What Is Business to Consumer (B2C)? Guide and Definition

A business may be started and expanded in a variety of ways. Some companies concentrate on selling products and services to other companies (B2B), whereas other companies concentrate on selling directly to consumers (B2C) “Business to Consumer”. Some businesses do both.

This short article will teach you all you need to know about the business-to-customer (B2C) model, including its advantages and the reasons it's often the ideal method to launch a new business.

What is Business to Consumer (B2C)?

The term “business-to-consumer” (B2C) refers to a model of trade between a business and a single consumer. Although B2C is a term that may refer to any type of direct-to-consumer selling, it is currently often used for operating an online store, sometimes referred to as ecommerce or detailing. Business-to-consumer (B2C) companies are different from business-to-business (B2B) companies in that they concentrate on selling their goods or services directly to consumers rather than other businesses. For those creating an ecommerce store, B2C is by far the most common business model.

It's important to go back to the late 1990s, with the 1998 holiday shopping season serving as the first “e-tail Christmas,” to comprehend how B2C evolved to be a popular business model. In large part because of their focus on providing their customers with direct service, Amazon exceeded $1 billion in sales for the first time in that year.

For conventional “brick-and-mortar” businesses and services that are losing in-person sales to online rivals, the development of business-to-consumer online sales has posed substantial hurdles in recent years.

As a consequence, to remain competitive, many traditional brick-and-mortar businesses are creating their own online presence. Customers can now take advantage of the convenience of online shopping while saving money on shipping costs by picking up or returning goods to the online retailer's physical storefronts.

Small businesses might save expenses by selling directly to customers rather than working with a third party, which can lower their potential profit.

5 Business-to-Consumer B2C Sales Models

In online B2C sales, there are generally five business models:

1. Direct Sellers

The majority of people are aware of this type of B2C since these are the online sites where consumers may purchase products. Small businesses that create and sell products, or manufacturers like Gap or Dell, are examples of what they may be. They can also be online equivalents of traditional department stores that sell products from a variety of brands and manufacturers.

Zappos.com, Macys.com, and Target.com are examples of direct sellers. In this store model, customers buy products and services directly from businesses, often household name brands, with online stores. Direct sellers usually have both a significant online and offline presence.

2. Online Intermediaries

These “go-betweens” connect sellers and customers without really owning the item or service. Online travel sites like Expedia and Trivago, as well as the arts and crafts marketplace Etsy, are two examples. Online businesses sell a business to other businesses by selling advertising to them, but the person is the ultimate consumer.

A common business model is to provide a useful product that compiles the best products and services for consumers. By making it simpler for customers to find precisely what they're searching for, online intermediaries sell their products and services to prospective customers.

3. Advertising-Based

This B2C advertising strategy makes use of heavy web traffic to sell advertising, which in turn helps the consumer buy products or services. This business model attracts site visitors with premium free content, who then see online advertisements. Additionally, to increase traffic and conversions, this model primarily depends on clever marketing initiatives.

It's vital to remember that the advertising model may be used in B2C and B2B situations alike.

Business-to-business media includes websites like the Huffington Post and Observer.com that don't offer paid subscriptions. Even though these advertisements eventually encourage sales of products created for certain customers, the media company is still selling advertising to other businesses.

On the business-to-consumer side, B2C refers to an online store that advertises to customers directly on websites like Facebook, Instagram, and Google.

4. Community-Based

To help marketers promote their products directly to website visitors, this B2C model takes advantage of online communities created around common interests. It may be an online discussion board for marching band members, diabetics, or photography people. B2C businesses that can target their marketing at specific problems in local groups may swiftly sell their products at scale.

The most well-known instance is Facebook, which enables advertisers to target people based on highly specific demographics. Social networking sites like Facebook are used by consumers to interact and keep in contact with friends and family, but there are also an increasing number of community-based activities there that make the platform a great location for businesses to advertise.

Businesses may use Facebook to advertise regardless of whether their focus is B2B or B2C. A more professional social network, such as LinkedIn, would be great for B2B marketing. On the B2B side, potential customers commonly use LinkedIn to advertise their brand and attract new staff, making it an ideal platform to discuss products and services tailored for businesses rather than individual consumers.

5. Fee-Based

For access to their content, these direct-to-consumer sites demand a monthly fee. They often include media outlets like The Wall Street Journal, which gives some content for free but charges for the majority of it, as well as entertainment services like Netflix or Hulu.

Businesses that sell directly to consumers should consider their target market's shopping habits and purchasing customers when offering different business-to-consumer choices, whether those options entail in-person or online transactions.

From a B2C standpoint, Netflix provides entertainment to users in exchange for a small monthly charge. Hulu, a streaming service, mixes B2C and B2B into its business model at the same time. On the one hand, they need individual customers who will pay a monthly charge to access their content.

On the other hand, they are selling business (business-to-business) advertising space that is integrated with Hulu content. Due to the variety of income streams, companies that sell to both businesses and consumers are somewhat protected against bad market circumstances, although this might focus attention on a single focus.

The majority of business models that operate inside the B2C framework fall into one of the five categories, but there are undoubtedly many additional versions.

Benefits of Business to Consumer (B2C)

After examining a few of the many B2C business models, let's examine some of the numerous advantages of B2C.

• Lower prices: Because there are fewer third parties to involve, direct-to-consumer business models may often charge less.
• 24/7 reach: In the context of online ecommerce, B2C enables a business to make sales every day of the year. You may earn sales while you're sleeping if you list a product or service on your website.
• Quicker sales cycle: B2C sales cycles are often significantly shorter than B2B sales cycles. If you advertise on Instagram and sell candles, for instance, a customer may decide in a matter of seconds whether or not to buy the candle. While in B2B, sales are sometimes a month-long process requiring support from several stakeholders, etc.

Although the B2B industry is theoretically larger than the B2C market in terms of potential income, the B2C model gives you access to more potential customers.

You can only sell to a certain number of people via B2B, but B2C has a far larger individual worldwide audience pool. In contrast to B2C sales, which may only be $20, B2B transactions sometimes involve tens of thousands of dollars.