Business-to-business
Business-to-business (B2B or, in some countries, BtoB) is a situation where one business makes a commercial transaction with another. This typically occurs when:
Business-to-Business companies represent a significant part of the United States economy. This is especially true in firms with 500 employees and above, of which there were 19,464 in 2015,[1] where it is estimated that as many as 72% are businesses that primarily serve other businesses.[2] One possible argument of economics to explain the levels of Business-to-Business activity is that it allows for business segmentation.[3]
B2B is often contrasted with business-to-consumer (B2C) trade.
Organization[edit]
B2B involves specific challenges at different stages. At their formation, organizations should be careful to rely on an appropriate combination of contractual and relational mechanisms.[4] Specific combinations of contracts and relational norms may influence the nature and dynamics of the negotiations between firms.
Business to business model[edit]
Vertical B2B model[edit]
Vertical B2B is generally oriented to manufacturing or business. It can be divided into two directions: upstream and downstream. Producers or commercial retailers can have a supply relationship with upstream suppliers, including manufacturers, and form a sales relationship.[5] As an example, Dell works with upstream suppliers of integrated circuit microchips and computer printed circuit boards (PCBs).
A vertical B2B website can be similar to the enterprise's online store.[5] Through the website, the company can promote its products vigorously, more efficiently and more comprehensively which enriches transactions as they help their customers understand their products well. Or, the website can be created for business, where the seller advertises their products to promote and expand transactions.
A good example of a vertical B2B model is manufacturers vs wholesalers.
Horizontal B2B model[edit]
Horizontal B2B is the transaction pattern for the intermediate trading market. It concentrates similar transactions of various industries into one place, as it provides a trading opportunity for the purchaser and supplier, typically involving companies that do not own the products and do not sell the products. It is merely a platform to bring sellers and purchasers together online.[6] The better platforms help buyers easily find information about the sellers and the relevant information about the products via the website.
A good example of horizontal B2B model is bankers vs corporate lawyers.
Growth of e-procurement[edit]
A 2022 Amazon report highlighted a "rapid transformation of B2B e-procurement in recent years", with 91% of the B2B buyers surveyed in their study stating that they preferred online purchasing.[7]
B2B2C[edit]
B2B2C means "business-to-business-to-consumer". According to the TechTarget website, the purpose of the terminology is to "extend the business-to-business model to include e-commerce for consumers". B2B2C aims to "create a mutually beneficial relationship between suppliers of goods and services and online retailers".[13] According to Lomate and Ramachandran, it enables manufacturers (the first "B" in B2B2C) to connect with, understand and serve their end customers ("C") without undermining their sales and distribution networks, including online sellers (the second "B") or excluding them from continuing customer engagement.[14]