Factories, traders, wholesale markets and B2B channels

Begin with why B2B looks different from shopping. Textbook §2.3.1 defines B2B as transactions between businesses and adds three practical features: larger quantities, greater specifications and longer lead times. It also notes that buyers may need recurring supply for repeated production. These features explain why a B2B page is organised around inquiries, quotations and samples rather than a buy button.

A second feature follows from the first: approval. A large purchase such as machinery usually needs sign-off from company leaders, so the buying process is longer and involves more people than a consumer decision. Pricing is negotiated, and payment terms are part of the deal. The textbook is explicit in §2.3.4: B2C consumers often pay the same price for the same item, while B2B firms negotiate prices and payment terms, and B2B volume is far larger.

But B2B is not defined by size alone. The test is buyer and purpose: a company buying for operations is B2B even if the order is small; an individual buying many items for personal use is still B2C. This matters because the same seller can serve both. A clothing firm may sell one shirt to a consumer and 1,000 to a retailer; the first is B2C, the second B2B, and the pricing, contract and delivery differ.

The global picture is often misread. Textbook §2.3.2, citing UNCTAD, puts US B2B ecommerce at about US$8.3 trillion, roughly 38% of the US$21.84 trillion global B2B market. Adding B2B and B2C, the US ranks first at over US$9 trillion, Japan second at over US$3 trillion, China third at over US$2 trillion, and Korea fourth at over US$1 trillion. Note the scope: this is a B2B-heavy total, not the B2C league table. It does not contradict China ranking first in B2C online retail.

Now the actors. A factory produces; it earns from production and capacity utilisation. A trader or wholesale stall consolidates: it fills categories, pools small orders into a container, prepares export documents and sometimes finances the deal; it earns a margin or service fee. A B2B platform matches: it provides listings, search, messaging and sometimes settlement; it earns membership or service fees and advertising. The overseas business buyer purchases for resale or production and bears import risk.

These actors often overlap. One batch of locks may be produced by a factory, sold through a Yiwu stall, transacted on a platform and declared by a trading company. If you assume one actor, you will misread both cost and responsibility. The platform seller is the contracting party; the factory may be a supplier behind it. Ask who signs the contract, who inspects quality, who handles customs and who answers a claim.

Platform economics deserve separate attention. The textbook notes that Alibaba.com charges sellers membership or service fees that vary by category, up to about RMB 150,000 per year in its account, and also earns advertising revenue; DHgate uses a small-wholesale model. For a seller, this is a fixed acquisition cost: it must be spread across orders. For a buyer, the platform lowers search and verification costs, which is why buyers tolerate platform prices above factory quotes.

This is exactly the puzzle in the three quotes. The factory at US$3.20 is cheapest per unit but demands 5,000 units and 45 days. The stall at US$3.50 can pool 2,000 units in two weeks but may have less control over production quality. The trading company at US$3.40 handles customs and consolidation and accepts a 30% deposit, which reduces the buyer's workload and cash risk. The right choice depends on cash, urgency, quality control and who can absorb a failure.

A practical comparison therefore has five columns: landed cost, lead time, minimum order, payment terms and risk allocation. Add the platform fee or trader margin where it belongs, and state the conditions under which the recommendation holds. "The factory is cheapest" is not a recommendation; "the factory is cheapest if you can order 5,000 units, wait 45 days and inspect quality yourself" is.