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| All about business to consumer(B2C), advantages/disadvantages, types, and examples.B2C |
What is Business to Consumer (B2C)?
Business to Consumer (B2C) is a business term. As its literal meaning shows, it is selling a product or service between a business to a consumer, that is complete from the business to the consumer with no middle channel. In Business to consumer companies sell their products to the end-user. Such companies are called B2C companies.
It is now more of a business model than a business term. It got boom with the rise of the Internet in the 1990s decades when retailers began selling products to consumers via the Internet.
As a business model, B2C differs from other business models.
The B2C business model focuses on sales and marketing between a business and a non-business user. It is believed that those who buy products for personal use are more interested in buying from B2C companies. Sales data from e-commerce companies confirm that low-cost items sell well.
Although, this model relies on individual deals and excludes the wholesaler. Production firms can earn more by using this model. It is seen; the consumer pays a higher price than the wholesaler.
The B2C model is more beneficial for small businesses. Individual consumers are less concerned about the company’s identity. They are more concerned regarding the brand name and reputation when buying more expensive items.
Types of B2C models.
The B2C model is one of the most widely used complex models. Many well-known companies are using B2C and B2B models at the same time. Here are some popular and mainstream types and examples.
Product-based B2C model
In the product-oriented B2C model, businesses sell products to end-users. The business also works as a supplier with production. He sells his products through his physical outfits and online stores.
An example of a product-oriented B2C company is the shoe brand Adidas, which sells its shoes to its customers through its physical storefront and online e-commerce sites. The Adidas company is a perfect example of a B2C model. A production-based company requires much less initial investment than other types of B2C business models.
Service-based B2C model
The service-oriented B2C model company, as the name implies, provides services to customers. Companies with service-oriented B2C models offer services rather than products and receive compensation.
An example of a service-oriented B2C model would be the lawn mowing business. There are many B2C companies based on services because it requires a less initial investment. They are easier to manage and easier to set up and run B2C companies.
Service-oriented B2C companies can have an online, physical presence, or both.
Software-based B2C model
Software-based B2C companies provide both their products and services. We can also place them under the “Product” or “Service” based B2C model. Software and related services have become so wide and complex that they now require a separate category. The software-based B2C model is divided into the following sections:
B2C model based on “product-focused” software
B2C model based on “service focused” software.
Service Focused “B2C model based on software.
Adobe and Microsoft are great examples of B2C companies based on product-based software. Adobe provides users with software products for editing and creating media and Microsoft documents.
Service Focused “B2C model based on software
Netflix and Spotify are excellent examples of B2C companies based on “service-based software. Both companies provide video and music services to users through the use of the software. These services are subscription-based. Services are flexible according to users and have easy access, which makes them more scalable than software products.
While these are just some great examples of understanding B2C models, it is another field that is being categorized apiece.
Online B2C Models
B2C model based on advertising
The advertising-based B2C model is where online websites generate revenue through advertising. These websites can be blogs or applications. They publish content of interest to users online. User interest content leads to visitors coming and seeing advertisements.
News websites and tech sites fall into this category. The Huffington Post and TechCrunch are the best examples of high-volume advertising-based B2C companies.
Community-based B2C model
Social media platforms are working with community-based B2C models. These are the best examples of online B2C business. Take the example of Facebook, which helps connect and build online communities among its users. Then they take advantage of the community platform to promote their products to make money.
B2C e-commerce
B2C e-Commerce is where businesses complete selling goods online to customers through the use of online marketplaces and stores. The B2C e-commerce model is an important area in e-commerce and is divided into two different sub-models.
Direct Sellers - In this model, consumers purchase goods through the manufacturers’ online store.
For example, Supreme’s online store,
Online Brokers - These are online e-commerce platforms that help bring together sellers and buyers. These platforms do not create the products listed on the site themselves, nor do they provide the listed services themselves.
For example, Etsy
Advantages of B2C Model
Vast and diverse market
Compared to the B2B business model, the market for B2C business models is much larger and more diverse. B2C companies have direct access to multiple customers. The B2C model is best if your goal is to reach a wider market. In contrast, the B2B model has very limited access.
Data-driven
It is difficult to get and use data to predict new trends in the market. B2C has no shortage of data as it receives direct and user feedback. Everyone in B2C is a data trove and this data, when used the right way, gives the B2C company a considerable advantage over others.
Easiest marketing
It’s easiest to market to people than to any other business model. B2C businesses can use social media and content marketing to drive sales and bring in new customers. B2C advertising campaigns are very effective.
Easiest expansion
Expanding a B2B business requires a lot of capital. B2B involves a lot of overheads and expenditures. In comparison, it is much easier to spread B2C to other niches and markets with less capital.
Disadvantages of B2C Model
High competition
B2C businesses can start with less capital. This type of business has low overheads and unnecessary expenditures. For these reasons, B2C businesses are very common and there is an atmosphere of fierce competition between them.
Low-profit margin
B2C business is about buying and selling low-cost items which have very low-profit margins. Compare to B2B business, B2C business has to increase sales to increase profit margins. It takes a long time to recover the invested capital.
The role of a middle man
The B2C sector is full of brokers who receive their commissions. Consumers have to pay more than the actual price. In addition, they are a barrier to establishing a direct relationship between consumers and businesses. This makes it difficult for businesses to get customer data that can be used for future improvement.
Segmentation
Although the B2C market is very wide and diverse. Where this is an advantage, there is also a disadvantage. The sheer number of segments, it makes difficult to decide to start a business.
Let’s look at some examples of B2C companies to get a better understanding of B2C.
Business to consumer(B2C) model example,s
Apple Electronics is a well-known company that designs and manufactures software, hardware, and online services. They make and sell smartphones (iPhones) to laptops (MacBook) to computers (iMacs).
They are a perfect example of a B2C company as Apple completes the process from design to manufacture of electronics and sells to consumers.
McDonald’s is an American fast-food chain with restaurants all over the world and is famous for its hamburgers. It is a business that provides fast food to consumers at its outlets. McDonald’s is cited as one of the largest B2C companies.
Amazon is the world’s largest e-commerce website and marketplace and is one of the four largest tech companies in the world.
Amazon Products, Amazon Original, and Amazon Prime are examples of B2C business.
TOMS is a well-known American-based company that designs and manufactures footwear, sunglasses, and women’s clothing. TOMS sells its products to consumers through its physical stores and online stores.
TOMS is a great example of B2C
Conclusion
The B2C business model is simple and easy to start with less capital. Although the difference between B2C and B2B is small in some areas, there is a B2C model that provides business to consumers. If there’s one business model which serves business purposes, it’s B2C.
If you have any digital skills today, there are hundreds of B2C online companies that can buy or sell your services online.
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