B2B eCommerce is an enormous market where clients and customers are almost always looking for solutions to their ever-increasing problems. But should you be a shark in this space? Let’s find out.
In our previous article, we talked a lot in detail about the types of eCommerce business models and how to approach each one as you plan on treading on the journey to building your very own eCommerce enterprise. We couldn’t get into specific details about how eCommerce business models work because the article would easily transform into a 10,000-word draft that no one would even care to skim over.
Instead, we decided to pick one of the most common eCommerce business models out there, in one dedicated article, and dissect it to help you understand how business in the virtual world works.
In this article, we’re going to take a look at B2B eCommerce business models and why they are the latest buzz in town – are they really worth building a business out of, or are they just passing clouds?
What Is A B2B Ecommerce Business Model?
Before we get started, however, We’ll need to understand what B2B business models are. Of course you can get the crash course from this article here, or you can read on to find out.
Speaking professionally, a B2B business model can be understood as a conceptual structure which is the base of a company and helps it to function in order to make a profit. More broadly speaking, it’s a way to make money by selling your products or services or both to businesses instead of customers directly. So in a way, your target customer is a business, who will be using your product to solve a customer’s problem.
That, at a very high level, is how B2B eCommerce business models work. Couple them with technology and sell your services online, and you have a B2B eCommerce business. Needless to say, there are several types of B2B eCommerce business models, each one tailored to meet a specific requirement. Let’s also take a look at these types to understand what type of business model you will want to implement.
Types of B2B ECommerce Business Models
Almost every company is supported by a B2B business provider or supplier, including partners. But not every B2B is the same. These companies vary largely because of the model they adopt, and the services they offer as a result. Let’s talk a bit about these different kinds of B2B eCommerce business models.
Supplier Oriented Marketplace
In simpler terms, this may be referred to as eDistribution. In eDistribution, companies act as a distribution medium between buyers and sellers. Amazon is a great example of this. These eCommerce businesses essentially act as a central marketplace for selling products. They take these products from sellers and deliver them to customers across countries all around the world.
Buyer Oriented Marketplace
We’d like to call this a double edged sword, because while the buyer-oriented eCommerce B2B business model can make you a lot of money for doing the simple task of connecting buyers and sellers, it can also impact your credibility by a great degree if not done right.
Examples for these eCommerce business models are eBay, OLX, and even Cars24. It’s a simple approach – you have a medium through which you connect buyers and sellers, and make money through commissions. Why did we call this a double edged sword then? That’s because scammers are a real thing, and if you don’t play your cards right, you’re inviting a whole host of them. We didn’t mention Quikr in this list for a reason. If you do it right, you’re a great business, but do it wrong and you’ve just permanently damaged your credibility as a reliable source.
As an intermediary marketplace, your eCommerce business will deal with selling products that will be rebranded and sold to customers by other businesses. For instance, if you have a stock of a million unbranded mobile cases, companies will buy these from your website, and rebrand them on their site, to customers who will buy them, at effective margins of course.
Alibaba follows this business model to a T, and makes a lot of money doing it. So if you have a manufacturing unit for any niche you want to go global in, you might test the waters with this one.
Advantages of B2B ECommerce Business Models
While not everything about B2B eCommerce business models is rainbows and sunshine, there are certainly several good things to talk about this line of business. It is one of the best ways to get started in business, because the world is living virtually today. You have to love the stone age feverishly to stick to your traditional business models.
A B2B eCommerce business model consists of stability, unlike a B2C model, where the customers will be able to jump from one provider to another. This causes B2B business models to be somewhat predictable.
Don’t get us wrong, B2C business models are just as lucrative and worth pursuing. But when you know your product is what helps another business make money, you know you have a certain amount of control over the many unpredictable turns that are a routine for businesses. The COVID-19 pandemic caused a lot of B2C businesses to go bankrupt, but how many B2B companies lost to the virus? Not a lot.
One more of the various advantages of B2B eCommerce Business models is that the selling cycle is short. A B2B model helps businesses reduce cost, and therefore help them spend more money on other growth vehicles. This relationship just continues for as long as one business depends on another.
With everyone hooked to their digital devices, and nearly everyone having access to the internet, it would be a blunder not to take eCommerce seriously. B2B eCommerce is especially great because you’re able to reach the whole globe, more efficiently, and at a way greater pace than before. You’re able to increase your brand’s awareness, build credibility, and increase sales exponentially in a very short span.
Sure, there are certain shortcomings – like overcrowded spaces, sharks waiting to eat your business alive at any given moment, and the unpredictability of the internet – but they’re too small to risk not taking a shot at the space. The age of eCommerce is just getting started, and it’s only going to grow from here. To be honest, the whole world is going there. Wouldn’t you want to be there, shop all set up to welcome hungry shoppers? Better get started while you’re still ahead.