The business-to-business (B2B) online retail market is expected to reach double the size of the business-to-consumer (B2C) online market by 2020, generating revenues of $6.7 trillion.

New analysis from Frost & Sullivan, dubbed Future of B2B Online Retailing, suggests that B2B online sales will account for close to 27% of total manufacturing trade, with China and the US set to be leaders in the marketplace. The US is anticipated to double its revenue contribution to $1.2 billion by 2020.

Frost & Sullivan said that B2B online retailing has been witnessing strong growth due to the rapid migration of manufacturers and wholesalers from legacy systems to open, online platforms – mirroring trends in the consumer eCommerce market.

As legacy systems involve the use of electronic data interchange, which the research group argues is expensive and cumbersome to handle, "B2B models will continue to move towards ubiquitous online platforms that allow buyers and sellers from anywhere in the world to transact goods and services with ease".

The report indicated that as Alibaba and Amazon become increasingly popular commerce portals, B2B online relationships could move from "a one-to-many to many-to-many business model". Instead of a model where one company invests and builds an e-platform for its suppliers, the report argued, the preference will be for a solution in which anybody integrates an e-procurement process and facilitates the purchase of goods online.

Frost & Sullivan's visionary innovation group team lead, Archana Vidyasekar, said: "As such, private industrial networks, where specific companies come together to exchange products, and public marketplaces that are employed for on-the-spot purchasing, have gained prominence over the last decade.

"With businesses buying more than selling online, these seller-driven B2C-type open public networks will help provide more visibility and storefront capabilities to sellers."

Retailers are expected to face a number of challenges because, unlike the B2C setting, the B2B online retail market comes with variable prices and high order volumes which Frost & Sullivan says necessitates a flexible shipping and logistics solution. Executing marketing or educational initiatives in the B2B setting is also said to be complex, because clients must understand the way products work and interact with their existing systems.

Pramod Dibble, visionary innovation group consultant at Frost & Sullivan, commented: "Nonetheless, with technological advancements facilitating the procurement of goods on the move through smartphones and tablets, business use of online platforms will rapidly grow.

"The emergence of cloud platforms that offer more scalability, both as a software and infrastructure service, too is pushing businesses towards B2B online retailing."

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Frost & Sullivan