What is B2B sales?
First, it's important to understand what exactly is B2B sales? How does it differ from B2C? What does the process behind a B2B sale look like and how do you make a successful B2B sale?
In its basic form, a B2B sale is a transaction between two companies. This means that one company buys a product from another company, which then pays for it. This is also known as a 'trade purchase'.
It can be physical products, such as a wholesaler selling groceries to a grocery store. A physical B2B sale is often for direct resale to private customers or for further production. B2B sales can also take place in digital form, such as a tech company selling software to an online business.
Nowadays, B2B sales also often consist of a service where the product being sold is expert knowledge, advice, or consultation. An example of this could be a digital marketing agency that is hired by a webshop to drive more traffic and revenue.
The difference between B2B and B2C
B2B is very different from B2C. The latter stands for business-to-consumer. It is also called "consumer buying". Consumers are usually private individuals, but can also be associations or similar. In this context, a consumer can be defined as a customer who has no intention of reselling the product.
The classic example is a clothing store, let's take H&M, which sells their goods directly to private customers. This is a B2C sale. The manufacturer that H&M bought the clothes from in the first place, however, is a business and therefore this transaction was B2B.
There are some very specific differences between B2B and B2C that are important to keep in mind.
- The price is more fluid. While an end consumer is usually not in a position to negotiate the price, they will often accept the asking price of a product. When it comes to B2B sales, the price of an item or product is much more negotiable. For example, the unit price will decrease the larger the order, called a volume discount. There is also generally more negotiation on price in B2B sales, and the cost of production can also vary, which has an impact on price.
- There are multiple parties involved with the buyer. If a company sells to another company, the buying company usually has to get approval from multiple parties. For example, larger companies have a management team, an accounting department and a CFO who all have a say.
- A B2B sale takes longer. Again, B2B sales are somewhat more complicated than B2C. There are no impulse buys when it comes to B2B. Due to the many different variables, negotiations can easily drag on. It's not uncommon for a sale to take months to complete.
- Payment is often made later. Whereas a sale to a consumer usually involves an upfront payment followed by the transfer of the product, in B2B sales it's often the other way around. In other words, the customer first transfers the amount after the product is received. If the product is a service, for example ongoing consultation, payment will be made in arrears on a monthly or quarterly basis.
3 tips for B2B online sales
It's probably no surprise that B2B online sales are on the rise and have been for the past year. Like all commerce, more and more B2B sales are happening online these days - helped along by the coronavirus pandemic. It's therefore an important area to familiarize yourself with. B2B selling online is also known as B2B e-commerce.
Even if you run a business with a physical product, your online presence is crucial to your bottom line. Because no matter what you're selling, you can rest assured that your competitors are online or well on their way to it. Here are three concrete tips to get B2B online sales right.
- Think omnichannel. The term "omnichannel" means being present or available everywhere. As a B2B company, you should provide your customers with a streamlined experience when engaging with you. This means that you have many channels for them to communicate with you, and that no matter which one they prefer, they receive the same warm welcome.
- Think like Google. Always keep in mind what your customers want, how they want it and exactly what they expect from you. In other words, treat your customer as a consumer. Even if you are shopping with a company as a business, and while the process can be long and difficult to navigate, all commerce ultimately comes down to the people behind it.
- Have a strong sparring partner behind you. B2B online sales is still a new and constantly evolving field. This means that there is a lot of trial and error among the players. It often pays to find a competent B2B agency that can look after your interests and give you a head start in the market.
Rules in B2B sales
Not all the same rules apply to B2B sales as to a regular consumer purchase (B2C). In fact, the sales law is somewhat stricter for B2C, precisely to protect the consumer.
In B2B sales, the parties generally have freedom of contract. This means that two companies can draw up a contract that describes terms such as delivery time and place, and discounts in case of errors or defects. B2B sales rules are therefore more free, but also less protective of the buying party.
If there is no firm contract or if the contract is incomplete, a B2B transaction will fall back on the rules of the Sale of Goods Act. It is therefore in the best interest of both buyer and seller to have a detailed contract for B2B sales, and you may even want to consider legal advice if it is a large or complicated order. Otherwise, there are templates online for terms and conditions of sale and delivery, for example, which can be used.