What Does Business to Consumer (B2C) Mean?
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A business-to-consumer, or B2C, business model is one in which a company sells a service or product directly to a consumer.
Familiar examples of B2C companies include Amazon, Walmart, and other companies where individual customers are the end-users of a product or service.
B2C is the alternative of the business-to-business model (B2B) in which a company sells their products first to another business, which will then sell the product to another business or a customer with a mark-up.
Companies can either be B2C, B2B, or a hybrid of both.
B2C as a business model typically involves a higher volume of clients, but a proportionally lower revenue.
B2B businesses deal with a smaller number of clients that make larger transactions.
Examples of the hybrid model are SaaS companies (Software as a Service), which often have many different tiers of service, tailored to companies or individuals, depending on the service.
Types of B2C Models
There are five distinct models that B2C companies use to move their products in a digital space.
1. Direct sellers are one of the most common, selling a product directly to consumers.
This includes small online businesses as well as large retailers like Microsoft and Apple that sell exclusively in-house products.
2. Online intermediaries don’t own the products that are sold on their site, but they put sellers directly in contact with buyers and usually profit by taking a cut of the transaction.
B2C E-Commerce giants such as eBay and Etsy are examples of online intermediaries.
3. Advertising based B2C is becoming increasingly common as more and more people exclusively consume online media.
In this model, a company purchases advertising space on a platform that receives large volumes of traffic, such as YouTube or Reddit.
Targeted advertising uses criteria such as internet searches, content viewed, and demographic to strategically place advertisements in front of promising customers.
4. Community-based B2C takes advantage of online, like-minded communities occurring on media platforms and beyond.
Since many of these communities form around a shared interest or physical location, companies can identify promising leads more easily.
5. Fee-based B2C models require payment to access a company’s content.
Subscription services like Netflix, Hulu, and Lynda are prime examples of this model.
How B2C Business Took over the Market
Before the dotcom boom of the late 1990’s, one or more B2B businesses were tied to every physical storefront.
Through the internet, these B2B businesses gave way to simpler B2C systems, through which customers could purchase from manufacturers directly.
This financial streamlining eliminated the middle man, causing the B2C model to become the modern standard.
As the early growth of the internet gained momentum, more and more stores switched to doing business directly with consumers over their websites.
In particular, sites like Amazon drew much traffic away from stores.
Many physical retailers were forced to shut their doors permanently, essentially driving B2B middlemen into extinction.
Today, the B2C model is the norm.
The B2B model is still in use, but often it only applies to businesses that make products specifically for use by other businesses.
Manufacturers of industrial or medical equipment, for example, still use the B2B model.
Why Do B2C Practices Differ from B2B?
In general, businesses are quite price-sensitive, and care little about the presentation, whereas customers are less price-sensitive and care more about the presentation.
When selling chocolate to a business, that business cares little about the packaging in which it arrives.
When selling to a customer, however, the packaging is a large point of emphasis.
What is the Advantage of B2C?
By selling directly to customers, manufacturers are able to avoid price markups on their products, especially in the digital realm.
Some companies are also able to deliver products or services upon customer request, which dramatically reduces overhead.
Websites can reach a significantly larger customer base than stores can, which is crucial for a B2C model to succeed.
For this reason, the world of B2C marketing has become vital to the success of online businesses.
The lack of physical storefronts also negates the risk and cost of property, keeping a company’s assets more liquid, and greatly increasing the ease with which company changes and expands.
One of the most common examples of modern B2C business are direct sellers, or in other words manufacturers that are able to sell directly to consumers.
Many online retailers, such as online clothing stores, follow this model.
A business to business, or B2B, model is one in which a manufacturer first sells their product (at wholesale prices) to a retailer, who then sells the products to consumers (at retail prices).
There are retailers that still use this model, however most businesses are now business to consumer, where the manufacturer sells directly to the consumer.
B2C Companies List
The majority of modern businesses, particularly online retailers, follow the B2C model.
Suffice it to say that a comprehensive list is not possible; however, you can tell a business is B2C if the seller is also the manufacturer.
If the seller is a retailer, the business is likely at least partially B2B.
Business to consumer marketing is a practice by which a company uses a platform, for example Facebook, to find communities of people that seem like good prospective buyers and advertise their products directly to that group.
For example, a company that produces clothing from recycled plastic fabrics may find and advertise to a group dedicated to reducing plastic waste.
What is B2C?
B2C, or business to consumer, is currently the most common model of business. It is a system by which a manufacturer sells products directly to the consumer, circumventing middlemen such as retailers.
While previously rare, the advent of internet commerce caused the eventual takeover of B2C businesses.
A consumer to consumer business, or C2C, is a platform that allows individuals to find and transact with each other.
Etsy is an example of a C2C business, as is eBay.
The internet has facilitated the proliferation of C2C businesses, but there are pre-internet examples as well; auctions, for instance.
B2B Business Model
B2B, or business to business, is a commerce model where a manufacturer sells a product or service to businesses in addition to or instead of consumers.
For example, auto parts manufacturers largely sell to car manufacturers. A company like Xerox may sell products to both consumers and businesses.