B2B2C eCommerce: a Business Model to Maximize Your Revenue

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.

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.

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:

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.

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.

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.

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.

A marketplace is easy to manage by the marketplace staff, as modern platforms like Virto Marketplace provide comprehensive admin and marketing toolkits.

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.

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.

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."

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.

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.

When a consumer uses one business to order a product or service from the online store/app of another business, that is an example of a B2B2C model in action. Amazon, Alibaba, App Store, and Google Play are good examples of B2B2C models.

Other examples of the B2B2C model include:

1. 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.
2. 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.
3. Group buying platforms: allow consumers to purchase products and services at a discount. Groupon is the most popular group buying platform.
4. 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.

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.