Business-to-Business (B2B): What It Is and How It’s Used

Business-to-business (B2B) refers to commercial transactions between companies — for example, a manufacturer selling components to a wholesaler, or a wholesaler supplying a retailer. B2B covers goods, services, and digital offerings exchanged among businesses, and it is distinct from business-to-consumer (B2C) and business-to-government (B2G) transactions.

Key takeaways

• B2B transactions occur between companies, often within supply chains (raw materials, components, wholesale distribution).
• B2B sales typically involve larger volumes, negotiated pricing, and longer sales cycles than B2C.
• B2B e-commerce is large and growing rapidly as companies use online channels for sourcing and procurement.
• Success in B2B hinges on relationship management, tailored solutions, and effective account servicing.

How B2B works

B2B commerce is common at multiple stages of production and distribution:
* Suppliers sell raw materials and components to manufacturers.
* Manufacturers sell finished or semi-finished goods to wholesalers or other manufacturers.
* Wholesalers sell bulk goods to retailers, who then sell to individual consumers via B2C channels.
In addition to physical goods, B2B includes services (facility management, logistics, IT, professional services) and software (enterprise platforms, SaaS).

B2B communication includes formal procurement processes as well as relationship-building activities between companies’ employees, such as negotiations, vendor management, and industry networking.

B2B e-commerce and digital procurement

The internet enables discovery, comparison, and initiation of B2B transactions. Company websites, online marketplaces, supplier directories, and e-procurement platforms let businesses:
* Research suppliers and products
* Request quotes and place orders electronically
* Manage contracts and invoices through integrated systems

The B2B e-commerce market is substantial and expanding as technology streamlines procurement and supply-chain interactions.

Special considerations for B2B sellers

Successful B2B operations focus on:
* Relationship management: Dedicated account teams and consistent professional engagement foster repeat business.
* Trade channels: Industry publications, trade shows, and conferences help build reputation and generate leads.
* Customized offers: Companies often negotiate volume discounts, service-level agreements, and contract terms tailored to client needs.
* Sales and support alignment: Coordinating sales, product, and support teams ensures smoother onboarding and delivery for complex solutions.

Common challenges in B2B markets

• Longer sales cycles: Purchases typically involve multiple stakeholders, formal approval processes, and higher costs, so deals can take weeks to months.
• Revenue concentration risk: Heavy dependence on a few large clients increases business risk if a client reduces orders or fails.
• Complexity and customization: Tailored products or services require extra coordination, increasing operational cost and time to delivery.
• Forecasting difficulty: Irregular large orders and extended negotiation periods complicate cash-flow and revenue projections.

Examples of B2B transactions

• Manufacturing: Component suppliers sell parts (chips, displays, casings) to electronics manufacturers, who assemble consumer products.
• Automotive: Independent suppliers provide tires, batteries, electronics, and other parts to car manufacturers.
• Services: Facility management, industrial cleaning, commercial property management, and outsourced IT services are commonly sold to businesses rather than consumers.
• Enterprise software: SaaS platforms and customized software solutions sold to companies for internal use.

B2B vs. B2C — main differences

• Audience and decision process: B2B targets businesses and typically involves formal procurement; B2C targets individual consumers making personal purchasing decisions.
• Sales cycle: B2B sales are generally longer and relationship-driven; B2C sales are quicker and more transactional.
• Pricing: B2B pricing is often negotiated and volume-based; B2C pricing is usually fixed and transparent.
• Complexity of product/support: B2B products may require onboarding, training, and dedicated support; B2C products emphasize convenience and self-service.

Brief FAQs

What counts as a common B2B purchase?
* Examples include raw materials, components for resale or manufacturing, enterprise software, outsourced services, and commercial real estate or workspace solutions.

What is B2G?
* Business-to-government (B2G) involves selling goods or services to government entities, usually through formal bids and contracts.

Is e-commerce the same in B2B and B2C?
* Both use online channels, but B2B e-commerce emphasizes procurement workflows, contract pricing, and integration with enterprise systems, while B2C focuses on the consumer shopping experience.

Conclusion

B2B commerce is a fundamental part of modern economies, linking suppliers, manufacturers, distributors, and service providers. It requires strategic relationship management, tailored offerings, and operational flexibility to navigate longer sales cycles and complex customer needs. As digital procurement and e-commerce platforms evolve, B2B interactions continue to become faster and more scalable, reshaping how companies find, buy, and manage business goods and services.