In business, you often hear terms like “B2B” and “B2C” thrown around. But what exactly do these terms mean?
Well, you’ve come to the right place.
In this article, we’re going to go over exactly what “B2B” means, what it describes, what sorts of businesses and business activities fit under this term and how the internet is opening new doors for B2B businesses across the globe.
What is B2B?
What is B2B? Well, to put it simply, B2B is short for “business-to-business”.
B2B refers to a specific business model focused on selling to other companies, rather than selling directly to consumers (called B2C, or “business-to-consumer”).
So, Ford is a primarily B2C business. They sell cars and trucks to consumers. Asahi Glass Co, on the other hand, is a B2B company that sells windows to Ford.
This is actually how most B2C businesses work. The B2C business buys goods and services from dozens—if not hundreds—of B2B businesses to create their final products for sale to the ultimate consumer.
However, B2B businesses don’t just support B2C businesses. Most B2B businesses are themselves supported by products and services from other B2B businesses. Some B2B businesses also engage in B2C activities that serve consumers directly.
When you get right down to it, B2C and B2B are really just adjectives that tell you who a company is targeting with a particular product or service.
If the target market is individual consumers, it’s B2C. If the target is businesses, it’s B2C.
B2B Services Businesses
For any business activity you can think of, there’s a B2B business that will take care of it—for a price.
Taxes, payroll, security, research and development, web design, call centers, human resources, marketing and advertising…you name it, there’s a B2B business that does it. You can even hire a B2B business to provide CFO or CTO services for your business.
While B2B businesses can thrive in any niche, there are several areas where B2B services businesses do particularly well.
Let’s take a look at a few of them:
Many entrepreneurs and business owners have great ideas…and no idea how to market them. That’s where hiring a marketing agency can be really handy.
Online advertising has made it easy for businesses to sell to anyone, anywhere. But, as online advertising becomes increasingly more powerful, it also becomes increasingly more complex.
As a result, you need paid search specialists, social media mavens, content marketing masters, conversion rate optimization oligarchs… (okay, got a little crazy with the alliteration there).
Marketing has gotten too complex for one person to be an expert at everything and many businesses can’t afford to hire an in-house marketing team to bring in the customers they need to succeed.
Marketing agencies help bridge that gap.
For example, at Disruptive, all of our marketing consultants are members of marketing teams that include experts from a wide range of online marketing specialties: AdWords, Facebook, web design, site testing, etc.
Individually, each team member is good at what they do, but collectively they provide much more value than any single person could.
By hiring a marketing agencies, businesses get all the benefits of an in-house marketing team at a much cheaper price. It’s a win for everyone, which is why marketing agencies have become such a popular B2B business to start.
Software as a Service (SaaS)
B2C software as a service (SaaS) businesses like Dropbox, Mint or Evernote are well-known and incredibly successful. However, the SaaS business model tends to work even better for B2B businesses.
If you’ve ever used Salesforce, Zendesk, Hubspot or almost any other software platform that helps with a business-related task or activity, you’ve worked with a B2B SaaS company.
Almost any B2B activity that can be done online is a candidate for a B2B SaaS companies: project management, marketing automation, inventory management, financial tracking…the list goes on and on.
SaaS businesses are particularly great B2B opportunities because of their scalability. You don’t need thousands of employees in hundreds of locations to create and run a good SaaS company.
A few good developers and a solid software that addresses a real business need is all you really need to create a successful B2B SaaS company.
These days, every business needs a website. But, as with marketing, not every business has the in-house skills needed to create and maintain an effective website.
Web development B2B businesses are the answer to this problem.
Web development companies help businesses design, create and maintain their websites. Depending on the client’s needs, that may be as simple as helping a new entrepreneur create a basic site or as complex as creating a custom app for a billion-dollar enterprise.
While these 3 examples are just a few of the more popular B2B services businesses, they give you a good feel for how a B2B services company works: they identify a need that many businesses can’t afford to cover in-house and find a way to meet that need at a much lower cost.
While B2B commerce has been around for hundreds of years, the digital age has opened new doors for countless B2B commerce businesses.
With the advent of B2B e-commerce, businesses can sell products to other businesses anywhere in the world. Although this digital revolution has had less obvious consequences than the B2C ecommerce revolution, the results are just as profound.
Businesses can now easily identify and access raw materials, components and other products from all over the world through B2B supply and procurement exchanges called “e-procurement sites”.
On these sites, a company’s purchasing agent(s) can look at supplies from a variety of vendors, place bids or request proposals—all without leaving the office.
Most of these e-procurement sites are fairly niche-specific, with different sites for industries or verticals like healthcare, construction, education, etc. In addition to facilitating contact between businesses and suppliers, these sites also often support product listings and discussion groups.
Alternatively, many B2B businesses use brokering sites to meet their supply needs. In effect, these brokering sites work as the “middleman” between businesses and suppliers, helping to connect the right businesses for a fee.
This is all good news for B2B companies.
While B2B commerce is nothing new, B2B ecommerce makes it much easier for businesses to find the right supplier or manufacturer for their needs instead of relying on whatever contacts or network they might have already had.
Ultimately, B2B and B2C are simply terms used to describe who a product or service is intended for. Otherwise, the two are very similar.
Both B2B and B2C companies are focused on addressing needs in the marketplace. The specific nature of those needs might be different, but both business models are very viable and have been heavily influenced by the advent of the internet.
The good news is, there’s never been a better time to start a B2B business. The trick is identifying a need in the marketplace that you can help fill. From there, it’s just a matter of getting the right pieces in place and marketing yourself to the world!
Still have questions about B2B? Have any additional insights into how the internet has changed B2B? Leave your thoughts in the comments!
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