You sell fruit at the market, home furnishings in a brick-and-mortar store, a car in a showroom or even clothes on an e-shop. Your customers buy from you and use the goods, they don't make anything from them and don't sell them on. You are part of a B2C business. What are its specifics and how does it differ from other business models?
What is B2C business
The abbreviation B2C stands for business-to-consumer and refers to the sale to the end consumer who uses the goods for their own use. That is, they buy the car they drive, the house they live in, the clothes they wear or the food they eat.
This is different from so-called B2B (business-to-business) commerce, in which a company sells its products to another company. The latter uses them to produce its goods or resells the products it buys to its customers.
Differences of B2C from B2B
Besides the customer, B2C business usually differs from B2B business in other aspects:
- the price of goods is uniform for all customers in B2C, whereas in B2B it often varies for individual clients,
- in B2C the consumer makes the purchase decision and usually buys quickly, whereas in B2B more people in the company are involved in the decision and the process is more lengthy,
- B2C business is characterised by a broad market, whereas in B2B the market is more limited, so companies also have to pay more attention to building relationships with customers,
- therefore, while in B2C, clients usually use customer service only when there is a problem with the goods purchased, in B2B, quality customer service is sought by clients before, during and after the purchase.
How to choose a suitable business model
The specifics of both business models will help you determine which one is better suited for your business. If you sell car parts that are not applicable elsewhere, B2B will be the obvious choice.
But imagine you grow vegetables and want to sell them. You have two options:
- Either you offer it directly to consumers, i.e. to customers who will buy it from you and use it in a B2C shop,
- or you can use B2B and sell it to shops, where they resell it to customers or to companies that make other products from it.
Advantages and disadvantages of B2C business
Lower operating costs (especially in e-commerce)
Shorter business cycle
Less intensive communication with customers
Lower profit from individual orders
More complex customer retention
You will either build a network of clients who will resell your goods yourself, or you will target the wider market of end customers directly. CRM will help you with B2B business management, where you have all client contacts, all communication and documents clearly in one place. Try CRM for free and see if it makes your business easier.
Types of companies in B2C
B2C is not just e-shops and brick-and-mortar stores. There are more business models in the B2C segment and they are often combined. Here are 5 basic B2C models:
- Direct sellers – Companies that sell their manufactured or purchased goods on their e-shop. Most e-shops fall here.
- Intermediaries – Companies that provide their e-shop to smaller manufacturers for a fee. These services are usually called marketplaces and are provided by large e-shops such as Alza, MALL or Amazon.
- Advertising B2C – These are typically websites that, in addition to their own content, publish a large amount of paid content from companies. On them, for example, they promote their products and services through paid articles.
- Fee-based services – Businesses that provide products or services for a regular fee. For example, newsletters with paid articles or e-shops sending mystery boxes on a regular basis.
- Brick-and-mortar stores – Businesses that customers visit physically, such as retail stores, restaurants, hairdressers, rental shops, etc.