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Business-to-business (B2B or, in some countries, BtoB) 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 with 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 do not, 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. However, within a B2B context, large companies may have many commercial, resource and information advantages over smaller businesses. The United Kingdom government, for example, created the post of Small Business Commissioner under the Enterprise Act 2016 to "enable small businesses to resolve disputes" and "consider complaints by small business suppliers about payment issues with larger businesses that they supply".
Comparison with B2CEdit
In most cases, the overall volume of B2B (business-to-business) transactions is much higher than the volume of B2C transactions. 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.
"Matesourcing" refers to the phenomenon where businesses seek business support from family and friends rather than obtaining business services from other businesses on a commercial basis. In 2011, UK business PC World published research commissioned from Trends Research which found that British SME's are increasingly asking family and friends for IT problem-solving and purchasing advice services.
- Small Business Commissioner role, 26 July 2015, accessed 22 October 2017
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- Matesourcing IT support could create small business headaches, 25 February 2011, accessed 15 April 2017
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- Temporal, P. (2005): B2B Branding–A Guide to Successful Business-to-Business Brands, International Enterprise Singapore.