4 MINUTE READ
Business-to-business (B2B) e-commerce is growing as the world becomes increasingly reliant on technology, especially during the COVID-19 pandemic. Read on to learn more about what B2B e-commerce is, its characteristics, an analysis of the current market, and how to set up e-commerce for your own business with the help of borderless™.
What is B2B e-commerce?
Business-to-business (B2B) transactions are those that occur between businesses, as opposed to transactions that occur between consumers and businesses (C2B).
B2B e-commerce transactions are simply B2B transactions that occur online through companies’ websites to purchase goods and services. B2B e-commerce is a vital part of the supply chain for businesses.
For example, ospitals engage in B2B e-commerce with medical supplier marketplaces to purchase PPE gear and other medical equipment. The average B2B e-commerce purchase (called AOV, or average order value) is $2,067, which is much larger than the B2C AOV of $171.
Without an efficient infrastructure in place for B2B e-commerce, the many products that we rely on for everyday use would not be able to be manufactured and distributed worldwide in an on-demand economy.
What are the characteristics of B2B e-commerce?
One key characteristic of B2B e-commerce, and B2B markets in general, is the sheer volume of products exchanged in this market. This is because B2B markets are largely involved with the supply chain of businesses.
For example, if a consumer buys a laptop from Dell online, that is only one product and one transaction total, compared with the hundreds, if not thousands, of product pieces between Dell and its supplier businesses that were needed to manufacture and assemble the computer.
Number of Buyers
Another central characteristic of B2B e-commerce is that there are fewer buyers, but each buyer makes up a larger share of the market. Compared with the millions of consumers that are purchasing products online, the number of buyers are smaller in size for B2B.
Relationships between buyers
A third characteristic of B2B e-commerce is that it is focused more on long-term relationships/partnerships. Whereas consumers will often fluctuate whom they are buying from, businesses often set up more formal agreements for longer periods of time.
Compared to retail e-commerce, B2B e-commerce relies much more heavily on international transactions. This reliance on international trade presents legal, cultural, and regulation-based challenges, as well as issues with high transaction costs in the B2B payment process.
B2B E-Commerce Market Size
Although B2B e-commerce is making up a larger portion of total B2B transaction volume, the B2B industry is still heavily dependent on paper checks. In fact, 51% of US B2B payments are still made by paper check; thus there is a clear opportunity for growth in this space.
The global business-to-business e-commerce market size is valued at $6.7 trillion dollars in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 17.5% from 2020 to 2027, to $20.9 trillion dollars. Right now it is almost double the B2C market of $3.2 trillion dollars.
In 2018, the US B2B e-commerce market topped $1.134 trillion, which is 12% of total US B2B sales for the year. This percentage is expected to climb to 17% by 2023, which is still a very small percentage of total B2B sales overall.
How has COVID-19 affected B2B e-commerce?
The coronavirus pandemic has drastically impacted the world economy, and its far-reaching effects are already apparent in B2B e-commerce statistics.
Due to the on-going COVID-19 pandemic, there is a rising inclination among customers towards online shopping since brick and mortar shops have closed. The same is true for B2B transactions. Conducting business online, especially via e-commerce, has never been more important and a requirement for growth.
In fact, according to a recent McKinsey and Company report, 66% of B2B leaders now believe ecommerce solutions are essential, up from 48% pre-COVID.
How can you set up your business for B2B e-commerce?
In order to set up your business for B2B e-commerce, you need to do the following things:
Create and maintain an effective website
Having a strong website is integral to succeeding in the B2B e-commerce space. 83% of B2B buyers look at the website before purchasing. Your website is the number one driver of sales, so you need to make sure that you build a visually appealing and easily accessible website for fellow businesses.
Dissect your products into smaller chunks
In order for your business to succeed online, you must dissect your offerings into smaller products/services that buyers can easily understand. You will operate in a space built on an on-demand economy and mindset.
Have clear pricing (if possible)
Customers are used to shopping online and paying for things upfront in order to get them delivered. The same behaviors are seen in B2B e-commerce. The clearer your product offering is and pricing the more likely you are to convert carts. Getting paid upfront also improves your cash flow which helps grow your business.
Discuss with your current customers the transition to online sales
If your B2B business is like most B2B businesses, it is heavily dependent on manual, paper-based payments. You will need to communicate with your customers the change to a digital payment system and transition your paper record-keeping to online.
Choose the right online payment method
In order to conduct B2B e-commerce, you will need to be able to make and accept payments online. There are a number of different methods to accept online payments where credit cards are most dominant however they are expensive. Alternative payment methods like online bank payments are now becoming popular in B2B e-commerce as they are more secure and affordable for high value transactions.
How borderless™ helps
borderless™ helps your business conduct B2B e-commerce in several key ways, making it the ultimate payments solution for your B2B business:
Easy Process: Get Started in Minutes
Signing up for a borderless™ account is easy, fast, and free. There are no sign-up fees, account fees, or hidden fees. Once your account is verified, you can begin making and requesting payments in 1-click!
Quick B2B Pay
Unlike traditional methods of B2B payments, borderless™ payments require no sharing of private bank information. Business accounts with borderless™ receive a unique handle, like on social media, that other businesses can use to easily pay you. You also receive a PayMe™ page that you can link to your website, on an email, or even with a scannable QR code.
One account for all future clients and suppliers –because that’s all you need. You can access your payment history with a searchable dashboard that allows you to easily keep track of all your payments in one, convenient place.
borderless™ offers low, tiered pricing for local B2B e-commerce payments, allowing you to keep more of your hard-earned money. There is a max fee of $5 for the first $2,000, plus just a 0.1% fee on any amount above $2,000.
Our competitive pricing is not just limited to domestic payments. If your business conducts B2B commerce internationally, borderless™ is still the payment solution for you, charging just 2% plus a small flat fee, with a capped fee of $200.
At borderless™, we know that the ability to make and receive payments internationally is critical to the B2B e-commerce industry. We also know how tedious international payments are. Our international direct debit solution allows you to conduct B2B e-commerce seamlessly and affordably, unlike with traditional payment methods.
borderless™ is currently available in Canada, Australia, and the United States, with plans to expand to 26 additional countries by 2021, allowing you to engage in B2B e-commerce all around the world.
borderless™ offers several methods of integrating our payment solution. In addition to our no-code solutions (Dashboard and PayMe™ page), we offer the ability to integrate our direct debit gateway onto your website using only a few lines of code.
This allows your B2B business to quickly and efficiently conduct e-commerce by allowing your customers to pay with their bank right at checkout saving you time and money.
Privacy and Security
With our online payments, businesses conducting B2B e-commerce never have to share their sensitive banking information again. With borderless™, you can request payments without sharing your bank details, and your customers can securely make e-commerce payments through our payment gateway.
We also use bank-grade security protocols and highly sophisticated data encryption tools, as well as a verified network, to keep your information safe.
For additional peace of mind, you can track your payments, so that you know exactly where your payments are real-time.
Sign up today with code BORDERLESS20 to start conducting B2B e-commerce more easily and affordably. Still not convinced borderless™ is right for you? Schedule a demo today to see the product in action and request free payment processing credits today.
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