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B2B

Business-to-business (B2B), also called B-to-B, is a form of transaction between businesses, such as one involving a manufacturer and wholesaler, or a wholesaler and a retailer. Business-to-business refers to business that is conducted between companies, rather than between a company and individual consumer.

Business-to-business stands in contrast to business-to-consumer (B2C) and business-to-government (B2G) transactions.

B2B Business Model Pros and Cons The B2B business model has both pros and cons for the business owner and their team.

Pros:

  1. Larger orders. B2B sales are high and orders are made in bulk. This means revenue can be higher with fewer sales than B2C businesses.
  2. Increase conversion. Businesses convert better than individuals. This makes marketing efforts more successful and wastes less money attracting new customers.
  3. Streamlined structure. Communication between businesses happens regularly so sellers are more informed about their customers’ needs.

Cons:

  1. Long buying cycle. B2B consumers take a long time to make purchasing decisions. Multiple stakeholders are involved and need a number of approvals to go forward.
  2. Limited market. B2B sellers have fewer potential customers and the ones they do have are very important. If even a single customer is unhappy, they can lose a lot of money.
  3. Difficulty forecasting. Both manufacturers and resellers can run into issues with demand forecasting since B2B has a shorter inventory cycle. This can in turn lead to overestimating demand and leave all parties with dead stock (see dead stock meaning).