Overview
If you’re a business that fulfills order requests for other retail stores as well as individual customers, then the concept of B2C and B2B may seem quite similar to you. However, several key differences between the two cannot be seen on the surface.
While B2B deals with order fulfillment from one business to another business, B2C refers to order fulfillment between a business and a consumer. Regardless of which business model you follow, every single completed order needs to reflect your brand, otherwise your business is sure to lose potential customers.
A little lost there? Worry not! This is why we’re here. Through this post, we aim to provide clarity on the key difference between B2B and B2C order fulfillment so that your business can grow as expected. With a clearer understanding of the concept, you will be able to nurture other relationships in the business, manage operations better, and provide more valuable services to your customers.
To begin with, let’s understand the concepts of B2B and B2C order fulfillment in detail.
Detailed look into B2B Order Fulfillment
Essentially, order fulfillment in the B2B space involves offering goods from selling businesses to buying businesses. In simpler terms, this involves one business transporting bulk shipments of its produce to a different recipient business. Such an engagement allows companies to store the required raw materials well in advance.
The main aim of B2B fulfillment centers is to provide reliable and quick order delivery. For businesses that are involved in a B2B arrangement with each other, fulfillment services are typically expected to be efficient and cost-effective.
B2B fulfillment services play an essential role in a business’s ability to deliver orders on time. Usually, such businesses are expected to follow sophisticated routing procedures for their warehouse operations to execute without glitches. Any delay or mishap caused by the B2B fulfillment provider can cause great damage to the selling business’ reputation, including losses through penalty fees and refunds.
A majority of large businesses use EDI (Electronic Data Interchange) software to integrate their warehouses with their B2B fulfillment service providers. These fulfillment providers must adhere to the given guidelines, including shipment details like invoice, product description, and barcode labeling, for their task to be considered completed successfully.
B2B order fulfillment can get influenced by trade barriers such as subsidies, shipping levies, quotas, and taxes. Additionally, corrupt governments, legal barriers, and security situations can be a hurdle for shipping companies. Nevertheless, such risks can be mitigated with the help of advanced reporting software and management systems.
A detailed look into B2C Order Fulfillment
B2C order fulfillment is focused on delivering finished products directly to consumers. In comparison to B2B, B2C is much easier to handle because there is no involvement of bulk shipments. B2C order fulfillment companies have fewer regulations, and they need to focus solely primarily on two requirements - customer satisfaction and timely delivery.
Most order fulfillment providers in the B2C space offer features like free shipping, customer support, and order tracking to their customers. There are a few service providers that offer additional services such as painting, labeling, assembling equipment, and packaging if you request them. This helps businesses make efficient use of space in their factories.
Now that we have a clear understanding of B2B and B2C and have acquainted ourselves with each of their roles, let’s take a closer look at the differences between the two concepts.
B2B Order Fulfillment vs B2C Order Fulfillment
These are the main differences between order fulfillment in the B2C and B2B ecosystems.
1) At the PrePurchase Stage
1. a) Revenue per customer
On the one hand where B2C order fulfillment involves handling of smaller products like headphones, kitchen appliances, or clothes, B2B shipments deal with bulk orders of raw materials. For instance, a B2C order might involve the purchase of a $200 headphone set from a customer, whereas a B2B order might entail a deal worth millions of dollars for products that can be used for years.
1. b) Product price
B2C transactions are standard and there are fixed prices for everyone. However, B2B order fulfillment provides pricing and services based on the requirement of the recipient business. The prices depend on various factors such as recurring orders, the size of the order, payment terms, and the duration of the contract.
1. c) Sales assistance
B2C customers require almost little to no sales assistance. For example, a smartphone buyer may want to repair his phone which he can even do at home by simply watching a DIY video. In contrast, B2B offers personalized support at various stages. For example, businesses that are engaged in long-term construction contracts require complex equipment that needs to be maintained regularly.
2) During Purchase Stage
2. a) Buying decision
A B2C purchase doesn’t require much thought when buying, and the decision to purchase is mainly based on emotions and personal preferences. Whereas for B2B, a lot of thought goes in before any contract is signed, and deliberate efforts are made to keep emotions and personal preferences aside.
2. b) Buying process
For a B2C purchase, the customer just needs to choose which store/retailer he wishes to purchase the product from. However, for B2B, purchasing businesses need to negotiate with multiple suppliers/warehouses before they can make a final buying decision.
2. c) Order size and transactions
Generally, B2C purchases are light deliveries involving a single transaction. Whereas B2B shipments are huge, bulky, and ordered several times round the year as per the requirement of the business.
2. d) Payments
The transactions in a B2C order are straightforward, where the customer directly pays for the items before delivery of the product. However, in a B2B engagement, materials can be purchased on credit, allowing the recipient company to pay the supplying company at a later date.
3) After the Purchase
3. a) Relationship with the end recipient
A B2C customer can purchase from any vendor of their choice. However, in contrast, a B2B engagement involves having a cordial business relationship with the client. Most B2B contracts involve an exchange of large recurring shipments, and maintaining a close partnership is important for the success of both parties.
3. b) Order fulfillment and shipping
Generally, B2C order fulfillment providers offer low cost or free shipping and deliver within a week of placing the order. Sometimes the option of same-day delivery is also provided. However, the shipping systems in a B2B setting are quite different because they involve larger shipments, cost much more money, and require sophisticated equipment.
3. c) Returns
For a B2C transaction, clear refund and return policies are pre-existing in the retail market. However, B2B order fulfillment providers handle orders worth millions, making it extremely crucial to write down the obligations and process in case of return or loss in the contract. Sometimes, third-party insurance providers are involved to reduce the risk on each of the businesses.
How does order fulfillment work in a B2B setting vs a B2C setting?
Though B2B and B2C have a similar fulfillment process, each of the settings has its unique aspects in the following cases.
1) Unit and order volume
Generally, B2B orders are greater in quality but lesser in volume, because B2B clients tend to order only a couple of times a year. However, B2C is smaller in quality but greater in volume. This is because B2C customers have less time and they tend to make multiple orders during the year.
2) Shipping methods
Due to large order volumes, shipping and logistics for B2B orders are more complex. These orders are generally via freight. B2C orders, however, are shipped via courier providers such as UPS and USPS.
3) Regulations
B2B order fulfillment is required to follow tedious supply chain processes and regulations, especially when dealing with heavy materials, hazardous items, overseas shipping, and the interchange of data. Whereas, B2C does not have to comply with such regulations.
4) Overall fulfillment costs
Considering the heavy volumes of B2B shipments, the orders are mostly of high value and often may require specialists for loading and unloading the freight. Completing B2B orders requires much more time and equipment as compared to fulfilling B2C orders. This makes B2B orders much more expensive.
5) Speed of fulfillment
B2B involves larger volumes and heavier materials, making it longer to fulfill the orders. Additionally, certain regulations and processes need to be followed while routing these orders. Whereas B2C fulfillment has a time constraint and needs to be delivered within a certain time frame. A business could lose its customers and their reputations if orders are not delivered swiftly.
6) Payment
Payments for B2B orders are generally fulfilled within an agreed period via payment methods such as purchase orders and credit. In comparison, for B2C orders the payment needs to be completed almost immediately through card, cash, or check.
7) Returns
Due to the high volume of B2B orders and signed obligations, the return process is much more complicated as compared to B2C orders where there is a set return and refund policy.
8) Assistance for sales
For B2B order fulfillment there is plenty of support provided, including a separate manager that personally sees to the order specifications. However, in B2C there is almost little to no assistance during the sale, especially because the order takes place on an eCommerce platform.
9) Sales process
The B2B sales process is much more tedious and lengthy due to its nature, as it involves multiple stages of approvals and negotiations. Whereas for a B2C, the customer just needs to place an order and it is almost immediately shipped.
Regardless of the business model, each type of setting has its own set of challenges. Let's take a closer look at the challenges faced by both B2B and B2C business models.
What are some of the challenges involved in order fulfillment for each type of business?
For a B2B business:
- The order fulfillment process is mainly speed-dependent, because any delay in the manufacturing process could drastically affect the production and assembly line.
- Almost all B2B orders are subject to tedious regulations and trade barriers, such as taxes, tariffs, shipping levies, and other government regulations.
- B2B orders, their barcodes, and invoices have to comply with the rules of the Electronic Data interchange. This process is complicated and often causes a hold-up in B2B sales.
For a B2C business:
- With B2C orders, consumers expect reliable and speedy deliveries. If your order fulfillment process is unorganized and inefficient, you could lose out on customers.
- Most often, despite having a powerful product along with an amazing eCommerce platform, B2C businesses have outdated software for the fulfillment process which is not even integrated with the warehouse operations properly.
- B2Cs need to be prepared to handle returns. This includes accepting the return, evaluating, and restocking the goods, instead of letting the stock sit in storage unrecognized.
What are some of the benefits of using an order fulfillment service provider for each type of business?
Listed below are some benefits you can avail of by hiring a third party for order fulfillment.
- With a fulfillment provider, you can avail discounted rates for shipping as they can recognize the value and volume of your shipment. Cheaper shipping rates allow you to get a competitive advantage over the industry.
- The possibility of expanding and exploring new markets is much higher with fulfillment providers. A fulfillment center allows you to store your product and ship from the preferred market.
- Most often, returns are processed by the fulfillment center itself. 3PL providers consolidate and ship your returns, in turn saving you time and money.
- A fulfillment provider can cut several operational costs such as rent, utilities, equipment, insurance, and labor. With a fulfillment provider, you only have to pay for the resource that you have used, and this saves you from unnecessary wastage of money and resources.
- Currently, fast shipping is what customers are looking for and with a fulfillment provider, you will be able to provide speedy deliveries to your customers, both domestic and international.
How can businesses make sure they are selecting the right order fulfillment partner for their needs?
Selecting a suitable fulfillment partner is crucial for the success of an eCommerce business. Here are five simple pointers to keep in mind while selecting a fulfillment partner.
- Select a provider that meets all your requirements.
- Ensure that the selected fulfillment provider is willing to grow along with your business.
- The selected provider must offer a varying range of shipping solutions.
- Make sure the fulfillment provider is experienced in handling companies such as yours and has a good reputation.
- The provider should be able to seamlessly integrate operations with your business.
Conclusion
Understanding the difference between B2B and B2C order fulfillment is essential for online retailers. By knowing which type of customer you are dealing with, you can create a process that caters to their needs and increases the chances of a smooth transaction. For example, if you are selling to businesses, you may want to offer an expedited shipping option at an additional cost in order to make sure your product arrives on time. However, if you are selling to consumers, this may not be as important because they are less likely to need the product right away. Retailers who take the time to understand these differences will be better equipped to handle orders quickly and efficiently. Have you ever struggled with fulfilling orders? Let us know in the below comment.