How B2B e-commerce works: a comprehensive guide

Alibaba.com JANUARY 12, 202210 MIN READ
How B2B e-commerce works: a comprehensive guide

If you’ve ever considered starting a business, or have actually run one, you’ve probably encountered the term “B2B” a number of times. While it may be clear that “B2B” stands for “Business-to-Business,” it may not be so clear how B2B commerce actually works.

In this article, we’ll be specifically looking at the ins and outs of B2B e-commerce, exploring its processes, and sharing key insights on its advantages over traditional offline B2B trade.

The Statista report on B2B e-commerce shows that at the end of 2020, the global B2B e-commerce market was valued at US $14.9 trillion, which is over five times the B2C market.[1] With these types of stats considered, it’s easy to see why a number of businesses are deciding to add B2B e-commerce channels to their business operations.

If you want to know more about how B2B e-commerce works, read on to learn how you can consolidate your business’s online presence and find out what resources and tools are available to help you reach more B2B buyers.

What is B2B e-commerce?

b2b e-commerce

B2B is a type of business model or commercial transaction that refers to trade that takes place “Business to Business.” B2B e-commerce refers to online trade conducted by businesses that primarily sell their products or services to other businesses (as opposed to end consumers).

This means that when it comes to marketing and sales strategies, all efforts are directed toward individuals in charge of procurement on behalf of companies, rather than individuals who are purchasing for themselves.

B2B e-commerce is different from traditional B2B trade in that significant actions related to the sales and buying processes take place online, i.e. online marketing, online research, online brand/product evaluation, online purchasing, etc.

How does B2B e-commerce work?

Suppliers have the option of choosing different B2B e-commerce models for their businesses. One option is for the suppliers to set up their own websites and trade directly with consumers from those websites.

Another model, which has become more prominent recently, is the B2B online marketplace model, which involves online trading platforms such as Alibaba.com. These online platforms act as virtual marketplaces where sellers and buyers from all over the world converge, interact, and trade. On such platforms, sellers are able to set up their storefronts, and list, advertise and sell their products and services.

Let’s now look at the processes that buyers and suppliers go through when conducting B2B e-commerce.

What is the B2B e-commerce process for both buyers & suppliers?

As mentioned earlier, the B2B e-commerce process primarily takes place online (though certain stages take place offline). It’s imperative for sellers to know the different stages as this helps them build their online presence, generate leads, and successfully close deals.

Supplier’s B2B e-commerce process (B2B sales pipeline)

Below are the 6 key stages that suppliers go through as they go down the B2B e-commerce sales pipeline.

1. Prospecting

This is the first part of the sales pipeline and it involves suppliers looking for the businesses that they’ll be selling to. Ideally, you would have created a buyer persona (or customer persona) that will give you more clarity on who your ideal customer is, what they need, why they need you, and what sort of budget they have.

The distinction between the traditional B2B process and the B2B e-commerce process is that with the former, prospecting is primarily done in-person (trade shows or other industry-specific events), while with the latter, prospecting is largely done online (professional networking websites, online B2B marketplaces, virtual trade shows, and online buyer–seller forums and webinars.)

2. Qualification

Qualification is the process of ascertaining whether or not your lead is a qualified lead, that is, whether they match your buyer persona, making them more likely to convert into a customer.

During this stage, you will analyze whether or not your proposal to them actually serves their business. This is also the stage where you get to fully know your prospect’s needs and wants in order to determine how you can help them.

3. Proposal

During this stage, the seller presents their offer to the customer, highlighting their competitive advantage and how their product or service would benefit the prospect’s business.

While proposals may differ depending on the industry, below are some key elements included in most proposals:

  • Purpose: Your offer to the prospect
  • Objectives: What the prospect stands to gain from the deal
  • Benefits: Perks the prospect gains from trading with you (certain online discounts, etc.)
  • Process: Outlining the steps the prospect will go through when buying from you
  • Pricing: Detailing what the products or services on offer will cost the prospect at their desired quantity
  • Next steps: What the prospect should do if they would like to trade with you

4. Negotiations

Negotiating involves attempting to work out a deal that serves both parties. The terms being negotiated may include pricing and discounts, the minimum order quantity (MOQ), cost of shipping, lead time, among many others.

As this is part of the B2B e-commerce sales pipeline, negotiations will likely be taking place online over an independent messaging platform or the messaging platform that is integrated into the online marketplace.

5. Closing

This is the stage where the deal is sealed and a lead or prospect is converted into an actual customer. Beyond the commitment that a prospective customer may communicate online or over a call, it is important to have formal invoicing, contracts, and payment so the deal is considered closed.

It is also key to invite inquiries, give the buyer time to go through contracts or any relevant documents, thank them for doing business with you, and communicate the desire to maintain a long-term relationship with them.

6. Retention

With statistics showing that a mere 5% increase in customer retention could actually boost a business’s profits by up to 25%, it’s easy to see why retention is one of the key stages in the B2B sales process.[2]

Some great ways to retain customers include offering quality products and services, having effective communication, sending “thank-you” messages, offering the customer discounts or rewards, sending gifts to key customers, and personalizing their experiences.

Buyer’s B2B e-commerce process (B2B buying process)

Similar to the B2B e-commerce sales pipeline, the B2B e-commerce buying process primarily takes place online. Below are the 5 key stages that buyers go through when conducting B2B trade online.

1. Problem recognition

This is the first stage in the B2B buying process. It involves the buyer identifying their specific need or demand for certain goods or services. These needs may either be related to business operations or business development.

Some needs that may trigger problem recognition include:

  • Shortage in stock
  • The buyer needs to expand their product offering
  • The buyer needs to replace an unreliable supplier
  • The buyer needs to source raw materials used for manufacturing into final products

2. Information search

Once the need has been identified, the buyer will then conduct primary research with the goal of finding the right products or services to meet the need. As this is B2B e-commerce, and as more and more buyers move to remote interactions and digital services, this process will largely take place online.

It is important for sellers to ensure that their online storefront or website content and product listings use search engine optimization (SEO) to allow greater exposure.

3. Evaluation

This stage involves the buyer weighing the advantages and disadvantages of the different suppliers or product options they have.

Some factors buyers may consider include the following:

  • Product specifications detailed on online listings (features, functionality, etc.)
  • Pricing
  • Quality assurance and certification
  • Availability of inventory
  • Online customer reviews and testimonials
  • Supplier or platform’s payment terms
  • Delivery and returns terms

4. Purchase

During this stage, the buyer proceeds to make a buying decision and places an order with the chosen supplier. This may be a one-off purchase or part of an ongoing supply arrangement.

The buyer finalizes their purchase by negotiating, agreeing to payment terms, and [usually] making an online transaction. Buyers on Alibaba.com have the option of using Alibaba.com’s buyer protection service, Trade Assurance, which protects online orders made through the platform.

5. Post-purchase activity

This final stage involves the buyer’s activity following purchase. This may include sharing customer feedback, leaving product reviews, or completing satisfaction surveys.

This stage helps sellers glean key insights to help them improve their products and services so as to increase customer satisfaction and encourage repeat purchases.

What are the advantages of B2B e-commerce compared to traditional B2B trade models?

Below are some significant advantages that B2B e-commerce offers when compared to traditional B2B trade models.

Helps you build your online presence

Research shows that over 75% of B2B purchases are actually taking place online.[3] This means that it’s imperative for B2B businesses to build a solid online presence. B2B e-commerce enables you to do that as you digitize your product catalog, manage online storefronts, and engage with consumers online.

Enables you to capitalize on existing buyer demand to expand your customer base globally

B2B marketplaces have a solid buyer base made up of millions of B2B procurement professionals from all over the world who already trust the platforms due to verification processes, inspection services, reviews, and guarantees. You can capitalize on this existing demand to gain traction for your brand.

Gives SMEs access to foreign markets

As B2B e-commerce makes it easier to conduct cross-border trade, SMEs are granted the unique opportunity of being able to access hundreds of foreign markets through millions of international buyers. They can do this without incurring the high financial and time costs related to setting up physical operations.

Offers relatively low costs

B2B online marketplaces allow sellers to set up storefronts at low initial costs. Suppliers are also able to decrease their operating costs by no longer having to use more expensive traditional marketing channels such as print, TV, and radio.

It’s easy to set up

B2B online marketplaces make it so that even without previous web hosting or coding experience, you can set up and run an online storefront easily. Platforms such as Alibaba.com provide sellers with onboarding assistance and offer useful tools and resources to help you optimize your online store.

3 reasons to start B2B e-commerce on Alibaba.com

b2b e-commerce

1. Extensive global buyer base

With an active buyer base of over 26 million buyers located all over the world, you’re given access to an extensive network of prospective customers.

At the same time, you’re able to instantly access foreign markets and engage with global customers on a platform where over 400,000 product inquiries take place daily.

2. Access to optimization tools

Alibaba.com enables you to optimize your online operations using in-depth data and a suite of smart advertising and efficiency tools. As a seller, you’re provided with dashboards that help you analyze and improve your performance.

You’re also offered extensive customer support, seller resources and guides, and industry reports to help you set up and run a successful e-commerce business.

3. Retain more income because of low commission rates

With the goal of helping SMEs go global, Alibaba.com allows sellers to retain more income from each sale. The platform takes commission rates that are at times as low as 0%, enabling you to maintain your profitability.

Sell on Alibaba.com

Now that you know the ins and outs of how B2B e-commerce works, you’re armed with crucial knowledge to help you leverage the B2B e-commerce model to reach more buyers and extend your business’s global footprint.

Trading on a large B2B online marketplace like Alibaba.com is your getaway to the world. You’ll be able to access the right tools and services to help you consolidate and capitalize on your online presence while being provided with essential resources and support to make your B2B e-commerce process easier, smarter, and more efficient every step of the way. Start selling on Alibaba.com today!

Reference:
1. https://www.statista.com/study/44442/statista-report-b2b-e-commerce/
2. https://www.annexcloud.com/blog/21-surprising-customer-retention-statistics-2021/
3. https://www.sana-commerce.com/b2b-buying-process-2019-report-how-to-meet-b2b-buyers-demand/

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