As far as rivalries go, there are not many landscapes more competitive than technology and commerce and there is one battle truly brewing.
B2B (business-to-business) compared against B2C (business-to-consumer) business models are complex and have many variables. However, in this article, we explore and unearth the key differences to help businesses choose between them.
Many retailers (like these!) and start-ups across the world are weighing up their options and closely comparing B2B and B2C technology. This is driving increased awareness of the disparities and highlighting software companies (like us!) as important partners to have.
In the corporate landscape – particularly for those at the forefront of emerging tech – there are many questions being asked:
- Which path is more lucrative?
- Do I lose all profit if operating solely B2B?
- Can a company serve both markets?
- What about retention and customer lifetime value?
- What investment is needed for each approach?
All valid questions, yet scale and budget will ultimately be the deciding parties when choosing between B2B and B2C.
56% of businesses who bought their product from other businesses (like all the millions of companies who buy Microsoft product) made over half of their business purchases online in 2017, up from 30% in 2014. This highlights the fastly growing trend towards a need for technology stacks, which operate successfully in the B2B market.
This trend has already been reacted to by the industry; in early 2018, SalesForce acquired leading B2B eCommerce provider CloudCraze and within months announced the re-birth of the same technology under the SalesForce banner – extending their cloud service to this new and exciting market.
Alternative eCommerce platform vendors (Magento, Sitecore, Oracle, Hybris and more ) are rolling out B2C-like functionalities that co-exist with complex business rules (partial orders, volume pricing, multiple shipping addresses etc) – yet the specialist B2B platform space remains a small market.
Marketplace giants such as Amazon and Alibaba have easily grown to become the “Google of shopping” in several B2B verticals and for many are blurring the lines between B2B and B2C. Amazon Business, the marketplace where Amazon combines more than 30,000 sellers (and itself), had $1 Billion in sales in its first year and is growing 20% every month
However, for the purpose of this article, we have considered B2B and B2C markets requiring different tech and there are, therefore, 5 distinct areas for consideration:
B2B audiences are typically ordering large quantities of product and on a regular and consistent basis. B2B audience members themselves are looking for technology which is efficient and easy to use, reliable and not often changing – these qualities within a website allow for product to be found and orders to be placed quickly.
Also, a B2B retailer will undoubtedly have less ‘customers’ than a B2C retailer of the same size, yet they may have several logins/users accessing and ordering on the same customer account.
This is easily compared against a B2C audience, which in most markets is much, much larger in size. However, the B2C model in most business verticals is crowded and consumers have too many retailers to choose who to buy from.
2. Customer experiences and behaviour
With over 1.5 billion websites in the world (a 70% YoY increase from 2016) both B2C and B2B websites need to be fast and easy to navigate, yet need a point of difference. This difference is often achieved with an ‘experience’, such as a heavy use of video, real-time notifications of discounted product, personalised messaging or functionality a customer will benefit from using. Investing in developing experiences like these will ultimately pay off in returning customers and brand recognition, which both B2B and B2C retailers desire.
B2B audiences usually have a deeper and more personal relationship with the business they are buying from, which is often used to leverage custom pricing or discounts. These relationships are often managed by account managers on either side, who act as purchasers to review and protect margin as much as possible. With these relationships in place, businesses rely heavily on brand reputation and usually have 1 key channel of marketing, such as email or catalogue-drops. On the other hand, marketing to a B2C market is tough. Really tough. This requires high levels of advertising investment and full sales attribution being difficult to measure.
In 2019, B2B companies in the U.S. will invest higher in eCommerce technology than online retailers do. The business systems that support B2B or B2C transactions differ hugely in complexity, scalability and investment level. This puts a large emphasis from the outset on selecting the correct partner and technology, which can scale with your business in a fully agile way.
Historically, B2B software, such as eCommerce websites, would be known for being far more advanced and functionally-able compared against their B2C equivalents. However, both models have exciting new opportunities to innovate: A.I. (artificial intelligence) within order and WMS processes; next-day and same-day delivery options; invoicing and payment setups with automated payment transfers and image recognition for product searching and order placing.
5. Product and logistics
Most B2B retailers have price books or sets that are unique for particular groups of customers, sometimes even prices unique to each customer. This is often decided by contract winning and large tender processes, but the effort to gain these customers is quickly repaid as relationships are long-term and order volume is high. While a B2C retailer will sell the same few items to a huge pool of customers, a B2B retailer will sell products to the same one customer by pallet-load. This requires different logistics and a more advanced way of organising shipping processes which require in-house teams with experience and modern WMS systems that are agile and fully-integrated with additional systems.
Regardless of the above considerations and differences, consumers are increasingly digitally savvy and look beyond a website for brand perception. That’s why any retailer’s online presence needs to be consistent. Social media pages and online reviews should reinforce the positive message conveyed by the website, but service and value (irrespective of business model or customer type) should be every retailer’s #1 priority.
B2B purchasers are pushing the need for more advanced B2C-like functionalities at a time where B2B investment in commerce capability is a high priority for a majority of B2B CEOs. The growth of the digital-savvy millennial workforce, mobile ubiquity and relentless optimisation of eCommerce technology is forcing the hand and pace of the traditionally slow-moving B2B sector.