Web-Business-To-Consumer (B2C) - Meaning, Types, Pros, & Cons

5/26/23, 2:18 PM Business-to-Consumer (B2C) | Meaning, Types, Pros, & Cons
Home » Financial Advisor » B2B vs B2C » Business-to-Consumer (B2C)
Business-to-Consumer (B2C)
Written by True Tamplin, BSc, CEPF®
Reviewed by Subject Matter Experts
Updated on March 30, 2023
Fact Checked
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Table of Contents
What Is Business-to-Consumer (B2C)?
Evolution of B2C
Types of B2C Models
Benefits of B2C
Limitations of B2C
Examples of B2C Companies
B2C Companies and Mobile Purchasing
B2C vs. Business-to-Business (B2B)
https://www.financestrategists.com/financial-advisor/b2b-vs-b2c/b2c/ 1/22
Conclusion
What Is Business-to-Consumer (B2C)?

Business-to-consumer (B2C) is a type of business transaction where a company sells products or
services directly to consumers who are end-users of its products or services.
B2C sales can be seen in everyday transactions. For instance, when you purchase a new phone or
clothes, eat out at a restaurant, or pay for gas.
Consumer behavior is the primary driver in the B2C markets. B2C companies must maintain good
relations with their customers that they return. They must understand what their customers want
and how to motivate them to make a purchase.
This drive is what built the B2C sector. However, it is also one of the major challenges for B2C
companies because they have to be up-to-date with suitable products and services for their
customers.
Customer knowledge will increase the loyalty of customers and reduce any cost associated with
their transfer to other competing businesses.
B2C is different from business-to-business, in which the exchange of products or services is

between businesses rather than between businesses and consumers.
They also differ from their marketing campaigns because B2B is designed to demonstrate the
value of a product or service to other businesses. B2C, on the other hand, must elicit an
emotional response to their marketing strategies in their customers.
The rise of technology has changed the way B2C transactions are performed. Today, consumers
can easily purchase everything online, from books to clothes to food and beverages.
Evolution of B2C
Hundreds of thousands of domain names were registered when the internet grew in the 1990s.
However, there were issues with security on some online sites.
It then led to the development of Secure Socket Layers (SSL) encryption certificates by Netscape
that ensures trust in a site and allows consumers to be more comfortable accessing the internet.
E-commerce grew significantly in the late 1990s. Amazon's revenues, for instance, jumped from
$15.7 million in 1996 to $610 million in 1998.
The growth of B2C online sales has created significant challenges for traditional "brick-and-
mortar" services and businesses that are losing physical store sales to online competitors.
Many brick-and-mortar retail businesses are continually establishing their online presence to stay
competitive in their respective industries. On a positive note, consumers see this as much more
accessible and convenient.
Business-to-Consumer (B2C) Definition | Finan…

Finan…
Types of B2C Models

There are common types of B2C models, which are as follows:
Direct Sellers
Direct sellers are retail sites or stores where consumers purchase directly from the seller.
Manufacturers, small businesses, and producers could be the direct sellers that market their
products and services to their customers.
For example, if customers want to purchase an iPhone, they can go directly to the manufacturer's
website, check product information, and order it.
Online Intermediaries
Online intermediaries are "go-betweens" companies that put buyers and sellers together without
owning the products or services.
These companies usually set up a platform that connects buyers with independent sellers. Their
profit comes from charging a small percentage of each sale from vendors.
Examples of online intermediaries are Amazon, eBay, Trivago, Expedia, and Etsy.
Advertising-Based
Advertising-based companies advertise their products or services on platforms with significant

reach.
Businesses use traffic-driving strategies like content marketing and accordingly choose the
platform that would be the most effective to advertise their products or services.
With this, businesses ensure that more people are getting aware of their products or services and
would click on the ads to make a purchase.
In this case, B2C advertising-based companies profit from selling advertising space, and sellers
generate revenue by getting the leads converted.
Youtube and Reddit are popular platforms that use their sites for advertising products or services
from other companies.
Community-Based
Businesses use online communities, such as Facebook, Instagram, LinkedIn, Twitter, and online
forums, to help them market their products directly to site users.
They often use platforms that host people with shared interests, ideas, or opinions and host
targeted advertisements that help brands and businesses promote and sell their products or
services directly to customers.
Fee-Based
Fee-based B2C companies, such as Spotify or Netflix, require users to have a premium
subscription to allow access to additional content.
Other examples of B2C companies are The Wall Street Journal, Hulu, and The New Yorker.
Benefits of B2C
The following are the benefits of the B2C model:
Vast & Varied Market
The B2C market is large and varied. It gives the companies the advantage of targeting a more
significant number of consumers.
Even small businesses operating at home can sell their products or services to customers on the
other side of the world. This enables the company to grow and increase business profit.
Reduced Cost
Operating costs would be reduced when using a website since fewer physical resources and
staffing would be required.
With the B2C model, companies can reduce additional costs related to infrastructure, staffing,
and electricity. They can also easily manage inventory and warehousing with fewer people and
resources.
Direct Communication
Companies that adopt the B2C business model communicate with their buyers directly and in a
personalized way. This can be through emails, SMS, and push notifications.
Businesses can also track results actively and check which communication method works best.
They can also get feedback directly from the customer, which would help in product
development or improving services.
Limitations of B2C
There are also some limitations when it comes to B2B, and these are the following:
Highly Competitive Market
B2B presents a very competitive market. Many B2B companies are already operating in almost
every conceivable product category, so it can feel overwhelming when starting a new business.
The competition it brings involves price competition, too. A B2B company must be able to
compete against established businesses and find an effective way to attract customers despite
this.
Finding and Retaining Customers
Due to the huge competition, businesses need to find ways to differentiate their products or
services from their competitors. They need to have a good marketing strategy to make sure that
their target consumers are reached.
Marketing should understand the details about their customers, such as who they are, what is
important to them, how they are inspired, and how they purchase and receive the types of
product one is selling.
B2C companies need to design their whole operation to serve their customer niche effectively.
They need to prepare to pay a significant amount of money on marketing to find and attract
customers.
Thus, it is critical that once the business has customers, it needs to come up with strategies to
keep them coming back, as the cost of selling to existing customers is much lower than the cost
of acquiring new ones.
Lower Margins
Products sold in a B2B business are cheaper. The business has to find alternative ways to gain
back the lost revenue by focusing on quantity over quality.
This increases the risk of not having repeat buyers because of quality issues which will also affect
business profit in the long run.
Offering discounts can also be worthwhile in certain circumstances and only if it achieves your
goals, such as clearance discounts which can help you to sell off old stocks, release working
capital and improve cash flow.
Introductory discounts can also encourage customers to try a new product. However, they may
create the wrong image for your product or generate sales that are not repeated when the
discount is removed.
Examples of B2C Companies

The following are examples of B2C companies:
Amazon
Amazon specializes in e-commerce, digital streaming, cloud computing, and artificial intelligence.
When customers purchase Amazon products, they are performing a B2C transaction.
Additionally, customers pay for the online service of Amazon.
Netflix
Netflix is a popular online streaming platform that offers its service to mass-market consumers.
Consumers can access various movies, documentaries, and television services when they pay for
monthly subscriptions.
Netflix also produces original content. By offering self-produced content to viewers, Netflix is
performing a B2C transaction.
Spotify
Spotify offers a music streaming service to mass-market consumers with its monthly
subscriptions. Consumers can easily access millions of songs, podcasts, and the latest albums.
Other popular B2C companies are Starbucks, H&M, Facebook, Youtube, Alibaba, Airbnb, Uber,
and eBay.
B2C Companies and Mobile Purchasing

Mobile purchasing continued to grow after the e-commerce boom decades ago. With
smartphone apps and traffic growing annually, B2C companies have shifted their attention and
efforts to mobile users and capitalized on this popular technology.
Around the early 2010s, B2C companies were racing to develop mobile apps and websites of
their own.
With this, success in a B2C model is established by continuously evolving with the appetites,
trends, opinions, and desires of the consumers.
B2C vs. Business-to-Business (B2B)

There are differences between B2C and B2B, some of which are indefinite. There are cases when
these differences do not apply. For instance, not all B2B products or services are complex, but on
average, they are more complex than B2C products and services.
Some key differences between B2C and B2B are the following:
User Groups (B2B) vs. Individual Buyers (B2C)
B2B tends to market a group of businesses or stakeholders in order to make one sale. This may
include executives, IT staff, product users, and managers.
In B2C, you tend to market and sell to one individual buyer only.
Detailed Information vs. Broad Description
B2B needs to create detailed and longer information for your customers. It may involve
preparing a proposal or giving an exact quote to prospective customers.
B2C only needs to create a short and broad text. For instance, you do not need to prepare a
proposal for someone looking to buy new shoes.
Rational vs. Emotional
B2B companies need to plan more carefully because there are more risks and higher amounts of
money involved.
Emotions do not play a role in the decision-making process as much as they would for B2C
companies. B2C buyers tend to be more spontaneous and even purchase things without actually
having a need for them.
Multiple Pricing Tiers vs. Single Pricing Tier
B2B companies usually offer multiple pricing tiers and levels of discounted prices based on the
quantities and frequency of orders.
B2C companies offer a single tier of pricing for all customers that are only affected by sales or
discounts.
Large Scale vs. Personal Use
B2B focuses its marketing efforts on people that need to buy products or services for a lot of
people. For instance, a company wants to purchase new laptops for all its employees.
B2C market to people who buy it for themselves, family, friends, or other people in their
household.
Longer Sales Cycle vs. Shorter Sales Cycle
B2B has longer sales cycles. This means it needs to sustain over a more extended period before a
sale is made.
In B2C, it only has short sales cycles that make a sale at the very first touchpoint.
Longer Customer Relationships vs. Shorter Customer

Relationships
In B2B, the goal is to establish a long-term relationship with customers. It needs to continuously
maintain the customer to continue to buy products or services from them in the future.
In B2C, although there is a wide market, there are usually shorter customer relationships, and
customers are less likely to be loyal.
Higher Acquisition Costs vs. Lower Acquisition Costs
B2B may have higher customer acquisition costs that are justified with its equivalent higher
prices. B2B products and services are usually solid investments for the company purchasing it.
This is why it takes more resources to generate customers for those products.
B2C usually has lower customer acquisition costs that go along with lower prices.
They have lesser customer acquisition costs since most of the purchases are less costly, more
casual, and sometimes impulsive.
Simpler marketing strategies can generate enough leads and customers for B2C products.
Conclusion
B2C is the process of selling products or services from businesses to individual consumers.
It has evolved over time, and B2C companies have shifted their focus to mobile users in recent
years.
When deciding whether to use a B2B or B2C model, it is important to consider the type of
product or service being offered, the target market, the price of the product or service, and the
desired customer relationship.
Generally, B2C companies need to focus on creating a strong brand and providing an excellent
customer experience.
B2B companies, on the other hand, need to focus on developing long-term relationships and
providing detailed information about their products or services.
Each type of business model has its own advantages and disadvantages, so it is important to
choose the suitable model for your company based on your specific needs and goals.
Business-to-Consumer (B2C) FAQs
What is the business-to-consumer (B2C) model?
Business-to-consumer is a type of business model in which businesses market and sell products or
services directly to consumers.
What is the difference between B2B and B2C?
Business-to-business (B2B) is a commerce transaction between businesses, such as one involving a

manufacturer and wholesaler or a wholesaler and a retailer. Business-to-consumer (B2C) is a type of
business model in which products or services are sold directly to consumers.
What is an example of a B2C transaction?
An example of a B2C transaction would be an individual buying a pair of shoes from an online retailer.
What is a B2C target market?
A B2C target market is a group of individuals to whom a business plans to sell its products or services.
Businesses may have multiple target markets for different products or services.
Why is B2C marketing important?
B2C marketing is important because it enables businesses to reach a large number of potential
customers. Additionally, B2C marketing can help businesses build brand awareness and establish
themselves as industry leaders.
ABOU T T H E AU T HOR
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of
Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy

Financial Ratios Guide, a member of the Society for Advancing Business Editing and
Writing, contributes to his financial education site, Finance Strategists, and has
spoken to various financial communities such as the CFA Institute, as well as
university students like his Alma mater, Biola University, where he received a
bachelor of science in business and data analytics.
To learn more about True, visit his personal website, view his author profile on
Amazon, or check out his speaker profile on the CFA Institute website.
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5/26/23, 2:18 PM Business-to-Consumer (B2C) | Meaning, Types, Pros, & Cons

Home » Financial Advisor » B2B vs B2C » Business-to-Consumer (B2C)

Why Trust Finance Strategists?

What Is Business-to-Consumer (B2C)?

Types of B2C Models

Examples of B2C Companies

B2C Companies and Mobile Purchasing

B2C vs. Business-to-Business (B2B)

What Is Business-to-Consumer (B2C)?

B2C is different from business-to-business, in which the exchange of products or services is

Business-to-Consumer (B2C) Definition | Finan…

Types of B2C Models

Advertising-based companies advertise their products or services on platforms with significant

Vast & Varied Market

Highly Competitive Market

Finding and Retaining Customers

Examples of B2C Companies

B2C Companies and Mobile Purchasing

B2C vs. Business-to-Business (B2B)

User Groups (B2B) vs. Individual Buyers (B2C)

Detailed Information vs. Broad Description

Rational vs. Emotional

Multiple Pricing Tiers vs. Single Pricing Tier

Large Scale vs. Personal Use

Longer Sales Cycle vs. Shorter Sales Cycle

Longer Customer Relationships vs. Shorter Customer

Higher Acquisition Costs vs. Lower Acquisition Costs

Business-to-Consumer (B2C) FAQs

What is the business-to-consumer (B2C) model?

What is the difference between B2B and B2C?

Business-to-business (B2B) is a commerce transaction between businesses, such as one involving a

What is an example of a B2C transaction?

What is a B2C target market?

Why is B2C marketing important?

True Tamplin, BSc, CEPF®

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy

Software as a Service (SaaS)

Key Performance Indicators (KPI)

Sale of Business Contract

12 Questions to Ask a Financial Advisor

Accredited Asset Management Specialist (AAMS®)

Accredited Domestic Partnership Advisor (ADPA)

Connect With a Financial Advisor

Meet Top Certified Financial Advisors

Find Financial Advisor Near You

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