Business-to-business

The "electronic components district" of Guangzhou, where numerous shops sell electronic components to other companies that would use them to manufacture consumer goods

Business-to-business (B2B) refers to a situation where one business makes a commercial transaction with another. This typically occurs when:

• A business is sourcing materials for their production process (e.g. a food manufacturer purchasing salt).
• 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).

B2B is often contrasted against business-to-consumer (B2C). In B2B commerce it is often the case that the parties to the relationship have comparable negotiating power, and even when they don't, 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.

Comparison with B2C

In most cases, the overall volume of B2B (business-to-business) transactions is much higher than the volume of B2C transactions.^[1][2][3] 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 sale of the finished product to the end customer. For example, an automobile manufacturer makes several B2B transactions such as buying tires, glass for windscreens, and rubber hoses for its vehicles. The final transaction, a finished vehicle sold to the consumer, is a single (B2C) transaction.

However, in certain cases, for example a toothbrush manufacturer may make lesser B2B transactions of raw materials than the number of B2C transactions of toothbrush units that are sold.

See also

• Business-to-consumer
• Business-to-government
• Customer to customer
• Masterseek (business-to-business search engine)

Notes

1. Sandhusen, Richard (2008). Marketing. Hauppauge, N.Y: Barron's Educational Series. p. 520. ISBN 0-7641-3932-0.
2. Shelly, Gary (2011). Systems analysis and design. Boston, MA: Course Technology, Cengage Learning. p. 10. ISBN 0-538-47443-2.
3. Garbade, Michael (2011). Differences in Venture Capital Financing of U.S., UK, German and French Information Technology Start-ups A Comparative Empirical Research of the Investment Process on the Venture Capital Firm Level. München: GRIN Verlag GmbH. p. 31. ISBN 3-640-89316-6.

References

• Huczynski, A. et al. (2001): Organisational Behaviour, 4th Edition, Harlow.
• Temporal, P. (2005): B2B Branding–A Guide to Successful Business-to-Business Brands, International Enterprise Singapore.