When it comes to running a business, there are two different paths you can take: B2B and B2C. A B2B business involves selling products or services to another business, whereas a B2C company focuses on marketing and selling to the end consumer.
Both can be on a local or a global scale, and in some cases, a company can choose to sell to other businesses as well as the end consumer. This blended business model can help companies diversify their income, but it can also be quite difficult to market a B2B & B2C business online.
In this post, we’re going to discuss how each of these models looks in terms of eCommerce before we break down the key differences between the two.
We will talk about aspects related to the audience, marketing tactics and more.
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Whether your business uses a B2B or B2C model will determine the way that you market to your audience, structure your businesses, make important decisions and more. That’s why it’s so important to have a clear understanding of which model your business uses.
B2B is short for “business-to-business.” As the name implies, it focuses on selling products and services to another business or company.
On the other side of the spectrum, you have B2C businesses. B2C is short for “business-to-consumer,” which is a business that sells directly to consumers.
Both of these business models can be very profitable and sustainable. Neither is better or worse than the other. They are simply different.
Here is a quick comparison of these general business models so you can get a better idea of the characteristics of the difference between the two.
As you can see, B2B and B2C eCommerce businesses are different in many ways. From the type of buyer to the presence in the online world, each model has distinct characteristics.
Let’s take a closer look at the 7 key differences between the two.
The most distinct difference between the B2B and B2C business models is the type of buyer. As we covered, B2B businesses sell to other businesses and B2C businesses sell to consumers.
This is pretty straightforward, but the consumer vs. business distinction is an important one that will guide each aspect of the two business models that we compare for the rest of this post.
“Consumers” and “businesses” are very general ways to describe the different buyers for B2C vs. B2B. Within each of these general audiences, there are wide ranges of more specific buyers.
In B2B, for instance, you could be selling raw materials to manufacturers, ready to sell products to retailers and more. For B2C, you’ll mostly be selling products that have already been manufactured, packaged and branded.
Choosing a niche is important because it allows you to get very specific on who you serve. It will help you to better develop your product to meet their needs, and it will help you with your marketing strategies.
When you’re targeting consumers, you could narrow your audience down by age, gender, interests, needs and more. For example, clothing is often sold to men, women, juniors, boys, girls and babies. Everybody wears clothes, but the same fit and style of clothes won’t work for everybody.
Some B2C retailers have options for all of these different types of consumers, but the growth of eCommerce has made specialized shops even more popular. For example, stores like Carter’s sells baby and kids’ clothes, while Anthropologie focuses on women’s clothes.
Of course, you still have your general stores that serve many different markets like Walmart, Target and Amazon that sell it all, but these are wildly successful because of strategic partnerships and years of building their brand’s reputations.
The range of possible audiences looks a little different if you’re selling to businesses. When you’re targeting other businesses, you’ll likely choose your audience based on their specific goals. For example, your niche could be the mega-general stores like Walmart or Target, or you could serve smaller online boutiques.
If you sell raw materials, your audience would be manufacturers.
Each of these examples represents a super slight percent of all of the possibilities. Both B2B and B2C businesses have the opportunity to choose from thousands of different target markets in many industries. The key to success is choosing the market that you can serve the best.
The decision-making process that consumers follow is generally different from what businesses go through when buying items to stock their shelves. The motivation to make a purchase is different in each case. The main influence on motivation is the expected return on investment.
Businesses typically buy items to resell or to create something else to sell. Orders are placed with the intention of using the items purchased to make money.
B2B buyers typically have a good idea of how much profit they could make on the products that they are buying from you, and they buy accordingly. The demand for the products that they are buying also comes into play. They want to make sure that they purchase the optimal amount of stock so that they don’t sell out too quickly or overbuy.
There is rarely buying on a whim in the B2B space since, for most businesses, every purchase is carefully mapped out.
Consumers, on the other hand, aren’t typically buying with the goal of making a monetary return on investment. People purchase things that they want or need. They buy things to make their lives better in some way or another.
In this case, “better” could be described as healthier, happier, more attractive or more fit. It could also relate to some sort of social status or internalized desire.
Many consumers are subject to impulse buying, which is making a purchase without putting much thought into it. Many B2C stores, both online and those with physical storefronts, are designed with this in mind.
Think about the check out at the grocery store. Candy and trinkets are on shelves along the lines, making it easy to toss one in your cart to add another dollar or two to your receipt.
There is a major gap between the average total cost on an order for B2B and B2C businesses. Although there is a lot of variation from product to product, cost per unit is typically lower when selling to another business as opposed to a consumer, but a business will buy a much higher quantity.
B2B sellers often offer discounted wholesale rates when selling products in bulk. Minimum order quantities are set in place to ensure that buyers don’t buy in small quantities to take advantage of the low wholesale prices.
On the other hand, B2C sellers price their items to be sold in small quantities.
For example, if you manufacture and sell televisions that cost $100 to make, you could sell one unit to a consumer for $200 or 1000 units to another retailer for $175,000. When you sell to another business with a minimum of 1000 units, your profit is 25% less per unit. However, you can count on much more profit from one sale than you would if you were selling a single unit to a consumer.
Since B2B and B2C eCommerce businesses target very different audiences with different needs, decision making processes and budgets, the way each reaches their ideal buyers is very different.
When it comes to marketing your products, you’ll have to consider where your ideal customer will be looking for your products.
Digital marketing is huge right now, and many B2C businesses reach their audience on social media. However, there is so much noise on social media platforms, so B2C marketing typically requires a lot more creativity to rise above and stand out.
For B2B businesses, you’re targeting a buyer or team of buyers who are buying on behalf of a business. These clients probably are not looking for sellers on social media. The key here is to have a team of salespeople that fosters relationships with buyers for businesses in your target audiences.
Online shopping is becoming more and more popular. eCommerce was originally more prevalent in the B2C space, but B2B retailers are moving online, as well.
B2C businesses have used both online and in-person models for many years now. However, more and more physical storefronts are closing down, pushing consumers to buy online.
Moving towards eCommerce makes sense since operating online exclusively saves businesses tons of money since they don’t have to pay rent in malls and plazas or hire employees to work in their stores. Additionally, the ability to shop from the comfort of their home with speedy delivery makes things very convenient for buyers.
Many B2B businesses still used more traditional approaches until recently. COVID-19 is a driving force for the rapid digitalization of B2B marketplaces. Business had to be conducted online since the in-person tradeshows and showrooms that many buyers relied on were no longer a possibility.
B2B buyers and sellers both report that they now prefer online transactions over the traditional alternatives, so this trend will likely remain beyond the pandemic.
Alibaba.com has been at the forefront of the shift towards eCommerce in the B2B space. Our end-to-end platform and additional professional services provide wholesale distributors, exporters and other B2B sellers with everything they need to grow their businesses online.
Since the B2B and B2C business models are so different, eCommerce looks a bit different in each. Buyers and sellers both have different needs in these areas, so choosing a suitable eCommerce platform with the appropriate tools.
B2B sellers typically need to be more hands-on with their buyers, so specialized communications portals with features like in-app calling and automatic translation are valuable on online B2B marketplaces.
Online B2C marketplaces, on the other hand, typically don’t require much one-on-one communication with buyers, so these features aren’t necessary.
In-house shipping is another resource that is more valuable to B2B businesses. Small shipments to consumers are reasonable to outsource, but it could be more cost-effective to ship orders in bulk quantities. That means that access to in-house shipping service is a major plus for B2B sellers.
Aspiring entrepreneurs who are starting from square one are faced with many decisions in regards to what they will be offering and who they will offer it to. One of those decisions is whether they will start a B2B or B2C business.
Many entrepreneurs who are looking for a problem to solve—as opposed to those with a developed idea—wonder whether it is better to go the B2B or B2C route. Our answer? There is no better or worse. It comes down to preference and goals.
Both types of companies have the opportunity to be very lucrative. The success of your business will depend on your ability to provide a solution to an issue.
If you create a product that nobody wants or needs, it doesn’t matter who you’re selling to, because nobody will buy it.
Understanding the differences between B2B and B2C eCommerce will help you to better structure your business.
Alibaba.com is a leading global B2B marketplace, helping to instantly connect business buyers with manufacturers and wholesalers around the world. If you are a manufacturer, wholesaler or a B2B company looking to increase orders, or offer your products on an international scale, Alibaba.com can help you to scale up and sell to buyers around the world.
Here are some of the top reasons why B2B businesses choose to sell through Alibaba.com.
So, if you’re looking for an online platform as a new B2B business, Alibaba.com is waiting. Want to know more about how Alibaba.com can help grow your sales online? Speak to an expert now.