Business to Consumer (B2C) Meaning
A business-to-consumer, or B2C, business model is one in which a company sells a service or product directly to a consumer.
Familiar examples of B2C companies include Amazon, Walmart, and other companies where individual customers are the end-users of a product or service.
B2C is the alternative of the business-to-business model (B2B) in which a company sells their products first to another business, which will then sell the product to another business or a customer with a mark-up.
Companies can either be B2C, B2B, or a hybrid of both.
B2C as a business model typically involves a higher volume of clients, but a lower revenue per client with shorter sales cycles.
B2B businesses typically deal with a smaller number of clients that make larger transactions with longer sales cycles.
Examples of the hybrid model are SaaS companies (Software as a Service), which often have many different tiers of service, tailored to companies or individuals, depending on the service.
5 Types of B2C Models
There are five distinct models that B2C companies use to move their products in a digital space.
1. Direct sellers are one of the most common, selling a product directly to consumers.
This includes small online businesses as well as large retailers like Microsoft and Apple that sell exclusively in-house products.
B2C E-Commerce giants such as eBay and Etsy are examples of online intermediaries.
3. Advertising based B2C is becoming increasingly common as more and more people exclusively consume online media.
In this model, a company purchases advertising space on a platform that receives large volumes of traffic, such as YouTube or Reddit.
Targeted advertising uses criteria such as internet searches, content viewed, and demographic to strategically place advertisements in front of promising customers.
4. Community-based B2C takes advantage of online, like-minded communities occurring on media platforms and beyond.
Since many of these communities form around a shared interest or physical location, companies can identify promising leads more easily.
5. Fee-based B2C models require payment to access a company’s content.
Subscription services like Netflix, Hulu, and Lynda are prime examples of this model.
List of B2C Example Companies
Examples of B2C companies include:
- Priceline Group
As you can see from the list above, the most common example of modern B2C business are direct sellers, or manufacturers that are able to sell directly to consumers.
Many online retailers, such as online clothing stores, follow this model.
How B2C Business Took Over the Market
Before the dotcom boom of the late 1990’s, one or more B2B businesses were tied to every physical storefront.
Through the internet, these B2B businesses gave way to simpler B2C systems, through which customers could purchase from manufacturers directly.
This financial streamlining eliminated the middle man, causing the B2C model to become the modern standard.
As the early growth of the internet gained momentum, more and more stores switched to doing business directly with consumers over their websites.
In particular, sites like Amazon drew much traffic away from stores.
Many physical retailers were forced to shut their doors permanently, essentially driving B2B middlemen into extinction.
Today, the B2C model is the norm.
The B2B model is still in use, but often it only applies to businesses that make products specifically for use by other businesses.
Manufacturers of industrial or medical equipment, for example, still use the B2B model.
B2B vs B2C Differences
In general, businesses are quite price-sensitive, and care little about the presentation, whereas consumers are less price-sensitive and care more about the presentation.
When selling chocolate to a business, that business cares little about the packaging in which it arrives.
When selling to a consumer, however, the packaging is a large point of emphasis.
View our B2B vs B2C page for more.
B2B and B2C Hybrid Models
Companies that are considered B2C companies often have aspects or branches that are also B2B.
A company whose focus is B2C may also have departments dedicated to B2B offerings.
For example, Microsoft is traditionally thought of as B2C, however Microsoft’s cloudhosting service Azure is a B2B service.
Additionally, if a seller is a retailer and its own manufacturer, the business is likely at least partially B2B.
What Are the Advantages of B2C?
By selling directly to customers, manufacturers are able to avoid price markups on their products, especially in the digital realm.
Some companies are also able to deliver products or services upon customer request, which dramatically reduces overhead.
Websites can reach a significantly larger customer base than stores can, which is crucial for a B2C model to succeed.
For this reason, the world of B2C marketing has become vital to the success of online businesses.
The lack of physical storefronts also negates the risk and cost of property, keeping a company’s assets more liquid, and greatly increasing the ease with which company changes and expands.
Business-to-Consumer (B2C) Marketing
Business to consumer marketing is a practice by which a company uses a platform, for example Facebook, to find communities of people that seem like good prospective buyers and advertise their products directly to that group.
For example, a company that produces clothing from recycled plastic fabrics may find and advertise to a group dedicated to reducing plastic waste.
B2B (Business-to-Business) Model & Examples
A business to business, or B2B, model is one in which a manufacturer first sells their product (at wholesale prices) to a retailer, who then sells the products to consumers (at retail prices).
Examples of B2B businesses include Cisco Systems and auto parts manufacturers like Denso Corp. which sell to car manufacturers.
Many SaaS companies (software as a service) like Salesforce are also considered B2B since the software offered is intended to service businesses.
However, SaaS companies are actually more of a hybrid model since businesses function as the end consumer.
C2C (Consumer-to-Consumer) Business Model & Examples
A consumer to consumer business, or C2C, is a platform that allows individuals to find and transact with each other.
Etsy is an example of a C2C business, as is eBay.
The internet has facilitated the proliferation of C2C businesses, but there are pre-internet examples as well; auctions, for instance.
B2G (Business-To-Government) Business Model & Examples
Some companies focus on servicing the government and are considered a “B2G” company.
An example of a B2G company is Northrop Grumman which has 90,000 employees and focuses on aeronautics, defense, and cyberspace.
As is the case with all business models, companies may have its primary focus be B2G while having aspects have a B2B or B2C business.
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Business-to-Consumer (B2C) FAQs
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True contributes to his own finance dictionary, 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.