B2B 101: A complete guide to B2B international trade

Alibaba.com JUNE 15, 202115 MIN READ
B2B 101: A complete guide to B2B international trade

In recent times, the business world has seen more international trades than at any time in history. This is, of course, largely due to the widespread use of the internet and social media.

The world wide web created a platform for not just individuals but also businesses from all around the world to interact with one another. Consequently, this has created a fertile ground for the growth of B2B international trade.

As a business owner, you need to go beyond knowing the basics of B2B transactions. You should also understand the relationship between international trading and online B2B marketing. This knowledge is crucial to experiencing growth and expansion as a business in relation to e-commerce.

That's why we've created this guide. After reading this article, you'll have all the information you need to place your business on the international market scene.

What is International Trade?

Simply put, international trade is the buying and selling of goods or services across national borders. This trade may be either imports or exports. Imports mean that goods or services are brought into the country. Exports, on the other hand, refer to goods and services sold to another country.

These transactions are beneficial to countries for several reasons, including:

  • Variety: International trade provides a country with varieties of a specific product. This, in turn, gives citizens a wide array of options to choose from. Not only does this improve their quality of life, but it also helps the country grow as a whole.
  • Reduced dependency: International gives a country’s local market access to an unlimited number of customers. Reaching a global market is important as it reduces the economic pressure on the local market. This aids in the growth of a country’s economy.
  • More Employment: Since international trade gives a country a larger customer base, it requires more production of goods. This, in turn, creates a need for newer industries to cater to such production. Creating more companies helps generate more employment. This brings down the country’s unemployment rates.
  • Availability: There are certain commodities that a country cannot produce. International trade provides such countries with access to those kinds of products.
  • Use of Excess Produce: Via international trade, countries can sell their excess products to foreigners. By doing that, they can earn foreign exchange.
  • Fosters Peace and Goodwill: International trade helps to foster peace and goodwill among countries. Since they become economically interdependent, they develop a close cultural relationship.

Of all the types of transactions that take place within the international marketplace, B2B stands out. The term, B2B, refers to transactions that take place between two businesses. As such, B2B international trade entails the exchange of goods and services between businesses from different countries.

This trade may involve a company supplying raw materials to another company. The buying company then processes them into finished products. Other times this transaction can involve a company taking the place of wholesalers while the other company acts as a retailer.

9 Characteristics of B2B Market

B2B transactions have specific features that set them apart from b2c trading. These features are key in understanding how B2B trading operates. Some of the characteristics of the B2B market include:

#1. A complex decision-making unit

Making a decision is easier for one individual than it is when it involves many people. That's why decision-making in b2c transactions is simpler. The customer alone decides if they want to buy from the business or not.

However, in B2B transactions, the decision-making process is more complex. This is because there are multiple steps involved in making a decision as a business. There are also various individuals involved.

These individuals are usually specialists in one area or the other. They come together to use their combined knowledge to decide on what is best for the company. This often leads to long deliberation periods before they take any step.

However, not every decision a business makes requires deliberations. Some decisions like purchasing a stapler are low risk. A junior employee can make such decisions without calling for a meeting.

What determines the need for deliberation is the risk and value attached to the products. Based on such risks and values, products fall under four categories which are:

  • Low-risk, low-value purchases: These are products that do not require deliberations. Little thought goes into purchasing such products. This is because making a wrong decision while buying them poses little to no financial risk. Furthermore, the nature of these products makes them easy for an employee to make the purchases themselves. Examples of such products include paper clips, safety pins, etc.
  • Low-risk, high-value purchases: These are commodities like raw materials. Purchasing this category of products requires the assistance of specialists. It also involves the approval of the company’s senior executives. As such, deliberations must take place before the company purchases the product. These deliberations are necessary so that the company can buy quality products at a minimized price.
  • Low value, high-risk products such as insurance packages. These purchases require the presence of experts and top officers in the company. This is because the risk is in the product and not on the price. Therefore, before any such transaction can occur, the company must consult with an expert on the matter.
  • High value, high-risk purchases. These are products that call for deliberations by every board member and decision-making unit. For instance, a CFO, CEO, Purchasing Director, Production Director, and other top management department leaders will need to deliberate before purchasing plant equipment.

The implication of these for B2B marketers is that they will have to show a high level of expertise when interacting with the target audience. Showing a high level of expertise will help convince a buying company to purchase a product.

#2. Rational buyers

In b2c markets, a consumer can decide to buy a product based solely on sentiments. However, this is not the case when a company wants to buy a product. This is because various specialists come together to deliberate on whether or not the company should make a purchase.

This gives little to no room for sentiments. As such, companies will always go for products that offer more benefits irrespective of whose feelings might get hurt.

The implication of this is that B2B marketers must strive to make their products top quality. Otherwise, they can lose their customers to another company selling better products.

#3. Deeper product description

A company selling a product or service will have to describe its products in a way that convinces the target audience. They must bear in mind that the international company they are selling to consists of experts and specialists. The description of the product must, therefore, appeal to them.

For b2c transactions, a selling company may not need to go into details of how a product works to convince consumers. However, in B2B transactions, a supplier will have to explain to a buying company how a product works to achieve its goal.

The effect of this is that a selling company has to show some level of expertise in selling their products to another company. If they hope to convince purchasing companies, they must learn to give a detailed analysis of their products. That way, they can get new customers.

#4. Limited customers

In B2B marketing, it is common to see a selling company with a limited number of customers. However, this limited customer base makes sales that dominate the ledger. This is because these companies buy in large quantities. The quantity that a company purchases will often outweigh those of a regular customer. It doesn’t matter that the customer uses the product very often.

The implication of this for suppliers is that they can keep records of the demands of their customer companies. This allows a supplier to know what the customer wants. As such, they can build long-term relationships with their consumer companies.

Furthermore, purchasing companies are usually looking for partnerships. They want a company they can trust to produce quality stocks. But that’s not all. They also want a company that will hold on to stocks on their behalf.

As a B2B marketer, you must be ready to provide these value-added services to your customers. Otherwise, you may lose them to another company that’s prepared to do so.

Providing these services will further cement the relationship between both companies.

#5. Fewer customer-based segments

As already stated, B2B markets involve a limited number of customers. This limited number of customers makes it easy to categorize customers into different segments. You categorize them based on their needs and behaviors.

When it comes to B2B transactions, there are fewer behavioral-based segments. A buying company will hardly allow whims, insecurities, indulgences, and sentiments to influence their purchase of a product. This is because the purchase is not for an individual but a group. Also, different members play a role in the decision-making.

These features result in fewer segments which are:

  • Companies that focus on price. These companies are always price-conscious. They are always looking for means to beat down the price of a product. They’re more focused on the price of a product than on its quality.
  • Quality and brand-focused companies. Companies such as this are willing to pay any amount for a product, as long as what they are getting is top quality. Companies in this segment are usually medium to large-scale organizations.
  • Companies concerned about after-service. These companies are interested in the extra services that come after the purchase of a product. Some of these services include deliveries, technical advice e.t.c. These companies can be small, medium, or large scale.
  • Companies focused on partnerships. These companies are all about establishing a long-term relationship with a supplier. They try to seek out a supplier who never fails to deliver the described products and services. These companies are usually large-scale companies.

The effect of these for marketers is that they will have to carry out their research to find out which segment their customers fall under. This will help them to satisfy the needs of each type of customer. By doing this, it will help the marketers to create long-term relationships with any of the companies.

#6. Personal relationship

A peculiar feature of B2B transactions is the position of personal relationships. Oftentimes, the supplier’s sales and technical representatives visit the customers. By doing this, they are able to build trust and establish personal relationships. Consequently, this creates a long-term buyer-customer relationship that can span for years.

What this means for suppliers is that they should maintain contact with customers to build trust and a strong relationship.

#7. Long-term buyers

B2B buyers often repeat purchases. This is because both the supplier and the customer are interdependent. For instance, a company that buys raw materials will repeat purchases if they plan to continue producing finished goods.

The significance of this for the B2B marketer is that they will need to learn how to retain their customers. Because losing a customer can seriously affect sales of a product as there are not so many B2B buyers in the market space.

#8. Fewer changes in production

Under the b2c transactions, the products are subject to several changes depending on the whims of the consumers. On the other hand, B2B suppliers hardly make several changes to their products. This is because the demand of the customers hardly changes. These demands are not subject to trends like those in b2c markets.

However, this does not mean that B2B suppliers never make changes to their products. But when they do, the changes are carefully planned and successfully commercialized.

What all this means for B2B suppliers is that they have to research available data. This research will help them to manufacture products that will continually hold the interest of consumers.

#9. Going beyond packaging

While b2c suppliers can use packaging as a tool to sway consumers, B2B marketers do not have that advantage. The reason for this is simple. B2B customers are not as interested in the packaging of a product. They look beyond that to determine the utility of the product they intend to purchase.

This goes on to tell B2B suppliers that packaging is secondary. The quality and utility of the product are primary. So for a B2B supplier to sway their buyer, they must produce top-quality products aside from packaging.

The Basic Process of International B2B Trade

When it comes to international trading, B2B suppliers are a key factor in the trading process. They must develop certain marketing strategies to drive demand for products and make sales. These steps are:

#1. Finding potential buyers

This first stage involves finding potential buyers for products and services. This step entails determining if a potential buyer requires a product and if they can afford a product. Some platforms offer suppliers the opportunity to connect with buyers. One of these platforms is Alibaba.com which helps you find buyers for any export business.

#2. Preparation

In this stage, the B2B supplier prepares for the first contact with a potential customer. Their sales team endeavors to carry out thorough research on their products and services. This research will help them tailor their presentation to meet the needs of potential clients.

#3. Making contact

This stage involves the supplier contacting the prospective client. With the widespread use of the internet, this process is a lot easier. A supplier no longer needs to travel to physically meet with the prospective consumer.

They can simply connect on an online platform where the supplier can pitch to the customer. Nonetheless, there are different styles of making contacts. Some of these styles are:

  • Presenting prospective clients with gifts at the beginning of the presentation. This applies when there’s physical contact.
  • Asking questions to arouse interest.
  • Offering samples of products and services to potential customers for reviews and evaluations.

#4. Presentation

At this level, the supplier carries out a presentation. They try to show prospective consumers how their products or services can meet their demands. This presentation will also include a price quotation. Here, the supplier informs the potential customer of the price of their products or services.

The presentation doesn't have to be a one-way conversation. It can also involve listening to the clients to determine their needs. Determining their needs will help the supplier to restrategize their presentation to meet those needs.

#5. Objections

Objections sometimes occur in the trade process. A prospective buyer may not always like the products or services a supplier presents. A supplier must be ready to face rejection. They must be receptive to criticism and use them to improve their products. This will help them achieve success in sales.

#6. Closing the deal

At this point, the prospective client agrees and places an order for the supplier’s products or services. Once the customer places an order, the supplier begins to work on shipping the product to them. Shipping a product to a client in another country involves different processes. These are:

  • Export haulage: This is the first aspect in the transportation of products. It involves the movement of the product from the supplier to the location of the transportation personnel. This personnel will be responsible for delivering the products to the consumer's country.
  • Custom clearance: The company supplying products will need to fulfill all the custom demands. These demands involve settling the customs paperwork as required by the country of the supplier. After this procedure, customs will issue a clearance for the goods.
  • Origin handling: This deals with the handling of the product before placement on a ship.
  • Freight: The supplier books a space on cargo and places the product onboard. After that, it is up to the freight forwarder to determine which option will meet the timeline. The two major freights are air and ocean freights.
  • Import custom clearance: This clearance can start even while the product is yet to arrive in the customer's country. The freight forwarder is in charge of handling these legal papers needed for customs clearance.
  • Import haulage: This is the last stage where the product is delivered to the buyer. The transportation process cost depends on the agreement between the supplier and the customer.

#7. Follow up

After a successful sale of a product, communication does not end. Maintaining a relationship with a customer is good for repeat business and referrals. Apart from this, it also shows true partnership.

Benefits of Going Online

The internet has been instrumental in the projection of international trade. The opportunities the internet offers greatly benefit business owners. Today we have more businesses practicing e-commerce as a result of the COVID-19 pandemic. It led to a lot of businesses switching to the online marketplace.

Here are some of the benefits going online offers to B2B businesses:

  • Increased market reach. The internet provides more reach to a larger target audience which helps to drive demand for products.
  • Constant interaction with customers. The net enables B2B suppliers to keep in touch with their consumers continually. This strengthens the relationship between the supplier and the customer.
  • Better campaign. A supplier can create a powerful campaign for their products using the internet. There are a lot of avenues to advertise products, especially through the use of social media. With digital marketing and content marketing, a product can reach millions of people. For instance, an individual can use search engine optimization to make their website frequently appear on the search engine result pages.
  • Saves cost. The internet helps to reduce certain costs. It eliminates the time and cost of having to travel to meet a customer to finalize a deal. With the internet, both the supplier and customer can agree.

B2B E-commerce Market Size and Statistics

The e-commerce market is gradually replacing the physical market. People now prefer to order what they want off the internet without having to go outside.

As of 2019, the estimated value of the eCommerce market size was about 12.2 trillion US dollars.1 This shows the expansion of eCommerce, especially the online B2B marketplace.

Consequently, the rate at which e-commerce is expanding may cause the physical market to be non-existent in the coming years.

Sell on Alibaba.com

If you are looking for a way to penetrate the international market, then Alibaba.com is a great place to start. As one of the biggest B2B online trade platforms, Alibaba.com offers both the supplier and the buyer a platform to connect and transact. With Alibaba.com, you can become an international business from the comfort of your home. Learn more about the products and services for international sellers and the simple steps to open your own online store here.

1. https://www.statista.com/study/44442/statista-report-B2B-e-commerce/