User:Jdcruz7/Business-to-business

Business-to-business (B2B or, in some countries, BtoB) is a situation where one business makes a commercial transaction with another. This typically occurs when:


 * A business is sourcing materials for their production process for output (e.g., a food manufacturer purchasing salt), i.e. providing raw material to the other company that will produce output.
 * A business needs the services of another for operational reasons (e.g., a food manufacturer employing an accountancy firm to audit their finances).
 * A business re-sells goods and services produced by others (e.g., a retailer buying the end product from the food manufacturer).

Business-to-Business companies represent a significant part of the United States economy. This is especially true in firms of 500 employees and above, of which there were 19,464 in 2015, where it is estimated that as many as 72% are businesses that primarily serve other businesses. One possible argument of economics to explain the levels of Business-to-Business activity is that it allows for business segmentation.

B2B is often contrasted with business-to-consumer (B2C) trade.

History of Business-to-Business
The history of business-to-business (B2B) commerce can be traced back to the earliest forms of trade and bartering. However, the development of B2B as a distinct concept and practice has undergone significant evolution over the centuries. This section provides an overview of the major milestones and key developments in the history of B2B.

Early Trade and Bartering:

B2B transactions have their roots in the early days of human civilization when communities engaged in trade and bartering activities. Local merchants would exchange goods and services with each other based on mutual needs and preferences.

Emergence of Marketplaces:

As economies grew and trade expanded, physical marketplaces and trade routes began to emerge. These marketplaces acted as hubs for B2B transactions, enabling merchants to connect, exchange goods, and negotiate deals.

Industrial Revolution and Mass Production:

The Industrial Revolution of the 18th and 19th centuries revolutionized manufacturing and introduced mass production. This era witnessed the rise of factories, increased specialization, and the need for efficient supply chains to support B2B transactions.

Development of Intermediaries:

As markets became more complex, intermediaries such as wholesalers, distributors, and agents emerged to facilitate B2B transactions. These intermediaries helped bridge the gap between producers and buyers, handling tasks such as bulk purchasing, inventory management, and logistics

Introduction of Electronic Data Interchange (EDI):

In the late 20th century, the advent of computer technology led to the development of Electronic Data Interchange (EDI) systems. EDI revolutionized B2B communication by enabling the electronic exchange of structured business documents between organizations. It replaced traditional paper-based methods, improving efficiency and accuracy

Rise of the Internet and E-commerce:

The widespread adoption of the internet in the 1990s transformed the B2B landscape. Online platforms and marketplaces emerged, facilitating B2B transactions and opening up new opportunities for global trade. E-commerce allowed businesses to connect and transact directly, reducing the reliance on intermediaries.

Advancements in Supply Chain Management:

The late 20th and early 21st centuries witnessed significant advancements in supply chain management, which greatly impacted B2B transactions. Concepts like just-in-time inventory, vendor-managed inventory, and supply chain integration enhanced efficiency, reduced costs, and improved collaboration between businesses

Shift towards Personalization and Customer-Centricity:

In recent years, B2B transactions have seen a shift towards personalization and customer-centric approaches. Businesses have recognized the importance of building strong relationships, understanding customer needs, and providing tailored solutions. Account-based marketing and customer experience management have gained prominence in the B2B arena.

Integration of Technology and Automation:

The integration of technology, such as artificial intelligence, machine learning, and robotic process automation, is revolutionizing B2B transactions. Automation streamlines processes, enhances data analytics, and enables more efficient supply chain management, paving the way for improved B2B interactions.

Future Trends and Outlook:

The future of B2B commerce holds further advancements in technology, including the Internet of Things (IoT), blockchain, and augmented reality. These innovations have the potential to transform supply chains, enhance transparency and trust, and enable new forms of collaboration and value creation.

Organization[edit]
B2B involves specific challenges at different stages. At their formation, organizations should be careful to rely on an appropriate combination of contractual and relational mechanisms. Specific combinations of contracts and relational norms may influence the nature and dynamics of the negotiations between firms.[citation needed]

Vertical B2B model[edit]
Vertical B2B is generally oriented to manufacturing or business. It can be divided into two directions: upstream and downstream. Producers or commercial retailers can have a supply relationship with upstream suppliers, including manufacturers, and form a sales relationship. As an example, Dell works with upstream suppliers of integrated circuit microchips and computer printed circuit boards (PCBs).

A vertical B2B website can be similar to the enterprise's online store. Through the website, the company can promote its products vigorously, more efficiently and more comprehensively which enriches transactions as they help their customers understand their products well. Or, the website can be created for business, where the seller advertises their products to promote and expand transactions.

Horizontal B2B model[edit]
Horizontal B2B is the transaction pattern for the intermediate trading market. It concentrates similar transactions of various industries into one place, as it provides a trading opportunity for the purchaser and supplier, typically involving companies that do not own the products and do not sell the products. It is merely a platform to bring sellers and purchasers together online. The better platforms help buyers easily find information about the sellers and the relevant information about the products via the website.

Growth of e-procurement[edit]
A 2022 Amazon report highlighted a "rapid transformation of B2B e-procurement in recent years", with 91% of the B2B buyers surveyed in their study stating that they preferred online purchasing.

Comparison with B2C[edit]
In B2B commerce, it is often the case that the parties to the relationship have comparable negotiating power, and even when they do not, each party typically involves professional staff and legal counsel in the negotiation of terms, whereas B2C is shaped to a far greater degree by economic implications of information asymmetry. However, within a B2B context, large companies may have many commercial, resource and information advantages over smaller businesses. The United Kingdom government, for example, created the post of Small Business Commissioner under the Enterprise Act 2016 to "enable small businesses to resolve disputes" and "consider complaints by small business suppliers about payment issues with larger businesses that they supply."

The principal difference between B2B and B2C is that the first one refers to commerce transaction between manufacturer and retailer, and the second one it is the retailer supplying goods to the consumer. In B2B there are business people on both sides, whereas in B2C there is normally one business person and one consumer. In the first case, the decision is pursued by need (because the other business needs it), and in the second case, they are expectations rather than needs. B2B has many sellers and different stores, whereas B2C, is usually just one supplier. B2B concentrates on raw data for another company, but B2C focuses on producing something for consumers. A B2B transaction entails direct-sourcing contract management, which involves negotiating terms that establish prices and various other factors such as volume-based pricing, carrier and logistics preferences, etc. B2C transaction is clearer, it has spot sourcing contract management that offers a flat retail rate for each item sold. Time is also different as B2B has a slower process than B2C which is concluded in shorter periods (that could be minutes or days).

Business-to-business generally requires an upfront investment whereas business-to-customers do not need a business to spend money on infrastructure. The last difference mentioned here is that in B2B, lagging behind in the digital transformation, have to deal with back-office connectivity and invoicing a number of different partners and suppliers, while B2C results in more seamless transactions as options, such as cyber-cash, allows the business to accept a wider variety of payment options. B2B typically only allows payment via credit card or invoice, making the purchasing process longer and more expensive than with B2C. B2B, as there are normally bigger amounts involved over longer periods of time, usually have higher costs than B2C, which consists of quick, daily transactions. Businesses typically want to buy on net terms, meaning that B2B merchants have to wait weeks, if not months to get paid for their goods or services. As a result, smaller businesses with less capital often struggle to stay afloat. In B2B, brand reputations greatly depend on the personal relationship between businesses. On the other hand, in B2C, the business's reputation is often fueled by publicity through the media.

In many cases, the overall volume of B2B (business-to-business) transactions is much higher than the volume of B2C transactions. The primary reason for this is that in a typical supply chain there will be many B2B transactions involving subcomponents or raw materials, and only one B2C transaction, specifically the sale of the finished product to the end customer. For example, an automobile manufacturer makes several B2B transactions such as buying tires, glass for windows, and rubber hoses for its vehicles. The final transaction, a finished vehicle sold to the consumer, is a single (B2C) transaction.

B2B2C[edit]
B2B2C means "business-to-business-to-consumer". According to the TechTarget website, the purpose of the terminology is to "extend the business-to-business model to include e-commerce for consumers". B2B2C aims to "create a mutually beneficial relationship between suppliers of goods and services and online retailers". According to Lomate and Ramachandran, it enables manufacturers (the first "B" in B2B2C) to connect with, understand and serve their end customers ("C") without undermining their sales and distribution networks, including online sellers (the second "B") or excluding them from continuing customer engagement.