What is B2C eCommerce — business model, B2C Companies and Examples
What Is B2C (Business to Consumer)
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?
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
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?
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
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.
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
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
- 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
- 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
- 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
- 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
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.
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.
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.
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.
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 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.
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.
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.).
Marketing channels in B2C ecommerce
- 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.
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
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
Paid search advertising
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
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
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.
B2C eCommerce FAQ
What are some types of B2C models?
Most often, there are five types of online B2C business models. You can choose which one is the best for your company, but think about using a combination of all five models to target consumers online. The first type uses direct sellers as the most common model, in which you sell goods from a company website. The other four types are online intermediaries (some kinds of marketplaces), advertising-based B2C (newspaper portals, for example), community-based types (sales within a Facebook group to Instagram followers), and a fee-based type like online cinema or adult-oriented portals.
When did the B2C business model become the standard?
You can name different dates, but the role of B2C became vital at the uncertain time of the coronavirus pandemic. If not for the dedicated work of online retailers, billions of people would have had to leave their homes in search of food and medicine. Now the habit of buying everything online has remained with consumers.
Is Amazon a B2B or B2C?
Amazon is a very large marketplace where most of the goods are sold according to the B2B2C model, i.e., from thousands of small manufacturers under their own brands. Nevertheless, Amazon sells some proprietary brand products for consumers (B2C), and also a large volume of IT services for other companies on the B2B model.
What are some B2C sales examples?
Let's say your Mom loves Chanel №5 perfume and you decide to buy it online for her with home delivery. If you type “buy Chanel №5” on Google, you will get hundreds of links from various retail chains and marketplaces. Among them, there will be one that is directly from the brand's website. Placing an order there is one example of a classic B2C purchase based on the direct-selling model.
How is B2B marketing different from B2C?
Marketing is primarily about customer knowledge, so the main differences between B2B and B2C businesses are the different types of customers. B2B sells to businesses, including those that resell products further, while B2C sells directly (or through marketplaces in the B2B2C model) to the end consumer. The set of marketing practices for B2B is therefore different from B2C. For example, in B2B, direct marketing works well for most products, while in B2C, it is used only for luxury goods.
What are the technologies used in B2C ecommerce?
A hot trend in B2C ecommerce technology is the use of cloud platforms with the administrative management of an online store through a browser. This greatly simplifies the process of maintaining the store and does not require the purchase of your own servers. At the same time, very large retailers prefer to rent only room, electricity, cooling, and network connections in data centers, and install their own servers for full control of their IT infrastructure.
What is the information technology infrastructure required for B2C ecommerce?
It doesn't matter if your store is cloud-based or on-premises, it needs a server with an installed operating system and an ecommerce platform software. Of course, the server must be connected to the internet using a broadband connection.
In the cloud, this IT infrastructure is hidden from the store owner, while on-premises, you have to perform server maintenance and software updates on your own. For very small online stores that just want to try ecommerce for the first time, you can, for example, use WordPress with a WooCommerce or similar plug-in. However, it is better to choose one of the vendors of cloud B2C platforms and a subscription plan for deploying a store in the cloud.
What is a B2C ecommerce platform?
A B2C ecommerce platform is software that allows companies to manage all transactions related to the online sale of products or services. For a long time, ecommerce platforms have focused on managing the sale of physical products (which you can hold in your hands, such as a paperback book), but more and more solutions today provide functions for selling digital products (an audio book, for example) sold on a subscription model.
Ecommerce platforms support the main business processes of the retailer, such as selling products and services, integration with CRM software and ERP systems, and having built-in internal inventory and delivery functions.
How much should a B2C company spend on marketing?
This question is not an easy one to answer and is largely dependent upon the marketer’s scope of professionalism and the discretion of the CEO as to what budget to allocate for the marketing of a product. Companies with established businesses usually spend a percentage of their annual sales on marketing and, within this budget, the marketing team performs their activities. For startups, especially in the digital economy, such as issuing cryptocurrency tokens, marketing costs can be huge. In general, marketing costs are always limited by the availability of funding.
How do distribution channels differ in B2C and B2B marketing?
Although distribution channels are in many ways similar for B2C and B2B, the difference in the type of end customers adds additional paths to B2B distribution. For example, this is the participation of suppliers in tenders held by large corporations for the purchase of products for their production or the functioning of offices. There are also online trading platforms where only companies can get access.
Which one is the biggest example of B2C?
Admittedly, Amazon is an example of one of the largest B2C business segments in the world, although some countries have their own leaders. For example, in China the largest B2C is Alibaba, with more than 1 billion consumer clients. Another of the largest international brands is McDonald's, which serves fast food to 70 million people daily.
What is B2C strategy?
The B2C strategy is as old as time, and is aimed at expanding trade to new markets, where the goal is to sell as many goods as possible at the highest prices possible. It is only thanks to competition that the market is in balance and we can buy a wide range of goods online and at reasonable prices.
What is the B2C target market?
As the name B2C suggests, the target market is consumers, both locally and internationally. In order to stand out from the competition, the trend of modern B2C is a high level of personalization that brings a first-class user experience. Knowing your target audience is the first rule of successful trading, both online and offline.
What is the difference between a B2B and B2C transaction?
In B2С ecommerce, when you visit an online store, you can see prices that are the same for all consumers. Yes, there may be targeted price options for people from certain regions, but these are special cases and not the general rule. Transactions in B2C are carried out very quickly - you enter the credit card number, click the “buy” button, and that’s all; now wait for your purchase.
In the B2B segment, everything is much more complicated. Only small purchases are allowed to be paid with corporate credit cards, so generally the payment takes longer and is more complicated. The buyer sends the invoice to the seller, where the legal staff checks this document, then finance puts the invoice in the payment queue, and only then money for the purchase comes to the bank account of your company. This is important to know for small companies, because if you sell something to a large corporation, there are often special conditions of delayed payment of 30 or even 60 days. Sure, you will receive the money, but not so quickly. This is the great difference between B2C and B2B transactions.
What is B2C retail?
Retail in the B2C ecommerce segment is usually considered online trading based on the most common direct-sales model. You go to a brand's website and buy a product or service there. Also, retail is understood as a purchase on marketplaces such as Amazon or Alibaba.