What is B2B eCommerce Model – Advantages & Disadvantages
The B2B eCommerce business model has become one of the most successful online business strategies that have led to huge revenue for internet businesses. It is expected that by the year 2020, the revenue related to B2B eCommerce will shoot to around $6.7 trillion. With the rapid growth of eCommerce across the globe, more and more companies are adapting to the B2B model to get their business deals done. Let us have an idea of what the B2B eCommerce model is and how does it suit the modern day business proceedings.
What is the B2B eCommerce Business Model?
In simple terms, the B2B eCommerce Business is a form of electronic commerce that deals with the transaction of goods and services between businesses through the internet. In most cases, this transaction is performed through an online portal. The main objective of this business model is to increase the business efficiency and revenue of retailers. Rather than manually processing orders, all the orders in the B2B model are processed in the digital platform. Contrary to the conventional eCommerce model of purchase and sale between the consumer and seller, the B2B model deals in commercial transactions between businesses.
The crux of this business model is based on careful planning in order to have efficient and profitable transactions in consideration with complex market conditions.
B2B eCommerce Business Model Advantages
- Market Predictability: Compared to the other business strategies, the B2B eCommerce business model has more market stability. B2B sectors grow gradually and can adapt to various complex market conditions. This helps to strengthen the online presence and business opportunities and get more potential clients and resellers.
- Better Sales: An improved supply chain management process along with a collaborative approach increase customer loyalty in the B2B eCommerce business model. This, in turn, leads to improved sales. It helps businesses to showcase product recommendations and unlock effective upselling and cross-selling opportunities.
- Lower Costs: Due to an effective supply chain management process, this online business model leads to lower costs for the businesses. In most cases, the work is done through automation that eradicates chances of errors and undue expenditure.
- Data Centric Process: One of the main advantages of the model is that it relies on effective and factual data to streamline the whole process. In this way, errors can be avoided and proper forecasts can be made. With an integrated data-driven approach, you can calculate detailed sales statistics.
B2B eCommerce Business Model Disadvantages
Just like the other business models, the B2B eCommerce Business model has some flaws too, which are:
- Limited Market: Compared to the B2C model, this type of business has a limited market base as it deals with transactions between businesses. This makes it a bit of a risky venture for small and medium eCommerce businesses.
- Lengthy Decision: Here, the majority of the purchase decisions involve a lengthy process as there are two businesses involved. The process may involve dependence on multiple stakeholders and decision makers.
- Inverted Structure: Compared to the other models, consumers have more decision making power than sellers in the B2B business model. They may demand customizations, impose specifications and try to lower price rates.
Nevertheless, it is finally up to the business to decide on how to take their venture forward based on their business vision, revenue target and other business objectives.