Tag: B2B

The Ultimate Guide To B2B Wholesale Transactions

If you stopped for coffee today, you experienced a business-to-consumer transfer of money. In short,it is called a B2C transaction, which is natural when going about our everyday lives. On the other hand, business-to-business, a.k.a. B2B transactions involve the transfer of money from one business to another. In 2019, B2B ecommerce was worth $12 trillion globally and Forrester expects that B2B sales will surpass $1.2 trillion by the end of 2021.

B2B transactions are the norm when running a business, but they are not much like stopping at the local café. It can be a simple purchase but, there are often many components involved such as B2B loans, wholesale orders, and more. But what do B2B transactions look like, and what is the best way to manage them? Keep reading to learn the benefits and challenges of B2B sales, and how B2B wholesale platforms work.

What Can B2b Wholesale Transactions Look Like?

The relationships and transactions between two businesses are referred to as B2B. When it comes to B2B wholesale transactions, two businesses will interact with each other, and buy or sell products in bulk. These wholesale transactions tend to happen between wholesalers and retailers or wholesalers and manufacturers. People usually use the term, ‘business-to-business,’ to contrast with the term, ‘business-to-consumer.’ Generally, B2B transactions are considered wholesale transactions but not every business-to-business transaction has to be a purchase. A B2B transaction can be a line of credit, a revenue-sharing and loan agreement, a promissory note, or anything related to a fund transfer.

B2B Wholesale Transactions – Benefits

As B2B wholesale transactions are conducted between two businesses, the seller and buyer will both benefit. Here are some key benefits of B2B wholesale transactions:

Boost Average Order Value And Order Volume

B2B wholesale transactions boost average order value (AOV). The purpose of the B2B wholesale is to purchase products in bulk, with the seller earning a profit margin. This way, it will not only boost AOV but also the volume of orders over time.

Yield Discounts

As a buyer, you may get a volume discount when you purchase goods from a wholesaler. If you are an individual customer, you may have seen the benefits of a B2B wholesale transaction when you buy products from a wholesaler and get bulk discounts.

Maintain A Fixed Margin Of Profit

Another benefit of B2B wholesale transactions is that they help the wholesaler maintain a fixed margin of profit of about 3 to 10%. A fixed profit margin makes wholesalers less worried about business because the amount of profit they get after selling goods can be calculated in no time.

Lower Operating Costs

The best thing about B2B wholesale transactions is that they help to lower operating costs. To get the word out, billboards or TV ads and printed flyers can be used, and digital marketing campaigns are run from desktops. This affordable marketing helps to reach more business customers, which come with high streams of sales. Websites have become more interactive these days to provide the customers with detailed information about a product, decreasing the need for sales representatives. Customers can even try the product on virtually before purchasing it. These lower operational costs and, coupled with chances of more sales, are a win-win situation.

Challenges For B2B Wholesale Transaction Platforms

B2C shoppers experience the ease of use and efficiency that motivates the B2B buyers, but have different needs. The long-term contracts in B2B ecommerce come with more stability, but there are still challenges of B2B ecommerce sales.

Global Competition

There is no doubt that the world has become a global marketplace. Global competition comes with web exploration, which increases pressure on price and hurts the low margin of profit of wholesalers the most. But if wholesalers expand their footprints across the globe while selling their products at affordable rates, they can boost more profit margin and sales.

Retail Consolidation

The number of wholesaler supermarkets, retailers, office suppliers, DIY suppliers, and home electronic stores has dropped. Now, there are two kinds of wholesalers who are possibly changing the face of the B2B industry: those who will focus on specific niches and excel in them and those who will accommodate diverse businesses to keep growing.

Improve Efficiency

As the B2B wholesale transaction market across the globe is valued $12 trillion and B2B e-commerce sales are expected to reach $1.8 trillion in the USA alone by 2023, the improvement to your organization’s efficiency can give it a great competitive edge.

How B2B Wholesale Transaction Platforms Work

As B2B ecommerce faces multiple challenges, many wholesalers look to other B2B wholesale platforms for optimal efficiency. But how do these platforms work? They have some key features stated below:

Volume Orders And Online Payments

In B2B wholesale, a volume discount is included when you place large quantity orders. These platforms take into account that discounting large volume orders causes businesses to purchase more, increasing sales. When it comes to managing online payments, bulk ordering makes sense.

Availability Of Inventory

In the B2B wholesale industry, the availability of inventory is the main issue. These platforms need to consider the inventory available when logging in new orders. Generally, B2B e-commerce platforms have a map of the available inventory. To maintain efficiency, it is essential to keep track of your inventory in real-time.

Account Management

It is true that business-to-business wholesale transactions can be easily executed. An accountant can help manage company accounts, look at company history to view prices you paid for goods, view how many orders you have received, and much more. Knowing this information leads to increases in the average order value, and helps with future planning to reach the desired customers with the help of B2B wholesale transaction platforms.

Bottom Line

The market share of B2B wholesale transactions is increasing day by day. The value these sales bring over time is huge. At first, doing business in this B2B e-commerce industry seems challenging, but with these tips, you will be a B2B professional in no time.

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5 Tips to improve B2B and B2C ecommerce pricing strategies

It is not easy to maintain and survive in today’s market where a new competitor is arriving every other day. Customers, be it direct or indirect, are hard to keep loyal to a specific brand when offered several options at competitive prices. As a customer, you must have experienced a time when the features of a competitive product caused you to change your mind when making the decision to purchase the product.

One of the most significant factors that stimulates customers’ buying decisions is budget, i.e., the pricing offered by the company. A customer evaluates a product based on the quality and durability offered within the budgeted price. However, the product offered by any company includes several other costly components such as marketing cost, salaries of staff, rental and holding cost, etc.

With so many costs included, it is challenging to offer the customer a convincing price to hook them onto the product and generate consistent sales. To address such challenges regularly, suppliers need to fabricate strategies for pricing to facilitate B2B and B2C customers.

Tips for improved B2B and B2C eCommerce

For sure, the 20-80 rule prevails for many suppliers in the market, but is not enough to rely on for the business overall. Out of numerous pricing strategies like economy pricing, premium pricing, psychology pricing, etc., you may adopt one or a combination of some that suit you best.

Choosing the best competitive price that covers all the incurred costs along with a reasonable profit margin requires specific practical strategies. Here are five tips to construct enhanced pricing strategies.

  1. Market Prices

Keeping a regular check on the market prices offered within the industry is essential. B2B customers are well aware of pricing when making wholesale purchases, and are even offered special discounted prices from sellers. 

Loyal customers, including both B2B and B2C, may agree to pay higher prices for an added value on products. However, keeping them hooked on your product in the long run requires a continuous evaluation and comparison of the competitors’ pricing.

Research for the competitive price will extend based on the line of products you are dealing with. For example, research will vary for different collections if you are selling clothes or shoes, i.e., casual, formal, fusion, etc.

  1. Wholesale Price Effects

Not all companies can afford or practice forward or backward integrations to support their products and services. This interdependency for business on other business results in B2B business, and contributes to a significant amount of profitability when making wholesale sales. Direct customers, i.e. B2C customers, contribute in relatively smaller amounts. However, their purchases are often more frequent than those of B2B customers.

For offering the best competitive prices to your B2B customers, research will also be needed to review the pricing offered within wholesale markets. This practice of reviewing the wholesale market will enable you to attract retail customers by offering the best possible prices.

  1. B2C Customers

Direct customers, i.e, B2C customers, contribute relatively smaller amounts to your profitability; however, their number of purchases is multiple to that of B2B customers. It is crucial to understand the current trend prevailing in the retail market. The dynamics of the fashion industry are constantly changing. These changing trends depend on various factors that include climate change, cultural inheritance, modern needs, etc.

These retail customers’ needs vary throughout the year, affecting their preferences and ultimately their desire to pay for a specific product. Offering discounted prices and other loyalty campaigns are ways to attract B2C customers during these seasons, i.e., marriage, Christmas, New Year’s Eve, etc.

Remember that sentimental values are often associated with purchases to price the product at an amount that factors in the emotional value experienced by the customer. Therefore, value-based pricing is one way to improve your pricing strategy to increase product sales periodically, if not permanently.

  1. Dynamic Pricing

Not all products can be offered at the same price throughout the year. Raising prices during peak purchase seasons may work for some sellers, while other sellers grab the attention of the customer during seasons by offering reduced prices on products. These discounted prices attract large volume purchases, creating a win-win situation for sellers and buyers, and eventually profitability.

However, pricing products can also be profitable when calculated by carefully analyzing and managing data that shows customer purchase behavior. Customers’ needs, including when they purchase, how much they are willing to pay, and when the product is purchased, change throughout the year. The decision of pricing your products differently requires additional efforts that should be supported with reliable data obtained from both internal and external sources.

  1. Optimizing Channels for Selling

Recognizing the power of eCommerce is key. Customers worldwide have numerous choices today at their fingertips, making them unwilling to deal with the hassle of visiting physical stores. Why waste effort and time when you can have the product directly at your doorstep within a few clicks?

Ecommerce has created numerous opportunities for businesses and dramatically helped sellers reach their focused market without worrying about physical distances. Within the extended market, sellers need to cater their pricing strategy to many geographically scattered markets with competitive pricing.

Customizing your business process to support discounts or offering special prices may help your pricing strategy. This can be done through proper planning and investing in digitalization which is a common but challenging practice today. 

The integration of eCommerce into your pricing strategy empowers the customer to self-serve in many cases. With this ease of shopping, customers often do not mind paying a little extra for the convenience of obtaining the item without leaving the house.

Bottom Line

Pricing strategies are numerous for both B2B and B2C customers. For B2B, a seller needs to analyze the size of the business, which usually has recurrent customers with long term business relationships and sales cycles. On the other hand, B2C customers tend to have different purchase behaviours throughout the year.

Choosing pricing strategies that cater to the customer and obtaining credentials for profitability is a challenge in today’s dynamic market, but can be done using the business tips above.

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