Different Types of Business Transactions

Understanding your company’s role in a transaction is important. It affects everything from how you service your customers to marketing, pricing and more. There are several different types of business transactions. In some cases, companies may work with multiples types of business transactions, and they may set up different units or departments within the organization to simplify their efforts. By understanding more about these types of transactions, you can make more informed decisions about your company.

Barista staff placing customers order in queueIn-Person Retail to Customer Transaction

If you are a retailer with a storefront, you likely conduct in-person retail to customer transactions on a frequent basis. This type of transaction may be for clothing stores, grocery stores, gas stations and other related venues. To complete this type of transaction, the retailer may need to use a credit card processing service as well as accept cash or checks as a form of payment. Because transactions may not be completed without the customer visiting the store, it is imperative that marketing focuses on drawing customers to the venue.

Not In-Person Retail to Customer Transaction

This type of transaction is becoming increasingly common because of the prevalence of e-commerce, but it also includes phone orders. Payments may be made over the phone using a credit card, online using a merchant account service or even by mail. Marketing may include sending catalogs by mail as well as online marketing and other efforts designed to steer a consumer to a specific website. Many retail stores have an e-commerce division now.

Wholesale Provider to Retail Business Transaction

This is a business-to-business transaction that essentially makes the retailer the middleman in a transaction. Retailers often do not sell their own goods but stock their stores with items purchased through a wholesaler. Because a retailer may receive the items at a discounted price when making a large bulk order, the retailer may receive a discount. This enables the retailer to markup the price when selling it to a consumer. Many wholesale providers have an invoice or billing system in place, and they may focus on building strong relationships with retailers for repeat business.

Wholesale to Consumer Transaction

There are instances when a wholesaler may offer goods directly to a consumer, and there is savings to the consumer in this type of transaction. This is a rare type of transaction due to the inability of most wholesalers to market to consumers or to have an easy shopping and payment method in place. In many instances, these transactions are completed online with a merchant account system. Because many wholesale providers do not market directly to consumers, it may be difficult for consumers to find wholesale providers to work with.

Business-to-Business Transaction

Businesses can be consumers in many situations. For example, when they purchase furnishings, electronics, office supplies and other items, they are a consumer in a transaction. Companies that offer goods or services that appeal to businesses may have retail or online presences, and they market directly to businesses. While some payments may be due immediately with each purchase, many of these companies can set up a payment or billing system for the benefit of business customers.

Consumer to Consumer Transaction

These types of transactions generally involve the sale of used products, such as boats, cars and furnishings. It was common for consumers to advertise their desire to sell personal items in the newspaper, but online advertising is becoming increasingly common. These transactions often involve cash, and some larger transactions may use money orders.

There are several types of business transactions that may take place, and your company may focus efforts on one or several of these transaction types. When you understand your company’s role in the business cycle, you can more easily market to your target audience and establish appropriate pricing.