Business-to-Consumer (B2C)
What is B2C?
The acronym B2C stands for business-to-consumer. It can sometimes also be referred to as direct to consumer. This term refers to the direct sales of products and/or services from businesses straight to customers who buy strictly for consumption. There are no middlemen involved with B2C transactions. Most B2C companies today tend to be online retailers that sell their products and/or services through the internet to consumers, though there are also brick-and-mortar B2C companies as well. People looking to start a business that sells directly to customers can get started with an online store builder.
The origin of B2C dates back to the beginning of commerce itself. However, it wasn't until the advent of the internet that BC became widely recognized as a distinct type of transaction. The rise of eCommerce platforms and online marketplaces has made it easier than ever for businesses to reach their target audience directly.
4 types of B2C models
Any business that creates value for, and sells directly to, consumers, either through products or services, is said to have a B2C model of operation. While the main focus of a B2C type of business is to serve consumers directly, some may also serve other businesses.
Here are some of the main types of B2C business models:
Product-based B2C model: As the name implies, in a product-based B2C model, businesses supply and/or sell products to end-consumers, either through their physical or online stores. For example, fashion or shoe brands, like Nine West or Nike will sell their clothes, accessories and shoes directly to consumers either in a brick-and-mortar store or online—and often via both. This type of product-based B2C businesses may also sell their products to consumers via third-party eCommerce sites, like Amazon.
Service-based B2C model: Similar to the previous model, a service-based B2C business provides services instead of physical products directly to consumers. The services, such as dog grooming or lawn care, can be ordered online or from a physical storefront, depending on the business.
Software-based B2C model: These B2C companies that specialize in software can either be product or service-based. The former involves selling actual software products and solutions (Adobe, Microsoft, etc) while the latter offers software services (Netflix, Hulu, etc.) to consumers.
B2C eCommerce model: In this type of B2C, businesses sell products to consumers in online stores and marketplaces. While Amazon is the largest online retailer, many brick-and-mortar stores today also sell their products online. This B2C eCommerce model can be divided into two different sub-models.
2 Digital B2C business models:
Direct sellers: Where consumers purchase goods directly from the manufacturers via their online retailers. There are many examples of direct sellers in almost any product niche.
Online intermediaries: These are online eCommerce platforms that bring together the buyers and sellers; the platforms themselves do not make the products or services listed on the site.
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B2C vs B2B
What does B2C mean vs B2B? B2B stands for business-to-business. Unlike B2C, which focuses directly on consumers, B2B refers to the exchange of products or services between two companies.
For example, a company that sells office supplies like furniture or software to other businesses is operating business to business.
In some cases, there are businesses that can operate both as B2B and B2C models. For example, an event marketing company may plan corporate events, weddings and small events for individual clients while also providing party rental services to other businesses.
B2C examples
In the traditional sense, a B2C sales model refers to the process of selling goods and services directly to customers at supermarkets, shopping malls, restaurants, etc.
However, today, the process also (or mainly) includes online retail, otherwise known as eCommerce. In fact, B2C first became popular in the late 1990s during the dotcom boom, but has since taken on a life of its own through online retail giants like Amazon.
Here are some popular examples of B2C:
Fast food chains: You can’t get a more traditional B2C model than McDonald’s or Burger King or any of its fast food counterparts. Most of these fast-food giants generally sell their products to customers at physical places, though in some parts of the world, you can order meals online for delivery.
Fast-food chains follow the B2C model since they serve consumers and individuals, not other businesses.
Amazon: Amazon is the epitome of a B2C eCommerce model. Though there are physical stores, the online giant sells countless products directly to consumers from different retailers and/or manufacturers.
Supermarkets: Like the fast-food chains, Costco, Sam’s Club, Walmart, and other supermarket chains serve as both product-and service-based B2C companies, both in store and online. Though they primarily focus on consumers, they also cater to other companies.
Key components of a B2C strategy
The following are what make up an effective B2C strategy:
· Products or services designed for individual consumers
· Direct communication between the business and consumer
· An emphasis on building customer relationships
· A focus on meeting consumer needs and desires
Advantages of B2C
Lower prices and cost of business: Unlike other business models, B2C businesses most commonly do not have employees—or at least have fewer employees. In B2C ecommerce businesses, since there are no physical stores involved, this cuts costs like rent, cleaning, inventory and other brick-and-mortar fees. In general, the cost of starting a business may be considerably lower.
Direct communication with a wider audience: With advancements in technology like small business apps and social media marketing, it’s much easier for B2C businesses to connect and engage with their customers. What’s more, B2C businesses can personalize their email marketing campaigns including push notifications, SMS correspondence, making customer’s feel more connected to the brand. As a result, oftentimes B2C companies are able to convert visitors through their eCommerce website and social channels.
Improved accessibility: Without time constraints of operating a storefront, an online store can be accessed at any time of day, from any location. B2C online businesses are open 24/7 meaning their customers can shop directly, at any time.
No third party clients: The need for middlemen is reduced since B2C businesses sell directly to consumers. This streamlines the process for both parties involved.
Stronger customer relationships: Consumers appreciate the direct communication and become more engaged with a business. This helps with fostering brand loyalty and trust.
Best Practices for B2C
Looking to develop a strong B2C strategy? We recommend checking out some of these best practices to get you started.
· Develop a strong online presence with a website and social media marketing
· Create personalized marketing messages and offers
· Emphasize the benefits of your products or services to consumers directly, go with a show don't tell approach
· Provide excellent customer service to build customer loyalty and customer retention
· Use proven lead generation tactics to build your customer base
Challenges of B2C
One of the biggest challenges of B2C is the intense competition in most industries. With so many businesses vying for the attention of individual consumers, it can be difficult to stand out. The cost of acquiring new customers can be high and time intensive, which can impact long and short term profitability.