B2B and B2C – WHAT IS IT
The differences in business processes and functionality of B2B and B2C companies are significant and systemic.
B2B or Business to Business
This is a segment in which manufacturers and importers sell to distributors, dealers, online stores and retailers.
In B2B, a company deals with a different business: wholesale buyers will use the purchased products to make a profit, for example, by reselling them further or offering installation, delivery, installation, and maintenance services.
In B2B, 80% of customers are usually regular.
B2C or Business to Consumer (or Customer)
these are retail companies selling goods directly to the end consumer.
A B2C company already works with the end consumer, who buys goods directly for his own use.
In B2C, you have to pay each time to re-attract current customers and, unfortunately, the frequency of purchases in B2C is several times less frequent than in B2B.
Different target audiences with different needs lead to differences in online stores of wholesalers and retail companies.
Let’s consider the difference between B2B and B2C and understand how this affects solutions for automating wholesale business processes.
DIFFERENCES IN ONLINE STORES
1) Registration
1.1) B2B
The client enters, attracted by the goods on the “showcase”. The buyer studies the assortment, selects the goods and immediately places an order, registration often occurs already when placing the order. The possibility of purchasing without registration is also practiced – with an indication of the terms of delivery of the goods.
Retail online stores often offer “one-click registration” – instant registration with a link to Google services or popular social networks like Facebook. This allows you to get rid of complex registration and login forms, password recovery systems. The user’s mail, name and photo are added instantly, while the mail is already verified, and the data exchange has a high level of security. Everything is simple and fast.
1.2) B2B
In B2B, complex settings are required already at the registration level, the work with which is most often delegated to managers. The scheme by which the client saw the product and made an order does not work in the case of wholesalers due to the lack of personalization of prices, discounts, payment terms, shipment, paperwork, etc.
A wholesale client usually needs – “landing” on the site in a specific place, for example, directly in the personal account, with all the data for a quick start. However, in order to quickly create accounts for B2B clients, their configuration must provide for many factors:
- form of business organization – legal entity or individual (sole proprietor);
- country of company registration – Moldova, other countries;
- taxation features – for example, is it a VAT payer;
- price scheme by which he will make purchases of goods or for services – choice of service option;
- features of the contract and work with documents;
- payment features – prepayment, staged or post-payment;
- features of forming an order and shipment of goods or delivery of services;
- relationship with the supplier company – distributor, dealer, etc.
A system that allows you to quickly configure a user account based on these factors will significantly simplify and speed up the start of working with him.
2) Verification
2.1) B2C
Often in B2C, verification occurs by confirming the client’s mailbox, and when registering in one click or making a purchase without registration, it is not required at all. Usually, the client makes a payment – the goods are sent to the specified address, and this is where the interaction ends.
2.2) B2B
Often in B2B platforms, verification can be provided in several types for different cases:
- with independent registration of the client;
- when adding a client who already exists in the database;
- with confirmation of the manager, etc.
Processing registration or verification of the client in B2B is mandatory.
3) Personalization
3.1) B2B
In B2C, goods, prices, and purchase conditions are the same for everyone without exception.
This is required by the legislation of many countries as part of consumer protection. In addition, retail usually does not imply personalization for first purchases.
Most often, the need for special discounts arises only to motivate repeat purchases: for this, stores use promotional codes for discounts or loyalty programs with cumulative discount gradations.
3.2) B2B
Wholesale sales usually require large-scale personalization of conditions for the client: from prices and discounts to product range, categories, and batches of goods.
It is the personalization of cooperation that is the main advantage of working with a selected supplier from the point of view of a wholesale company.
Many system functions are subject to personalization:
- Prices and discounts. They are calculated personally for the customer using a complex algorithm that takes into account many factors and variables of various hierarchies. Sometimes there are dozens of such factors, which is why calculating the discount coefficient requires a lot of labor.
Simple discounts — such as discounts on the amount or volume of an order, gift discounts when buying illiquid assets — need to be displayed to counterparties to understand the mechanism of their work and motivate them to use these offers. - Promotions and loyalty programs. Automation of business processes frees up to 60% of managers’ time, which can be directed to marketing tasks. This implies the development of more complex mechanics of discount offers — additional discounts and special offers for clients who came through some advertising channel, referral discounts, bonus accounts, loyalty programs with a complex hierarchy of clients, etc.
- Product range. A company present in several markets or in several segments at once can vary the range of goods available to different categories of clients. A good B2B platform offers wide possibilities for customizing the catalog assortment depending on the type of clients.
A catalog is a set of components that can be grouped, moved, collected into separate categories according to a number of characteristics, form virtual categories, hide and show products or their groups to different clients. - Units of measurement and minimum order quantity. If in retail all products are sold individually, then in wholesale some customers can order products in tens or hundreds, others – in packages, boxes, pallets. In this regard, a minimum order quantity appears, which for small wholesale companies can be 1 package, and for large wholesale – 10.
- Currency. For customers from different countries, you can customize the display in different currencies, instantly converting them in the system, say, into Moldovan lei, dollars or euros.
- Warehouse balances. The display of balances can also be personalized for the customer, integrating the platform with many data accounting systems from different suppliers, warehouses, branches.
4) Working with the catalog and content management
If in B2C a high-quality image and description of the product are important, then for B2B this is not critical. Purchasing managers know the products they work with well, so they only look for the name or the article number of the product. For quick order formation, only modifications are important – color, size, weight, etc.
The client spends most of their time in the catalog, so logically organized settings of the catalog module are of paramount importance in B2B. Thoughtful search and sorting of products is important: according to Amazon, smart search in B2B gives up to 70% of the result in sales. Therefore, text search in the catalog should be able to adapt to errors in the request and various endings, very quickly indexing the product database.
Various sorting of products by novelty, popularity, date of addition, category characteristics also help to simplify work with the catalog.
These features are also needed in retail, but in B2C online stores simply do not offer such solutions to retail customers. There, customers are forced to simply manually review the catalog, which is not so difficult if it contains dozens, maximum hundreds of items.
But in B2C, catalogs already include tens and hundreds of thousands of items, so well-thought-out sorting and searching are critically important for wholesale customers to place an order.
A convenient solution for B2B platforms is a tabular display of the catalog or list: the absence of the need to add each item to the basket individually will save the manager both time and nerves. And if the buyer traditionally prefers to work with tables in Excel, he will appreciate the option of downloading the catalog to an xls file.
5) Transaction volumes and payment
The volume of B2B transactions is larger than in B2C, which, together with the peculiarities of business organization, affects the terms of payment. If retail most often works on an advance payment basis, then wholesale usually allows for a payment deferral of up to several months and payment in stages.
Along with product reservation, the balance of payments and credit limit can also be additional monetization tools, positively or negatively affecting pricing and discounts for a specific client — that is, they can also act as personalization factors.
B2B platforms provide tools to simplify work with payments — such as a payment schedule or quick preparation of financial reports. A common case is payment for each order separately, which can be optimized with the B2B solution used in the company. The financial module of the platform tracks the credit limit, accounts receivable, overdue payments for individual orders.
6) Order processing and handling complaints
Retail orders are usually small, so they are processed as they are received. The manager checks the availability of the goods in the warehouse and immediately takes the order into work. Wanting to make a purchase “here and now” and receive the order as soon as possible, the consumer himself finds a replacement for the missing product in another online store.
Since in wholesale purchases the transaction is of a deferred nature, and orders can be divided into several parts, wholesalers are ready to wait for the required item to appear, agree to shipment in batches, and accept offers for replacement.
In retail, only one type of transaction is common: order – confirmation – payment – delivery. Wholesale companies use several types of transactions: prepayment, postpayment, factoring, letter of credit. All these types of transactions should be supported by the selected B2B platform.
Movement by order status – workflow – in B2B should be displayed to the client, who should be able to see all the current information on the order at any time: its assembly, shipment, movement from warehouse to warehouse.
B2B solutions should also be able to combine several orders of one client (or several, to optimize logistics) and vice versa, split them, allowing for shipment in parts.
Work with complaints is structured similarly to orders: they are linked to a specific order and receive statuses that the client can track independently, without involving a manager. This saves resources usually spent on tracking complaints, which takes a lot of money and is a weak point for many large companies.
7) Payment Acceptance
Payment methods available in Moldova
- Cash
- Bank transfer
- By bank card online
- By bank card using a POS terminal
- Payment Terminals (Cash-In or ATM)
- Payment using e-wallets (Payment systems)
- Cash payment at banks or Posta Moldovei
- A promising option for payment acceptance – Instant payments for business
8) Working with documents
A retail online store requires a minimum of documents — invoices and delivery notes. But working in B2NB requires a full set of documents for each order. Contracts, reconciliation reports, invoices, and consignment notes can be either generated in the B2B platform system with unloading if necessary, or loaded from third-party accounting systems like 1C.
B2B platforms also allow you to work with third-party price lists, which are best integrated through ERP for regular updating. It is very important that the data is updated promptly: in B2C, it is enough to update prices and balances once a day, while in B2B, this data can change significantly during the day.
Another type of document that can be provided to wholesale customers through B2B platforms is marketing materials for sales: catalogs and booklets, flyers, special POS materials for placement at the point of sale. These products can be downloaded as pdf documents and sorted by brands, categories and specific products.
9) Behavior pattern and customer classification
The customer behavior pattern in B2C is quite easy to study by classifying customers into groups depending on gender, age and preferences. Unlike retail, wholesale customers are difficult, and sometimes impossible, to systematize: their behavior is influenced by dozens of different factors with varying degrees of priority.
Classifying the behavior pattern of wholesale customers is also difficult because one purchaser can manage several accounts, and sometimes, on the contrary, several purchasing managers use the same corporate account.
That is why it is better to use proven solutions in B2B automation. Such systems allow you to organize business process management as efficiently as possible.
10) Administration
In b2c, a regular admin panel provided by any CMS engine is enough to manage the work of an online store. There are relatively few customers here, their behavior is predictable, orders are small, personalization is not needed. The manager only needs to make sure that the goods are in stock, confirm the order, verify that the payment has been received and deliver.
Management of B2B solutions is carried out by many people, both on the supplier’s side and on the buyer’s side, where one client can work on behalf of several legal entities with different terms of cooperation for each. Therefore, B2B developments should provide for a hierarchically complex system of access rights to various sections of the platform.
Managers managing the platform on the supplier’s side can perform the following functions:
- confirmation and processing of registration;
- adding and verifying clients;
- personalization of prices and terms of work with each client;
- setting up the catalog and enriching product content;
- working with “abandoned carts”;
- customer service – a personal manager to contact with any questions;
- document flow, management of financial or marketing issues.
Therefore, in B2B, the ability to separate rights and access is extremely important. At the same time, complete and detailed information on the company should be available under the account of the general manager.
11) Marketing
Marketing in B2C focuses on increasing sales and order amounts. In B2B, marketing efforts are aimed at increasing the volume of orders over a certain period of time.
The most important thing that automation of business processes in B2B allows you to achieve is to free up resources for the implementation of marketing tasks.
Marketing tools of B2B marketplaces allow you to implement non-standard solutions:
- Individual discounts for customers who have been absent for a long time;
- Automatically scheduled calls to customers who have changed their minds about placing an order after adding products to the cart (working with “abandoned carts”);
- Discounts to increase the check (for a certain order amount);
- Gift discounts when buying illiquid goods;
- Special offers in email newsletters for customers who did not visit the site, visited but did not make purchases, made purchases less than a certain amount, did not click on certain products or clicked on certain products more often than others;
- Banners and personalized promotional offers,
- Virtual product categories created for a specific customer.
Typically, it is necessary to assign separate employees to solve these problems.
Summary
The main mistake companies make is expecting a B2C platform to become the basis for a similar, maximally simple solution in B2B. Although wholesale and retail trading platforms look similar, they have critical differences in the organization of business processes.
The complexity of a B2B platform is primarily due to non-linear multi-factor algorithms developed for customer service. Such algorithms have many variables with different priorities and determine:
- pricing and discounts;
- promotions and bonuses;
- terms of cooperation;
- display of goods in the catalog;
- access and rights of managers.
