplaces also facilitate Customer To Customer (C2C) transactions.