Business to Business (B2B): Explanation, Types, Example

October 10, 2020January 16, 2023 Sohini Mazumder 0 Comments

B2B, which in simple words means Business to Business. When business transactions occur between 2 business organizations then this is known as B2B. Here consumers in the end are replaced by the business units. The transaction-level which happens between B2C business surpassed by the level of transaction that occurs in the B2B business model.

B2B model of business, like another process, needs proper and articulate planning. The planning should be sound enough to make the business successful and also should not cause any negative impact on the business, in any given situation. While planning every points are needed to consider, and equal concentration should be given to them.

Business requires networks, communication, and maintaining relations. Similarly, B2B is all about nurturing and maintaining the created and new relations. Efforts should be made to continue the communication with the buyers.

A professional approach shall be undertaken to keep healthy communication. Feedbacks should be taken about the delivered product, and also communication regarding the tracking of the order should also be done.

Business to Business Model Includes:

Horizontal B2B model:

These are the one-stop-shop type of units. Under one roof it sells a variety of products, but the sales are restricted to the business units instead of consumers. They sell a large variety of products and services to the required organization or firm.

One example of this can be considered as an e-commerce website, e.g. Flipkart and Amazon. These businesses has a large variety of goods to offer.

Vertical B2B model:

Here goods and services are sold from within one industry. Every seller of the industry sells goods and services to one industry only.

For example, considering the computer production. Sellers under this industry will give their products to one place only. They will sell mouse, keypad, other tools to their respective industry only.

Advantages of B2B Business Model:

Currently, the B2B form of business has been growing at a fast rate. Few advantages have been considered for a business to business model, they have been mentioned below:

B2B usually happens through, this helps the companies to promote, advertise, and make all aware of their goods and services. This also helps the buyers to place their orders also helps in bring buyer satisfaction as they can track their order and also the processing of the order.
B2B companies have the opportunity to sell their products in bulk quantities. A large amount of quantity sold helps in increasing the profit of the organization. Also, when the company needs to promote its product and services their advertisement and the promotional cost get curtailed as they can use their website for this process.
While selling in bulk, the B2B business targets a large number of markets. This helps them also to expand their business. Also, the process is secured from both the ends. that doesn’t cause any hurdle or confusion.

Disadvantages of the B2B model:

Like any other business matters, the B2B model also has some points or conditions which undermine their performance.

Few disadvantages of B2B models have been mentioned below:

Getting an effective customer base is important. Research and surveys end up helping to find prospective and dedicated customers.
The sales in the B2B model is restricted only to buyers who have ordered in bulk. When the number of buyers is very limited than their sales automatically become limited.
For the sake of attracting more buyers, they have to reduce the cost. This in the long-run has an adverse effect in the business. They cannot earn enough profit by selling their product or services to their prospective buyer.

ALSO READ: How To Write a Business Plan [A Complete Guide]

Types of B2B model:

B2B business model is of various types. Few of them have been mentioned below:

Product Based B2B Model.
Software-Based B2B Model
Service-Based B2B Model

1. Product Based B2B Model

This type can be availed via online service, brick- and- mortar or it might include both. It basically concentrates on providing the goods and services physically to the buyers. Here the business might supply their customized products to their targeted buyers. They usually face higher cost than other types and also requires a high amount of investments.

2. Software-Based B2B Model

This includes a subscription or a membership factor where to avail a certain service the buyer needs to subscribe to the seller’s account. This type can be again subdivided into 2 parts; they are:

Product-focussed software-based B2B model
Service-focussed software-based B2B model

3. Service-Based B2B Model

When a business unit provides services of its own to another business then this B2B model is known as Product Based B2B model. This can include services like- consultancy service, Employee Training Services, Marketing Agencies

Examples of B2B Business Model:

B2B mode is very commonly found in the real business world. This helps in helping the other business to grow. In a way, this type of business model helps each other to grow. One example of this can be Apple- it maintains B2B relationships with Panasonic, intel and etc.

In general, the automobile industry is also a B2B model because all its assimilated parts come from various companies.

This is all about the B2B model of business. With a growing business, the need for this model of business is also growing.