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  • A Guide to B2B2C and B2B eCommerce

A Guide to B2B2C and B2B eCommerce

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B2B vs. B2C: Strengths and Weaknesses

B2B (Business-to-Business) companies sell to other companies, and B2C (Business-to-Consumer) companies sell to consumers. Many businesses do both, running B2B and B2C models concurrently (sometimes referred to as Business-to-Many or B2M.)

B2B and B2C models have their strengths and weaknesses, depending on the products and services sold and a prospect’s position in the customer cycle. These are:

The Duration of the Decision-Making Process:

B2C purchase decisions are often made on the spur of the moment, while B2B businesses face a more significant time burden. B2B sales reps have to work harder and longer to get deals over the line and cultivate long-term relationships.

The Number of Decision-Makers:

B2C companies usually deal with a single decision-maker, while B2B businesses face group decision-making. This process can be tricky to navigate, as a firm “no” from any single individual in the decision-making chain can end a hard-fought deal.

The Length of the Business Relationship:

With B2C customers, the business relationship often ends at the point of purchase. B2B business relationships are more long-lived. It’s not unusual for B2B relationships to last for many years and require careful nurturing.

The Size of the Lead Pool:

In the United States, there are 327 million individuals and 5.6 million businesses. The lead pool for B2B business customers is significantly smaller, making B2B relationship management crucial.

Order Values:

The average transaction value (ATV) of a B2B purchase is significantly higher than that of a B2C purchase, meaning B2B companies need fewer customers to sustain profitability.

What is B2B eCommerce?

B2B eCommerce is when one company sells goods or services to another company through an online sales portal. It’s steadily overtaking more traditional forms of B2B transactions. Forrester forecasts that U.S. B2B eCommerce will reach $1.8 trillion and account for 17% of all B2B sales in the U.S. by 202—a compound annual growth rate (CAGR) of 10%. That’s huge.

Key Benefits of B2B eCommerce:

 

  • Better Reach: Businesses significantly increase their total markets by moving online to reach a global pool of potential customers through web searches.
  • Higher Efficiency: Forward-thinking businesses migrate their services to the cloud, integrating them for greater efficiency. Inventory tracking, fulfillment, and supply chain management are just three processes that can be streamlined and consolidated through B2B eCommerce.
  • Easier For Customers: Customers increasingly favor shopping online. Just like B2C, it’s easier to view order histories, track deliveries, access terms and conditions, and browse products.
  • Increased Order Values: Upsells, cross-sells, recommendations, and promotions are made more accessible and more effective.
  • Improved Customer Feedback: Potential new customers can read reviews and feedback from existing ones, instilling trust. It’s word-of-mouth at scale.
  • Lower Overheads: Automation of repetitive, time-sapping tasks reduces the administrative burden on sales and customer service reps. Those on the payroll can spend more time on creative and strategic projects.
  • Enhanced Analytics: eCommerce analytics provide deeper insights into everything from next year’s sales to the efficacy of marketing spend, aiding decision-making, and informing strategy.
  • Fewer Costly Errors: The potential for human error is diminished through greater automation and a rule-based back-end.
  • Better Catalog Management: Adding, removing, and editing products can be done on the fly.
  • Appealing to Millennials: A growing number of B2B decision-makers are millennials—a group with a strong preference for online transactions.
  • Ideal for Complex Products: B2B customers benefit from a simple, consumer-like buying experience for even the most complex or engineer-to-order products.

What is B2B2C?

B2B2C is a slightly more sophisticated model. It’s also frequently misunderstood. B2B2C isn’t a simple channel partnership where a business wholesales its goods to another company, which in turn sells them to the end-consumer (or another enterprise).

With B2B2C sales, the first business (B1) reaches customers through the second business (B2) but interacts directly with the customer using its brand. Unlike a channel partnership, customers are fully aware that they are buying from B1, and, crucially, B1 retains the customers and data generated from every transaction.

For a B2B2C relationship to be successful, there needs to be justification and motivation on all sides. B1 has to be sure that B2B2C will be more profitable or strategically advantageous than going direct-to-consumer, which generally returns a higher margin per transaction. And, B2 has to be confident that by acting as a conduit for B1, it isn’t damaging sales of its products.

How Does a B2B2C Model Benefit B1?

  • Large volumes of customers in bulk
  • Economies of scale by selling more units
  • A level of credibility and trust by partnering with an established and respected B2
  • Extremely low per-customer acquisition costs

 How Does a B2B2C Model Benefit B2?

  • A commission on sales
  • More customers into stores
  • A more extensive range of high-quality products
  • Increased sales of related products and services
  • Co-ownership of B1 customers (subject to the B2B2C agreement)

 How Does a B2B2C Model Benefit Customers?

  • A more convenient shopping experience
  • A higher degree of confidence in their purchase
  • Face-to-face customer assistance

 

While B2B2C can be hugely beneficial to all parties (hence the model’s rise in popularity), it’s not without risks. B1 risks having its customer base stolen. B2 can take what it’s learned from the relationship and make competing products. Furthermore, B1 has little control over the way B2 employees sell its products and whether or not the information is conveyed correctly.

On the flipside, B2 has to trust that B1 will deliver on its promises, giving B2 customers the level of service they expect. Any delays or errors will likely reflect more negatively on B2 than B1. B2 also needs to be sure that B1 products aren’t cannibalizing, directly or indirectly, sales of its products because that would render the relationship counter-productive.

Getting Started with B2B2C and B2B eCommerce

Before getting started, you need to decide which model, if any, will fit your business. The global B2B eCommerce market, valued at U.S. $12.2 trillion in 2019, is over six times that of the B2C market. Quite simply, the B2B eCommerce opportunity is vast, and most companies would be foolish not to invest in this space.

But, of course, there are always exceptions. Companies fearful of revealing details of their products and prices to competitors (and customers) may want to think twice about the B2B eCommerce route, as will companies that cannot meet any higher demand.

The B2B2C model is a complex arrangement that takes much work from both sides. It works best when B1 wants to solve a customer problem but categorically does not want to be in the business B2 offers.

The next step for either one is a solid implementation plan that takes into account the needs and wants of all stakeholders and has established roles, budgets, and accountabilities for every target and proposed outcome.

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eCommerce and Omnichannel
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