Comparison of B2b and B2c Companies
Essay title: Comparison of B2b and B2c Companies
Comparison of B2B and B2C Companies
This report is a supply chain comparison between two companies in which one is a business-to-business (B2B) model company and the other is a business-to-consumers (B2C) model company. The comparison will be between the companies Wal-Mart and Grainger. Wal-Mart is a well-known conglomerate known around the world that is in the retail business that seeks to sell products to consumers at a significantly reduced discount compared to its rivals. Grainger sells supplies to different companies through the company’s own website.
First, let’s start by distinguish between what a B2B company is and what a B2C company is. The definition of a business-to-business is when businesses sell products or services to other businesses, hence B2B. Grainger is a business-to-business company. A business-to-consumers description is when businesses sell products or services to individual consumers, hence B2C (Schneider, G. Electronic Commerce: The Second Wave). Wal-Mart is a business-to-customers business. As one could imagine, each model has a different aspect and strategy on how to sell its product or service. I will begin with Wal-Mart’s supply chain method and attempt to break each step down to the last process, which is when consumers by their product.
Wal-Mart
Almost every American has shopped at least once at a Wal-Mart store located somewhere in the United States. The first store ever opened was in tiny Rogers, Arkansas back in 1962 by an entrepreneur named Sam Walton. At that time, other retail stores such as Kmart and Target were just beginning too. Even though each three stores offered similar products and services, Walton’s store focused on serving the customers and giving them what they wanted, which was cheaper prices. In Walton’s autobiography, he describes what gave his Wal-Mart stores the edge over its competition. “The secret of successful retailing is to give your customers what they want, and really, if you think about it from the point of view of the customer, you want everything: a wide assortment of good quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience. You love it when you visit a store that somehow exceeds your expectations, and you hate it when a store inconveniences you, or gives you a hard time, or pretends youŇ‘re invisible” (The Wal-Mart Story. 2006).
The main reason that Wal-Mart is able to offer customers such low prices is because they are very efficient in their supply chain management. Wal-Mart is able to squeeze out the lowest cost from supplies by buying in bulk and then passing those savings down to customers. Walton’s philosophy was to pass down these savings down to customers and in return volume will dictate the company’s profits. During the process, Wal-Mart embraced technology and was one of the first companies to use technology to track their inventory supply to keep proper inventory in stock at all times. This early innovative initiative had a huge impact early in their success and is now imitated by many businesses. Today, Wal-Mart buys from over 61,000 suppliers in the United States. To keep things fair within all suppliers, Wal-Mart limits to no more than 20% of any one’s supplier’s business (Wal-Mart facts: Supplier Diversity). Lets take a look at Wal-Mart’s supply chain:
Grainger
Grainger is not a household name that as many people recognize like Wal-Mart but Grainger has actually been around since 1927 when William H. Grainger founded the company. Back then, Grainger started out as a company that was a wholesaler of electric motors. Today, Grainger sells a variety of equipment and has been recognized for a variety of awards such as Top Business-to-Business Web Sites, Most Prepared Supplier Award, and Most Admired Wholesale Company (Grainger Awards and Recognition).