What is B2C eCommerce — business model, B2C Companies and Examples
What Is B2C eCommerce — Business Model, B2C Companies and Examples
It would be true to say that almost all Internet users are familiar with the B2C ecommerce model. When you buy any item or service online for personal use directly from a brand, this is B2C in action. Consumers appreciate the convenience of online shopping, where they can purchase clothing, electronics, media subscriptions, and services via the internet. The explosion of B2C online commerce occurred since 2020 and #pandemic, when billions of people changed their usual shopping behavior and began to buy food, clothing, entertainment subscriptions, etc. online.
Online shopping and sales are the most popular online activities worldwide. According to Statista, B2C revenues from online sales are projected to grow to almost 6 trillion U.S. dollars in 2023. Further growth of the industry is predicted; the full potential of the ecommerce market has not yet been reached.
What Is B2C (Business to Consumer)
A B2C model is all about the interaction between a business and their customers as individuals. This is direct communication to the customer, either selling them goods or providing services.
Examples of such a model are:
- an ordinary online or offline shop,
- a direct service vendor like your internet service provider,
- a restaurant near your house, and others.
What Is B2C eCommerce?
B2C, the acronym for "business-to-consumer," is a business model based on transactions between a company that sells products or services and individual customers who are the end users of these products. The B2C ecommerce definition suggests the commerce transaction takes place on the internet through a company’s website or mobile app featured with an online catalog.
Among websites and mobile apps, new online sales channels like messengers and chatbots are emerging today. Retailers are also trying tech innovations to drive B2C sales, such as smart glasses and smart mirrors. Smart mirrors and smart glasses have been designed to merge aspects of online shopping with real store visits.
Advanced smart glass systems can automatically give the users information about a product they're holding, such as price and availability of sizes, colors, and materials. The user can then communicate with the system using voice commands, sign language, or finger gestures.
The mirrors can take a 360-degree image of an outfit, which customers can view using hand gestures. Customers could also see a side-by-side comparison, email friends for feedback, or post images on social media.
Similar smart technologies are also used in online shopping. For example, you can try a lipstick color if you turn on your laptop/phone camera (Loreal, Maybelline, and other brands); also, Walmart and other large retailers have virtual try-on clothing on their websites.
B2C storefronts to internet retailers
Over a millennium of trading, many manufacturers have sold their products to retailers who display the products on their shelves and counters. Retailers' profits came from the margin they added to the price paid to the manufacturer.
With the invention of B2C ecommerce, some businesses began to sell products directly to consumers. Prices in online stores became lower due to the exclusion of an intermediary retailer. POS (point-of-sale) retailers first felt this competition during the dot-com boom in 1999-2001. Then many retail companies began to quickly adjust their trading strategy and ensure their presence on the internet.
More than 20 years after the dot-com revolution, B2C companies operating on the internet continue to dominate in the pace of sales. Amazon, Priceline, and eBay were part of the successful early dot-com boom, then they expanded their businesses and became giants of the online trading industry.
What is the difference between B2C and B2B?
The formulas defining the model of online businesses consisting of two participants, such as B2C, B2B, B2G, or P2P, are easy to understand. Just substitute Business for “B,” Consumer for “C,” Government for “G,” and Person for “P.”
Keeping these abbreviations in mind, you will immediately understand who the sellers and buyers are. If you dig deeper, though, B2B and B2C models differ not only in the roles of who the buyers are but reflect the difference in trade business processes for companies and end users.
Consider changes between B2B and B2C in the processes of client registration, verification, personalization, cataloging, and transaction volumes and payments. There are specific processes when a company buys from a company (B2B), like contracting, invoicing, order processing, shipping, handling complaints, and transaction records, as well as some others.
The future of B2C model: B2B2C marketplaces and ai-personalized stores
Any company that sells in the B2C sector knows how important the market size is. Of course, there are niche markets for luxury brands, but they don't make the weather.
The fact is that many B2C companies are now using marketplaces to reach a larger audience of potential customers. And it makes sense: marketplaces offer a ready-made audience of buyers, as well as easy listing and marketing tools.
There are a few reasons why B2C companies are increasingly turning to marketplaces. First, as we mentioned, marketplaces offer a larger audience of potential customers. Second, marketplaces can be a great way to reach new markets and expand into new geographic areas. And third, marketplaces provide an easy way for B2C brands to list and promote their products.
The marketplace business model is called B2B2C because it consists of two business participants. The supplier (first B) collaborates with the owner of the online marketplace (second B) as an independent merchant to sell their goods to a larger audience. According to the marketplace model, Amazon, Expedia, and Travelocity are good examples of selling goods and services from businesses to consumers.
So, it's clear that marketplaces are playing an increasingly important role in the B2C sector. And we'll likely see even more B2C brands migrate to marketplaces in the future.
Will the marketplaces be the only future of B2C ecommerce? Of course not; advances in technology will lead to new business models. For example, there could be a personal online store for each user, where AI will study purchasing habits and collect all products usually bought by the user. And they will also carry out marketing campaigns, offering promotions of the same products from all possible suppliers.
Advantages of B2C ecommerce
Almost 30 years have passed since the first successful B2C projects, so millions of words and web pages have already been spoken and written about the advantages of B2C ecommerce. This is truly a world of borderless trade and the convenience of shopping from home.
The value of B2C ecommerce became especially evident during the pandemic when billions of people lost the ability to go to brick-and-mortar stores, and online shopping became the only way to provide themselves with food, medicine, and other essential goods. Importantly, online shopping habits have remained with consumers after lockdowns worldwide ended.
For example, according to Reuters, 70% of Britons say buying online and on mobile phones have become their main and preferred shopping methods, up from less than 50% before the pandemic.
The benefits of B2C are a win-win for consumers and suppliers alike. Let's talk about them briefly.
B2C ecommerce advantages for consumers
There are several reasons for the growing popularity of B2C ecommerce for consumers.
- In most cases, it is simply more convenient for consumers to shop online than to go to brick-and-mortar stores. This is especially true when the consumer buys a familiar product, or that product does not require trying it on in a fitting room or other evaluation before purchase.
- Consumers can buy from a global market, whereas brick-and-mortar businesses are limited to their local area.
- B2C ecommerce businesses like marketplaces can offer a wider range of products and services than brick-and-mortar businesses.
- Sometimes, consumers can find a more personalized shopping experience than brick-and-mortar businesses offer.
B2C ecommerce advantages for businesses
B2C ecommerce also has many advantages for businesses.
- It is generally less expensive to set up and operate a B2C ecommerce business than a brick-and-mortar retail.
- B2C ecommerce businesses can reach a larger market of consumers than with offline trade.
- B2C ecommerce businesses have the potential to generate more sales and profits when combined with many ecommerce business models like B2C, B2B2C, and frontend technologies (websites, mobile apps).
- B2C ecommerce businesses can provide a higher level of personalized customer service than brick-and-mortar businesses.
Disadvantages of B2C ecommerce
The world is not ideal, and even such a progressive type of trading business as B2C ecommerce has its challenges and disadvantages.
- SEO dependence. One drawback of B2C ecommerce is the strong dependence of sales volume on the visibility of the store in the search engines. If it is enough to place offline retail in a location with good traffic in order to provide it with enough buyers, then the online store should spend a lot on context ads, ordering SEO optimization, and having perfect textual content like blogs to get better indexing in Google, Bing, and other search engines.
- Marketplace dominance. Another difficulty for small businesses is the need to join large marketplaces such as Amazon, Alibaba, and eBay. Yes, ecommerce sales to consumers through online marketplaces are an effective way to solve the problem of access to millions of buyers for a small business, and this is called the B2B2C model (business-to-business-to-consumer). However, marketplaces typically charge hefty commissions that kill small business sellers' margins.
- Delivery contractor dependence. Dependence on delivery service contractors is another disadvantage of B2C commerce. Customer purchase satisfaction largely depends on prompt, convenient, and damage-free delivery. There is a big contrast here with a brick-and-mortar store, where people can come and pick up the purchased goods themselves, except for heavy and oversized things.
- App stores monopoly. Moreover, if a seller would like to create their own mobile application to sell online, they have to bow to Apple or Google to place the application in the App Store and Google Play, then pay commissions there.
B2C commerce challenges
There is much more competition and higher demands from customers in B2C ecommerce than in the business-to-business model. Taking a closer look at the B2C store success recipe, we can highlight the following factors.
- Consumer traffic. If Google, Bing, or Yahoo! do not know your name, you do not exist. Search engine marketing and optimization are the lifeblood of any online business. The typical consumer behavior is to click a link on the first or second page of search results. A B2C website must be optimized to attract traffic; the structure, architecture, and content management system must work for you from its creation. This is why choosing a website platform is vital to its success.
- Payment processing. Many customers are hesitant to submit their personal data to websites for security reasons. SSL encryption, PCI compliance, and other trust marks have proven to increase online clients' confidence.
- Client support. Sales are about people. The cost of acquiring a new consumer is almost ten times higher than of maintaining an existing loyal customer, who usually spends 60% more than a new client. An optimized customer experience encourages visitors to become loyal customers, so the most significant emphasis should be on improving retention.
- Customer experience and loyalty. Many strategies help make clients feel appreciated. Online shopping needs to be easy; it needs to motivate clients to become your partners – the advocates of your brand. These tactics can be supported with powerful, easy-to-use tools that help deliver engaging promotions, campaigns, and loyalty programs.
- Product findability. Online stores continue to become more straightforward, intuitive, and flashy. The convenience of on-site search and navigation is a key component of usability. The associations, specific jargon, abbreviations, autocomplete suggestions of the search dictionary, filters, refinements, and clear product hierarchy are essential features that dramatically increase conversion rates. If clients can’t find a product, they can’t buy it. An online store platform must contain usability-related tools to make searching as easy as possible for shoppers who return to order again.
Types of B2C Models
As in any emerging market, B2C ecommerce participants have enormous potential in niche and local fragmentation. The winning formulas vary for international multichannel distributors, theme-based online stores, specific deal aggregators, or national closed retailing. Regardless, the key challenges are still quite similar for all B2C online stores.
Direct selling in the B2C segment is a very effective method for selling consumer goods and services. Generally, this means a sale from a seller to a buyer without intermediaries. In practice, direct selling is a very effective way to appeal to special groups of buyers whose contacts and buying preferences are known. These could be people with a certain hobby, sports fans, owners of premium cars or boats, etc.
For example, anglers and hunters often leave their contacts at specialized stores or ammunition manufacturers’ websites. This way, they can be sent news of the release of new fishing rods or accessories for hunting and then purchase such items directly with home delivery.
The term “internet intermediaries” or “online intermediaries” in B2C ecommerce describes the wide, diverse range of service providers that facilitate online interactions between consumers and merchants. These companies connect users to the internet, process data, and host various web services. In the B2C commerce segment, online intermediaries often provide services for replicating media content in global networks (CDN networks) and promote the sale of goods and services, including interactive geomaps, etc.
Most importantly, online intermediaries allow consumers to quickly access an enormous amount of information and locate online stores with local delivery or an offline POS around the shopper’s location. The shopper may not even have to go anywhere, as many POS have local delivery today.
The advertising-based B2C model is about attracting visitors through interesting or useful content. The B2C model works especially well on news sites and large forums. The owners of such resources receive income by displaying advertisements on their sites.
Also, sites with high traffic volume that target women's and men's lifestyles, such as Cosmopolitan and Men’s Health, can generate income from advertising and content (photos, videos, and articles) using product placement and subscription-based access.
If you are interested in certain topics discussed online, then you are most likely a member of thematic groups on social media platforms such as Facebook or are a follower of some Instagram guru. Typically, such a group is led by an entrepreneur or coach who moderates the subscribers.
Once they have recruited enough members, they use the group to promote their products and services and make money through the platform. In addition, such groups willingly advertise various brands that offer goods on the subject of the group, which is often the main income source for the community's owner.
Members of such online communities are already warmed up as potential buyers who share the content with their friends and social networks.
Entertainment sites like Hulu or Disney charge fees so that consumers can access their content. Of course, some of the content will be free to demonstrate the site's value, but the highest quality materials are offered by subscription. The biggest niche in this B2C model is adult content sites.
This fee-based B2C ecommerce is often called a freemium model, where basic content or services are free, but premium features come at a cost. The freemium B2C model is common among social media sites, mobile games, online cinemas, and productivity apps.
B2C marketing is a set of strategies, practices, and tactics a company uses to promote its products or services to consumers. B2C campaigns focus not only on benefits and value but also on attracting an emotional response from a customer, which is often the main motivation for purchase.
B2C marketing objectives include:
- Increasing website traffic. B2C campaigns motivate potential customers to visit a brand's website and learn more about its products.
- Expanding your mailing list. Emails bring the highest number of leads because the visits to the company's website increase; likewise, the number of new subscribers also increases.
- Studying your target audience. This allows you to interact effectively with your customers. B2C companies actively use segmentation, making it possible to send more relevant messages to their audience.
- Promoting a website in search results. The use of keywords helps the site advance in search results. Matching users' search queries also increases traffic.
- Increase conversions and brand awareness. B2C marketing strategies help a business reach and retain a wider audience. Mass mailings, social networks, and other channels are used for this. This approach popularizes the brand and increases profits.
- There are four pillars of marketing in the B2C sector that should be considered in any marketing campaign: target audience, branding, marketing costs, and buying cycle.
Knowing your target audience gives you a huge advantage over your competitors. Knowing your shopper’s profile means you don't have to waste your budget on broad-market advertising. Here, manufacturers of niche goods and goods targeting certain social groups, such as parents of newborn babies, are the big winners.
Brand success depends on establishing clear differentiation from competitors, developing brand awareness for consumers, and building trust to ensure long-term customer loyalty. Individualism and globalization are opening up new consumer markets, new brand potential, and greater relevance to consumers.
Pursuing success makes the B2C brand less reflective of what the customer is, but rather how this person wants to appear to others. Constant dialogue with the customer audience at various points of contact with the brand (omnichannel marketing) helps the brand know what customers expect and, ideally, exceed those expectations.
The acceptable cost of marketing is highly dependent on the market niche, level of competition, brand awareness, and many other factors. In a sense, this is the art of promoting a product at the lowest cost of a marketing campaign.
Therefore, new techniques are being developed, such as Growth Hacking. This is a type of marketing for ensuring sustainable, scalable growth for startups, companies, and websites.
The term “Growth Hacking” was proposed by Sean Ellis, who first wrote about the nonlinear approach as the key to winning a consumer’s business. It doesn't matter how the growth is achieved. There are no restrictions on communication channels and tools. Growth Hacking is often combined with trying to find shorter paths to target clients in existing business processes (including site logic, sales funnels, etc.).
The distinctive features of B2C marketing include a short sales cycle. Unlike B2B marketing, where the sales cycle is much longer, B2C customers do not spend a lot of time looking for analogs and comparing each function of the product they like. B2C customers usually buy products that their friends or bloggers have recommended or under an emotional intention, so the sales cycle is much shorter and less stressful for both the buyer and seller.
Marketing channels in B2C ecommerce
Marketing channels reflect the essence of B2B ecommerce and the customer traits that must be reached for sales success.
- Sales are made directly to the end customer.
- Customers are impulsive and want to know all the information about a product at once.
- Businesses are prompting an emotional connection with their products.
- This approach incorporates a consumer’s benefits and desires.
- The goal of potential buyers is self-improvement.
Consumers often make purchases immediately after viewing a product advertisement or within a very short time and are looking for instant results.
Email marketing for consumer brands is an effective way to reach target audiences and increase sales. Mass email newsletters and personalized promotional campaigns are often effective to reactivate existing customers and attract new ones.
Email marketing tools are used to collect and segment a database of customer contacts, demography, and other details, create and launch personalized email campaigns, automate mailings, analyze subscriber activity, and track results. Within email channels, marketers engage leads and promote them through sales funnels. However, email marketing is only effective if subscribers receive relevant emails.
Search engine optimization
SEO incorporates organic search engine optimization that aims to increase the visibility of a website in unpaid search engine results. Optimization techniques and tools help companies drive traffic to their website and increase sales.
For their part, search engines regularly update their algorithms so as not to give advantages to the methods of cheating and pumping the ranking of sites.
Therefore, organically valid content is gaining more and more advantages over SEO-optimized pages. Moreover, in August 2022, Google launched the so-called "Useful Content" update, the purpose of which was to find SEO-optimized pages and reduce their position in search results. At the same time, advantages will be given to pages with useful content written by humans for humans without the use of AI-generated texts.
Social media marketing
Social media marketing is the promotion of a brand, service, or product on platforms such as Facebook, Instagram, YouTube, and others. With the help of these channels, brands can not only send promotional emails, but also serve notifications. Social networks for B2C companies are a channel for reaching a wide audience of potential buyers and loyal customers.
Paid search advertising
This is a pay-per-click ad model. Brands pay to place digital ads that appear on search engine results pages or SERPs from Google, Yahoo, and so on. With pay-per-click advertising, the seller pays each time one of your potential leads clicks on your ad. The placement and frequency of these ads are dependent on their quality score and bid.
Mobile marketing tools help brands reach leads and loyal customers through their mobile devices. Most often, such tools include SMS, web pushes, and advertising in mobile applications.
Since the legislation of many countries restricts the mass distribution of SMS, companies today are more likely to send browser web push notifications about sales, new content or products, interesting updates, and so on. This approach grabs the attention of visitors and increases traffic.
Mobile apps often have a dedicated area where ads are displayed. This tool is similar in concept to displaying ads on website pages.
Personalizing the offer to the client in both B2C and B2B is one of the key trends in modern business that will determine the development of marketing in the 2020s. Satisfying the needs of a specific person, answering the request of an individual buyer, providing an exclusive service for an ordinary consumer - a few years ago, these approaches were only considered possible for VIP clients.
Now individualization of the offer is a key success factor and competitive advantage.
Real-time data is becoming increasingly important, such as geolocation movements, transaction histories, and behavioral data, including actions on third-party sites and social networks. Thanks to technological advancements, the definition of the audience and the contextuality of messages have reached a new level.
For example, already today, targeted advertising in Google allows you to narrow the audience segment down to a specific tenant of a particular house - and soon this will not be the limit.
Return on investments
ROI (return on investment) is an investor's income from their investment in the project. A high ROI means that profits are significantly higher than costs and everything is going like clockwork.
How much do all the efforts and costs for marketing promotion in B2C return to you? To answer this question, we need the ROI of marketing costs for your products in the B2C segment.
To calculate the ROI of client acquisition, you need to know two things:
- How much money did you spend on ads for attracting new customers and activating existing ones in total (ad spend)?
- How much did your company earn from this (ad revenue)?
It should be noted here that the effectiveness of marketing has an even more specialized ROMI indicator to be used:
ROMI (Return On Marketing Investment) = (ad revenue - ad spend) / ad spend × 100%.
This is a pretty simple formula. It will not be difficult for you to apply it in any area of your B2C business.
Starting B2C ecommerce
Of course, an article about the B2C business model cannot go without a section on how to start B2C ecommerce. Most likely, this information is needed for startups since companies with stable products and established businesses already have online sales channels.
Today's ecommerce technology is simple for any type of company. The main challenge is whether your product is good enough compared to your competitors, whether your products will be in demand with consumers — than how to create a website or launch a mobile app to start online sales.
The advice is that for a startup, it is possible not to launch your own store website at all if the task is to test the success of your products on a large audience of consumers. It is enough to trade through a large marketplace, such as Amazon or Alibaba. If sales there are successful, you can move on to the stage of creating your own online trading channels.
Many more difficulties with the choice of technological platform arise for medium-sized companies and enterprises if they want to sell their products to the consumer market directly through their online omnichannel rather than through dealers.
Today, the number of vendors for ecommerce solutions is around 100, so choosing a platform that will last a dozen years can be challenging. The technologies in IT are changing rapidly, and if you buy a trendy platform today, you may find that in 7–10 years, you will not be able to get vendor updates or find developers who will support your online store and other frontends.
Our advice — focus on ecommerce solutions based on Microsoft .NET/ASP.NET technology because they will be further developed and updated as long as Microsoft exists. And this is where Microsoft .NET/ASP.NET based ecommerce shines above its rivals — ASP.NET has been around since 2001 and continues with innovation today.
B2C ecommerce solutions
The pioneers of B2C ecommerce in the 1990s were forced to develop software to enable online trading on their websites. Quite often, they also ordered such development from third-party teams.
When the project was handed over to the customer, these independent teams were looking for new customers who also needed ecommerce software for their websites and gained further experience with them. Thus, the software took the form of a finished product called a B2C commerce platform, which could be sold to everyone on the market.
Today the market offers about a hundred ready-to-launch B2С software platforms or, as they are also called, B2C commerce solutions. As with any mature market, these platforms target retail and manufacturing businesses of varying sizes, product niches, and IT experience.
In the 2020s trend, virtually all B2C ecommerce platforms are hosted in the cloud. Among them, SaaS (Software-as-a-Service) has become increasingly popular; here, the vendor takes over all IT infrastructure, including hosting the software in a data center, deployment, and maintenance.
A client can launch an online store in a browser immediately after purchasing a subscription. This is convenient for companies because there is no need to spend their budget on buying servers, hiring an administrator, and incurring other costs for running IT infrastructure. All this is done by the vendor of the B2C commerce platform within the framework of the subscription.
If you want to read more about B2C ecommerce solutions and meet a list of vendors, you can find many reviews on this topic on the Internet. For our part, I can recommend the reviews and analytics at https://www.g2.com/categories/e-commerce-platforms.
Examples of successful B2C companies
There are many factors to consider when choosing a B2C ecommerce platform. The following review contains some great solutions for the specific needs of a B2C store.
Amazon.com is the world’s largest online retailer operating in B2B, B2C, and C2C ecommerce segments. The company sells goods directly to consumers, allows users to sell goods themselves, and supports user-to-user transactions. Amazon B2B, also known as Amazon Business, provides purchasing solutions for registered businesses of any size, including wholesalers and manufacturers, to buy various products on Amazon.
Walmart is considered a B2C company because most of its products are sold and marketed to consumers. To achieve high sales volumes in B2C, Walmart capitalizes on a customer's emotional attention when shopping offline. At the same time, like the other largest retailers, Walmart uses its IT platform to address both B2B and B2C markets.
Many people think Alibaba is the Chinese version of Amazon or eBay. In fact, it is not equivalent to Amazon or eBay, although there are some similarities. Consider a huge holding company with many business areas. Imagine someone merging Amazon, AWS, eBay, Shopify, Netflix, PayPal, and Citigroup into a single business empire, and then you have something similar to Alibaba.
eBay is one of the oldest and largest online marketplaces for buying and selling new and used goods. The online trading platform operates both in the B2C market and in the C2C market (sales from one consumer to another). By providing a platform for online trading, eBay receives a fee from the seller for listing items and a commission for selling the item.
Examples of Popular B2C eCommerce Platforms
Many B2C software platforms available today offer small and medium businesses the ability to run their business under a cloud-based subscription model. This includes such cloud types as platform-as-a-service (PaaS) and software-as-a-service (SaaS), which are becoming increasingly popular as they allow businesses to save on upfront costs and scale their operations more easily. The difference between PaaS and SaaS is in the ability for deeper customization in PaaS, while SaaS software is always available in the cloud.
Some of the most popular B2C software platforms include Shopify, BigCommerce, and Volusion. These platforms offer a wide range of features and allow businesses to tailor ecommerce solutions to their specific needs.
Shopify is one of the most popular ecommerce platforms for building a feature-rich online store without specialized web development knowledge. The solution is easy to use and comes with a huge set of store templates. Among the cons are the high price and the lack of migration options, i.e., upon canceling your Shopify account, your store will be deleted.
Magento is an open-source platform that allows you to create a self-hosted store with scalable architecture and powerful SEO. However, coding skills are required to customize the platform to your needs. You also have to host the Magento solution on your own server, so it’s not the best choice for a small company or a newbie.
Volusion offers a marketing emphasis with a user-friendly search engine, powerful inventory, promotion, and shipping tools. Its weaknesses include customer support and unstable hosting servers.
Bigcommerce allows you to easily create a store with a built-in, mobile-friendly website. The solution has cost-effective plans for small online stores, which aligns with the features provided. Extensive enterprise-class customization would be a challenge.
Ecwid is a popular B2C ecommerce platform used by thousands of merchants in 100+ countries. Ecwid has modules to connect with shoppers in person via a merchant’s website or through Instagram, Facebook, Amazon, or Google Shopping. It allows you to run email marketing integration and a dedicated mobile application to manage your marketing, merchandising, and sales.
Salesforce B2C Commerce
Salesforce B2C Commerce positions itself as a platform with unified and intelligent digital commerce capabilities. B2C Commerce is part of the Salesforce Customer 360 Customer Success Platform, with a software ecosystem that supports the customer journey across all core functions: B2B and B2C commerce, OMS, order payment, marketing, sales, and customer support.