B2B vs B2C Common Features
The common features of both B2B and B2C marketplaces are very similar: user login page, search bar, filtered settings, seller reviews, shopping baskets, checkout pages, and some form of a dashboard or shopping window. While the features are similar, the differences really lie in how these platforms actually operate. The features are designed in such a way with the ideal buyer in mind– an individual, or a business.
The benefits of a B2C marketplace are quite obvious, as we’ve all used and experienced websites like eBay or Amazon. The idea of a B2B marketplace is to bring these benefits to large enterprises.
For some indirect and tail-spend categories, the purchasing company may not actually need to maintain a pool of qualified suppliers. They may not need to follow the rigid process needed for other categories. They may not even need to negotiate for prices, or maintain contracts. They could simply go to an online shop, browse for the product or services that they are looking for, compare prices and specs on an open marketplace, choose the best ones, and check out.
The new generation of B2B marketplaces emerging are “enterprise-enabled,” meaning that they understand how large enterprise purchasing works. Consequently, they are able to offer the obvious benefits of a streamlined way of buying tail-spend categories of products and services, without the pitfalls. This provides the opportunity to create better value for both buyers and sellers who participate.
B2B vs B2C Common Features
The common features of both B2B and B2C marketplaces are very similar: user login page, search bar, filtered settings, seller reviews, shopping baskets, checkout pages, and some form of a dashboard or shopping window. While the features are similar, the differences really lie in how these platforms actually operate. The features are designed in such a way with the ideal buyer in mind– an individual, or a business.
The benefits of a B2C marketplace are quite obvious, as we’ve all used and experienced websites like eBay or Amazon. The idea of a B2B marketplace is to bring these benefits to large enterprises.
For some indirect and tail-spend categories, the purchasing company may not actually need to maintain a pool of qualified suppliers. They may not need to follow the rigid process needed for other categories. They may not even need to negotiate for prices, or maintain contracts. They could simply go to an online shop, browse for the product or services that they are looking for, compare prices and specs on an open marketplace, choose the best ones, and check out.
The new generation of B2B marketplaces emerging are “enterprise-enabled,” meaning that they understand how large enterprise purchasing works. Consequently, they are able to offer the obvious benefits of a streamlined way of buying tail-spend categories of products and services, without the pitfalls. This provides the opportunity to create better value for both buyers and sellers who participate.
Compare and Contrast B2B and B2C eCommerce
Businesses traditionally cannot use B2C marketplaces. This has always been the case for larger businesses, and is one of the reasons procurement exists as a function. There is a risk when buying goods, and the procurement team is there to protect the company from those risks.
B2C marketplaces are designed for the average consumer: an individual shopping online from home. B2B platforms are usually designed for the needs of, well, businesses! A B2B marketplace provides the due diligence and supplier screening on the buyers’ behalf, with an understanding of the needs of large enterprises. There are major differences between the way each conducts eCommerce.
B2C marketplaces often have no standards in place to help businesses through their approval processes usually involved in indirect procurement. Purchase requisition forms, purchase order forms, and approvals are not usually a part of B2C marketplaces, because again they are not designed for businesses.
A good B2B marketplace provider understands the need for approvals. After shopping, a buyer is able to “check out,” with the shopping basket becoming a purchase request. This shopping basket would move through the existing approval process of the business.
B2B vs B2C Buying Process
Most people are familiar with the buying process on a B2C marketplace, such as Amazon. Users are able to “shop” online, compare the prices of multiple vendors, read about product features, create a cart from multiple vendors, and check out by entering their purchasing information.
B2B marketplaces are a bit different. While users are able to “shop” in a very similar way, the payment and processing of orders is done according to traditional procurement rules. Businesses are able to fully integrate their information with the software of a good B2B marketplace, allowing them to sort suppliers based on the specifications laid out by their company. Purchase order forms and approval processes are automated through integrations with the marketplace platform. This provides all the efficiency and transparency benefits of a traditional B2C platform, while allowing (and even enhancing) all of the required procurement procedures.
B2B vs B2C Selling Process
Suppliers on B2C websites are usually not set up to handle the volume and required paperwork needed for large businesses to buy directly from them.
Suppliers on B2B marketplaces are usually set up a bit differently, with their aim being to sell large amounts of indirect spend items to large corporations. Suppliers can benefit from B2B marketplaces, because they are able to reach more and larger buyers without having to market to them directly.
Smaller, more sustainable, and local suppliers in particular are able to have more of a spotlight through a B2B marketplace that highlights their attributes. Ironically, one of the main drivers of the adoption of B2B marketplaces is to reinforce the localization initiative. The new generation of B2B marketplaces can filter and prioritize searches to support strategic purchasing objectives. Local businesses can, for example, appear higher on searches. In this way, without having to enforce a policy that may be abused, the objective is supported by the technology which naturally drives the desired user behavior. Previously, this was something that only individuals could do on B2C marketplaces.
Frequently Asked Questions About B2B vs. B2C
Can an online Marketplace really provide value in tail-spend purchasing for large corporates?
Yes! When procurement runs smoothly, the business makes more money. Higher revenues, lower risks, better efficiencies, and lower costs– all of the things that will get the CFO’s attention and support.
There is one particular area of the procurement function which has been getting increasing focus over recent years: the function of Indirect Procurement, Good Not For Resale (GNFR), and Tail Spend. Indirect spending accounts for 80% of the total number of Purchase Requests, Purchase Orders, and Invoices of a business– not to mention RFIs, RFQs, and RFPs!
It has been known for a long time that tail-spend is a “problem area,” meaning it is costing more than it should. This is the predominant reason why businesses across the globe have been looking at ways to optimize the way they do their indirect spend–and one of the areas gaining increasing traction is the concept of the B2B Marketplace.
How do buyers negotiate prices on a B2B marketplace?
When companies negotiate with suppliers on indirect spend items, they are unable to truly know whether or not they are getting a “deal.” This process occurs in a vacuum between the buyer and the supplier, with neither knowing the real supplies and demands at play in the pricing of the items. Plus, this process usually involves an irritating back-and-forth that created costly overhead and inefficiency for a procurement department.
One of the value drivers of a B2B marketplace is that there is transparency. Buyers can see all the prices from all the qualifying vendors, and can choose by the lowest price. However, they could also select a supplier based on other listed criteria like delivery times, location, and sustainability level.
In a B2B marketplace, you know that you are buying at competitive prices, without your procurement department having the cost overhead of trying to manage a negotiation process that is delivering limited value to the business.
What happens at the checkout of a B2B marketplace? How can businesses shop online without using credit cards?
On a B2C marketplace, individuals check out, pay with a credit card, and wait for the goods to arrive. To a business, that is the very definition of a nightmare. It is what companies have spent years trying to control and manage through complicated processes.
With an enterprise B2B marketplace, it can’t work like that. The shopping process is the same experience as buying at home. But when a buyer hits the check-out button, something completely different happens– an automated process flow goes through approvals and culminates with purchase orders arriving at the selected suppliers.
B2B vs B2C: Which Is Better?
When you consider how to optimize and streamline indirect spending to get better value in your procurement organization, you may want to consider shifting to a B2B marketplace. A B2C marketplace will simply not comply with the procedures and regulations that most procurement departments have in place, of businesses both small and large.