Practical Ecommerce

B2B Ecommerce Growing; Becoming More Like B2C

While B2C ecommerce gets the most media attention, B2B ecommerce is the bigger revenue generator, both globally and in the United States. The entry of ecommerce giants such as Alibaba and Amazon into B2B has accelerated the trend of B2B websites becoming more like B2C. Online B2B sellers now recognize that the customer experience in a B2B environment is just as important as the customer experience for B2C.

Consequently, expectations have grown and more B2B buyers require a simple ecommerce experience that mimics the consumer purchase model. Detailed specifications and product descriptions are crucial. Amazon Supply — the company’s B2B portal — offers free two-day shipping on orders above $50, detailed specifications, and an underutilized, but available, customer review section.

Amazon Supply offers free two-day shipping on orders above $50 and detailed specifications.

Amazon Supply offers free two-day shipping on orders above $50 and detailed specifications.

B2B Market Size

Globally, by 2020 the B2B ecommerce market will be twice as large as the B2C market — $6.7 trillion vs. $3.2 trillion  — according to research provider Frost & Sullivan. The company predicts that China will emerge as the largest online B2B market with $2.1 trillion in sales by 2020.

In the U.S., where B2B ecommerce is already twice as large as B2C ecommerce, Forrester Research expects B2B ecommerce sales to reach $780 billion and represent 9.3 percent of all B2B sales by the end of 2015. The firm predicts that B2B ecommerce will exceed $1.1 trillion and comprise 12 percent of all B2B sales in the United States by 2020. The firm forecasts a compound annual growth rate of 7.7 percent in B2B ecommerce over the next five years, resulting from the need by B2B companies to reduce their costs. Buyers also benefit from the self-service automated approach to purchasing, According to Forrester, 7.3 percent is the average conversion rate on B2B ecommerce sites, compared to 3.0 percent for consumer retail sites.

Alibaba's entrance into the B2B market has accelerated the trend of B2B websites becoming more like B2C.

Alibaba’s entrance into the B2B market has accelerated the trend of B2B websites becoming more like B2C.

Largest Industries

Petroleum and petroleum products, as well as pharmaceuticals and druggist sundries, represent the largest categories today within B2B ecommerce, according to Forrester, and will continue to claim the largest share of all B2B ecommerce through 2020. The pharmaceutical industry will see 20 percent of total sales coming from online sources by 2020, the highest penetration of all industries. However, the fastest growing segments between 2015 and 2020 will be durable goods categories: motor vehicles; motor vehicle parts and supplies; electrical and electronic goods; and machinery, equipment, and supplies.

B2B Ecommerce Business Models

Different B2B business models exist and the best choice depends on the size and complexity of a B2B company and its available expertise.

  • One-to-many. In a direct model, companies have their own B2B online store, where customers can purchase goods. Industrial supplier Grainger, one of the first catalog companies to move online, uses this straightforward model. In a private consortium, model companies create their own network that includes suppliers, distributors, retailers, and shippers. Only companies with substantial purchasing clout and a sophisticated supply chain infrastructure can make this work. Walmart Retail Link is an example of a private consortium.
 Grainger was one of the first B2B catalog companies to move online.

Grainger was one of the first B2B catalog companies to move online.

  • Many-to-many. The many-to-many model involves companies joining an extensive online B2B marketplace. This can be a private marketplace in which several companies choose to form a closed network, or a public marketplace model, which is open to all suppliers (some criteria for joining may exist) and is usually administered by a third-party with a recognized name and marketing and logistics expertise. Amazon Supply and Alibaba are examples of public marketplaces.

Trends

B2B online buying will increase as many enterprise and procurement software vendors are making mobile versions of their products available and employees of the purchasing companies will use smartphones and tablets to buy goods anywhere and anytime.

According to Forrester, B2B companies can substantially decrease sales costs — up to 90 percent — by guiding customers to an online self-service ecommerce environment. In a 2013 Forrester survey, 52 percent of B2B ecommerce executives surveyed reported that migrating formerly offline-only customers to online purchasing reduced their customer support costs. Grainger, a pioneer in B2B ecommerce, has stated that 94 percent of its 2014 revenue growth came from online sales.

Differences still exist between B2B and B2C ecommerce — prices fluctuate often with customer-specific pricing and volume-based discounts, and impulse buying does not exist. However, characteristics of B2C ecommerce have made their way to B2B websites. Among them are:

  • Personalization and customization;
  • Interactive catalogs;
  • Customer reviews;
  • Real-time inventory availability.

Many B2B buyers now prefer to both research products and buy online. Strong growth will continue over the next five years, especially purchases via mobile devices.

Marcia Kaplan
Marcia Kaplan
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Comments ( 12 )

  1. Ozan Bektas April 9, 2015 Reply

    Hi Mrs. Kaplan ,
    Its realy useful content.
    I am looking forward to your new contents
    Regards

  2. Justin King April 12, 2015 Reply

    I agree with the premise of B2B becoming more like B2C, but I think what is more interesting is how B2C is becoming more like B2B. When you look at Amazon.com and their Prime membership, they are offering account level services to their buyers. Contract pricing (free shipping for now, but don’t be shocked when you actually get better pricing), order approvals for my other family members buying on my account. The logged in experience really is closer to what we see in great B2B (ala Ferguson, Grainger, MSC) then tradition B2C.

    Thoughts?

  3. Marcia Kaplan April 14, 2015 Reply

    I think B2B has done more changing to become more customer friendly. I remember when B2B sellers just threw up a catalog and customers still had to call a sales rep. to place an order.
    I think Amazon is just trying to differentiate itself and offer a higher level of service than competitors in the B2C space.

  4. David Held April 20, 2015 Reply

    Marcia, I agree that from a user experience perspective that B2B has done more to adopt B2C than the other way around. However, Justin is correct as well in that from a business model perspective, B2C is moving towards relationships typically seen in B2B. More of my thoughts on this topic can be found here: https://www.linkedin.com/pulse/should-b2c-more-like-b2b-david-held

  5. Janet Henderson April 28, 2015 Reply

    Great article on the evolution of online B2B. When two companies do business, one of them becomes a customer, and the business customer is just as important as the individual. The experience must be favorable and memorable or they might go somewhere else. Every customer is matters, no matter the size.

    Janet Henderson
    Head of Marketing
    http://www.websitedesignhub.sg/e-commerce/

  6. Diego Reyes May 5, 2015 Reply

    Great Article !

    Diego Reyes
    eCommerce Director
    http://www.odegiecommerce.com

  7. Ron Steward May 30, 2015 Reply

    B2B eCommerce focus more on the whole sellers and B2C focus more on the end users.But now the B2B is also playing its role as B2C. Both are growing and blurring their difference boundaries.All online sellers platforms are moving towards the concept of one stop shop to facilitate more and more customers,suppliers and vendors.

  8. Nirav Sheth July 3, 2015 Reply

    It’s perfectly an attribution of the growth of eCommerce that is now mushrooming in great pool of online vendors. Merchandises getting online would have diverse promotional strategies and hence different categories and territories to target. Better earns the best from something. Online retailing is a strongly born concept. Sale is just global now!

  9. bella July 27, 2015 Reply

    this is also the trend on http://www.dhgate.com with more c class customers than b class customers.

  10. Andy Abbott January 13, 2016 Reply

    we found it difficult to get any business from b2b platforms for wholesale of products like wheat flour, wheat bran, soybean meal sunflower meal, premix for animal feeds, from Eastern Europe. Other story is Getting relevant regional price information (by HS codes). It is not a part of service of any mentioned b2b platforms. However prices are changing and it is difficult to track them even for FTE – If y know how let me know –

  11. KARTHIKEYAN January 23, 2016 Reply

    Svasam group planning to emerge with unique concepts in b2b e-commerce to compete with Amazon supply and Alibaba. http://www.bizbilla.com

  12. ACID21com February 26, 2016 Reply

    Interested in German B2B E-Commerce Services? This is what you want: https://www.acid21.com/b2b-e-commerce/

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