How does B2B e-commerce make money?

B2B is the process of up-selling bulk goods. B2B models operate on the concept of buying bulk direct from manufacturer (which is usually cheaper) and selling the product again to other customers for an increased price.

B2B in e-commerce stands for Business to Business. Unlike B2C, where customers buy a product or two per their needs, in B2B, the business buys the bulk products from suppliers or manufacturers. So, in B2B, product profitability and customer lifespan are much higher.

An example of b2b in e-commerce would be the automobile industry buying tires, batteries, hoses, etc., from manufacturers online.

To understand how B2B e-commerce makes money, first, we need to understand the usual product distribution channel:

1. The manufacturer trades the product to a wholesaler.
2. Wholesalers then sell products to retailers and other wholesalers.
3. The retailer sells the product to the customers.

The 1st and 2nd step follows the B2B model, while the 3rd step follows the B2C model. In the B2B model, the product is sold in bulks. The seller keeps a profit margin and sells the product to another business (wholesaler or retailer). This concept is followed in every step.