B2B (business-to-business) products are goods or services traded between business entities. The selling business’ output becomes an input for the buying business’ processes. B2B products tend to occur upstream and downstream along a typical manufacturing supply chain such as FMCG and automobiles.
However, certain types of services providers also provide B2B products such as commercial/industrial cleaning, property management, office security, freight, legal services, accounting services, management consulting services and enterprise software.
B2B products stand in contrast to:
- B2C products — goods and services traded between a business and individual consumer.
- B2G products — goods and services traded between a business and government.
Examples of B2B products are goods traded between:
- A raw materials supplier and a manufacturer.
- A wholesaler and manufacturer.
- A retailer and wholesaler.
The majority of tangible everyday products are the culmination of multiple B2B products traded between businesses as they work toward that final product. When you buy a bottle of your favorite soft drink at a local store, there’s been extensive B2B trading of chemicals, water, containers, labels and more that will ultimately constitute that drink.
B2B products are traded in much larger volumes and with a relatively bigger total transaction value than the average B2C transaction. They also require considerable foreplanning, comprehensive product evaluation, rigorous negotiation and extended consultation before successful transaction conclusion.
B2B products demand a high degree of customization to meet each client’s unique needs. The decision-making process is complex so nurturing the business relationship through regular and streamlined professional interaction is key to success.
The key drawbacks of B2B products are the long buying cycle, limited market size (much fewer number of potential customers compared to B2C products), the intense competition and the greater pressure on pricing.
Businesses do not have to exclusively deal with B2B products only. Some companies can and do sell their products directly to consumers as well. For example, a phone manufacturer can sell the product in bulk to retailers and telecommunication service providers but also sell directly to consumers.