B2B international trade has grown largely due to the widespread use of the internet and social media. A platform is created by the world wide web for not just individuals but also businesses from all around the world to interact with one another which in turn has created a productive ground for the growth of B2B international trade.
You need to go beyond knowing the basics of B2B transactions as a business owner. The relationship between international trading and online B2B marketing need to be understood properly as this knowledge is very much important to experiencing growth and expansion as a business in relation to e-commerce.
What is International Trade?
Buying and selling of goods or services across national borders is called international trade. International trade may be either imports or exports. Imports mean that goods or services are brought into the country and exports refer to goods and services sold to another country.
There are several reasons why these transactions are beneficial for countries, including:
Variety: International trade introduces a nation to a diverse range of products, offering citizens numerous options to choose from. This enhances their quality of life and contributes to the overall growth and development of the country.
Reduced Dependency: By connecting local markets to a global customer base, international trade eases economic pressure on domestic markets. It fosters economic growth by diversifying revenue streams and reducing reliance on limited local demand.
Employment Generation: The increased demand for goods in international markets leads to higher production requirements. This drives the establishment of new industries, creating jobs and lowering unemployment rates within the country.
Enhanced Availability: International trade grants access to goods and commodities that a country cannot produce domestically, ensuring the availability of essential and luxury products alike.
Utilization of Surplus Produce: Excess production can be exported to international markets, allowing countries to earn valuable foreign exchange while efficiently utilizing their resources.
Promotes Peace and Goodwill: By fostering economic interdependence, international trade strengthens cultural and economic ties among nations, promoting mutual understanding and cooperation.
B2B in International Trade:
Business-to-business (B2B) transactions are a cornerstone of international trade. This model facilitates exchanges of goods and services between companies across borders, promoting global commerce and collaboration.
In a typical B2B setup, one company may supply raw materials to another, which processes them into finished goods. Alternatively, a wholesale business might supply products to a retail company, streamlining supply chains and boosting cross-border trade efficiencies.
Characteristics of B2B Market:
The specific features of B2B transactions set them apart from B2C trading. Some of the characteristics of the B2B market include:
A complex decision-making unit:
Decision making in B2C transactions is simpler as making a decision for an individual is easier than when many people are involved in it. It is decided by the customer alone if they want to buy from the business or not.
However, the decision-making process is more complex in B2B transactions as a business because multiple steps and also various individuals are involved in making a decision.
Usually, these individuals are specialists in some area or the other and they come together to use their knowledge to decide on what is best for the company which often results in long deliberation periods before they take any step. However, every decision a business makes does not requires deliberations. Some decisions like are of low risk which can be made by a junior employee without calling for a meeting.
The risk and value attached to the products determines the need for deliberation. Products fall under four categories based on such risks and values. These include:
Low-risk, low-value purchases: Low-risk, low-value purchases do not require deliberations as little thought is required to purchase such products and making a wrong decision while buying these products poses little to no financial risk. An employee can make the purchases themselves because of the nature of these products. Paper clips, safety pins, etc. are examples of such products.
Low-risk, high-value purchases: Low-risk, high-value purchases are commodities like raw materials which requires the assistance of specialists while purchasing. The approval of senior executives of the company is also required for purchasing this category of products. Deliberations must take place before purchasing the product by the company so that the company can buy quality products at a minimized price.
Low value, high-risk products: Low value, high-risk products require the presence of experts and top officers in the company while purchasing because the risk lies in the product and not on the price. The company must consult with an expert on the matter before any such transaction can occur.
High value, high-risk purchases: High value, high-risk purchases are products that require deliberations by every board member and decision-making unit. For example, the CEO, CFO, Purchasing Director, Production Director, and other top management department leaders will need to deliberate before purchasing plant equipment.
These B2B marketers will have to show a high level of expertise when interacting with the target audience so that it will help convince a buying company to purchase a product.
Rational buyers:
A consumer can decide to buy a product based solely on sentiments in B2C markets. But, this is not the case when a company wants to buy a product because many specialists come together to deliberate on whether or not the company should make a purchase. There is little to no room for sentiments as companies will always go for products that offer more benefits irrespective of the feelings of anyone might get hurt.
Therefore, B2B marketers must aim to make their products top quality, else, they can lose their customers as they will go to another company selling better products.
Deeper product description:
A company will have to describe its products in a way that convinces the target audience. They must keep it in mind that the international company whom they are selling are consists of experts and specialists. Therefore, the description of the product must appeal to them.
A selling company usually does not need to go into details of how a product works to convince consumers for B2C transactions. However, a supplier have to explain to a buying company how a product works to make a deal in B2B transactions. Therefore, a selling company need to show some level of expertise in selling their products to another company. They must learn to give a detailed analysis of their products if they want to convince purchasing companies and to get new customers.
Limited customers:
A selling company usually have a limited number of customers in B2B marketing. However, the sales made by this limited customer base dominate the ledger because these companies buy in large quantities. The quantity that a company purchases is generally more than those of a regular customer despite the customer uses the product very often.
A supplier is allowed to know what the customer wants and can build long lasting relationships with their consumer companies as they can keep records of the demands of their customer companies. Usually, purchasing companies are looking for partnerships. They want a company whom they can trust to produce quality stocks and hold on to stocks on their behalf. You must be ready to provide these value-added services to your customers as a B2B marketer, else, you may lose them and they will approach another company who is prepared to do so. The relationship between both companies will grow by providing these services.
Fewer customer-based segments:
The limited number of customers in B2B markets makes it easy to categorize customers into different segments. They can be categorized based on their needs and behaviors. There are fewer behavioral-based segments when it comes to B2B transactions. Whims, insecurities, indulgences, and sentiments are hardly allowed in a buying company to influence their purchase of a product because the purchase is not for an individual but a group and different members also play a role in the decision-making. Fewer segments are there because of these features. These include:
Price-Focused Companies: These companies prioritize reducing product costs and concentrate more on pricing than quality, as their primary concern is affordability.
Quality and Brand-Focused Companies: Typically medium to large-scale organizations, these companies are willing to pay a premium for products that meet their high-quality standards and align with well-known brands.
After-Service-Oriented Companies: These can range from small to large-scale enterprises, emphasizing the value of post-purchase services such as delivery, technical support, and maintenance to enhance their overall experience.
Partnership-Focused Companies: Primarily large-scale organizations, these companies seek long-term relationships with reliable suppliers who consistently deliver on promised quality and services.
Marketers must research and identify which segment their customers belong to. This understanding will enable them to tailor their approach, meet diverse customer needs effectively, and foster enduring business relationships.
Personal relationship:
The position of personal relationships is a peculiar feature of B2B transactions. The sales and technical representatives of the supplier very often visit the customers so that they can build trust and establish personal relationships. A long-term buyer-customer relationship can be created by this which can span for years. So, the suppliers should maintain contact with customers to build trust and a strong relationship.
Long-term buyers:
Often repeat purchases is done by B2B buyers because both the supplier and the customer are interdependent. For example, a company that purchase raw materials will repeat it if they plan to continue producing finished goods. B2B marketer will need to learn how to retain their customers since losing a customer can seriously affect sales of a product as there are limited B2B buyers in the market space.
Fewer changes in production:
The products are subject to several changes under the B2C transactions depending on the ideas of the consumers. On the other hand, hardly any changes are made to their products by B2B suppliers because the demand of the customers hardly changes. The demands in B2B are not subject to trends like those in B2C markets. But, this does not mean that changes to their products is never made by B2B suppliers. The changes are carefully planned and successfully commercialized whenever it is done. B2B suppliers have to research available data so that the research will help them to manufacture products which will continually hold the interest of consumers.
Going beyond packaging:
Packaging is used as a tool by B2C suppliers whereas it is not used by B2B marketers as B2B customers are not as interested in the packaging of a product, rather they look the product to determine its utility. Therefore, packaging is secondary in case of B2B suppliers. The primary thing to consider is quality and utility of the product. So a B2B supplier must produce top-quality products aside from packaging to attract their buyer.
The Basic Process of International B2B Trade:
B2B suppliers are a key factor in the trading process when it comes to international trading. Certain marketing strategies must be developed by them to drive demand for products and make sales. These include:
Finding Potential Buyers: The first stage involves identifying potential buyers for the products or services offered. At this step, suppliers assess whether a prospective buyer needs the product and can afford it. Some platforms facilitate opportunities for suppliers to connect with buyers.
Preparation: In this stage, the B2B supplier gets ready for the initial interaction with a potential customer. The sales team conducts thorough research on their offerings to tailor their presentation to the specific needs and preferences of the potential client.
Making Contact: This stage involves reaching out to the prospective client. The internet has simplified this process, enabling suppliers to connect through online platforms without the need for physical travel. Suppliers can pitch their offerings virtually or in person, using various techniques such as:
- Presenting gifts during initial physical meetings to create a positive impression.
- Asking engaging questions to spark interest.
- Offering samples of products or services for evaluation and feedback.
Presentation:
The supplier carries out a presentation in this stage using which they try to show prospective consumers how their products or services can meet their demands. A price quotation is also included in this presentation to informs the price of their products or services to the potential customer.
The presentation should not be a one-way conversation. Listening to the clients should also be involved to determine their needs. Determining the needs of the consumers will help the supplier to re-strategize their presentation to meet those needs.
Objections:
Sometimes, objections can occur in the trade process. The products or services a supplier presents may not be liked by prospective buyer. A supplier must be receptive to criticism and use them to improve their products when face rejection which will help them achieve success in sales.
Closing the deal:
The prospective client places an order for the products or services offered by the supplier. The supplier begins to work on shipping the product to them once the customer places an order. Different processes are involved for shipping a product to a client in another country. These include:
Export Haulage: This is the initial stage of product transportation, involving the movement of goods from the supplier's location to the transportation personnel. These personnel are responsible for delivering the products to the destination country.
Customs Clearance: The supplier must fulfill all customs requirements, including completing the necessary paperwork as per their country's regulations. Once this process is complete, customs issue clearance for the goods.
Origin Handling: At this stage, the products are handled and prepared for placement onto the shipping vessel.
Freight: The supplier books space on cargo transport and loads the products. The freight forwarder determines the most suitable mode of transport—air or ocean freight—based on the timeline and requirements.
Import Customs Clearance: This process can begin before the goods arrive in the customer's country. The freight forwarder manages the necessary legal documentation for customs clearance.
Import Haulage: The final stage involves delivering the product to the buyer. Transportation costs for this process depend on the agreement between the supplier and the customer.
Follow up:
Communication between the supplier and the consumer does not end after a successful sale of a product. It is good maintain a relationship with a customer for repeat business and referrals. It also shows true partnership apart from this.
Benefits of Going Online:
The opportunities provided by the internet greatly benefit business owners. More businesses are now practicing e-commerce and a lot of businesses switching to the online marketplace as a result of the COVID-19 pandemic. Some of the benefits going online include:
Increased market reach: More reach to a larger target audience is provided by the internet which helps to drive demand for products.
Constant interaction with customers: B2B suppliers can keep in touch with their consumers continually with the help of internet which strengthens the relationship between the supplier and the customer.
Better campaign: A powerful campaign can be created by a supplier for their products using the internet. There are a lot of way to advertise products, especially by using social media. A product can reach millions of people with digital marketing and content marketing. For example, search engine optimization can be used by an individual to make their website frequently appear on the search engine result pages.
Saves cost: Certain costs can be reduced by using internet such as the time and cost of having to travel to meet a customer to finalize a deal can be eliminated as both the supplier and customer can agree with the internet.
B2B E-commerce Market Size and Statistics:
The physical market is gradually replaced by the e-commerce market as people now prefer to order on line without having to go outside. The expansion of eCommerce is seen clearly, especially the online B2B marketplace.
