Guide to B2B Wholesale eCommerce Marketplace and How It Works?

Let’s start with some definitions for the B2B Wholesale Marketplace:

B2B: Business to Business. The Buyer and Seller are both businesses trading in large volumes. Thus the buying business (Purchasing Party or Importer) gets a good discounted wholesale price as compared to the normal retail price. The Seller can be an exporter, wholesaler, distributor, supplier or manufacturer. The buyer can be an importer, distributor, retailer, e-retailer, eCommerce reseller, another manufacturer, etc.

Wholesale: The price is based on volume purchasing. The larger the quantity the lower the price the seller can offer and still make a profit. The wholesale price depends on the market conditions, quantity, demand and supply, economic conditions, and price negotiations.

Market: Can be a physical location such as a trade show, showroom buildings, local market, wholesale malls, or individual wholesaler location. Also, it could be a virtual marketplace online that traders could visit to shop for the needed goods that they can import and resell in their local market. The following are some of the online B2B marketplaces:

Guide to b2b wholesale ecommerce marketplace and how it works?
B2B Wholesale

How does B2B Wholesale Online Marketplace work?

Suppliers join these online B2B Wholesale Marketplaces and list their products and contact information.

Their listings must have enough information about the product such as:

  • Product Title: The product name, brand, model number, and a couple of keywords that describe the product.
  • Description: Complete details about the product name, functions
  • Features: What are some of the characteristics of this product and what makes it attractive to the buyer? Does it solve the buyer’s needs
  • Technical specifications: This is critical so the buyer can understand the product’s dimensions, weight, colors, the material used, mechanical or electrical data, quality controls, international standards met, and certifications.
  • Photo images: Clear photos of the products from different angles are important to convince the buyer that this product matches their requirements. The more images the better usually.

 

Guide to b2b wholesale ecommerce marketplace and how it works?
29 Istanbul Jewelry Show Fuar Fair YeniExpo

Research and Request for Quotation Steps:

Initial RFQ inquiry:

Wholesale Buyers and Importer visit these B2B wholesale marketplaces and start searching for the product they are interested in. Once they find a few products they start sending a request for quotations (RFQ) to the suppliers using the marketplace platform. Normally these suppliers get many RFQs on a daily basis. In order for the suppliers to take your inquiry seriously and act on it promptly, you should include the following information in clear business precise words and sentences:

  • Order Quantity: Specify how many of this product are you planning to purchase. Give an approximate number and don’t lie. You can also request different prices for different quantity ranges. That is fine. For example, you can say, give me a price quote for 100 pcs, 500 pcs, or 1000 pcs.
  • Port: Specify what port in your country you prefer the goods shipped to. This will help the exporter give you a more accurate shipping quote.
  • Preferred Shipping Method: Specify whether you prefer the shipment to be sent by Air freight (fastest), Ocean Freight, or Land. Remember, the more information you supply with your RFQ, the more interest you will get from the exporter.
  • Company: Include your official company name. This will tell the exporter that you are a serious company and not an individual trying to get prices only.
  • Company Type: Let the exporter know what type of company you are. Are you a
    • Distributor
    • Retailer
    • eCommerce
    • Manufacturer
    • Designer
    • Consumer
    • Government
    • Other
  • Company Introduction: Include some information about your company, such as years in business, how many locations, do you import currently from that country or competitor suppliers, etc.
  • Company Website: Include your company website in the inquiry. This will help the exporter gauge your inquiry seriousness, and whether your business is a good fit for both parties.
  • Telephone or WhatsApp No: This will help the exporter contact you directly and instantly in case they need to reach you to get more details about your inquiry before they prepare an accurate quotation (Pro Forma Invoice).
  • Address: Include your address including city and country

What is a Proforma Invoice?

A proforma invoice is an abridged or estimated invoice sent by a seller to a buyer in advance of a shipment or delivery of goods. It notes the kind and quantity of goods, their value, and other important information such as weight and transportation charges. Pro forma invoices are commonly used as preliminary invoices with a quotation, or for customs purposes in importation. They differ from a normal invoice in not being a demand or request for payment.

Order Placement:

Once the buyer receives the quotations from the different suppliers using the B2B Wholesale Marketplace, they can negotiate the terms and price, reach an agreement and then place an order. Once the order received by the supplier, normally there is sufficient lead-time for the exporter to get the order ready for shipping.

Shipping:

The order will be shipped according to agreed terms. Normally a freight forwarder is involved to book the shipping and transport the goods to the port with transportation and logistics companies.

Customs Clearance:

The importer arranges with a customs broker to clear the goods with customs and arrange to transport the goods to the importer warehouse.

The differences between business-to-consumer (B2C) and business-to-business (B2B)

B2B and B2C e-commerce may look the same, they are quite different. Business buyers and retail consumers have different purchasing needs. The differences can be:[2]

  • Buying Impulsively vs. Buying Rationally – B2C buyers will buy on impulse and make one-off purchases, B2B buyers plan for purchases and make recurring purchases
  • Single Decision Maker vs. Multiple Decision Makers – B2C purchases are decided upon by the buyer, B2B purchases often involve several layers of approval and may involve different departments
  • Short-term Customer Relationship vs. Long-term Customer Relationship – B2C purchases are often one-off purchases, B2B purchases are based on long-term and on-going relationships.
  • Set, Fixed Prices vs. Diverse Prices – B2C prices are generally not negotiable. B2B prices are usually negotiated individually.
  • Pre-Delivery Payment vs. Post-Delivery Payment – B2C e-Commerce is generally paid by credit card, debit card or PayPal before the goods are shipped in B2B payment is often on terms and may be 30 or more days after goods are shipped.
  • Deliveries focused on speed vs. Deliveries focused on punctuality[3] – B2C buyers are looking for speed of delivery and B2B buyers want deliveries on a reliable schedule. [2]

B2B Buyer Characteristics

Supply chains are more important to B2B transactions.[4] Manufacturing companies obtain components or raw materials from other companies and then sell to a wholesaler, distributor, or retail 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.[5] Wholesalers and distributors still have a supply chain, but their chain consists of finished products.

Generally, B2B and B2C web stores both have search, navigation, detailed product information and personal account history pages. However, in some ways B2B greatly differs from B2C. Most B2B businesses have complex ordering processes, large collections of attributes and elaborate back-end systems. Moreover, in a B2B scenario, buying is part the customers’ job. He needs to make sure he buys all necessary products or components for keeping his company up and running. Thirdly, since organizations can be very large, they need a lot of products or components to keep their business going.[6] 

Therefore, B2B buyers often place large orders. B2B purchases are also characterized by recurring orders instead of single purchases. Because of that, companies make deals based on their monthly or even yearly demand. They closely collaborate with each other, and each B2B customer can have its specific prices for certain products. Lastly, multiple people are involved in B2B purchases. For instance, a company can have multiple buyers or buying centers. They are responsible for finding the right products and making the right deal with resellers.

Because multiple people are involved in a single deal, B2B is more fact based instead of based on emotions. It’s not about the nicest packaging, but the best deal for the company. In general, ratio is leading.[7]

B2B Wholesale Advantages and Disadvantages

Advantages:

  • Convenience: While companies can sell through physical storefronts or take transactions by phone, B2B commerce often takes place online, where companies advertise their products and services, allow for demonstrations and make it easy to place bulk orders. Sellers also benefit from efficient order processing thanks to this digital transaction model;
  • Higher profits: B2B companies often sell their items in wholesale quantities so that buyers can get a good deal and need to restock less often. Larger order numbers lead to higher potential sales and more cash coming in for B2B sellers. At the same time, the ease of advertising to other businesses through B2B websites can help cut marketing costs and boost conversion rates;
  • Huge market potential: From business software and consulting services to bulk materials and specialized machinery, B2B sellers can target a large market of companies across industries. At the same time, they have the flexibility of specializing in an area like technology to become a leader in the field;
  • Improved security: Since contracts are a common part of B2B commerce, there’s some security for both buyers and sellers in that there’s less concern that one will pay and the other will deliver goods as promised. Since sales usually get tracked digitally, it’s also more secure in that B2B sellers can track and monitor their financial results.[5]

Disadvantages:

  • More complex setup process: Getting started as a B2B retailer takes work to figure out how to get customers who stay dedicated and make large-enough orders. This often requires thorough research to advertise to potential businesses, set up a custom ordering system and adapt quickly when sales are underwhelming;
  • Limits to sales: While B2B companies can sell a lot, they do miss out on potential sales to individual customers. The smaller pool of business buyers and the need to negotiate contracts can put some limits on profits, especially when the company loses key buyers to other competitors;
  • Need for B2B sellers to stand out: At the same time, the B2B market has many companies competing and selling similar products and services. Sellers often need to cut prices and find special ways to grab companies’ attention to succeed in the market;
  • Special ordering experience needed: B2B companies selling online need to put much effort into designing a website and ordering system that buyers find easy to use. This means presenting product and service information clearly, offering online demos or consultations and using order forms with appropriate options for quantities and any special customization needed.[5]

 

B2B Wholesale Online Marketplace

An online marketplace (or online e-commerce marketplace) is a type of e-commerce site where products or services information is provided by exporters, wholesalers, and manufacturer. Online B2B marketplaces are the primary type of multichannel ecommerce and can be a way to streamline the production process.

In an online B2B marketplace, exhibits and promotes the products to business buyers.  In general, because marketplaces aggregate products from a wide array of providers, selection is usually more wide, and availability is higher than in vendor-specific online retail stores.[1] 

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