B2B, B2C & B2B2C

B2C: Business to Consumer

B2C (business to consumer) business model focusses on selling products or services directly from a seller entity to consumers. B2C startups have a variety of choices in the way they want to launch their product in the market. They study consumer demographics and accordingly pitch their products and services to the consumer market.

However, a number of factors are important to be considered by prospective B2C startup players. Selling products directly to consumers incur higher startup costs as it includes warehousing, design, supply chain operations and marketing costs.

B2C startup provides entrepreneurs provides full control over most elements of their business structure from manufacturing to consumer. However, the sheer avenues of choice in marketing can be overwhelming. So, a startup must perform extensive research in order to identify the right channel for reaching its targeted audience.

Successful startups aim to identify and dominate a niche in which there is as little competition as possible. The B2C market players are big brand s who have global presence. So, when entering the B2C marketplace, a startup must be ready to deal with global competition.

B2B: Business to Business

B2B businesses adopt a business-to-business model in which they sell products and services to other businesses. Examples of B2B businesses include CRM software systems that are sold to businesses like Salesforce, the sale of office furniture or industrial equipment, or services such as security.

Most startups operating within the B2B space are service-based companies, as opposed to product-based companies. Product-based B2B companies need to purchase and warehouse stock, which multiplies startup capital requirements and risk. The key to startup success is adaptability and flexibility — the slow-moving nature of product-based business means that most startups opt for the agility offered by service-based business.

Service-based B2B startups may take the form of marketing consulting or cloud software solutions, for example. Both of these businesses benefit from the ability to rapidly adapt to market shifts and integrate new services that increase profitability at minimal expense.

B2B2C: Business to Business to Consumer

The B2B2C (business to business to consumer) business model can be seen as a fusion of the B2B and B2C models that overcomes one of the biggest difficulties experienced by B2C companies — accessing consumers

Using a B2B2C model, a business will sell a product or service to another business and leverage the access to consumers that the second company already possesses. The B2B2C business model relies on a close partnership between the first business and second business, and is designed to slowly build a dedicated consumer base for the first business over time.

A B2B2C startup has four key features:

A B2B2C startup is not a white label. Businesses that white label products and services are never recognized by the target consumer demographic, and are thus B2B businesses.

B2B2C startups have direct access to consumer data. The ability to access consumer data is critical for any B2B2C startup seeking to capitalize on network effects and scale — more data means better, more accurate services and products.

B2B2C startups gain brand recognition over time. The services provided by a B2B2C company may be delivered or marketed by a second business, but the target consumer demographic associates them with the original company that supplies them.

B2B2C startups are based on mutually-beneficial relationships. B2B2C companies benefit from access to consumers, while the second business in a B2B2C relationship benefits from price convenience, expanded service or product offerings, and a minimal-investment economic opportunity.

Summary

The B2B2C business model is attractive. B2C startups are faced by the challenge of entering a highly competitive market, while B2B companies must overcome a slow enterprise sales pipeline and can struggle with lead generation over the long term. B2B2C startups, however, benefit from the network effects delivered by partnering with an existing business, building a loyal customer base over time.

Courtesy: fullstack.com.au