What is B2B (Business-to-Business)

B2B (Business-to-Business) is a business model where one company sells goods, services, or solutions to another company, rather than to end consumers (which is called B2C - Business-to-Consumer).

Simply put: This is business directed at businesses.

Key characteristics of the B2B model:

• Customers: Other businesses, organizations, or institutions.
• Sales complexity: The sales process is usually longer and more complex. Many people are involved (entire departments, purchasing committees), thorough analyses are conducted, and terms are negotiated.
• Transaction volume: The value of a single transaction or contract is significantly higher compared to B2C. Sales are often in large quantities or subscription models.
• Relationships: Building long-term, trusted relationships is extremely important. The customer is not just a "customer," but a "partner."
• Rational decision-making: The purchase decision is based primarily on logic, economic benefit, ROI (return on investment), efficiency, and reliability, rather than emotions.

Examples of B2B companies:

• Microsoft (sells software like Microsoft 365 to companies)
• SAP / Oracle (provide enterprise software solutions for resource management - ERP)
• Slack, Zoom (sell communication platforms to businesses)
• Amazon Web Services (AWS), Google Cloud (provide cloud computing services to other companies)
• Component manufacturers (for example, a company that manufactures chips and sells them to Apple or Samsung)
• Advertising agencies and consulting firms
• Office furniture manufacturers (sell desks and chairs to companies, not to people for home use)

Common B2B business models:

B2B companies can charge for their services in various ways:

• Product sales: Selling physical goods (materials, equipment, raw materials) to other businesses.
• Subscription model (SaaS - Software as a Service): The most popular model in the modern B2B sector. The customer pays a monthly or annual fee for using software (e.g., Slack, Adobe Creative Cloud for teams).
• Usage-based pricing: The customer pays depending on the volume of resources used (e.g., AWS charges for server time and storage space).
• Licensing: Selling a software license for use for a specific period or for a specific number of users.
• Commission/transaction fee model: Platforms like Alibaba.com or Amazon Business connect B2B buyers and sellers, charging a percentage of each transaction.
• Project model/Consulting services: Charging the client for executing a specific project or providing expert advice (e.g., consulting firms like McKinsey, advertising agencies).

Advantages of the B2B model:

• Predictability: Subscription models provide stable and predictable revenue streams.
• Higher customer value (LTV): B2B customers, once acquired, usually stay for a long time and make large purchases.
• Less impulsive decisions: Decisions are made slowly and thoughtfully, which means if you've won a customer, they are well-informed and loyal.

Challenges of the B2B model:

• Long sales cycle: From first contact to signing a contract, months may pass.
• Complex sales process: Often requires convincing multiple stakeholders from different departments (IT, finance, management).
• High requirements: Customers expect a high level of personalization, support, and service.

Difference between B2B and B2C at a glance:

Conclusion:

B2B is a fundamental business model that powers the global economy. It is about creating value for other businesses, helping them become more efficient, productive, and profitable. Understanding its characteristics is key for anyone who wants to develop business in this field.