B2B business model has always been the most preferred mode of business for the manufacturers, wholesalers, stockist etc. as the total B2B Sales is expected to reach $9.4 T by the end of 2020 in US. There are possible reasons behind, why the B2B business has such a high growth rate compared to B2C? The answer could be that retailers are getting the products with better margins so their profit increases by selling to an end customer, as a manufacturer/wholesaler or stockist they can buy and sell in high volume so profit is big.
B2B Marketplace Eco-system:
If we talk about the B2B Eco-system it is divided into three stages Production, Distribution and Consumption having a specific channel sales network i.e. Manufacturer >Distributor (Online/Offline) >Wholesaler/Stockist >Retailer > End Consumer. In this arrangement everyone at every stage is putting their mark-ups so
retailers’ profit is shrunken as he’s the one who’s facing the end consumer and it becomes difficult for them to sustain against online e-commerce players.
To enhance competitiveness, businesses should consider leveraging technology and expertise. Hiring Magento developers can provide the necessary support to optimize online platforms, streamline operations, and improve the overall customer experience, allowing retailers to better position themselves in the market.
Nowadays after B2B eCommerce been introduced the middle distribution channel is been modified. There are multiple business possibilities in this arrangement i.e. 1. manufactures can have an online portal in place with call to price option or pre-defined prices for distributor, wholesaler or retailers 2. Manufacturer can directly sale to retailer by removing any middle sales channel network by offering the better prices. (In this arrangement manufacturer will be aware of end customer’s behaviour and requirements which in traditional way was very difficult).
What sort of products are being or could possibly be sold on B2B e-commerce store? Mostly the B2B business is for industrial products i.e. machineries, electronic capacitor etc. for which one needs to hire an efficient and large in number team of Sales reps whose job is to meet the B2B Customer explain them about everything related to the product and convince them to buy. This requires to put a lot much efforts and money so overall a very costly option. Now let’s put another option of having an online B2B eCommerce portal in place which in first place connects you to the whole world by allowing you to expect business from anywhere without investing a hell lot of money. In this arrangement B2B buyers are going to explore and experience each and every detail related to the heavy machinery or similar product as they don’t need to touch and feel the product what we generally do with consumer goods. Here I didn’t mean to say that the sales reps should or could be replaced but definitely their roles and responsibilities will be changed and enhanced.
What’s the need of B2B Marketplace?
Now other side of the business which is consumer related products such as stationary, clothing, fashion etc. Based on a research made in USA more than 90% B2B buyers said that they used online portals to buy things related to their work. So, as a result the offline companies who used to run the direct business are now struggling to compete with the larger companies so as the result either they merge with the large enterprise or shutdown their business. So, for the large companies its mercy killing and for the small companies its easiest way to get out. What do you think what possible might have
gone wrong that the small player had to undergo such situation?? The answer is non-acceptance of technology as they were happy doing the business with traditional way, wherein the other company came with an idea, gave the customer ease of use and took the business. So, having a B2B e-commerce or Marketplace is going to help you not only to survive but sustain within the cut-throat business situation.
Take another example of Auto-parts business which was once a purely B2B Driven business but as large players noticed that the manufactures are not updating themselves with latest technology, they got the benefit of the situation and as a result the total B2B Sales of the auto-parts business community got drastically dropped. So, now most of the companies understood the need of the time and started expanding and acquiring the latest technology by creating their own B2B e-commerce or B2B Marketplace to be in the race or possibly to win it.
For more details about Magento B2B eCommerce portal you can follow this video placed on Magento website – https://magento.com/resources/making-b2b-ecommerce-work-you or else do ask me and shall try sharing more information on this subject by writing on biz@logicrays.com