Selling Online Abroad B2B Versus B2C: Beware of Differences

2020 was a difficult year for most companies. However, companies that had diversified their sales across different markets and quickly adopted the technology were able to survive and even prosper.

Now everyone is fighting for their share of online sales and for a place in rich or fast-growing foreign markets.

To the extent that exporting online makes perfect sense (it always has, even more so today), it is important that companies, especially SMEs, have a clear understanding of what it means to sell B2C vs B2B online, what are the consequences and how to do that.

Sell abroad B2B online

I'll start with B2B because it's usually the easiest thing to do.

Now, B2B means business to business, therefore in a B2B transaction, the seller will look for another business as a buyer, not as a consumer.

It can be an industrial company, which uses the products as an input, or a distributor, who buys the goods with the aim of reselling them in its market.

The beauty of B2B commerce is that, if done right, it can be done with relatively little effort.

There are two types of B2B buyers: those who buy in bulk and those who prefer a long-term partnership. In both cases, it means that a business can make a lot of money from just one or a few orders (in the case of a partnership, even recurring orders, a small business dream).

This allows for a concentrated marketing effort focused on finding only one business partner (or a few). It doesn't sound like a big deal, but you save a lot of time and resources compared to B2C marketing.

From a legal perspective, the buyer will generally take care of most of the importing country's requirements, especially in the case of a small business supplying an established distributor. This is usually reflected in the sales contract that is closed under Rules of the Incoterms such as FCA or FOB, which is a small charge for the seller.

The sales channels are also quite straightforward. The bulk purchasing market is essentially divided among a few B2B online markets such as Alibaba, DHgate, Global Sources, eWorldTrade and Thomasnet.

Most of them are focused on Asia (especially China) partly because Asian companies are tech-friendly, partly as a consequence of the meteoric rise in industrial production in Asian countries.

According to long-term partnerships, it is not difficult to find a B2B website where to do business: Globartis, Enterprise Europe Network, Opportunity Network are just a few names in the world of B2B e-partnerships.

More recently, even global banks have moved to create their own networks between SMEs. While banks aren't exactly tech champions, their markets should offer more compliance within the platform, as only banking clients are supported.

That's important because, in the end, the only real problem a business can run into in an overseas B2B online transaction is that the buyer isn't trustworthy (the marketplaces will provide help, but it's always best to do your own due diligence ).

If you find the right buyer, everything should be fine.

Sell abroad B2C online

B2C means business to consumer, that is, selling directly to the end customer. There are some variations like B2B2C, but the concept is the same.

First of all, B2C will only make sense for companies that sell a final product, and not for industrial companies that supply intermediate goods, machinery or equipment to other production companies.

Hence the great advantage of selling B2C abroad is that you do not need a local distributor or importer.

This means not only that there are no profit leaks, but also that the company can decide when and where to do business for itself.

That is the good part. The bad part is that a) the marketing effort is huge and b) the legal consequences are much more complicated than with B2B.

What I'm saying is obvious: if you want to sell B2C, you need local customers. Therefore, you need the marketing effort to attract thousands of people to your product.

There is no shortage of channels to do it (social media platforms, for example), the problem is that it requires a lot of effort.

Also, if you sell B2C, the end customer will wait for the product to arrive at their doorstep. Therefore, you will sell under Group D Incoterms rules, most likely DDP, which places everything (transportation, import clearance, taxes) to the seller.

There is another way to go B2C, which is through a online b2c marketplace. Now, the world of these platforms is huge, since many are specific to a country or sector and all have their own characteristics.

For example, some are pure marketplaces (eBay), while others are retail (Amazon).

The most famous are PayPay Mall, Mercado Libre, AliExpress and Rakuten.

One last way to sell B2C abroad online is through B2B2C, also known as direct delivery. What happens is that a dropshipping platform like Shopify will take care of the production and logistics, leaving you only the marketing effort.

This makes sense only for companies with strong R&D and marketing capabilities, which do not have the manufacturing and logistics capacity to serve many customers in different markets.

Conclution

Selling online abroad is feasible and rewarding as companies diversify from their home market and explore new sales channels, such as online marketplaces.

The important thing to decide is whether to move to B2B or B2C. While there are compelling arguments for both, it may be best for a small business with little export experience and marketing capabilities to go B2B first.

The business may start with a wholesale, then find a partner, and then switch to B2C when things become more established.