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B2B E-Commerce

B2B E-Commerce

Business-to-business e-commerce involves the trade of goods and services between businesses over digital channels.

Types of B2B e-commerce

B2B e-commerce can be classified into a number of types, including B2B2C, wholesale, manufacturing, and distribution.

B2B2C

B2B2C (business to business to consumer) is a business model where a company sells their product or service in partnership with another company to an end customer. In this business model, the end customer understands that they are buying a product or using a service from the company that initiates the product or service, which differs from the practice of selling products under a white label.

As B2B companies grow and face challenges related to the increase in scale, they may opt for partnering with other businesses and transition to a B2B2C model to preserve service quality and sales efficacy. As of September 2018, the business-to-business e-commerce market in the US was evaluated at $900 billion. According to Digital Commerce 360, with the development of e-commerce as a popular sales channel, B2B buyers such as corporate procurement directors are frequently making purchases online.

For instance, a B2BecNews survey of 110 business buyers at companies in a diverse range of industries, ranging from automotive and healthcare to food and beverage to consumer products, found that nearly half of companies (48.3%) purchased products online at least once per week, and 16% carried out online purchases multiple times each week. It had also been discerned that B2B buyers were shifting much of their corporate purchasing online. The B2BecNews survey found that 48.6% of all companies conducted 50% to 74% of all their corporate purchases online, including 23% that did at least 75% or more through B2B e-commerce.

Wholesale

Wholesale is the purchase of goods in bulk directly from the manufacturer or distributors. Wholesale B2B models are present in many industries, including retail, food service, construction, and medical, among others. Traditionally, wholesale B2B transactions occurred over the phone, via email, or by way of spreadsheet order forms. With wholesale e-commerce, the process is digitalized using a B2B e-commerce platform.

Manufacturing

Manufacturers produce finished goods on a large scale by utilizing parts and raw materials in combination with manual labor and machines. In a B2B model, the finished goods are sold to other manufacturers or wholesalers.

Distribution

Distributors work with manufacturers to bring visibility to the goods they are producing. In an e-commerce model, the logistics of the sale happen online, often through an e-commerce platform. Digital distribution creates a greater opportunity for growth. Just as other B2B models, distributors strive to shorten the lead time from sale to delivery and for improvement in customer experience.

Episerver B2B survey

In response to a digital experience survey conducted by Episerver in 2019, 41% of B2B customers said self-service functionality would make it easier to do business online. However, self-service functionality was low on B2B leaders' list of priorities in 2020. Instead, the top website feature and functionality investments B2B leaders said their companies were looking to adapt in 2020 with personalized content (36%) and improving the mobile experience of their websites (33%).

B2Bs also planned to invest in web analytics or business intelligence (51%), email marketing systems (49%), and B2B ecommerce platforms (38%) by 2022. According to Episerver’s B2B Digital Experiences Report 2019, 60% of B2B enterprises said they were likely to use AI to replace human workers for marketing functions by 2022.

According to research conducted by Accenture Strategy in 2017, 73% of B2B executives said that customer expectations for personalized experiences have increased significantly over the years. As sales environments are becoming more digital and less reliant on human interaction, opportunities to sell are coming from less traditional places. Based on the research findings, customers are self-reliant, cautious, social media-driven, and demanding. The research found that:

  • The majority of customers are about halfway through the buying process before the first meeting with a company representative.
  • More than 90% of decision makers never respond to cold outreach marketing methods.
  • 61% of all B2B transaction start online and 58% use social media as a research channel.
  • B2B customers desire the same level of personalized service as they receive in B2C channels.
B2B e-commerce platform advantages

B2B e-commerce platforms offer a variety of features and advantages:

  • Reaching new customers: A B2B e-commerce site with public-facing catalog pages can be used to reach new customers. BigCommerce posits that B2B buyers both prefer and expect to be able to make their purchases online as the digital process is efficient and suitable for making repeat purchases.
  • Management of suppliers and customers: According to BigCommerce, B2B e-commerce offers better management of both the suppliers and customers. Business management software can be employed to obtain data about customers' shopping practices, which can be used to create personalized shopping experiences.
  • More revenue generated by existing customers: E-commerce enables business owners to implement automated cross-selling and upselling recommendation programs.
  • Data analytics: B2B e-commerce creates opportunity for organizations to run analytics campaigns. This feature is available in every B2B e-commerce platform that provides in-depth analysis of sales effectiveness, whereby various types of reports may be generated to that provide insight into business operations.
DHL's B2B e-commerce market projections

International courier company DHL predicted in 2021 that the global B2B e-commerce market size will increase more than 70% and reach $20.9 trillion by 2027. According to a DHL white paper, the B2B e-commerce market was worth $12.2 trillion in 2019. The report estimated that by 2025 80% of all B2B sales interactions between suppliers and professional buyers will take place in digital channels.

COVID-19 impact

DHL claimed that the outbreak of COVID-19 contributed to driving digital transformation and significantly accelerated Business-to-Consumer (B2C) and B2B e‑commerce growth, adding that millennials who are professional B2B decision makers and accustomed to technology are its main drivers. According to DHL, millennials accounted for 73% of all professional B2B purchasing decisions. Furthermore, the company calculated that the B2C e‑commerce volumes within the DHL Express network increased in 2020 by approximately 40%, compared to 2019.

Grand View Research B2B e-commerce research

Grand View Research (GVR) estimated the value of the global B2B e-commerce market at $6.64 trillion in 2020 and predicted a compound annual growth rate (CAGR) of 18.7% from 2021 to 2028. GVR opined that the complexity of products or services offered by B2B vendors is an obstacle to the penetration of the B2B e-commerce market, and that the proliferation of technology will cause the market to undergo growth over the forecast period.

North America B2B e-commerce market size, by deployment type, 2017-2028 (USD Billion)
COVID-19 impact

The research firm also claimed that the COVID-19 pandemic had a significant impact on the B2B e-commerce market as consumers engaged in more online shopping. Overall, the pandemic had resulted in an increase in the number of online orders, consumer behavior changes, supply chain disruptions, and closure of physical stores. While retail sales declined in 2020, e-commerce sales witnessed growth. According to the firm, the pandemic outbreak had motivated some businesses to migrate to online platforms to cater to customers worldwide.

B2B e-commerce in North America

North America constituted approximately 14% of the global B2B e-commerce revenue in 2020. Grand View Research posited that business buyers in the region have adopted e-commerce for procurements and that a significant portion of B2B sales in North America involved reorders and straightforward transactions with customers requiring no value-added services (VAS).

Deployment type insights

According to GVR, the intermediary segment dominated the B2B e-commerce market in 2020, with a revenue share exceeding 50%. Intermediaries are organizations that regulate trade between manufacturers and end customers. This deployment model enables sellers to reduce costs stemming from website hosting, logistics, and customer support services. GVR claims that the intermediary model is beneficial for scaling businesses and will contribute to the intermediary-oriented segment growth in the B2B e-commerce market.

In addition, the firm projects the supplier-oriented B2B e-commerce model to register a CAGR over 15% from 2021 to 2028. The supplier-oriented B2B model aims to help customers collect information about suppliers in unfamiliar regions or countries. For instance, the multinational computer technology company Dell sells over 85% of its computers to businesses through a supplier-oriented model.

Application insights

Within the B2B e-commerce market, the home and kitchen segment secured the highest revenue share of over 15% in 2020 and was not affected by COVID-19. The demand for small appliances and other kitchen products increased in 2020 as people spent more time at home, but B2B vendors had difficulty fulfilling orders due to localized lockdowns.

GVR informs that the demand for consumer electronics through online channels also underwent a rise during the pandemic, predicting that the segment will register a CAGR exceeding 17.0% from 2021 to 2028. A variety of pre-pandemic spending plans, including travel and home renovations, were replaced with investments in durables and electronics, including laptops, smartphones, ACs, and more. The new remote working standard further led consumers to invest in electronics. These factors drove the demand for consumer electronics in the first half of 2020 and GVR expects the trend to continue over the subsequent years.

Regional insights

Asia Pacific was a dominant regional market within the B2B space, having secured over 60% of the overall revenue share in 2020. An increase in the number of B2B vendors contributed to e-commerce growth in the region, among other factors. GVR also anticipates North America to register strong growth over the forecast period as the prevalence of large companies such as Amazon, eBay, and others has already established strong B2B sales channels in the region. GVR also proposes that advances in AI and cloud technology will further help drive customer experience and create avenues for additional growth in the e-commerce market.

Market share insights

GVR observes that the global B2B e-commerce market is highly fragmented with a mix of small, medium, and large-sized enterprises transitioning to an online-based business model. The firm points out that collaborations and partnerships will help local vendors cater to global markets at a faster rate.

Digital Commerce 360 market report

The 2021 B2B E-commerce Market Report by Digital Commerce 360 points out that an increasing number of business buyers are doing less purchasing by phone, fax, and manual transactions, and more online. According to the analysis contained in the report, in 2020 the total B2B electronic sales grew by 9.6%, compared to over 10% in the previous years. In addition, sales on B2B e-commerce sites grew by 10% to $1.39 trillion in 2021 from $1.26 trillion in 2019. Combined with e-procurement sales, B2B e-commerce sales in 2020 increased by 11.8% to $2.19 trillion.

B2B digital sales channels, including e-procurement, electronic data interchange (EDI) and other channels in addition to e-commerce sites, increased by 9.6% to $9.92 trillion in 2020 from $9.06 trillion in 2019. Moreover, in 2020, B2B sellers witnessed a significant increase in demand for digital commerce sales channels from B2B buyers as some traditional sales channels like distribution branches were shut down due to COVID-19.

Research and Markets reports

ResearchAndMarkets.com's report on the global business-to-business e-commerce market size estimates that it will reach $20.9 trillion by 2027, expanding at a CAGR of 17.5% from 2020 onwards. According to the report, the intermediary-oriented deployment type segment constituted the largest market share in 2019. This had been attributed to the increasing inclination of buyers and sellers to adopt this type of deployment model.

It had been projected in the report that the supplier-oriented deployment type segment would undergo substantial growth over the forecast period, owing to the presence of a number of suppliers on a common platform. Further, it demonstrates that the consumer electronics segment accounted for a market share exceeding 18.0% in 2019, owing to increased demand of electronics products demand among consumers and availability of products on online platforms.

Asia Pacific

Data in the report had also shown that Asia Pacific held the largest revenue share, which exceeded 65.0% in 2019 and was anticipated to expand at a CAGR of more than 18% over the forecast period. This growth was attributed to rising internet penetration and trend of conducting trade through online platforms. Furthermore, the analysis pointed to the improvement of user experience being a priority for major players in the B2B e-commerce segment.

Growth by sector

According to another report by Research and Markets that focused on the verticals within B2B e-commerce, the fashion and apparel sector was shown to have been growing at a significant CAGR in 2019, attributed to the rising trend of online shopping, as well as the consumer electronics segment, which rose due to the increasing penetration of smartphones and the internet globally. Electronic products trade in e-commerce includes mobile phones, laptops, home audio systems, smartwatches, and more.

Forrester Research

Forrester Research indicated that B2B e-commerce was one of the fastest-growing segments for new and established companies in 2019. The research firm also estimated that in the United States, B2B e-commerce will reach $1.8 trillion and account for 17% of all B2B sales in the U.S. by 2023. In addition, Forrester Research found that 74% of B2B buyers conduct research online before making a purchase. The devices used to make purchases include smartphones, tablets, and other mobile devices.

Net Solutions

A 2020 study conducted by Net Solutions revealed that 91% of B2B customers use mobile devices to search for a product, and 25% use them to make a transaction.

Other B2B market research and statistics

According to survey data, in 2018 48% of companies conducted 50–74% of all corporate purchases online, and 23% of companies carried out 75% or more of their purchasing online.

2020/2021 B2B e-commerce statistics

FinancesOnline has collated and published survey data pertaining to B2B e-commerce from various sources, including Accenture, Demand Gen Report, McKinsey & Company, Content Marketing Institute, and more. Among the collated data are the following findings:

  • One third of B2B buyers said that their expectations regarding customer experience have increased.
  • The five most important factors for B2B buyers evaluating solutions providers were: features or functionalities (73%), pricing (72%), reviews (59%), deployment time or ease of use (56%), and the provider’s ability to solve a pain point (47%).
  • Improving aspects of customer experience such as front-end sales and post-sale support can increase revenue by 5% to 10%.
  • 91% of executives said that they expect their business partners to carry out a more significant function in their operations.
  • According to 60% of organizations, external parties influenced 35% of their annual revenue.
  • 63% of B2B enterprises have collaborated with start-ups and digital ventures to improve their operations.
  • 6% of companies in the B2B industry are putting more resources into building their network.
  • Some of the key B2B marketing strategies that companies use today are: creating social media content (95%), creating blog posts or short articles (89%), sending email newsletters (81%), hosting in-person events (73%, and publishing videos (71%).
Key marketing strategies used by B2B Companies in 2020
Source: Content Marketing Institute
E-commerce revenue of small and medium B2B companies in 2020 before and during COVID-19, by country

According to Statista, compared to before the outbreak of COVID-19, sales fulfilled through online channels increased among small and medium business-to-business companies. A study conducted in the UK revealed that small and medium businesses (SMB) selling products and services to other companies generated 19% of their revenue through e-commerce before COVID-19, while the share rose to 25% during the pandemic. However, in the United States, the e-commerce share of revenue reported by small- and middle-sized companies was significantly lower than the average values exhibited by all the surveyed B2B sellers.

Source: Statista

B2B e-commerce companies

E-commerce and consumer goods companies

Timeline

Further Resources

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3. SMEs in the online platform economy | The Digital Transformation of SMEs | OECD iLibrary

Web

References

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