What is B2B sales?
First, it's important to understand what B2B sales are exactly. How does it differ from B2C? What is the process behind a B2B sale 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. It is also called a "trade sale".
These can be physical products, such as when a wholesaler sells 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 be digital, for example 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 hired by a webshop to generate more traffic and increased turnover.
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". Consumer usually refers to private individuals, but can also be associations or similar. A consumer in this context can be defined as a customer who does not intend to resell the product.
The classic example is a clothing store, let's take H&M, which sells its goods directly to private customers. This is a B2C sale. However, the manufacturer from whom H&M bought the clothes in the first place is a company and therefore this transaction was B2B.
There are some very concrete differences between B2B and B2C that are important to keep in mind.
- The price is more fluid. Where an end consumer is not usually in a position to negotiate the price, they will often accept the offer price of a product. When it comes to B2B sales, the price of a good or product is much more up for negotiation. For example, the unit price will decrease the larger the order, called quantity discounting. 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 several parties involved with the buyer. If a company sells to another company, the buying company usually has to obtain approval from several bodies. For example, larger companies have a board of directors, an accounting department and a finance director, all of whom have a say.
- A B2B sale takes longer. Again, B2B sales are somewhat more complicated than B2C. There is no impulse buying when it comes to B2B. Because of 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 handover of the product, for a B2B sale it is more often the other way around. That is, the customer first transfers the amount by 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 taking place online these days - helped along by the Corono pandemic. It is therefore an important area to familiarise yourself with. B2B sales online are also known as B2B e-commerce.
Even if you run a business with a physical product, your online presence is crucial to the bottom line. Because no matter what you're trading, you can be confident that your competitors are online or well on their way to it. Here are three concrete tips for getting B2B online sales right.
- Think omnichannel. The term "omnichannel" means being present or available everywhere. As a B2B company, you should make sure you give your customers a streamlined experience when they need to engage with you. This means that you have many channels they can use to communicate with you, and that whichever one they prefer, they get the same great welcome.
- Think like Google. Always keep in mind what your customers want, how they want it and exactly what they expect from you. Or to put it another way, treat your customer like a consumer. Even if you act with one company as a company, 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 at your back. B2B online sales is still a new and evolving area. This means that there is a lot of trial and error among the players. It therefore 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 an ordinary consumer purchase (B2C). In fact, the law on sales is somewhat stricter for B2C, precisely to protect the consumer.
In B2B sales, the parties are generally free to contract. This means that two companies can draw up a contract describing terms such as delivery time and place, and discounts in case of defects. B2B sales rules are therefore freer, but also less protective of the buying party.
If no firm contract has been made or if the contract is defective, a B2B transaction will fall back on the rules of the Sale of Goods Act. It is therefore in the best interests of both buyer and seller to have a detailed contract in B2B sales, and legal advice may even be considered if it is a large or complex order. Otherwise, templates for e.g. sales and delivery terms are available online and can be used.