What is B2C business model?

The world around us is constantly evolving. Remember the time when brick and mortar outlets were the outlook of a business?! Times have changed and now most of these businesses have an online presence too. Then there are those businesses like Amazon who have taken a leap in the e-commerce space and shifted their entire business completely online.

Whatever be the type of business, they all require a stringent business model to follow through with their goals. Here we are going to talk about the two most popular business models that govern online and offline businesses alike.

B2B Model – How Businesses Profit from Each Other

There is a general assumption that customers and businesses are poles apart- the customer being the consumer, and the business being the provider. Shattering these assumptions, the B2B Business model introduces us to a concept wherein businesses act like customers too.

B2B is a type of business model where the exchange of goods and services takes place between two or more businesses. The consumer usually isn’t involved in these types of models and comes into play only at a later stage.

A huge chunk of these transactions takes place in the exchange of raw materials. One common scenario is wherein a business sources materials from another business to manufacture a new product.

You can see this happening quite often in the Technology industry, a well-known example is the Apple iPhone itself. Apple makes iPhones under their trademark but sources various chipboards from Samsung. Although considered rival companies, there exists a B2B relation that profits both.

In most B2B business models both the businesses benefit from each other in some way and have comparable negotiating powers. They also employ professional staff and legal counsel who are constantly involved in negotiations with other businesses.

The final product that you see being yielded as an outcome of processing and manufacturing is usually rich in quality and goes in the market for several times the initial investment on raw materials.

Diversifications in B2B Business Models

As you might have imagined, a model as complex as B2B ought to be divided into several categories. They are divided into 3 types basically.

A) Supplier Centric Model

Supplier-centric models form the type of business where a supplier sets up a marketplace and intends to sell his customized solutions to various businesses. Most of them price their solutions according to the needs of the client/buyer.

B) Buyer Centric Model

This type of business model is most popular among the big corporates who involve in transactions with huge purchasing capacity and high volume purchases. The company here sets up a portal, mostly online to accept quotations from different sellers. The sellers then approach the company with their quotations and the company chooses to go with a seller that they deem profitable after thorough analysis.

C) Intermediary Centric Model

Intermediaries in the marketplace are the ones who provide a common platform for Buyers and Sellers to come together and interact, interactions in this sector can be in the form of transactions or plain communication. They maintain a database of buyers and sellers and their main goal is to profit from these associations.

B2B Business Model Example: Apple & Samsung

As we discussed above, Apple and Samsung working together on iPhone is a great example of the B2B business model. Samsung is a reliable provider of Processor chips for Apple and these processors are used on the latest Apple iPhones.

Even though there is a rivalry among the companies, both of them stuck with this B2B model because Samsung can meet the huge demand of processors for Apple, and Apple pays a hefty sum for each processor Samsung delivers.

B2C – How Businesses Profit from Consumers

Now that you are familiar with the B2B type of business model, let us move on to the next common type of business model. You would be surprised to know that every individual who has ever transacted online or offline has contributed to this model.

B2C business model is the type of model where the business sells directly to the consumers. These businesses produce an end product that is appropriately priced and then marketed to the general public. A quick example is if a solopreneur used online course software to sell educational content to their following.

This model is closer to the end-user and consumers are more familiar with B2C models because they interact with and form a part of this model. Recent ones are online shopping sites like Amazon.

Diversifications in B2C Business Models

Reaching out to consumers and selling products to them is the primary goal of a B2C business model. To accomplish this, B2C has been divided into different categories based on the type of audience and the type of targeting used to reach them.

A) E-Retail or E-Tailing

E-Retailing has become the latest trend. Most consumers have an online presence these days and reaching them online is the cheapest and fastest mode. Businesses have realized this and have started setting up websites and marketing campaigns to reach and sell products to netizens.

B) Brick & Click Retail

You are all familiar with the typical brick and mortar shops, the kind where you walk in, select your goods, pay at the counter and take your goods.

Now, these businesses have realized the potential of the Internet and have started reaching out to a wider audience by setting up websites for their shops.

The best example of Brick and Click retail is TATA-owned electronic showroom chain Croma. They began with a brick-and-mortar shop which spread throughout the country garnering loyal customers for over a decade. Recently they started advertising their products through the croma.com website and now even have a dedicated online shopping portal called tatacliq.com

C) Virtual Malls

Visiting a mall is an experience in its own, you get overwhelmed with the abundant choices that they portray, always providing a fair level of competition to all businesses. Now imagine an online version of the same, that is the whole concept of Virtual Malls.

It is a website hosting several merchants, giving them a space on the web to showcase their products. The website owners charge a nominal fee from sellers to display and sell products.

These types of malls are better for businesses who want to market their Books, Music, Movies, Software or something along that line.

B2C Business Model Example: Amazon

Amazon is a consumer-centric company that has aced the B2C business model. Their tremendous user base and gigantic inventory make them the ultimate online store.
They have mastered consumer satisfaction with their array of customer support agents and product return policies, these features helped them retain customers.

B2B and B2C Business Models – The Contrasts

Business to Business and Business to Consumer models differ in many aspects,

The galore of raw materials and subcomponents used in the manufacture of a product results in a large volume of transactions in the B2B model-based companies whereas the only transaction in a B2C model is the one between the company and the consumer i.e the sale of the final product.

From a marketing perspective, B2B campaigns are focused on the value of a product that will entice other businesses to opt for them. These campaigns are more professional in nature rather than casual since they target a more corporate audience.

B2C marketing campaigns are geared towards the general public hence there is an emotional appeal to these campaigns. The targeted audience resonates more with a casual approach of advertisement therefore these campaigns contain witty lines, catchphrases, or jingles.

Ending Note

Successful businesses are based on strong business models, there is no real alternative to those hence they are here to stay. It all depends on how well you utilize them.

If you have a blended business model, here is a case study of a project we worked on for “Tao of Tea“.

What do you think would be a better business model for those starting their own e-commerce website? Share your thoughts.

Business to Consumer (B2C) is a business model where businesses sell their products and services to end-users or customers. It allows companies to engage in direct commercial activities with consumers, enabling the latter to have greater accessibility to the former’s products and services.

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When customers get a chance to interact with the business directly, they trust those brands more than the rest, which reaches them via intermediaries. A few companies sell their products via online channels, while others use third-party e-commerceElectronic commerce (e-commerce) refers to the online presence of individuals, businesses, and governments, which they use to provide products, information, and services.read more platforms. The retail market is one of the best examples of a business to consumer marketing model.

• Business to Consumer (B2C) is a business model in which companies offer their goods and services to consumers.
• Every company is not always classified as B2C, B2B, G2B, or B2G. A company could use a hybrid model. The B2C model includes direct sellers, intermediaries, advertising-based, community-based, and fee-based platforms.
• A few businesses sell their products through their websites, while others rely on third-party e-commerce platforms.
• While the B2C model has a larger number of customers, the revenue is lower due to shorter sales cycles.

Business To Consumer Explained

The business to consumer marketing approach is always effective given the common platform businesses and consumers share. Michael Aldrich, an English innovator, originally presented the concept in 1979. It is one of the business models that operate around, which also include:

• Business to Business (B2B), where companies sell their products and services to other companies.
• Consumer to Consumer (C2C), where one customer sells the products and services to other customers.
• Business to Government (B2G), where companies sell products to the government, for example, the sale of defense equipment.
• Government to Business (G2B), where the government agencies sell required information to businesses.
• Government to Consumer (G2C), where the government sells the documents asked for by individual customers when required.

At one time, a retailer had a brick-and-mortar store where customers could purchase its goods. Now, online platforms enable customers to interact with the brands and purchase directly. A B2C business must maintain good relations with consumers.

Business to consumer e-commerce websites gives customers access to a range of products. It allows them to explore all relevant product information online to help them make a well-informed and smart purchase.

The B2C model might recognize brands that sell their products directly to consumers. But the businesses that connect the buyers and sellers through their platforms also fall under the B2C category. While the B2C business model has a higher number of clients, the revenueRevenue is the amount of money that a business can earn in its normal course of business by selling its goods and services. In the case of the federal government, it refers to the total amount of income generated from taxes, which remains unfiltered from any deductions.read more is lower as the sales cycles tend to be shorter. On the other hand, a B2B model has a small number of clients who make bulk purchases, helping the brands earn better revenue with longer sales cycles.

Example

Amazon.com is one of the business to consumer examples. Although the ecommerce website acts as an online platform for other businesses’ products, it also sells its services like Amazon Prime and Amazon Originals. These Amazon divisions’ services are delivered directly to customers.

Types Of Business To Consumer Models

Not every business is necessarily categorized as B2C or B2B or G2B, or B2G. Instead, a brand might have a hybrid model. For example, a brand can have the B2B model, which sells its items to a retail business, and the B2C model, which sells directly to consumers. However, the B2C model can be classified into five types based on how they target customers online:

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#1 – Direct Sellers

Businesses, especially small or manufacturing entities, sell goods and services directly to customers. These can be online retailers set up by brands to purchase their products. For example, if customers want to buy a Dell laptop, they can go to the manufacturer’s website directly, gather product information, and order it.

Online platforms connect brands and customers and help the latter buy and the former sell the products. They do not own products and instead sell them from various manufacturers on their websites. For example, Amazon.com and ebay sell branded items to consumers. These intermediaries profit from a percentage of the product sales.

It is the B2C method whereby companies advertise their products and services on a platform with significant reach. Through this, they make sure more and more people would come to know about their offerings and click on the ads to make a purchase.

Businesses identify their target customers using content traffic-driving tactics and accordingly opt for the platform that would be the most effective to advertise the products.

YouTube and Reddit are advertisement-based businesses that earn by selling advertising space on their platforms. On the other hand, sellers generate revenue by getting the leads converted.

#4 – Community-Based

Businesses use community-based platforms that host like-minded people’s ideas, opinions, or interests and host targeted advertisements. It helps brands promote and sell their products and services directly to customers.

For example, advertising baby products on a popular parenting portal would be more effective than using space on a news website. Facebook, Quora, etc., are some platforms where the community-based B2C model can easily be pulled up.

#5 – Fee-Based

Whether it is Spotify or Netflix, there comes the point where the service provider requests a premium subscription to have access to additional content. They are fee-based B2C players.

Frequently Asked Questions (FAQs)

What is business to consumer model?

Business to Consumer (B2C) is a business model in which businesses sell their products and services to customers. It is always effective given the shared platform that businesses and customers use. A few companies use their websites to sell their items, while others use third-party e-commerce platforms. Not every business is classed as B2C, B2B, G2B, or B2G. A business could adopt a hybrid model.

What are the differences between business to business (B2B) and business to consumer (B2C) models?

B2C is a business model where businesses sell their products and services directly to customers. In contrast, businesses sell their products and services to other businesses in a B2B model.

While the B2C business model has a higher number of clients, the revenue is lower as the sales cycles tend to be shorter. On the other hand, a B2B model has a small number of clients who make bulk purchases, helping the brands earn better revenue with longer sales cycles.