What is B2B2C in eCommerce: examples, business model and definition
Researching ecommerce business models, you will see long chains of letters denoting the interaction between market players: B2B2C, B2B2B, C2B2B, B2C2B, and others.
This diversity is a result of businesses discovering and applying innovative business models. Each acronym describes the go-to-market (GTM) strategy, pricing policy, stakeholder engagement, distribution channels, products supplied, and finance movement for that model.
The B2B2C (Business-to-Business-to-Consumer) model has been gaining popularity in recent years, with more businesses switching to this model.
- WHAT IS B2B2C (BUSINESS-TO-BUSINESS-TO-CONSUMER)
- WHAT IS B2B2C ECOMMERCE?
- HOW DOES B2B2C ECOMMERCE WORK?
- MARKETPLACE BURST OR WHY ARE B2B BUSINESSES EXPANDING TO B2B2C?
- ADVANTAGES OF B2B2C ECOMMERCE
- DISADVANTAGES OF B2B2C
- B2B2C ECOMMERCE MARKETING
- B2B2C ECOMMERCE PLATFORM EXAMPLES
- TOP B2B2C COMPANIES
- INTEGRATING SELLER&'S ERP SYSTEMS WITH A MARKETPLACE
- B2B2C ECOMMERCE FAQ
What Is B2B2C (Business-to-Business-to-Consumer)
B2B2C combines business-to-business (B2B) and business-to-consumer (B2C) into a single online trading model for a complete product or service transaction. When a consumer uses one business to order a product or service from another business's online store/app, that is an example of a B2B2C model in action.
According to a May 2021 survey, almost half of the industry executives interviewed (48.7%) said their company sold products to final consumers through an online store without intermediaries. The second main sales channel was B2B2C i.e., selling products to the final consumer through marketplaces with 42.3% of respondents. Traditional B2B, where manufacturing businesses sell to distributors or retailers before reaching final consumers, was used by 36.5% of respondents.
Meanwhile, The State of Customer Report says that almost 40% (39.22%) of manufacturers aim to adopt B2B2C model, and over 25% are happy with their CX strategy enhancement after starting their B2B2C journey.
You can see that the total sum of the sales models in the Statista report is over 100%. This is because companies combine different sales models as long as they benefit the company’s bottom line.
What Is B2B2C eCommerce?
Let’s explore the meaning of B2B2C. Business-to-Business-to-Consumer (B2B2C) is the term used to describe an ecommerce model in which a supplier of goods or services (let’s call them “first B") provides its products to a business (second B) to sell to consumers through its ecommerce channels.
It’s important to note that the B2B2C model is different from traditional reselling in the monetization principle based on commissions deducted by second B from any first B product sold. In comparison, a traditional “B2B plus B2C” reselling model works on price-based revenue (buy wholesale cheaper, sell in smaller bunches, or retail at a higher price).
The final price to the consumer in this model is usually set by first B, and second B simply gets a commission on each sale. Although, of course, there may be price cap agreements between them and marketing initiatives to stimulate the demand, so the price remains attractive to customers.
The B2B2C model is especially effective for the small business niche and emerging brands that can take advantage of middle B’s popularity and reputation.
The essence of B2B2C is based on partnership. In general, in B2B2C, products coming from first B expand the assortment offered by second B, giving customers more choice.
How Does B2B2C eCommerce Work?
The B2B2C business model consists of two business participants. A supplier (first B) works together with second B as a trader to deliver a better customer experience (CX) on second B's ecommerce site.
Here are some benefits of the B2B2C sales model.
- First B enters into a B2B2C collaboration to acquire more retail customers. As often, consumers respond positively to reduced prices, marketing promotions, bonuses, and welcome gifts, placing more orders for first B’s products.
- Second B can have several possible motives to participate in the B2B2C model. On one hand, it might simply be commercial considerations; for example, second B receives the sales commission that is funneled through it. The second reason is providing value to second B customers by giving them better (or more convenient) buying options. In some cases, such as buying a school uniform, second B is likely to want to ensure that all of their customers buy a standardized product.
- Consumers are the ultimate purchaser of first B’s products, and they benefit from easy access to them through second B’s sales channels. From its side, second B makes more revenue through commissions and cross-selling as well.
Let's give an example of the B2B2C model that every one of us knows as a user of a smartphone. These are app stores. Any company that develops a mobile app for iOS or Android has to register it in the AppStore or Google Play Store for a fee. When you buy the app, the store deducts a commission and passes the rest to the app development company.
You will also find such a definition of app stores as app marketplaces. This is because a marketplace is the most vivid and successful implementation of the B2B2C model. In marketplaces, businesses control their own inventory and pricing while still benefiting from the reach and convenience of ecommerce. And consumers enjoy the wide selection of products and competitive prices of marketplaces.
The B2B2C model has already proven itself in many industries. Alibaba, the world's largest online marketplace, uses a B2B2C business model. And Amazon, the largest online retailer in the United States, also uses a B2B2C model for its third-party sellers.
Marketplace Burst or Why are B2B Businesses Expanding to B2B2C?
A marketplace is a very successful implementation of B2B2C since it provides a large community of buyers and a large market for goods.
- Buyers are looking for marketplaces because they want to find a large selection of products in one place. They also want to be able to compare prices and read reviews before making a purchase.
- Sellers are attracted to marketplaces because they provide a ready-made audience of potential buyers. Marketplaces also make it easy to list products and reach a wide audience with minimal effort.
Today, building marketplaces has become mainstream in online commerce because all businesses understand that market size is important for successful trading. And the bigger the market, the better.
Marketplaces are a popular form of B2B2C trading to maximize market scope. And the bigger the market, the better the trading revenue.
That is why marketplaces are being created for mobile applications, industrial goods, electronic gadgets, goods for home and hobbies, etc. Quite often, they combine many product categories like Amazon, and you can find almost anything you want there.
If you don't know how to convert your company's website into an industry-specific or private marketplace, book a meeting with the Virto team now. The advantage of our Virto Marketplace solution is that you can still use your ecommerce application but simply add the ability to invite third-party sellers and expand the market scope for you and them.
To explore an example of a B2BC use case built on Virto Marketplace platform, request info on how we built the Kupinatao marketplace.
Advantages of B2B2C eCommerce
B2B2C ecommerce belongs to a win-win-win model in which all parties benefit.
- Sellers get access to all the customer base of a marketplace, increasing sales volume.
- The marketplace team expands the range of products offered, can run more cross-sell campaigns, and will acquire commissions from sellers.
- Consumers enjoy the B2B2C model in the form of marketplaces because they offer a wider choice of products.
B2B2C ecommerce advantages include:
Large market coverage
Marketplaces provide a large community of buyers that can be sold to. This is because a marketplace provides a platform for multiple sellers to list their products and services. A single marketplace, therefore, has a larger market for goods than a traditional ecommerce store.
Low prices for consumers
An advantage of B2B2C marketplaces is that they often have lower costs than traditional eCommerce businesses. This is because marketplaces can take advantage of economies of scale and pass the savings on to sellers and buyers. It also helps keep prices low due to competition between sellers with similar products. In addition, consumers often benefit from marketing promotions, especially when “first B” initially joins the marketplace.
One-stop shop for all consumer needs
A marketplace offers a large choice of goods for consumers, creating a convenient place for purchasing any products. They are generally more convenient for buyers and sellers alike, as they provide a one-stop shop for all their needs.
Saving costs for small businesses to sell online
It is efficient and cost-effective for small businesses to sell through a marketplace or an enterprise partner’s portal, obviating the need to develop and maintain their own online store.
D2C option in B2B2C
Furthermore, in some cases, orders placed online at second B's online store may be delivered to consumers immediately from first B. In this case, sellers have direct access to consumers if an agreement between the businesses allows this.
The B2B2C business model in ecommerce is gaining popularity among digital marketers as it allows products from different suppliers to be immediately on display to marketplace customers, bypassing wholesale, resale, and other intermediate stages.
Disadvantages of B2B2C
Along with the many benefits, the B2B2C ecommerce model has drawbacks as well, and in some cases, these cons can be extremely risky for seller companies.
Lack of customer contacts
Quite often, the conditions for joining a marketplace for sellers mean no access to the contact details of the end consumers. Accordingly, sellers cannot grow their customer base in this way.
Sellers can also incur high commissions that go into the marketplace owner’s pocket. For example, mobile app stores, such as the App Store and Google Play, take up to 30% of the revenue of applications sold there and also charge a fee just to join their mobile app store.
Tesla CEO Elon Musk criticized Apple's App Store fees on Twitter, calling the cut Apple takes from developers "definitely unacceptable" and comparing it to a "30% tax on the Internet."
Literally 10 times higher than it should be
— Elon Musk (@elonmusk) May 3, 2022
Monopoly marketplace risks
Using the previous example, there is a threat of an app being removed from the App Store or Google Play at any time, which is a big risk for the development teams. Given the monopoly nature of the App Store and Google Play, any removal of mobile applications results in significant revenue loss or even total ruin of numerous first B members who sell applications through the App Store and Google Play.
B2B2C eCommerce Marketing
In the B2B2C model, first B can join second B’s marketing programs, which are often held on national holidays and events, but could also be personalized (e.g., discounts on the birthday of every person in the client database). This also imposes obligations on first B to get well-prepared for sales events and create a sufficient stock of goods in their warehouse to meet the peak demand during such sales.
Marketing cooperation between sellers and the marketplace provides great opportunities that must be used flexibly and effectively. At the same time, sellers shouldn't rely on the B2B2C model as their only sales channel and need to develop their own client base and customer communications to establish a more stable market position.
For a seller (supplier, manufacturer), it might be profitable to participate in joint marketing campaigns that involve many sellers. For example, sell something in bulk — buy a case of beer from one seller, and get a set of mugs for half price from another. In other words, cross-selling marketing can be a very profitable sales technique in B2B2C.
B2B2C eCommerce Platform Examples
Besides marketplaces and app distribution services, other examples of the B2B2C model include:
- Online travel agencies: allow consumers to book flights, hotels, and rental cars from multiple businesses in one transaction. Examples of online travel agencies include Expedia and Travelocity.
- Online food ordering platforms: allow consumers to order food from multiple restaurants in one transaction. Examples of online food ordering platforms include Seamless, Grubhub, DoorDash, and Uber Eats.
- Group buying platforms: allow consumers to purchase products and services at a discount. Groupon is the most popular group buying platform.
- Crowdfunding platforms: allow groups of people to pool their money to finance a project or product, mostly in a small business niche. Kickstarter is the most popular crowdfunding platform.
However, large marketplaces implement other sales models along with B2B2C. For example, since businesses can also shop on Amazon along with consumers, the B2B2B model is being implemented. Interestingly, consumers can also sell their goods on such marketplaces; therefore, C2B2C and C2B2B models are possible.
C2B2C and C2B2B are types of ecommerce where consumers sell products or services to consumers or businesses through an online marketplace. The fact is that thrift stores, which existed for at least a hundred years before the era of online commerce and second-hand websites like eBay, Craigslist, or OfferUp provide early examples of the C2B2C model.
For an example of a C2B2B model, you can visit UpWork. It is the world's largest freelancing and crowdsourcing marketplace. Businesses post projects, which are then bid on by freelancers. The businesses choose the bids they like and award the project to the freelancer.
The key point of B2B2C is that it allows businesses to target a larger community of buyers than they would be able to reach on their own. This, in turn, creates a larger market for their goods and services.
Top B2B2C Companies
B2B2C companies can be found in any industry: from manufacturing to art sellers. Good examples of eCommerce companies using a B2B2C model are:
- App Store
- Google Play
All of them offer either goods or software manufactured by other businesses and provided directly to customers. Some examples from other industries are:
- Uber Ecosystem. When ordering from the app (whether it’s food or a taxi), most probably, you order from a company partnering with the platform.
- Even Financial. A financial platform working with big players like American Express to make it convenient for the end client to use any of the services of their partners.
- Airbnb. You do not order services from Airbnb directly; they offer the services of many touristic operators.
Integrating Seller's ERP Systems with a Marketplace
If you're running a B2B2C marketplace ecommerce site or use one as a seller, you know that integrating your seller's ERP systems can be a challenge. You need to make sure that orders and inventory are updated in real-time and that all communications between the two systems are smooth and efficient.
The seller's administrative interface on the marketplace usually contains some automation tools for loading the catalog and product descriptions, but the most productive solution is to build an integration between the seller's ERP and the marketplace’s IT system.
How can you solve the main problems associated with the lack of integration of a seller's ERP in B2B2C ecommerce? Azure Logic Apps is a cloud service that helps you schedule, automate, and orchestrate tasks, business processes, and workflows when you need to integrate apps and data across cloud and on-premises services. With Azure Logic Apps, you can easily connect your seller's ERP system to your B2B2C marketplace ecommerce site, ensuring that your catalog, orders, prices, and inventory are updated in real-time.
This way, you can ensure that your marketplace runs smoothly and efficiently, with minimal manual intervention. By the way, the Virto team has a lot of experience with such integration, and this post will tell you how the integration of the seller ERP and marketplace systems works.
The B2B2C model is a combination of two business models: business-to-business (B2B) and business-to-consumer (B2C). In the B2B2C model, one business uses another business to reach its consumers. The B2B2C model differs from its commission-based monetization principle.
B2B2C is a mutually beneficial relationship that offers first B the benefit of introducing its products and services to a new range of potential customers. B2B2C also simultaneously generates a revenue stream for second B business, as well as positions second B to present its customers with new and relevant products and/or services. The consumer customer base also benefits as a consequence of being the recipient of "B’s" expanded products and/or services diversification.
For small manufacturers and startups, the B2B2C ecommerce model offers good opportunities for business development and budget savings. This is a way to expand sales – not only in local markets but also to establish a presence in other markets in which second B operates.
The B2B2C model has proved to be successful for many businesses, so it is definitely worth considering if you are looking for an efficient way to sell online. Virto Marketplace can help you convert your existing web store to a marketplace or build a marketplace from scratch.