What is B2B: definition and types

B2B (business-to-business) is a transaction made between businesses, as opposed to transactions between a business and the final individual consumer (B2C). All industries have companies that engage in B2B. This is a necessity, as all companies require specific supplies and services, and many companies provide those specific supplies and services. 

While commonly B2B trade means transactions over the internet, it has always been standard for companies to purchase goods and supplies, outsource, and insource from other companies. For a simple example, car manufacturers have never made all of the components of their cars from scratch – they buy the materials and parts from other companies to put them together.

B2B in the modern age is really no different except more and most often these transactions are done via the internet. B2B is a huge e-commerce market, dwarfing B2C (business-to-customer) by nearly 260%

Many B2B companies are also B2C, like computer companies or office supply companies. Personally, I buy about 5 pens a year, whereas a company’s 10-story building’s worth of people will probably need quite a few more and are going to buy them in bulk. A computer company may sell tons of personal computers, but the real money maker is selling bulks of desktops and laptops to companies and offices. For a second, imagine how many computers are sold to the US government or hospital systems; how much more money do you think a company makes off of these white whales vs. the selling of personal computers? So while many B2B companies are strictly B2B, there is plenty of overlap between B2B and B2C.

Vertical B2B

Vertical B2B is companies selling goods and services specifically within one industry. Again, the car manufacturing industry is an excellent and easy-to-understand example of vertical B2B: one company makes steel and only sells it to car manufacturers, another provides the tires or the engines. All of the companies involved have car manufacturing as their one reason for existing.

Horizontal B2B

In horizontal B2B, multiple industries are served. These companies reach broader and have more than one demographic to serve. If you’ve ever watched the tv show The Office, you’ll immediately understand the difference. The fictional Dunder Mifflin is selling paper, but they sell to all types of companies, from supplying different offices with copier paper to winning losing the bid to provide the print paper for the Yellow Pages. That is horizontal B2B.

B2B E-commerce

Digital B2B is rising, and rising as one of the most lucrative and creative realms of business. E-commerce is quickly replacing many more traditional approaches to business. Websites are the new vendors, allowing for information gathering, proposals, purchases, brokering, and bidding. 

Web tools and services are also moving in and shaking the B2B world. From website development to email tools to infomediaries to software (and more!), you will find many companies needing those services and hiring other companies to do them. For example, every company needs a website and they’re going to want professionals to make it, not Tom from the mail room who runs a meagerly followed Facebook group about ferrets. Right? Right.

E-commerce especially lends itself to niche markets. Businesses can need some extremely specific services, niche companies exist to fill those needs, and online is where to find those companies now.

Going back to ferrets for an example, niche markets can be something as specific as pet ferret care: even if a company is hand-making all of their products, they will still need to buy the supplies, thus creating another B2B relationship. Their suppliers may be varied – a bottle of ferret shampoo has different ingredients than that of a ferret treat – yet on the other side, the ferret supply company’s buyers will be less varied – pet stores, mainly. B2B is a chain with many links, even in the niche realm, and that is why it is so lucrative. 

B2B marketing

Whether vertical or horizontal, B2B marketing is a big world. Building your brand, creating relationships, maneuvering negotiations, and filling a niche are all required for success, but it’s getting your product out there that creates revenue. The internet plays a vital role in this now. Company websites and blogs, social media, SEO, emails, videos, and ebooks are all used to create brand and product awareness.

B2B marketing must begin with research. Researching the marketplace (including competitor brands), prospective and current clients, and services puts you in a position to make correct business and financial decisions based on facts. Going in blind isn’t going to help you with building a strategy. As mentioned earlier, finding a niche or specialization is key. Creating a strategy to fill that niche is how you get to success. In B2B transactions, companies are looking for experts who distinguish themselves from other companies in some way. 

Next is getting your name out there. When someone is searching for a product like yours, you want your product to show up. Having a website is just the tip of the iceberg. You need your website to rise to the top of google searches. Fine-tuned SEO (driven by thorough websites, blogs, and articles) is a great start that will get you on the radar fast. 

Along with always having your inbox open through customer service emails and chats, sending out exploratory emails will help you bring in an audience. If you’re willing to break an egg to make a cake, paid advertisements can be well worth their money because, even though it’s business-to-business, human beings make up a business and are enticed by ads.

The single most important thing once you get the attention is to keep it. Reviews, follow-ups, customer service, and keeping your product information up to date is going to keep you in business.

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