What Does a B2B Wholesale Transaction Look Like?
Transactions between two businesses are referred to as business-to-business or (B2B) transactions. Business to Business transactions do not look like a customer purchase. Oftentimes, B2B transactions are often for much larger amounts of product and money. These are fast becoming a huge industry. To put it in perspective, in e-commerce B2B transactions alone surpassed 12 trillion dollars. So how do you tap into B2B to help create a solid foundation for your business as a B2B wholesale distributor?
What is the Definition of a B2B Wholesale Transaction?
This is the purchase or sale of products in bulk between two distinct businesses. These are most likely to occur between manufacturers and wholesalers and wholesalers and retailers. Typically, B2B transactions help to distribute large amounts of products which improves average order value and improve efficiency.
Benefits of B2B Whole Transactions
There are several distinct benefits to wholesale transactions between businesses. These benefits are realized by both the seller and the buyer. As a B2B wholesale distributor, there are plenty of benefits
Benefits for the seller:
- Increased AOV (average order value)
- Stabilized Source of Business
- Lowers Expenses
- Fixed Margin of Profit
When businesses have low AOV it can have an adverse effect on costs. This can show up in increased transaction fees and labor costs. When businesses can move large amounts of goods in a single transaction, it improve efficiency and lowers those costs.
Benefits for the buyer:
- Yields Discounts
- Provides Incentives to Buy in Bulk
- Helps Stabilize Inflow and Outflow
What Challenges Are Involved in B2B Wholesale Transactions?
While engaging in long-term contracts for B2B transactions, there are inherent challenges. Those challenges are listed below:
- Efficiency
- Increased Competition
- DTC and Retail
Efficiency
When buying in bulk in long-term relationships, it breeds efficiency and efficiency improves the bottom line. This also provides businesses with a competitive edge.
Increased Competition
While individual customers cannot gain the same AOVs businesses can, they can still disrupt how companies do business. With online sellers like Amazon, businesses can sell directly to customers. This means businesses fight over the available customer base.
DTC and Retail
In a global marketplace, wholesalers can complete easily to carve out a share of the available customers. This means any inefficiency within your business model with be exploited and result in lost revenue. To be a leader among B2B wholesalers Canada you need to be organized.
How B2B Platforms Operate
Software is used to close the gap with other competitors. Software often has the following features:
- Bulk Ordering and Pricing
- Inventory Management
- Account Management
Canadian business distributors are all looking for a competitive edge. Why not reach out to Scott’s Info to find out how we can provide it. Give us a call today.
