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What Is Business-to-Consumer (B2C)?
Business-to-consumer (B2C) sales involve directly selling products and services to the end-user, marking a contrast to the business-to-business (B2B) model, which centers around transactions between businesses. Emerging in popularity during the dotcom boom of the late 1990s, B2C initially applied to online retailers that engaged with consumers over the internet—examples include industry leaders like Amazon and Priceline. As a digital sales model, B2C encompasses various strategies to cater to consumer needs, and understanding its evolution and how it operates today is crucial for businesses aiming to thrive in a competitive market landscape.
Key Takeaways
- Business-to-consumer (B2C) refers to the sales model in which companies sell products directly to consumers, a model that gained popularity during the dotcom boom of the late 1990s.
- B2C models have evolved from traditional mall shopping and television infomercials to include e-commerce giants like Amazon, which sell directly through online platforms, often bypassing traditional retail intermediaries.
- With the advent of the internet, five main B2C models emerged: direct sellers, online intermediaries, advertising-based, community-based, and fee-based businesses.
- Mobile commerce represents a significant growth area for B2C companies, with businesses increasingly developing mobile apps to engage with consumers and further streamline the purchasing process.
- Unlike business-to-business (B2B) models, which involve transactions between businesses, B2C transactions focus on appealing directly to everyday consumers, often using emotional marketing strategies tailored to individuals.
Business to Consumer (B2C)
Exploring the Evolution of Business-to-Consumer (B2C) Models
Business-to-consumer (B2C) is among the most popular and widely known sales models. Michael Aldrich first utilized the idea of B2C in 1979 and used television as the primary medium to reach out to consumers.
B2C traditionally referred to mall shopping, eating out at restaurants, pay-per-view movies, and infomercials. However, the rise of the internet created a whole new B2C business channel in the form of e-commerce or selling goods and services over the internet.
While many B2C companies collapsed during the dotcom bust due to reduced investor interest and less venture capital, companies like Amazon and Priceline survived and thrived.
B2C businesses need to keep good customer relationships to encourage repeat business. Companies should regularly check and adjust their marketing strategies to ensure success.
Business-to-business (B2B) marketing campaigns are geared to demonstrate the value of a product or service. Companies that rely on B2C usually try to catch the eye of the consumer and elicit an emotional response to their marketing.
B2C Storefronts Compared to Online Retail Giants
Traditionally, many manufacturers sold their products to retailers with physical locations. Retailers made profits on the markup they added to the price paid to the manufacturer. But that changed once the internet came. New businesses arose that promised to sell directly to the consumer, thus cutting out the middle person—the retailer—and lowering prices. During the dotcom bust in the 1990s, businesses scrambled to establish a web presence. Many retailers had to close their doors and went out of business.
Years after the dotcom era, online B2C companies still outperform their brick-and-mortar competitors. Companies such as Amazon, Priceline, and eBay are survivors of the early dotcom boom. They have gone on to expand upon their early success to become industry disruptors.
Fast Fact
Online B2C can be broken down into five categories: direct sellers, online intermediaries, advertising-based B2C, community-based, and fee-based.
Navigating B2C in the Digital Era
Most online B2C companies use five common business models to reach consumers.
1. Direct sellers. This is the most common model in which people buy goods from online retailers. These may include manufacturers or small businesses or simply online versions of department stores that sell products from different manufacturers.
2. Online intermediaries. These are liaisons or go-betweens who don’t actually own products or services that put buyers and sellers together. Sites like Expedia, trivago, and Etsy fall into this category.
3. Advertising-based B2C. This model uses free content to get visitors to a website. Those visitors, in turn, come across digital or online ads. Large volumes of web traffic are used to sell advertising, which sells goods and services. One example is media sites like HuffPost, a high-traffic site that mixes advertising with its native content.
4. Community-based. Sites like Meta (formerly Facebook), which build online communities based on shared interests, help marketers and advertisers promote their products directly to consumers. Websites typically target ads based on users’ demographics and geographical location.
5. Fee-based. Direct-to-consumer sites like Netflix charge a fee so consumers can access their content. The site may also offer free but limited content while charging for most of it. The New York Times and other large newspapers often use a fee-based B2C business model.
The Shift to Mobile in the B2C Market
Decades after the e-commerce boom, B2C companies are continuing to eye a growing market: mobile purchasing. With smartphone apps and traffic growing year-over-year, B2C companies have shifted attention to mobile users and capitalized on this popular technology.
Throughout the early 2010s, B2C companies were rushing to develop mobile apps, just as they were with websites decades earlier. In short, success in a B2C model is predicated on continuously evolving with consumers’ appetites, opinions, trends, and desires.
Important
Because of the nature of the purchases and relationships between businesses, sales in the B2B model may take longer than those in the B2C model.
B2C vs. B2B
As mentioned above, the business-to-consumer model differs from the business-to-business (B2B) model. While consumers buy products for their personal use, businesses buy products to use for their companies. Large purchases, such as capital equipment, generally require approval from those who head up a company. This makes a business’ purchasing power more complex than that of the average consumer.
Unlike the B2C business model, pricing structures tend to be different in the B2B model. With B2C, consumers often pay the same price for the same products. However, prices are not necessarily the same. Businesses tend to negotiate prices and payment terms.
What Is Business-to-Consumer and How Does It Differ From Business-to-Business?
After surging in popularity in the 1990s, business-to-consumer (B2C) increasingly became a term that referred to companies with consumers as their end-users. This stands in contrast to business-to-business (B2B), or companies whose primary clients are other businesses. B2C companies operate on the internet and sell products to customers online. Amazon, Meta (formerly Facebook), and Walmart are some examples of B2C companies.
What Is an Example of a Business-to-Consumer Company?
One example of a major B2C company today is Shopify, which has developed a platform for small retailers to sell their products and reach a broader audience online. Before the advent of the internet, however, business-to-consumer was a term that was used to describe take-out restaurants, or companies in a mall, for instance. In 1979, Michael Aldrich further utilized this term to attract consumers through television.
What Are the 5 Types of Business-to-Consumer Models?
Typically, B2C models fall into the following five categories: direct sellers, online intermediaries, advertising-based B2C, community-based, and fee-based. The most frequently occurring is the direct seller model, where goods are purchased directly from online retailers. By contrast, an online intermediary model would include companies like Expedia, which connect buyers and sellers. Meanwhile, a fee-based model includes services such as Disney+, which charges a subscription to stream their video-on-demand content.
The Bottom Line
B2C, or the business-to-consumer model, refers to companies that sell directly to their consumers, without going through retailers or other intermediaries. B2C sales originally relied on television advertisements to reach consumers, and gained greater prominence when the internet became widespread. B2C sales are contrasted with B2B models, in which companies direct their sales at other businesses.
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