Though it all deals with selling goods and services online, e-commerce is actually a broad term that has several different applications. The most common forms are B2B and B2C. B2B is short for business-to-business where your customers are other businesses. B2C is short for business-to-consumer, which refers to a business selling items to end customers. This article will discuss the major differences between these two forms of e-commerce apart from the obvious.
The Complexities of B2B
B2B e-commerce is usually more complex and requires a higher level of security than B2C. These transactions often involve many complicated issues, such as system integration within the organization, and partners exchanging goods and information. Over the years, the cost of implementing such an infrastructure has proved to be prohibitory, causing many businesses and suppliers to revert back to using more primitive methods such as phones and fax machines. However, several organizations failed to realize they would save money in the long run as operating costs can be cut dramatically while ensuring better control over supply chain integration. The major hurdle with B2B has always been getting partners to collaborate in implementation of infrastructure and networking.
Compare and Contrast
Some of the most significant differences between B2B and B2C include:
– B2C has spot sourcing contract management that offers a flat retail rate for each item sold
– B2B transactions entails direct-sourcing contract management which involves negotiating terms that establish prices and various other factors. This may include volume-based pricing, warranty coverage, carrier and logistics preferences.
– B2C does not call for a business to spend money on a costly and extensive infrastructure.
– B2B generally requires a tremendous upfront investment on security mechanisms and integrating the systems of the business as well as its partners, often resulting in an expensive, time consuming process.
– B2C often involves user defined profiles and traditional online marketing strategies.
– B2B e-commerce requires a number of complex processes such as studying order history data, understanding the preferences of trading partners, dealing with third-party payment records and other strenuous matters.
– B2C e-commerce requires that businesses update their websites on a regular basis to reflect new products, discounts and prices.
– B2B involves the integration of a variety of catalogs from different suppliers. The products in these catalogs must be properly formatted , priced and delivered to potential buyers in a consolidation manner. Such processes generally call for highly efficient business systems and advance analytic software.
– B2C results in more seamless transactions as options such as cyber-cash allows the business to accept a wider variety of payment options
– B2B generally deals with back-office connectivity and invoicing a number of different partners and suppliers.
These are just a sampling of the many differences between B2B and B2C. Although B2B has its fair share of disadvantages, it does offer the benefit of good supply chain coordination. In addition, there are numerous third-party companies that offer products and services that can help B2B transactions run efficiently.