B2B eCommerce Definition: What Is B2B eCommerce?
If you’re a wholesale distributor or manufacturer, and you’re looking to grow your business, B2B eCommerce is likely either already part of your current business model, or soon will be. But what is it––what's a good B2B eCommerce definition? B2B eCommerce is defined by Investopedia as, “a type of commerce transaction that exists between businesses, such as those involving a manufacturer and wholesaler, or a wholesaler and a retailer.” That’s a very broad B2B eCommerce definition, and not surprisingly, B2B eCommerce can indeed include transactions across a broad range of industries.
Getting to a Good B2B ecommerce Definition
To get a handle on what B2B eCommerce is, it’s helpful to break the concept down into its two component parts: the B2B or business-to-business component, and the eCommerce or online transaction component. When you think of it this way, the definition of B2B eCommerce can be quite broad. The automotive industry is a great example of an ecosystem of complex B2B relationships. Within automotive, there is a huge supply chain that represents companies that do everything from supply the initial raw materials (metals, glass, rubber, etc.), to the manufacturing of not just the car itself but all the components of the car, from radios to headlamps, computer systems and more. The supply chain can include hundreds of businesses and B2B customer relationships to produce a single car that will then be sold to the end consumer. The eCommerce component speaks to how all these different types of businesses may use the Internet to transact and manage relationships with one another. Although the terminology “B2B eCommerce” has only been in use for about a decade, B2B eCommerce business processes have actually been around a lot longer, going back to as early as the 1960s and 1970s. In 1975, the first EDI (electronic data interchange) standards were published and within a few years, manufacturers like GM and Ford, and retailers like Sears and K-Mart, had mandated that their suppliers use EDI. EDI is now a standard business practice, used by more than 90% of Fortune 500 companies. eCommerce, of course, is no longer limited to EDI. Over the last 40 years, eCommerce options have expanded to include many different types of transactions. A recent report in eCommerce World identified four major types:
- eCommerce Site: a company’s own e-commerce site that is open to all or password-protected for approved customers.
- Punch-out or web procurement: web-connected procurement software linked directly to the customer’s enterprise resource planning system.
- Vertical market networks: a commercial vertical market network or industry web exchange such as Covisint for vehicle makers and Exostar for defense and aerospace manufacturers.
- Open online marketplaces: sites such as those operated by Alibaba Group or Amazon Business.
B2B eCommerce Examples
The 2016 edition of B2B eCommerce World’s B2B eCommerce 300 report lists some of the world’s biggest companies as users of B2B eCommerce, and a growing number of small companies are benefiting from it too. The 300 companies featured in the report are projected to grow web sales by 13.3% this year to $547.1 billion (from $482.79 billion in 2014)—figures that easily eclipse the U.S. B2C e-commerce market. Companies included in the report include manufacturers and distributors such as 3M, Boeing, Coca-Cola, ConAgra, Microsoft, Nike and many other of the world’s biggest companies, as well as smaller companies like Four Seasons General Merchandise, Fox Outdoor and Augusta Sportswear. Some companies are using large marketplaces either targeted at a specific market vertical or one with a broader appeal, like Alibaba or Amazon Business, to reach their customers. Other companies are setting up their own eCommerce websites, which can range from simple to complex. This option allows businesses to customize their site for their exact needs. For instance, Augusta Sportswear – a sportswear manufacturer and distributor – has developed a website that allows it to sell sports uniforms and corporate apparel directly to schools, teams and businesses. On Augusta’s site, customers can research and select fabric options and customize the apparel they select with team names, mascots, colors, and team member names. B2B eCommerce is a very broad business concept that can be defined in a number of ways. The possibilities for companies to benefit from B2B eCommerce are equally broad, allowing companies to choose from a wide range of options to support their business objectives. What's your B2B eCommerce definition? Is your company using or planning to use B2B eCommerce in 2016? Tell us about it in the comments.