Business-to-Business (B2B): What It Is and How It’s Used

What Is Business-to-Business (B2B)?

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

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

Understanding Business-to-Business (B2B)

Business-to-business transactions are common in a typical supply chain because companies must typically purchase components and raw materials for use in their manufacturing processes. Finished products can then be sold to individuals via business-to-consumer transactions.

In the context of communication, business-to-business refers to methods by which employees from different companies can connect through outlets such as social media. This type of communication between the employees of two or more companies is called B2B communication.

B2B E-Commerce

Grand View Research has reported that the B2B e-commerce market was estimated at $18,665.5 billion in 2023 and that it's expected to grow at a rate of about 18.2% annually from 2024 through 2030. It attributes the growth to rapid technology improvements.

Company websites allow interested parties to learn about a business's products and services and to initiate contact. Online product and supply exchange websites allow businesses to search for products and services and initiate procurement through e-procurement interfaces. Specialized online directories provide information about particular industries and companies and the products and services they provide. This also facilitates B2B transactions. 

Special Considerations

Successful business-to-business transactions require planning. They rely on a company’s account management personnel to establish business-client relationships. Business-to-business relationships must also be nurtured for successful transactions to take place, typically through professional interactions before sales.

Traditional marketing practices also help businesses connect with business clients. Trade publications aid in this effort, offering opportunities to advertise in print and online. A business’s presence at conferences and trade shows also builds awareness of its products and the services it provides to other businesses.

Examples of Business-to-Business (B2B) Commerce

Business-to-business transactions and large corporate accounts are commonplace for firms in manufacturing. Samsung is one of Apple's largest suppliers in the production of the iPhone. Apple also holds B2B relationships with firms like Intel, Panasonic, and semiconductor producer Micron Technology as of fiscal year 2022.

B2B transactions are also the backbone of the automobile industry. Many vehicle components are manufactured independently and auto manufacturers purchase these parts to assemble automobiles. Tires, batteries, electronics, hoses, and door locks are typically manufactured by various companies and sold directly to automobile manufacturers.

Service providers also engage in B2B transactions. Companies specializing in property management, housekeeping, and industrial cleanup often sell these services exclusively to other businesses rather than to individual consumers.

The Bottom Line

B2B transactions usually occur between wholesalers and retailers. A wholesaler will sell products to a retailer and that retailer then places price tags on them and offers them to consumers for a profit. They can also involve a manufacturer purchasing necessary raw materials from a supplier to create a product that can eventually be sold to consumers. In any case, the cost generally trickles down to consumers.