Business acronyms giving you the “ack!?” factor? Don’t know the difference between B2B and B2C? And what even is D2C or B2X?
If you’re anything like me — these terms make your eyeballs glaze over faster than a doughnut on a Krispy Kreme conveyer belt.
But don’t worry. I’ll walk you through not only the difference between B2B and B2C e-commerce, I’ll define each of these concepts, and show you how e-commerce software tools can support both of these approaches.
Let’s take a look.
What are B2B and B2C e-commerce?
Let’s define some terms real quick.
B2B stands for Business to Business. This refers to businesses who sell other products or services to other businesses as opposed to consumers.
What are some examples of B2B businesses?
- Software company that sells payroll software
- Restaurant supply company
- Food distributor
- Medical devices company
Each of these businesses sells their product to other businesses. That’s what makes them B2B.
B2C stands for Business to Consumer. These companies sell their products directly to end-users who are not businesses.
What are some examples of B2C businesses?
- Grocery stores
- Book shops
- Clothing stores
A clothing store sells a pair of jeans directly to a consumer who will wear those jeans the next day. That’s why its Business to Consumer.
Okay, so what is D2C?
D2C stands for Direct to Consumer
Like B2C, D2C sells their products to their consumer. However, while all D2C is B2C, not all B2C is D2C.
Imagine a store like Macy’s. At Macy’s, you can buy a Polo Shirt by Ralph Lauren. The Macy’s is B2C — business to consumer.
However, Macy’s did not create that shirt. Instead, Macy’s acquired that shirt from Ralph Lauren, and then sold that shirt to an end-user.
D2C means direct to consumer, meaning there is no intermediary. A business sells their product directly to the consumer.
When a consumer buys that Ralph Lauren polo directly through Ralph Lauren’s web store, that’s D2C.
…and what is B2X?
Ok, last acronym for now. B2X means Business to X — as in the business is agnostic to whom it sells. It could be another business or an end consumer. This type of business set-up requires creating specific sales set ups for multiple different consumer personas.
What is e-commerce?
E-commerce is the process of buying and selling goods and services online. If you buy something through a web store, that’s e-commerce!
What does this have to do with B2B and B2C?
Businesses sell their products through channels. These channels include:
Both B2B and B2C businesses use e-commerce (aka web stores) to sell their products to their customers. However, the needs of B2B and B2C buying aren’t completely identical. In general, B2B buying is more complicated.
As a result, the e-commerce experience for B2B and B2C need to be different.
What is the difference between B2B and B2C e-commerce?
Around a decade ago, B2B buying was still centered around email, phone orders, and (gasp) even faxing. At the same time, B2C had exploded into the e-commerce space, with nearly every brand offering a curated, easy-to-navigate online shopping experience.
Today, the situation has changed. New B2B buyers, having experienced the simplicity of B2C e-commerce, began making demands. They wanted to buy products for their businesses just as easily as they had from their favorite B2C brands.
B2B businesses had to evolve to meet this demand. However, building a seamless B2B e-commerce solution wasn’t as easy as a B2C e-commerce store.
Why is that?
Because of the complexity of B2B buying and the buying practices of the B2B buyer.
Let’s get more specific.
The difference between B2B buyers and B2C customers
When you are selling to other companies (B2B), there are a lot of differences compared to B2C. B2B buyers are buying as part of their job. They need to make sure they buy all necessary products/components to keep their company up and running. It’s not buying because they like it, it’s buying to keep the business alive.
Since organizations can be very large, they need a lot of products or components to keep doing business. Therefore, B2B buyers are often purchasing a lot of products at the same time. Also, since companies can grow their business, they need more and more products in a short period of time. B2B purchases are characterised by repeatedness instead of single purchases.
Because of the repeat purchases, companies make deals based on their monthly/yearly demand. They closely collaborate with each other, and each B2B costumer can have its specific prices for certain products. Last but not least, multiple people are involved in B2B purchases. For instance, a company can have multiple buyers. They are responsible for finding the right products and making the deals with resellers. Then, there is a manager who is in charge of checking the buyers and closing the final deals. In the end, a finance department is involved as well to collect all invoices.
Due to the fact that multiple people are involved in a single deal, B2B is more fact-based instead of based on emotions. It’s not about the nicest packaging, but the best deal for the company.
What is the difference between B2B and B2C e-commerce buying behavior?
The buying behavior of B2B buyers and B2C customers in e-commerce can be quite different, due to the different motives behind their purchases.
Let’s take a look at some of the larger differences that drive their unique buying behaviors.
Single buyer vs. decision making unit
When buying online as a consumer (B2C), it’s a personal decision to find a certain product that you want to order for yourself or your family etc.
B2B customers, on the other hand, can be:
- sales representatives
Within an online web store, these B2B customers need specific accounts matching their specific needs. The buyers need an account to create an order, but they should not be able to place the order yet. The manager needs an account where they can see all items that the buyers want to order, with the ability to finalize and place the order. A financial employee needs an account where they can only download the invoices.
Given all the roles involved in the online B2B purchase process, it’s important for your B2B e-commerce success to make sure your web store can handle such accounts.
Small orders vs bulk orders
Why is that? Aside from the booming B2B market is the fact that B2B orders have higher average order values. This is because businesses are often using more products than single end users. This difference in purchase behavior is very important for a business to take into account when operating a B2B-focused web store. While B2C customers want to know if there is a single product in stock, it’s not that relevant for B2B customers. They are more interested in the quantity and delivery discounts based on their company’s agreement.
Consumer prices vs. customer-specific prices
When selling to end users, fixed pricing is present for everyone, regardless of your individual purchase history. Within a B2B environment, prices are mostly based on agreements. B2B customers have specific discounts on specific products. They need to be able to purchase products at the right price, based on the company they work for.
In addition to customer-specific discounts, it is also possible that B2B customer prospects need to be offered different standard prices (depending on location). For both standard and discount prices, your web store needs to show the right prices based on the customer visiting the web store.
This can be managed by having customer log-ins. Prices can be hidden when a customer hasn’t logged in yet. After logging in, prices are displayed based on the customer‘s company.
Direct payments vs invoices
In a B2C environment, customers are expected to pay for their orders directly payment options like:
- inhouse payment processors
Due to the fact that B2B customers typically place several orders per month or even per week, B2B payments are often made on credit. Instead of paying directly, B2B customers are typically quoted each month on the orders that have been placed. This process is much more convenient for buyers, making it easier for them to place orders more frequently.
B2B e-commerce solutions, like Sana Commerce Cloud, allow B2B buyers to pay their invoices online through their customer portal using a variety of different payment options such as card or ACH.
Stocks for ASAP shipments vs. smart shipments
If a popular consumer web store runs out of stock, that is a big problem. Consumers will switch to other web stores that are able to deliver more quickly, even if products are more expensive. Forecasting the right amount of stock is crucial for B2C.
B2B organizations operate entirely differently. Instead of buying to fill an urgent lack of stock, B2B buyers often have IT systems that help them order the right amounts at the right times to keep stock levels high. Therefore, next day delivery isn’t the most crucial thing for B2B customers. However, B2B buyers are very concerned with their shipment being on-time. Late deliveries can completely derail the success of a B2B business. Therefore, it is important that you offer accurate order tracking as well as reliable shipping that will get to your B2B buyer when they expect it.
B2B buyers are also concerned with cost efficiency. Smart shipments that arrive on-time and are competitively priced are more relevant than next day delivery for B2B customers. Make sure that your B2B customers can select multiple shipping methods and show the price differences per method. Also, be aware of the fact that your customers can order from anywhere. Based on the location of your customer, shipping costs will change. Especially in case of freight shipments – goods that are too large or heavy to ship via classic carrier services. In that case, full truckload shipments can be beneficial for customers.
In a nutshell: you need to offer your B2B buyers these key features for shipping:
- Ship large deliveries
- Make sure they arrive on time
- Price them as competitively as possible
Low-frequency purchases vs. repeat purchases
B2C end-users typically buy fewer products worth less, compared to B2C businesses that buy more products worth more. In general, a B2B order is worth around 4 times more than a B2C order. As B2B companies need these products to run their business effectively, they’re also making more frequent purchases.
Let’s take a food company for example. This company makes ready-made meals for supermarkets. Each of these meals requires many different components such as:
Let’s focus on those spices. They’re using a variety of spices such as pepper, salt, turmeric, and cumin.
The food company buys these spices through a web store of a spice seller. However, because the food company churns out these meals frequently, they need to continue to make purchases of spices; they can’t just buy one box at the beginning of the year and make food until the spices run out. Depending upon how many ready-made meal orders they get, they’ll keep ordering spices to meet demand.
Buying because you like it vs. buying as part of your job
Traditional consumers often start their online purchasing journey visiting blogs, watching videos and reading reviews about several products before purchasing. They know in general what they want but often don’t know exactly which product they will buy until they’ve scoped out all their options.
On the other hand, B2B customers look for a specific product. They exactly know what they are looking for, and most of the time the B2B buyer is searching for a specific product code instead of a name. Purchasing online is part of their daily tasks and should be as easy and convenient as possible.
Broad market vs. specific market
The online B2C market is very broad. The big online warehouses such as Amazon and the Dutch bol.com are typical examples of online shops focusing on a huge variety of products and consumers.
B2B web stores are usually just the opposite, focusing on a specific niche market instead. For instance, when selling machinery parts, the parts being sold are typically machine-specific. It would be very difficult and confusing to your customers if you were to start selling parts for all types of machines.
When selling to a specific niche market, make sure you understand your customers’ specific needs. In the example of selling machinery parts: if you’re selling 30 specific screws, your customers want to be sure they purchase the right one. They will be interested in all dimensions of the screw. Make sure you add this information to each product page.
Searching for product names vs. searching for product codes
While consumers search for broad terms such as “large travel suitcase” and want to get inspired as to which one to choose, B2B buyers already know exactly what they want. It’s very specific and most of the time they already know the specific product code.
A typical B2B search is something along the lines of “984356191000AV”. It is very important to include such specific information, and make sure customers can conveniently search for very specific information.
Semi tailor-made vs. tailor-made
As a typical consumer, you probably receive a lot of emails from web stores. Your name is in the header and the email contains products you probably like based on your previous purchases, maybe even discount codes. Although these emails look personal, they are not custom. They are generated automatically using software.
Conversely, B2B customers do actually have personal relationships with online sellers. They have agreed on specifics for prices and volumes, for instance, and it’s very important that B2B buyers can purchase online based on these agreements. When they log in, they expect a tailor-made account with their specific prices, bulk discounts, shipping fees and more.
What features does my B2B e-commerce solution need?
While B2B and B2C e-commerce solutions will have significant overlap — there are some key differences between B2B and B2C e-commerce solutions that you will need to account for when setting up your web store.
Here are the key features to include:
Show customer specific prices and bulk discounts
When you are selling to businesses and consumers, it’s possible to create a consumer page and a business page. Consumers do not want to create a profile and log-in before they can see the prices of the goods you are selling. By clearly communicating whether a certain web store page is meant for consumers or businesses, you can get the best of both worlds.
Complex pricing structures are already recorded in your ERP system. By making your ERP system the foundation of your e-commerce, you can easily make sure that all customers will see the right prices and discounts. in real time. Every time you change any price structure in your ERP, or you add new pricing rules for a certain customer, it is immediately visible in your web store.
Verify the preferred payment methods among your B2B customers
In B2B, you will have a range of customers. If your smaller customers are not ordering in a strict routine, they may want to pay via their organization’s credit card. If a big customer is ordering every week, they might just want to be invoiced every month. If you have a lot of large customers, this can be a difficult task.
Maybe you allow just a couple of your customers to purchase on account. Or maybe some of your most loyal customer can order up to € 500.000 on account per month, while some smaller customers can order up to € 100.000 per month. All the customer-specific information about payment options is stored in your ERP system.
B2B shipping methods cannot be covered by B2C e-commerce solutions relations
B2B shipments are totally different from B2C shipments. Almost all B2C shipments are processed via the traditional carrier services (e.g. UPS and PostNL). Due to large order sizes or bulky products, this can be a big issue for B2B e-commerce.
The solution? You probably need freight shipping. Your B2B e-commerce solution must be able to understand which shipping method is applicable for a certain order. It is also important to understand the different shipping costs according to the shipping method. To determine the right shipping costs and expected delivery time, you must know where your customer is located. What’s more, shipping costs can differ for each of your customers. For instance, if a customer is ordering each week, you are more likely to offer lower shipping costs.
Depending on the details of the order, you can show all customer-specific ordering conditions to the customer in real time in the web store.
Integrating your ERP with your e-commerce solution eliminates shipment mistakes.
Simplify repeat purchases to strengthen your long-term relations
Online B2C purchases are characterized by one-off purchases while online B2B orders are placed regularly. Repeat purchases are an important measure for these businesses; based on previous orders, new orders can be placed or adjusted. When switching to selling through a web store, make sure your customers can access their order history. After you get comfortable with your e-commerce solution, you can add offline insights to your customer’s online account history through the information stored in your ERP as well. This also opens the door to automating your sales. Long-term customers often have a specific purchasing pattern. Based on information about on- and offline order history available in the ERP, new quotes can be generated automatically. Your customers just need to verify the quote
Create an easy and sophisticated purchase environment for your customers by connecting your web store to your ERP data
Your ERP is a font of information. It has stock details, product details, invoices – it’s the brains of your business. By choosing an integrated e-commerce solution, you bring that valuable data into your web store, and your customers benefit. They discover real-time stock data, accurate and localized pricing, can retrieve their invoices (even invoices from orders placed on different channels), and can track their shipments more efficiently.
B2B e-commerce, integration is critical
We’ve covered a lot of proverbial ground today.
But there are a few key takeaways we should go over.
- B2B buying is more complicated than B2C buying
- The difference between B2B e-commerce and B2C e-commerce is that B2B e-commerce has more features to reflect the complexity of B2B buying
- An integrated e-commerce solution handles the complexity of B2B buying by harnessing the power of your ERP.
Sana Commerce is an integrated e-commerce solution that leverages the power of your ERP to scale your business.
…ready to discover how integrated e-commerce can streamline the B2B buying experience?