Advantages and Disadvantages of B2B E-commerce

B2B ecommerce business model has been rising at a rate of 7.4% percent every year. For this reason, most companies are adopting the B2B ecommerce model to scale their profits and increase efficiency. These are B2B ecommerce advantages and disadvantages.

B2B definition and B2B ecommerce definition

  • B2B or B-to-B (Business-to-business) refers to business that is conducted between companies, rather than between a company and individual consumer.
  • B2B e-commerce, business-to-business electronic commerce (B2B electronic commerce), is the sale of goods or services between businesses via an online sales portal. In general, it is used to improve the efficiency and effectiveness of a company’s sales efforts.

Advantages and Disadvantages of B2B Ecommerce

Advantages of B2B E commerce Model

There are many benefits in B2B ecommerce businesses. Some of the benefits of b2b e-commerce are the following:

Efficiency

Enterprise Resource Planning (ERP) is a trend for B2B commerce that has led to efficiency in the operations of a business. Customers can order goods online and reach customer care at their convenience. Customer care service improves the shipping process and also the company gets to know customer complaints so that it can rectify.

b2b e commerce advantages and disadvantages
Diagram showing some typical ERP modules.

Better Scale

In a B2B model, a business has a higher chance of gaining more market. The market demands more for a B2B model in which a business can achieve by coming up with new sales channels. Also, through an online advert, a B2B model can reach more potential customers.

Lower Costs

Growing sales while reducing costs seem impossible, but it is the case with B2B commerce. There are lower costs since all the processes are automated. Automation gets rid of errors and unforeseen expenditures. B2B commerce heavily relies on the use of technology, thereby reducing the cost of labor. This finally leads to the provision of excellent services through customer care service.

Increase in Sales

With e-commerce, you not only get new customers, but you also get mew recommendations. For this cause, customers are likely to purchase related products with the same features as those of B2B models.

Acquire New Markets

B2B commerce can reach a wider market exclusive of the market that is already in existence. This is because B2B models can sell to both consumers and resellers. It is also possible to sell to both online and direct customers, thereby increasing its market.

Market Predictability

Unlike other markets, the B2B model has a more stable market. It can also adapt to various conditions within the market. This is important in acquiring more potential customers and resellers. For this reason, it is easy to predict how the market will be in the future based on sales records.

Data-Centric Process

disadvantages of b2b business model

B2B model heavily relies on facts and figures streamlining the whole process. With data, it is possible to forecast and even calculate the sales statistics. The use of factual data eliminates errors and frauds in business processes.

Sell Direct to Consumers

In the B2B model, a business can opt to sell its products to direct consumers. Improved operations make the process efficient and easier. You can structure your catalog so that it can accommodate consumers. To do so, digital marketing and online merchandising are important.

Disadvantages of B2B Ecommerce

Just like any other model, even the B2B model has its flaws. These are some of B2B disadvantages.

Limited Market

A B2B model usually has a smaller market compared to the B2C model since it deals with trade between businesses. Normally, there are many consumers than retailers and this makes the B2B model’s market smaller. This makes it a risky business, especially for small and medium B2B businesses.

Lengthy Decision-Making Process

Unlike the B2C model, where the consumer doesn’t have to consult anyone to make a purchase, B2B models strictly follow a chain of command. All the stakeholders must be consulted before the final decision is made.

Inverted Structure

In B2B models, the buyers have more power in determining the price and features of a product. This is because sellers want to retain their customers; hence they must maintain flexibility in product development. This is unlike B2C commerce, where the price and features of a product heavily depend on the seller.

B2B Ecommerce Platform

These are a few examples of B2B ecommerce software:

B2B Ecommerce Examples

There are countless examples of B2B e commerce. Some of the leading B2B e commerce examples are:

Final Thoughts on B2B Advantages and Disadvantages

B2B in ecommerce involves business transactions between business organisation over the internet. Although there are limitations of B2B ecommerce, B2B ecommerce model comes with many advantages such as increase in sales, efficiency, lower costs, and reliance on data to streamlining business processes.

Vincent is a writer with an interest in finance, business, technology and health niche. He holds a Bachelors degree in Applied Statistics with computing. Read more about Vincent and see our complete editorial team at FiFi.