Business-to-Consumer

GLOSSARY

B2C (Business-to-Consumer)

Business-to-consumer (B2C) is the business model of selling products directly to customers and thereby bypassing any third-party retailers, wholesalers, or any other middlemen. Direct-to-consumer sales are usually transacted online, but direct-to-consumer brands may also operate physical retail spaces as a complement to their main e-commerce platform in a clicks-and-mortar business model.

What is B2C(Business-to-Consumer)?

Business-to-consumer (B2C) is the business model of selling products directly to customers and thereby bypassing any third-party retailers, wholesalers, or any other middlemen. Direct-to-consumer sales are usually transacted online, but direct-to-consumer brands may also operate physical retail spaces as a complement to their main e-commerce platform in a clicks-and-mortar business model.

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Key takeaways:

The term B2C is applicable to any business transaction where the consumer directly receives goods or services -- such as retail stores, restaurants and doctor's offices.

Most often it refers to e-commerce businesses, which use online platforms to connect their products with consumers.

B2C businesses sell goods and services directly to their consumers. A consumer can be defined as an end user who purchases a product or service for personal use.

Online B2C became a threat to traditional retailers, who profited from adding a markup to the price.

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Types of B2C Models:

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.

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Examples of B2C companies:

1.Amazon

2.Google

3.Facebook

4.Tencent

5.Walmart

6.Target

7.Alibaba

8.Priceline Group

9.eBay

10.Netflix

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The difference between B2B and B2C:

B2B stands for ‘business to business’ while B2C is ‘business to consumer’. B2B ecommerce utilises online platforms to sell products or services to other businesses. B2C ecommerce targets personal consumers. A company that sells office furniture, software, or paper to other businesses would be an example of a B2B company.

B2B ecommerce tends to be more complex than B2C ecommerce. It involves heavier research, more needs-based purchasing, and less marketing-driven buying. Many B2B buyers have very tight parameters around the purchases they can make. This means that traditional revenue drivers like add-ons don’t have the same impact. B2B organisations didn’t have much of an incentive to optimise their customer journey but this is changing in the current climate.

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Notes:

Companies that are considered B2C companies often have aspects or branches that are also B2B.

A company whose focus is B2C may also have departments dedicated to B2B offerings.

Websites can reach a significantly larger customer base than stores can, which is crucial for a B2C model to succeed.

Different marketing tactics are used in B2B and B2C, although the methods of advertising, promotions and publicity are the same.

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Related Terms:

B2B(Business-to-Business)