B2C e-commerce has become commonplace. Any retailer worthy of success offers its customers the option to buy products online - a third of all purchases are now reportedly made through the internet - while those that don’t offer it risk losing sales and reputation. Worldwide B2C e-commerce increased by 20.1% in 2014, reaching $1.5 trillion for the year, with sales expected to top $2 trillion by 2017.
While B2C e-commerce sales remain impressive, the B2B market has grown to be almost double its size. The B2B model - which refers to companies which sell their products to other businesses - has long been underrepresented, with only a handful of sites specalizing in the service. Alibaba is perhaps the most prominent company in the field, yet despite its revenues topping $12 billion in 2014, most have never heard of the Chinese e-commerce giant.
In the US, the space is expected to get considerably larger. Forecasts suggest $855 billion in sales in 2016, dwarfing B2C sales which are only expected to hit $554 billion by that time. The rise in popularity has been mainly driven by a shift in B2B buyer behaviour, which sees them research their purchases online, motivated to take advantage of the significant cost savings that come with the B2B e-commerce environment.
As the B2B industry develops - it’s likely to reach $12 trillion worldwide and $1 trillion in the US alone by 2020 - we will see B2B E-Commerce become more innovation driven. In fact, Frost and Sullivan put the industry at the top of its ‘emerging industries list’, fending off stiff competition from Big Data Analytics and Connected Living.
As mentioned before, Alibaba’s achievements are often not appreciated by the wider-public - it has recorded more trade volume than Amazon and eBay combined after all - and is representative of the lack of attention surrounding B2B e-commerce. The marketplace is now dominated by ‘consortia-led exchanges thriving on low-cost Internet platforms and harnessing the value proposition of collective bargaining/selling’ according to Forbes, which is positive news, as it represents a move away from the outdated model which concentrated on electronic data exchange.
The B2B e-commerce market remains an intricate one, with the buying cycles involved notoriously complicated and time consuming. It is, however, a lucrative one and the $1 trillion will act as a wake up call for companies which have the resources to make an impression on the industry.