What is Business to Business (B2B): Definition, Meaning & Examples
July 14, 2021 Max 4min read
What Is Business to Business (B2B)?
Definition of B2B
Business to business or B2B refers to transactions between businesses. The B2B business model involves a manufacturer and wholesaler or sometimes a wholesaler and retailer. Two or more companies conduct business in b2b, and it’s not between a company and an individual.
B2B stands for business to business, and it is a form of transaction between two businesses.
For example, the business is between the manufacturer and a wholesaler. And not between a business and a consumer (B2C).
Generally, B2B transactions happen in the supply chain, where a company would purchase raw materials from another for manufacturing purposes.
B2B transactions are most common for automobile industry companies, real estate management, housekeeping, and industrial cleanup companies.
Business-to-Business products or services are much more valuable than those at the consumer level.
Since the risks associated with B2B are higher, the decision-making process requires a lot of planning and brainstorming involving all the stakeholders.
Hence, this process may require several months to reach a viable conclusion.
Examples of Business to Business Transaction
Business to Business operates in a wide range of industries, from tech to manufacturing to financial services, retail, SaaS, and so on.
Samsung is one of Apple’s largest suppliers in the manufacturing of the iPhone. Apple also has B2B accounts with many other large corporates such as Panasonic and Micron Technology.
While the vehicle components are manufactured independently in the automobile industry, many manufacturers purchase these components to assemble the automobiles.
Things such as tires, hoses, locks, etc., are usually manufactured by various companies and then sold directly to the automobile manufacturer.
A B2B transactional model can also provide SaaS companies.
B2B propositions are Dropbox and many other SaaS companies.
How Does Business to Business Work?
Any good B2B marketing strategy requires following the crucial steps necessary in marketing planning, i.e., establishing your audience, building an authoritative image, creating a solid content strategy, and expanding your channels.
Similar to B2C marketing, another effective way to grow your business can be through social media.
Time and time again, websites such as LinkedIn have proven to be extremely helpful for companies performing well in the business-to-business area.
Online specialized directories can also become a great way to raise awareness about your products and increase their overall recognition in the market.
To build amazing products, teams must take the assistance of the product management software available.
This recognition also helps companies get in touch with any other interested companies.
Another thing to consider is trade publications and participation in trade shows and industry conferences.
In addition to all this, B2B companies also must pay attention to building relationships with other companies before sales which makes networking a vital aspect of B2B marketing strategy.
What Are the Major B2B Business Models?
The b2b business model that is complex will have several categories for simplification purposes.
There are three major b2b business models:
Supplier centric b2b
In this type of b2b business model, a supplier will set up a marketplace and sell a customized solution to other businesses.
Most of the sellers will put a price according to the needs of the buyers or clients.
Buyer centric b2b
Buyer centric b2b business models are mainly for huge corporates. Their transactions especially involve huge purchasing capacity and massive purchases.
The buyer-centric b2b business model company will set up an online portal and ask for various quotations from sellers.
The company will then go through the quotations and select the buyer accordingly. They will also do some analysis to check the profitability of the quotations presented to them.
Intermediary b2b
As the name suggests, intermediaries are the companies who set up a shared marketplace. They then call the buyers and sellers to that place. It is like a common platform where buyers and sellers can interact.
These interactions can take various forms of communication or transactions.
The intermediaries maintain the database containing buyers and sellers. The main agenda with the intermediary b2b business model is to profit from associations.
FAQs
Business to business refers to a type of transaction between two businesses. It involves a business selling a product or service and another business buying it from them.
B2B is an acronym for Business to Business type transactions.
B2B involves a transaction between one business and another. In contrast, B2C or business to consumer consists of a business and a consumer transaction.
B2B SaaS examples could be Google, Microsoft, Shopify, Slack, SurveyMonkey, and so on. They provide business(software) to other companies.
The B2B product example will be electronics, tires, batteries, etc., that certain companies manufacture and sell to other automobile companies.
Not to forget, some service providers also engage in B2B. For example, housekeeping also provides services to other businesses and not just individuals.
Apple’s largest supplier for the production of the iPhone is Samsung. Another B2B company example is Apple itself, and apple has b2b relationships with Panasonic, Intel, and Micron tech