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B2B trade vs B2C trade - one letter and so many differences

B2B trade vs B2C trade - one letter and so many differences

Though the abbreviations "B2B" and "B2C" look very similar, they denote two different trading branches. Basically, B2C means retail trading, whereas B2B, wholesale, import and export. In B2C trading, the contract parties are the trader and the consumer, whereas in B2B trading, these are companies only.

B2B vs B2C - what are the consequences of this?

The buyer’s rights protection

Used in B2C trade due to the stronger position of the trader towards the consumer. Hence, among others, the buyer is entitled to return the product within 14 days without giving any reason if the purchase was made outside of the place of business (i.e., mainly online). In B2B trade these rules do not apply as neither contracting party is a consumer. Of course, the seller can accept returns, but there is no such obligation - please remember it when placing an order. Exception takes place only in a situation when the trader buys goods for other purposes than those related to his business. In other words, if you buy a product for resale, you are not a consumer, and you are not entitled to a refund.

Transaction value

The average order value in B2B trade is much higher than in B2C. This generates a number of consequences, but the most important one is the issue of transaction security. Many convenient and safe payment methods, popular in retail trading, are not used in wholesale. There are other ones instead. You can read about them here  Safe transactions.

Transaction finalising methods

Retail trade is becoming more and more e-commerce, i.e. online sales. Although traditional trading will probably never disappear, the value of online trading is constantly growing. In B2B, however, the sought-after method of finalizing a transaction is visiting the vendor's premises to set the contract conditions on site, or to collect the goods directly from the warehouse. The forms of communication are changing, yet many buyers and sellers still prefer face-to-face meetings instead of finalising transactions online.

Transport and delivery

The dominant model on the B2C market is one by which the trader organises the transport of goods to the consumer. Every other situation is very rare. Meanwhile, the B2B trade is different:  some sellers are able to arrange transport, whereas others are not. Therefore, you should carefully read the offers’ descriptions and ask about shipping options. You should also familiarise yourself with the "incoterms", i.e. international trade rules, about which you can read here Incoterms.

VAT

VAT should be paid by the final recipient. For example, if you are buying a TV for your home, you will have to pay VAT for it. But if you buy a TV for resale, the burden of paying the VAT lies on your customer. This is especially important when you are going to buy goods in the EU; as a VAT payer, you will be able to purchase a zero-rate item as long as the seller is also a VAT payer. You can read more about VAT here VAT UE.

 

As you can see, there are quite many differences between B2B and B2C trading. It is worth knowing them to avoid any misunderstandings when finalising transactions with the wholesalers, manufacturers and distributors. 

Author:

Merkandi

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