B2B eCommerce Definition: What Is B2B eCommerce?
This blog post will cover:
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. Let's break down B2B eCommerce even further:
B2B eCommerce stands for business to business electronic commerce and refers to online transactions between businesses, often involving wholesale distributors selling products to retail buyers. Manufacturers may also sell directly to retailers through B2B eCommerce.
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. Here are four major types of transactions that the industry is seeing:
- 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 Companies
The 2018 edition of B2B E-Commerce World’s B2B E-Commerce 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. Below is a list of companies from the report with more than $10 billion in B2B sales, as well as their growth percentages over 2017:
Top B2B eCommerce Companies
- Cisco Systems Inc. -
B2B eCommerce Sales Growth: 44.0%
- Apple Inc. -
B2B eCommerce Sales Growth: 5.0%
- General Motors Co. -
B2B eCommerce Sales Growth: 9.2%
- Ford Motor Co. -
B2B eCommerce Sales Growth: 2.3%
- General Electric Co. -
B2B eCommerce Sales Growth: -6.7%
- US Foods Inc. -
B2B eCommerce Sales Growth: 6.2%
- Nike Inc. -
B2B eCommerce Sales Growth: 6.1%
The 300 companies featured in the report grew their online B2B eCommerce sales by 7.1% in 2017 to $563.7 billion—with B2B eCommerce companies greatly contributing to market projected eCommerce sales of $1 trillion in 2019. Companies in the report include manufacturers and distributors such as Cisco Systems, Apple Inc., General Electric Co., U.S. Foods Inc., Nike, Microsoft, and many other of the world’s biggest companies, as well as many small companies in the space.
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 B2B eCommerce websites, which can range from simple to complex. This option allows businesses to customize their site for their exact needs.
Check out B2B eCommerce examples from companies using our B2B eCommerce portal, Handshake Direct.
One company highlighted in the report, Protolabs—an industrial grade 3D printing firm—uses B2B eCommerce to meet a growing demand for custom-manufactured industrial parts. In addition to experiencing impressive growth of 9.4% in their B2B eCommerce sales in 2018, the company has received heaps of praise from their business customers who enjoy a seamless self-service ordering experience through their B2B eCommerce portal.
How does B2B eCommerce fit into your business?
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.
But what about your company? Can you see any ways that your bottom line might benefit from implementing B2B eCommerce to enable customer ordering?
At Handshake, we've seen great performance from our customers using Handshake Direct. On average, our B2B eCommerce customers have reported:
- 17% increase in average order values
- 11% increase in average order volume
- 73% decrease in data entry costs
Do the math! You could be selling online through a B2B eCommerce portal and experiencing dramatic results like these, today.
So, what's your B2B eCommerce definition? Want to see Handshake’s B2B eCommerce software in action? Schedule a 10-minute call with a Handshake specialist here.