Business-to-business (B2B or BtoB) is a situation where one business sells products or services to another business. The main reasons for B2B transactions are the following:
- A business needs source materials from another business (e.g., a car manufacturer buying car parts from OEMs)
- A business uses the services of another business to operate (e.g., using the services of Slack to communicate inside the business or Google Workspace for outside communication)
- A business re-sells another company’s goods or services (e.g., a car rental broker mediates the services offered by suppliers)
Business-to-business is often compared with business-to-consumer (B2C) which refers to selling products or services directly to consumers. In B2B there are usually more people involved in the decision-making process than in B2C where the consumer usually makes the decision alone. Also, in B2B the parties have similar negotiating powers. Both sides have legal counsel and professional staff. For these reasons B2B transactions usually take more time than B2C transactions since they typically involve some form of negotiation and drawing up a contract.
B2B can be used to describe both traditional and e-commerce transactions. For international B2B companies, it is crucial to at least have a website describing their product or service. However, more and more companies are taking their business to online platforms altogether and creating an e-commerce website similar to B2C sites. Instead of receiving orders by telephone or email, they are received digitally, reducing the manual labour done by sales reps.