Business to Business (B2B)

Business to Business (B2B)

What is Business to Business (B2B)?

Business-to-business, also known as B2B, is a form of business-to-business transaction, such as that involving a manufacturer and a wholesaler, or a wholesaler and a retailer. Business to business refers to business that takes place between businesses, rather than between a business and individual consumers. Business-to-business transactions contrast with business-to-business (B2C) and business-to-business (B2G) transactions.


Business to business

Understanding Business to Business (B2B)

B2B transactions are common in a typical supply chain, as companies buy components and products such as other raw materials for use in manufacturing processes. Finished products can then be sold to individuals via business-to-consumer transactions.

In the context of communication, business to business refers to the methods by which employees of different companies can connect with each other, for example via social networks. This type of communication between employees of two or more companies is called B2B communication.

Research firm Forrester estimated that in 2020, the U.S. business-to-business retail sector accounted for about half of the gross domestic product of the U.S. economy, selling more than $ 8 trillion in goods.

B2B e-commerce

At the end of 2020, Forrester said the B2B e-commerce market had exceeded $ 1.134 trillion – above the $ 954 billion it projected for 2020 in a forecast released in 2020. This is approximately 12% of the $ 9 trillion total B2B sales in the United States for the year. They expect this percentage to reach 17% by 2023. The Internet provides a solid environment in which businesses can learn about products and services and lay the groundwork for future business-to-business transactions. Company websites allow interested parties to learn about and contact a company’s products and services. Online product and supply exchange websites allow businesses to search for products and services and initiate purchases through electronic procurement interfaces. Specialized online directories providing information on industries, businesses and the products and services they provide also facilitate B2B transactions.

B2B examples

Inter-company transactions and large corporate accounts are commonplace for companies in the manufacturing sector. Samsung, for example, is one of Apple’s biggest suppliers in the production of the iPhone. Apple also maintains B2B relationships with companies like Intel, Panasonic and the semiconductor producer Micron Technology.

B2B transactions are also the backbone of the automotive industry. Many vehicle components are manufactured independently and automakers purchase these parts to assemble automobiles. Tires, batteries, electronics, hoses and door locks, for example, are typically manufactured by various companies and sold directly to automakers.

Service providers also engage in B2B transactions. Companies specializing in property management, housekeeping and industrial cleaning, for example, often sell these services exclusively to other companies, rather than to individuals.

Development of B2B relationships

B2B transactions require successful planning. These transactions depend on a company’s account management staff to build relationships with business customers. Business-to-business relationships also need to be nurtured, usually through professional interactions before sales, for transactions to be successful. Traditional marketing practices also help businesses connect with their business customers. Trade publications contribute to this effort, offering businesses the opportunity to advertise on paper and online. A company’s presence at conferences and fairs also promotes the products and services it provides to other companies.

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