Business-to-business

The "electronic components district" of Guangzhou, where numerous shops sell electronic components to other companies that would use them to manufacture consumer goods

Business-to-business (B2B or, in some countries, BtoB) is a situation where one business makes a commercial transaction with another. This typically occurs when:

  • A business sources materials for its production process for output (e.g., a food manufacturer purchasing salt), i.e. providing raw material to the other company that will produce output.
  • A business needs the services of another for operational reasons (e.g., a food manufacturer employing an accountancy firm to audit their finances).
  • A business re-sells goods and services produced by others (e.g., a retailer buying the end product from the food manufacturer).

Business-to-Business companies represent a significant part of the United States economy. This is especially true in firms with 500 employees and above, of which there were 19,464 in 2015,[1] where it is estimated that as many as 72% are businesses that primarily serve other businesses.[2] One possible argument of economics to explain the levels of Business-to-Business activity is that it allows for business segmentation.[3]

B2B is often contrasted with business-to-consumer (B2C) trade.

  1. ^ "2015 SUSB Annual Data Tables by Establishment Industry". www.census.gov.
  2. ^ "Fortune 500 2015". Fortune.com. Retrieved 2018-10-18.
  3. ^ Hayter, Roger; Patchell, Jerry; Rees, Kevin (1999). "Business Segmentation and Location Revisited: Innovation and the Terra Incognita of Large Firms". Regional Studies. 33 (5). Taylor & Francis Online: 425–442. Bibcode:1999RegSt..33..425H. doi:10.1080/00343409950081275. Retrieved 8 April 2023.