We all might know that B2B (business-to-business) and B2C (business-to-consumer) are the most common business models that flourish all around the world. With a basic understanding, every entrepreneur may realize the purpose and know-how to build and grow these businesses successfully.
Did you know that giant companies like Amazon and Google are operating B2B2C business models?
But, what is a B2B2C (business-to-business-to-consumer) business model? Are u able to perceive the importance of starting a startup company with this model?
Let’s explore in this article, all about the B2B2C business model in further reading.
What Does B2B2C Mean?
B2B2C means Business-to-Business-to-Consumer. B2B2C is a business model in which the business delivers a product or service to the consumer using other businesses indirectly.
B2B2C is a combination of both B2B (business-to-business) and B2C (business-to-consumer) business model that serves the consumer with the best value and earns the profit.
Understanding B2B2C Business Model
As mentioned above, the B2B2C model combines B2B and B2C. Before moving further, let’s have a look on B2B and B2C business models and how it works.
B2B Business Model
B2B (business-to-business) is a business model in which a particular company sells the product or service to other businesses or companies. For example, a Manufacturing Company sells the product to the wholesaler, or the wholesaler sells to the retailer.
Not all companies manage the whole business operations on their own. They might need some external services to support their functions.
For example, a manufacturing company may find it difficult to manage and control its day-to-day activities. To make the process simpler, they will use ERP (Enterprise Resource Planning) software, which will be provided by a software servicing company.
This end-to-end transaction occurs between two companies, which is exactly known as B2B.
B2C Business Model
B2C (business-to-consumer) is a business model in which a particular company sells the product or service directly to the customer or end-user.
This is the most familiar type of business and also traditional method, where consumers directly buy a product or service from the provider without any intermediaries.
For example, a retailer shop, restaurant, etc…
B2B2C Business Model
Here, three parties are involved in transferring the products or service from end-to-end.
Let’s understand B2B2C with an example of an e-commerce model.
- #B1 – Producer or manufacturer brand
- #B2 – Intermediator (e-commerce or e-retailer)
- C – consumer or end-user
The first B (#B1)
The first B (#B1) is the business that runs a shoe manufacturing company. This company properly conducts market research and produces varieties of shoe models for different customers concerning age, gender, and purposes.
After the production process gets completed, it dispatches the finished goods to the intermediator, which is second B (#B2) and shares the profit.
The second B (#B2)
The second B (#B2) is the business that acts as an intermediator between company #B1 and customer C. This company #B2 acquires the products from #B1 and maintains the stock in a warehouse.
And it helps the customer to search and map the products of different categories through their e-commerce platform. If a consumer orders the product online, #B2 will deliver the product directly to the customer’s place.
This #B2 company displays offers in their website or app and attracts the customer to buy the product.
C – Consumer
This business model helps the customer offering the best value and experience using door delivery services, which cuts down the time and travel expenses. It just makes the process simple from the customer’s perspective.
- #B1 Company: As it owns the product, its main function is to customize the product to satisfy the market needs – that means a product-market fit. The other important work of the business owner is to create brand awareness to the people and acquire customers.
- #B2 Company: This Company interacts with the customers or end-user by creating a value proposition. It communicates with the customer that explains why a customer should buy the product and what benefits they will get through the service.
Difference Between B2B and B2B2C
Accessibility To The Customer
In B2B business, the end-user is another business, which means you have to sell the product or service to the big companies that are very few in the industry. Despite that, access to their data is not easy as you think.
But in the B2B2C business model, access to the consumer data is easier, because they are large in numbers. Those data are already acquired and segmented by the intermediates.
Brand visibility for the B2B business will be less when compared to the B2B2C model. Again the reason would be the large group of audience. Also, it would be easier for the B2B2C model to create brand awareness among the people.
B2B model invests huge time in marketing activities and is confined to only certain marketing channels.
In the B2B2C model, the marketing efforts are less from the manufacturer’s side, and it is shared with the intermediator, who will take care of the rest. It uses marketing collateral to attract the audience.
B2B model must adopt the pricing strategies and it should be fixed for the long-term. Frequent changes in pricing plans could create a negative impact on the firm.
In the B2B2C model, a margin is fixed between the first company and the intermediator. The intermediator could change the prices of products by offering discounts to the customer, without affecting the profit share.
Complexity Of Business Process
In B2B business, it involves a set of a process like marketing, lead generation, negotiation. Almost it would be a service-based company and it will be a complex thing to close a single lead even if the service creates the best value to the business.
B2B2C business model involves more operations like production, logistics, and supply chain. These are managed by different departments from both companies. Therefore, it makes the process simple.
Benefits Of B2B2C Business Model
Here are the four important benefits of the B2B2C business model that every founder should know before starting.
- Brand Credibility: It creates brand credibility among people when partnering with other reputed businesses. Customers recognize to purchase your product if it is recommended by the company, whom they believe in.
- Customer Data: Accessibility to the customer data is easier via this model, as it would be shared by the partnering company. And it helps in determining the customer behavior, buyer personas, and their preferences in buying according to recent trends.
- Expands Network: It seems clear what if the company partners with other businesses as channel partners. It acts through co-branding and shares the mutual benefits. The business gives opportunities to expand networks while communicating with a pool of experts in the same industry. When these collaborative efforts are placed in the right approach it increases the return on investment.
- Overhead Expenses: The manufacturing company is out of the extra burden to manage the stocks in a warehouse and distributing them to the customer. The supply chain system is fully owned and controlled by the mediator that reduces the overhead costs.
Let us know if we missed out on anything in this article B2B2C Business Model and share your thoughts in the comment section.