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Feb 11, 22  |  Ibrahim Imran

What Are The Major Types of B2B Business Models

While there are many different sorts of organizations, the bulk of them rely on B2B suppliers and enterprises to function.

What are B2B businesses, and why are they called that?

In this article, we are going to be explaining the four major types of b2b business models. 

What Exactly is B2B (Business to Business)?

Business to Business (B2B or B2B) is a type of commerce in which companies trade and transact with one another rather than with end customers. These companies use the tradable offering to improve their product or resell it for profit.

In contrast, businesses that sell to customers do not do so. Consider the following scenario: a corporation produces automotive parts, such as brake pads, and sells them to a car manufacturer who constructs the full vehicle. This business is believed to operate on a B2B basis. It is a company that provides services to another company.

It's as simple as that.

A Business to Business (B2B) model of operation is any business model that creates value and then sells it to other businesses (B2B model). Furthermore, the B2B business models differ from the B2C business models.

Business-to-Business (B2B) vs. Business-to-Consumer (B2C)

B2C, or Business to Consumer, refers to a business strategy in which the company services its customers rather than other businesses, as opposed to B2B.

Which leads us to - The fundamental differences between B2B models.

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B2B Business Models Types 

Because B2B is such a large and sophisticated model, it can be divided into two types: popular and mainstream.

B2B Model Based on Products

The product-based B2B model is a form of B2B model in which a company sells tangible goods to other companies. This company could operate as a supplier, selling your tailored items to a variety of other companies. Be aware that the company caters to other businesses and companies, not to individuals or consumers.

A company that offers security hardware to enterprises and institutions is an example of a product-based B2B corporation. Kisi is an excellent example of a B2B company that sells security devices to other organizations.

Furthermore, product-based B2B enterprises can have a physical or online presence, or both, and it's worth noting that because the items are often physical (in nature), they demand a significantly larger initial investment and overhead expenditures than other B2B types.

B2B Model Based on Services

A business with a service-based B2B strategy does precisely what its name implies: it supports other businesses by providing services of its own.

Here are a few examples of service-based B2B businesses:

  • Providing advisory services
  • Marketing Consultancies
  • Services for call management
  • Services for Employee Training
  • Providing language services

Since it is considerably easier to build up service-based B2B enterprises, they are numerous and substantial. In addition, compared to product-based B2B enterprises, service-based B2B firms are easier to set up and maintain. 

It depends on the service that these service-based B2B enterprises provide whether they have an online or physical presence, or both.

B2B Business Models Based on Software

Software-based B2B businesses can be classified as either "product" or "service" businesses. While the latter is in charge of offering services to others, the former is in charge of giving software solutions to them. Because many products and services are given as software-based tools to other firms, a different paradigm for software is required.

The software-based B2B approach can be divided into two categories: –

  • A software-based B2B paradigm that is "product-focused."
  • A software-based B2B business that is "service-focused" (SAAS model)

A software-based B2B paradigm that is "product-focused."

Xero and Freshbooks are two instances of "product-focused" software-based B2B enterprises that supply accounting and invoicing tools to businesses.

A software-based B2B business that is "service-focused" (SAAS model)

Salesforce is an excellent example of a software-based B2B corporation that is "service-focused." Other businesses and companies can use Salesforce's Customer Relationship Management (CRM) and cloud services.

Program-based solutions are typically membership or subscription-based, and they are the easiest to expand because the software can be deployed and deleted fast and easily as needed.

While there are just a few primary and recognizable varieties of B2B models, there are many more that are hybrids of the above few. However, there is one more type of b2b business model that can be classified separately: B2B ecommerce.

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Ecommerce B2B

B2B e-commerce refers to the sale and purchase of items between businesses using online marketplaces. E-commerce is a crucial component of the B2B paradigm, and it works extremely effectively for both customers and enterprises. The field of B2B e-commerce can be separated into three sub-models. They are –

Model Based on the Supplier

The ecommerce business operates as a supplier for other firms under the supplier centric model. This is mainly because of there being more buyers in terms of sellers within the market. Under this strategy, the company sells its products to other companies through its own or other platforms.

A supplier-centric strategy implies that you have some control over product pricing and inventories.

Model Centered on the Customer

In the buyer-centric approach, the ecommerce company is looking to buy things and has its own online marketplace where suppliers (read: other companies) can post their products and quotations for customers to compare and choose the best.

Model of the Intermediary

In this approach, the ecommerce company serves as a mediator, bringing buyers and sellers together. This is possible in markets or industries with a large number of sellers and purchasers. The ecommerce company has a platform or marketplace that connects and facilitates commercial transactions.

This leads us to the next point: the benefits and drawbacks of the B2B model.

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