B2B2C eCommerce Business Model

Updated: October 15, 2021 | Sergey Berezin, Marketing writer

Reading about business models of online/offline businesses, you will be surprised by the long chains of letters denoting the logic of interaction between market players: B2B2C, B2B2B, C2B2B, B2C2B, and others. 

This diversity is a fruit of businesses to find and apply innovative business models. Each acronym we discuss here – specifically, B2B2C – describes the go-to-market (GTM) strategy, pricing policy, stakeholder engagement of that model, distribution channels, products supplied, and finance movement. Thus, B2B2C combines business-to-business (B2B) and business-to-consumer (B2C) into a single online trading model for a complete product or service transaction.

What is B2B2C eCommerce?

Let us disclose B2B2C meaning. Business-to-Business-to-Consumer (B2B2C) is the term used to describe the eCommerce model wherein Business "A" and Business "B" engage in collaborative business deals and development exercises whereby Business "A" pays Business "B" for the ability to offer Business "A’s" product or service to Business "B’s" consumer customer channel for selling online.

B2B2C model

How Does B2B2C eCommerce Work?

The B2B2C business model has three members. Business “A” establishes a mutually beneficial business deal with Business “B” to bring a better choice of products to “Consumers” and provide a higher level of customer experience at Business “B’s” ecommerce website. Here is the reason for each party in this chain.

B2B2C Meaning: First “B” Is Business "A" in B2B2C

This means an original business that enters the B2B2C collaboration and has a hope to acquire more consumer customers. 

In the classical market model of channel partnership, Business "A" has to find a wholesale buyer, such as a distributor or a retail chain, and establish trade relations with them to sell Business “A’s” goods to retail buyers at the last stage of the sales channel. 

The advantage of B2B2C model in ecommerce is that Business “A’s” products immediately fall into the view of Business “B’s” customers at Business “B’s” ecommerce website, bypassing the intermediate stage of wholesale, resale between companies, and other intermediate stages. Moreover, orders placed online in Business “B’s” online store can be delivered to consumers directly from Business "A", i.e., Business "A" could have direct access to customers if it is allowed by an agreement with Business “B”.

This model is especially effective for the small biz niche and emerging brands that can take advantage of Business “B’s” popularity and reputation.

Business A in B2B2C model

B2B2C Meaning: Second “B” Is Business "B" in B2B2C

An intermediate Business “B” can have several possible motives to participate in the B2B2C model. On the one hand, it might just be commercial considerations; for example, the second “B” might get the sales commission that is funnelled through it. But often the middle “B” doesn't make too much money in this chain. 

Therefore, there must be other motives as well. Some of these involve providing value to Business "B" customers by giving them better (or more convenient) buying options. In some cases, such as buying a school uniform, middle “B” is likely to want to ensure that all of their customers buy a standardized product.

Business B in B2B2C model

С Buyers in Business-to-Business-to-Consumer eCommerce

As with any successful trading business model, there must be all parties to the beneficiaries. Consumers are the ultimate purchaser of Business “A’s” products and they benefit from easy access to them through Business “B’s” sales channels.

Often, Business “B” negotiates reduced prices, marketing promotions, bonuses, and welcome gifts for buyers of Business “A’s” products. Consumers respond positively to such promotions, placing more orders and thus Business “B” makes more revenue through commissions and cross-selling of its own goods as well.

Why are B2B Businesses Expanding to B2B2C and Is This Model Successful?

The essence of the B2B2C model is based on partnership and successful business deals. Such a model is viable if the products of Business "A" do not compete, but complement the products of Business "B". In general, B2B2C model products coming from Business "A" usually expand the functionality of Business “B’s” products or help them be used more effectively.

As an example, consider Business “B”, which sells premium footwear, and Business “A” as a furniture factory. In this case, Business “A” can offer Business “B’s” wealthy clientele its nice-looking oak shelves to store shoes in home dressing rooms.

Advantages of B2B2C When Selling Online

B2B2C belongs to a win-win-win model in which all parties benefit. Business “A” gets access to Business “B’s” customer base at their ecommerce website and thus increases its sales volume. Business “B” is expanding its range of products offered to the market, can run more cross-sell campaigns, and get commissions from Business “A” for orders made on its online store. 

Consumers can buy Business “A’s” products in their usual sales channel owned by Business “B”. In addition, consumers often benefit from marketing promotions, especially in the first months when Business “A” joins the B2B2C model.

Disadvantages of B2B2C

Quite often, for Business “A”, the conditions for joining the model are similar to the rules of marketplaces. This means they receive no access to the contact data of the consumers. Accordingly, Business “A” cannot grow its customer base in this way. For example, many analysts classify Amazon as a B2B2C model giant, where small business sellers do not get access to Amazon’s customers and cannot run analytics on such customers. In other words, customer ownership for Business “A” is often not supported in the B2B2C model.

Business “A” can also incur large commissions that go into Business “B’s” pocket. For example, mobile app stores, such as the App Store and its rival Google Play, also work under the B2B2C model, taking up to 30% of the revenue of applications sold there and also charging a fee for joining their mobile app store. 

There is a threat of removing an app from the App Store and/or Google Play at any time, and this 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 the loss or total ruin of numerous Business “A” members who host applications in the App Store and/or Google Play.

B2B2C Marketing

In the B2B2C model, Business “A” can join Business “B’s” marketing programs, which are usually held on national holidays and events, but could also be personalized (e.g., on the birthday of every person in the client database). This also imposes obligations on Business “A” to get well prepared for sales events and create a sufficient stock of goods in their warehouse to meet the peak demand during sales.

Marketing cooperation between Business “A” and Business “B” provides great opportunities that must be used flexibly and effectively. But Business “A” shouldn't rely on the B2B2C model as its only sales channel and needs to develop its own client base and customer communications. Otherwise, as mentioned above in the section on B2B2C model disadvantages, the cooperation could suddenly stop because of a Business “B” decision, and Business “A” must be prepared for such a risk.

B2B2C eCommerce Platform Examples

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

However, large marketplaces implement other sales models along with B2B2C. For example, since other businesses can shop on Amazon along with consumers, the B2B2B model is being implemented. Interestingly, consumers can also place their goods on such marketplaces; therefore, C2B2C and C2B2B models are implemented there as well.

Summary

B2B2C is a mutually beneficial relationship that offers Business "A" the benefit of introducing its products and/or services to a new range of potential customers. B2B2C also simultaneously generates a new revenue stream for Business "B", as well as positions Business "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 Business "B’s" expanded products and/or services diversification.

For small manufacturers and startups, the B2B2C ecommerce model offers good opportunities for business development budget savings. This is a way to expand sales - not only in local markets, but also to establish your presence in other markets in which Business “B” operates.

FAQ

Does B2B2C make sense for all B2B ecommerce businesses?

If a business operates according to the B2B model and, at the same time, there are goods that are interesting to consumers, then the development of a sales channel according to the B2B2C model undoubtedly makes sense and will bring an increase in sales. 
For example, if company “A” produces washer fluid for car wipers and supplies it to car factories in barrels and tank trucks, then it makes sense to make small packages and sell through gas station chains, which will act as Businesses “B” in this model.

What is the difference between B2B and B2B2C?

The B2B model does not involve consumers and this is how it differs from B2B2C. Business “A” sells Business “B” goods and services that ordinary people do not need, but only companies. For example, the company sells taps for oil pipelines and it is clear that only oil operators need such products, not ordinary people.

What is the difference between B2C and B2B2C?

The B2C model is a direct sales process that does not imply any third parties and in this differs from B2B2C. The same company can and should combine B2C and B2B2C models at the same time in order to get a stable position in the market. For example, a company sells the products on its online store and on a marketplace such as Amazon.

Are the White Label model and B2B2C the same?


It should be noted that B2B2C has an important difference from the “White Label” sales model, in which one company produces a product, while the other sells it under its own brand. In the B2B2C model, Business “A's” products and services are offered to consumers under their original Business “A” brand.

Which ecommerce platforms are best for B2B2C?

Ecommerce platforms for deploying marketplaces must have a very large set of functionality and customization. Typically, marketplaces are big and rich companies with a strong team of in-house developers, so they often use their own platforms or some very expensive enterprise ecommerce solution. For example, Alibaba uses DC Brain platform to optimize the performance of the 200-plus global internet data centers hosting its online stores.
If we talk about the architecture of the ecommerce platform for B2B2C, it should be a composable and headless platform with support for microservices and cloud-ready deployment.

What are the characteristics of B2B2C ecommerce?

Like any other sales channel, B2B2C is characterized by a set of parameters, among which the main ones are sales volume and margin in the channel. And yes, it will not work here to accept the sale of goods at net cost and below to capture market share, since Business “A” does not have access to Business “B’s” customer base.

How would you do marketing for a B2B2C ecommerce business?

For a B2B2C model, the most common way of marketing activity is participation in the promotion campaigns that go on the online store of Business “B”. Of course, Business “A” can run its own promotions independently, if such functionality is provided on the ecommerce platform belonging to Business “B”.

How do you build B2B2C manufacturing relationships?

B2B2C manufacturing relationships are built on collaboration between companies where Business “B” introduces Business “A” to its product roadmap. Having this information, Business “A” can plan to release products that complement new Business “B” products and will be of interest to consumers.
The most understandable example is when Business “A” specializes in producing cases for mobile phones, finds out in advance the roadmap for the release of new phones and their sizes, and immediately offers covers for them.

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Sergey Berezin
Marketing writer