What is B2B Ecommerce? Five Models Revolutionizing the Traditional B2B Landscape

What is B2B Ecommerce? Five Models Revolutionizing the Traditional B2B Landscape

There’s a reason B2B ecommerce is a multi-trillion dollar industry.

Average B2B conversion rates tend to be closer to 10%, compared with 1-2% for B2C.

That’s because B2B buyers are often more informed. They’ve already performed a dozen searches before hitting your site. Almost all of which (89%) happens from the computer.

Historically, B2B markets were closely-held. There was little-to-no information available. It was difficult to know how one product or service differed from the other … unless you got on the phone with a sales rep.

Today, though, 57% of the sale happens before someone even speaks to your company, according to Google.

B2B ecommerce is a streamlined way for professional buyers to purchase complex goods or services. It transforms the opaque and intangible into transparent and concrete. It’s the logical next step based on how customers want to buy.

Here are the five most common B2B ecommerce models … and how each of them works.

1. Traditional, direct-to-consumer model

Bookpal was founded over a decade ago in Irvine, CA.

Their premise is simple on the surface. They sell books in bulk.

However, here’s the wrinkle.

The end customer might be the consumer. But they sell wholesale to businesses, schools, and other large organizations.

The tricky part was creating an online experience that reflected both, without sacrificing the other.

Somehow they managed to pull it off, increasing order volume 211% in less than three years. The site has also seen a 40% conversion rate increase and another 19% increase average order value within 90 days.

bookpal

The key, according to founder Tony DiCostanzo, was to give buyers a B2C experience they could relate to.

“Even though B2B customers might be utilizing their employer's checking account versus their own, he added, ‘you want to give them an experience that resonates with what they're familiar with and rewards them for similar behaviors.”

Tony DiCostanzo, Founder, Bookpal

Tony and his team looked to other popular retail brands for inspiration. They considered the experience their customers would receive at Nordstrom or Pottery Barn, adopting a similar functional aesthetic.

It wasn’t all the same, of course. But by adopting an ecommerce model, they were able to provide an easier way for businesses to consume their inventory, evaluate volume pricing, and get an Amazon-like expectation of delivery.

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This same-but-different online experience removes buying friction from the purchasing process. Simple tweaks make it easier to buy, like highlighting someone’s price for them. According to Tony:

"If they typed in 100, the 100 column would highlight. If they typed in 1,000, the 1,000 pricing highlighted, and it would give them what their subtotal was for that book. Those types of things really helped to remove the friction in the purchasing process as far as how much 75 copies would cost versus 125."

evaluate volume pricing

Image via Marketing Sherpa

B2B ecommerce is similar in many ways to the typical B2C one you’re used to.

Products are organized into a logical hierarchy. You can browse and add them to your cart. You can even checkout and pay in many cases. Then there’s lots of surrounding white space to minimize distractions.

They might be buying hardware and software for the first time, for example, to scale their operations.

For example, Aeris sells IoT (Internet of Things) connectivity to businesses. We’re talking large, custom orders with big companies.

But they recently split off Neo as a self-service, ecommerce model to expand into smaller markets.

There are two components in each sale. The first is the hardware device or SIM card. The second is the ongoing software, or 3G/LTE connectivity. They’ve been able to productize a complex service by standardizing price for both.

For example, SIM cards range from ~$3 to 5 each, depending on the quality.

pricing by quality

Rate plans are then broken down based on data requirements and connection speeds.

pricing breakdown by consumer requirements

Adding all of this stuff up on scratch paper wouldn’t work. So they also helpfully provide a simple calculator to do the heavy lifting for you. Simply punch in your SIM type, number of units, and connection preferences:  

pricing calculator

And they come back with an easy-to-understand pricing scheme broken out on a monthly basis.

easy price breakdown

You can also do a deeper dive into each product you’re buying. You can see an expanded description of how 2G / 3G SIM cards compare, along with how they’re packaged or sold.

expanded product description

Then, you can purchase and select shipping. Just like your favorite online clothing retailer.

payment shipping methods

Shopify Scripts can be used to increase average order value or reward loyal customers at this step.

For example, you could require a $100 order minimum to unlock free shipping. “Nine out of ten customers say free shipping No. 1 incentive to shop online more,” according to a Walker Sands Future of Retail reported in MarketingLand.

Bookpal does exactly that, offering free ground shipping on orders over $100.

free shipping over $100

Scripts can also create a new customer tier to automatically give VIP customers free shipping on repeat orders. Amazing Prime customers spend twice as much as non-Prime ones. Convenience sells, apparently.

Segmenting customers also helps you determine pricing and payment methods for each. For example, accounts under $250,000 in revenue can sign up directly for mobile-payments from Square.

segmenting customers

But once you cross that threshold, a new option to speak to the sales department unlocks.

qualified segment

Medical device company, Medline, will show off their product inventory for all to see. However, you’ll have to login or create an account to view pricing details.

account required for pricing

They’ll even ask you payment terms, like credit card vs. net 30, when creating your account for the first time.

payment info required for pricing info

This allows each company to begin the segmentation process. Now, they can get a better understand of who they’re dealing with, how to satisfy them, and who to route them to internally.

2. Selling to multi-product retailers

B2B ecommerce isn’t one-size-fits-all.

Many that sell direct to consumers also might sell to retailers. A lot, in fact.

Take Blake Envelopes out of the UK. Businesses can buy office products direct from their site.

Blake Envelopes selling to retailers

But they can also purchase the exact same products from big box, local retailers, too. For example, these Wallet Peel and Seal Diamond envelopes are also available at EBB Paper, Express Envelopes, Premier Paper, and, of course, Staples.

multi-product retailer

(Unfortunately, Dunder Mifflin is not an option at the moment.)

Selling to multi-product retailers is common in the apparel industry. The Elephant Pants uses a friendly store locator to help customers find where their products are locally sold.

store locator

There’s a subtle, secondary reason for these companies to show off local retail stores. It gives them social proof with third-party validation. It increases credibility for those in the first category who are buying direct.

3. White-labeling for resellers

B2B sales are unique because the person you’re selling to may not actually benefit directly from your product or service.

In many cases, you’re selling to an intermediary. You might not even talk to the actual end user at all.

White-labeling and licensing become common in this case. It allows you to standardize how products are created, packaged, and sold.

It gives you the ability to control the purchasing and fulfillment. You can focus on where you excel in product design while enabling an independent sales force to be the ‘boots on the ground’ for you.

Firerock creates custom, prefabricated masonry, flooring, roofing, window and door products. They have their hands full with just that description alone.

Firerock white labelling for resellers

So they don’t sell direct. Instead, they only work with a network of pre-qualified dealer and certified installers who sell to the end user.

certified dealer locator

This sales model also allows Firerock to sell directly to people who intimately understand their products (which isn’t always the case with the end-user).

Firerock can expand their product offering, detailing all of the unique specifications that make their products unique (and thus, more expensive).

product specifications

Working with a smaller number of certified dealers translates into higher lifetime customer values. They’re selling more products to fewer customers, as opposed to selling one product to exponentially more end-users.

That means they can step-up customer acquisition efforts. For example, they offer free, concrete samples (literally) that support their offering’s value. This would be cost prohibitive if they were operating under the direct-to-consumer model.

free sample kit

Their promotional efforts also become laser-focused. They’re able to invest all of their resources into a unified message on why dealers should work with them exclusively. All of their collateral, like the homepage video, speaks to that one value proposition.

value proposition video

The alternative? You try to ‘sell’ all of the individual products, instead, which only spreads resources even thinner without making the same impact.

4. Warehousing virtually

Today’s B2B buyers “don’t require face to face contact,” according to insights from the Inside Sales Virtual Summit. 75% of them are already influenced by social. They know what’s going on and what they want.

Beyond specs, they also know the budget. There’s money to spend that needs to be spent.

So you can make difficult, custom sales easier to navigate.

For example, United Material Handling designs and builds warehouse solutions. A food and beverage company might come to them, looking to store perishable goods, which need to be turned over every few days.

Every job is custom, then. That F&B solution will differ dramatically from another which might have zero product turnover.

However, they’ve simplified the buying process on their site by allowing potential customers to search their inventory.

United Material Handling warehousing virtually

Fast turnaround times are key for these buyers. If the supplier has to order material, it could kill timelines.

So this inventory feature gives customers expectations on both availability and pricing, instantly.

pallet flow

They can continue adding products to their “System.” All without ever having to speak to someone.

It’s only when they can confirm the entire order details do they submit to close the final details with a sales rep over the phone.

submit order form

The company can then work out payment details, delivery specifics, and more.

That allows more stakeholders to get involved. Most B2B purchases (70%) require more than two decision makers. A third requires more than five. And “81% of non-C-suiters have a say in purchase decisions.”

Adopting a B2B ecommerce model can help you overcome a lot of the buying friction you feel now. However, there will always be a need to adapt to multiple buyers for the largest, complex sales.

5. Wholesaling to retailers

The final major B2B ecommerce model is wholesaling. It allows a very specific customer segment to purchase in bulk, often at discounts, to then re-sell your product later to consumers.

Selling direct-to-consumers sounds amazing. Until you realize that juggling tens of thousands of $100 one-off purchases, support, etc. doesn’t scale as easily as you’d assume.

Wholesaling solves that (or at least, augments it). You can pre-approve specific companies that will order in greater quantities. More revenue, less logistical headaches, and even fewer dollars spent on shipping and support.

Up to 80-90% of The Elephant Pants buyers create orders directly in their wholesale ecommerce platform.

The Elephant Pants wholesaling to retailers

Wholesale customers can be segmented in the backend of Shopify Plus. You can create custom price lists for this new customer segment and automatically apply any discounts to products directly.

custom price lists

You can even apply discounts or order customizations across entire product collections.

pricing discounts customizations

You can then assign these price lists based on someone’s user role when they create an account. Or you can create a completely separate login area for wholesale customers only.

Teroforma Wholesale login

Alibaba takes it a step further, creating an entirely separate microsite to help connect people with a list of their suppliers to get instant quotes.

Alibaba microsite

There are a few downsides with the wholesale model, though. All of which extend to how you craft a wholesale ecommerce website experience.

Volume discounting means you’re taking a margin hair-cut right off the top. The buying cycle tends to be longer initially, requiring more customer onboarding. And then you’re losing control of your own brand’s products.

Your buyers will turn around and sell them to direct to consumers.

That means you’re potentially jeopardizing the first-hand account someone has with your products. While you could also be creating competition for yourself if selling direct might be in the cards one-day.

Many of the companies listed so far blend models in short-term. They might dabble in two or three of them. But at a certain point, a definitive direction is usually made.

Bookpal only sells books in bulk. They only do wholesale. The lowest quantity they offer is 25 books that guarantee several hundred dollars per order -- well above the threshold any normal consumer might consider.

single ecommerce model

That might not work for everyone. But it works especially well for them, delivering double-digit growth over the past few years.

Conclusion

It’s true that the B2B ecommerce market offers tremendous potential.

The total size is expected to eclipse the B2C market in the next few years.

However, shifting your website is often a shift in your business model.

Each ecommerce type has its own pros and cons. The decision creates a rippling effect that affects your supply-chain, sales, and just about every other major decision.

That’s why many offer a mix of these major five models to begin with.

That way, you can hedge your bets in the short-term to see which enables you to capitalize best in the long-term.

Photo of Brad Smith

About the Author

Brad Smith is the founder of Codeless, a SaaS content creation company. Frequent contributor to Kissmetrics, Unbounce, WordStream, AdEspresso, Search Engine Journal, Canva, and more.