Business-to-business

Business to business (from English business-to-business or B2B) refers to commercial transactions between companies, that is, to those that are typically established between manufacturers and/or a manufacturer with its distributor, or between a distributor and a retailer. The relationships between a merchant and its end customer are called business-to-consumer or B2C (from English, business-to-consumer). Both terms are used especially in the field of electronic commerce.

History

In its early days, the term B2B was used to describe the transmission of information regarding business transactions, typically using technologies such as electronic data interchange, introduced in the late 1970s to electronically send documents such as purchase orders or bills.

It later came to include activities that would be more accurately termed network commerce, such as purchasing goods and services over the Web via secure servers (see secure hypertext transfer protocol, a special server protocol that encrypts the confidential fulfillment of orders for the protection of consumers and the organization's data) using electronic payment services such as authorizations for credit cards or electronic wallets.

B2B has also been driven by the creation of portals to group buyers. Thus, we find, for example, portals for construction companies, hardware stores, automotive, food, chemical, restaurant or hospitality, among others. The companies come together to create these pages joining forces which allows them to negotiate in better conditions. The maintenance of the pages is produced by asking for a fee for quoting or by charging the partners a commission for the business carried out on the portal.

Some of the advantages that business-to-business brings to the companies involved are:

• Rapidity and communication security.
• Direct integration of transaction data into the company's computer systems.
• Possibility to receive more offers or demands, expanding the competition.
• Dispersonalization of the purchase with which possible treatments of favor are avoided.
• Decrease in operating costs: less commercial visits, faster negotiation process, etc. Therefore, buyers can ask for a price reduction under the lower cost of management, or sellers increase their trade margin.

Comparison with B2C

The main difference between B2B and B2C is that the former refers to business transactions between manufacturers and retailers, while the latter refers to retailers that supply goods directly to the consumer.

In B2B, there are business participants on both sides, whereas in B2C there is typically a seller and a consumer. In the first case, the purchase decision is based on need (because the other company needs it), while in the second case, it is based more on expectations than on needs. B2B has many different sellers and stores, while B2C has only one provider.

In B2B, the focus is on raw data that is provided to other businesses, while in B2C, the focus is on producing something for consumers. B2B transactions involve managing direct sourcing contracts, which involves negotiating terms that set prices and various other factors, such as volume-based pricing, transportation and logistics preferences, etc. On the other hand, B2C transactions are simpler, with spot sourcing contract management offering a retail price for each item sold. Time is also different, as B2B has a slower process than B2C, where transactions are completed in shorter periods (minutes or days).

B2B usually requires an initial investment, while B2C does not need a company to spend money on infrastructure. Another difference is that in B2B, which lags behind in digital transformation, you have to deal with back office connectivity and billing from several different partners and vendors, while B2C results in smoother transactions, since options like the cyber-cash allow the company to accept a greater variety of payment options.

B2B Marketing

Business-to-business marketing, also called industrial marketing, is the application of marketing fundamentals to the type of business relationships characteristic of B2B markets.Industrial marketing has experienced a boom in recent years. Some of the most used digital marketing techniques in the B2B sector include inbound marketing, email marketing, ecommerce, search engine advertising and social networks, display advertising, among others. Niche publications (specialized magazines, supplier guides, newspapers, etc.), experiential marketing, events and trade fairs are also used.

In trade marketing, marketing between companies is considered to be the commercial relationships that a company has with its wholesalers or retailers.