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    BUSINESS BUSINESS ESSENTIALS

    Business-to-Consumer (B2C)
    REVIEWED BY WILL KENTON Updated May 20, 2019
    What Is Business-to-Consumer (B2C)?
    The term business-to-consumer (B2C) refers to the process of selling products and services
    directly between consumers who are the end-users of its products or services. Most companies that
    sell directly to consumers can be referred to as B2C companies.

    B2C became immensely popular during the dotcom boom of the late 1990s when it was mainly
    used to refer to online retailers who sold products and services to consumers through the Internet.

    As a business model, business-to-consumer differs significantly from the business-to-business


    model, which refers to commerce between two or more businesses.

    Understanding Business-to-Consumer
    Business-to-consumer (B2C) is among the most popular and widely known of sales models. The
    idea of B2C was first utilized by Michael Aldrich in 1979, who 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 of goods and services over the Internet.

    Although many B2C companies fell victim to the subsequent dot-com bust as investor interest in
    the sector dwindled and venture capital funding dried up, B2C leaders such as Amazon and
    Priceline survived the shakeout and have since seen great success.

    Any business that relies on B2C sales must maintain good relations with their customers to ensure
    they return. Unlike business-to-business (B2B), whose marketing campaigns are geared to
    demonstrate the value of a product or service, companies that rely on B2C must elicit an
    emotional response to their marketing in their customers.

    Business-to-Consumer
    B2C Storefronts Versus Internet Retailers
    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 middleman—the retailer—and lowering prices. During the bust of the dotcom
    boom in the 1990s, businesses fought to secure a web presence. Many retailers were forced to
    shutter their doors and went out of business.

    Decades after the dotcom revolution, B2C companies with a web presence are continuing to
    dominate over their traditional brick-and-mortar competitors. Companies such as Amazon,
    Priceline, and eBay are survivors of the early dot com boom. They have gone on to expand upon
    their early success to become industry disruptors.

    KEY TAKEAWAYS
    Business-to-consumer refers to the process of selling products and services directly between to
    consumers.
    B2C was mainly used to refer to online retailers who sold products and services to consumers
    through the Internet.
    Online B2C became a threat to traditional retailers, who profited from adding a markup to the
    price.
    B2C Business Models in the Digital World
    There are typically five types of online B2C business models that most companies use online to
    target 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. Basically, large volumes of web traffic are used to sell
    advertising, which sells goods and services. Media sites like the Huffington Post, a high-traffic site
    that mixes in advertising with its native content is one example.

    4. Community-based. Sites like Facebook, which builds online communities based on shared
    interests, help marketers and advertisers promote their products directly to consumers. Websites
    will 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.

    B2C Companies and Mobile


    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 been shifting attention to mobile users and capitalizing on the 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 the appetites, opinions, trends, and the desires of consumers.

    B2C Versus Business-to-Business (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 do so to use in their
    companies. Large purchases, such as capital equipment, generally requires approval from those
    who head up a company. This makes a business' purchasing power much more complex than that
    of the average consumer.

    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.
    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. In fact, businesses tend to negotiate prices and payment terms.

    Related Terms
    Explaining Electronic Retailing (E-tailing) With Amazon and Alibaba
    Electronic retailing (e-tailing) is the sale of goods and services over the internet, which can
    include B2B or B2C sales. more
    Business to Business (B2B)
    Business to business is a type of commerce transaction that exists between businesses, such as
    those involving a manufacturer and wholesaler or retailer. more
    How Affiliate Marketing Works
    Affiliate marketing is an advertising model in which a firm pays third-party publishers to promote
    leads to the company’s products. more
    The Best Customer to Customer Sellers Can Be People Like You
    Customer to customer (C2C) is a business model whereby customers trade with each other using a
    third-party platform such as eBay or Craigslist. more
    What Is Business-To-Business Advertising?
    Business-to-business advertising is marketing efforts directed toward other businesses rather to
    individual consumers. more
    The Ins and Outs of Banner Advertising
    Banner advertising refers to the use of a rectangular graphic display that stretches across the top,
    bottom or sides of a website. more
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