B2B2C — what it is, how it works, and why everybody wins
The business-to-business-to-consumer (B2B2C) model isn’t as straightforward as other ecommerce models, like business-to-business (B2B) or business-to-consumer (B2C). But if you’re leading either type of business, you may find that neither model really works for you or your customers. You may even be exploring alternative models to take your business to the next level but don’t know if B2B2C is the right choice.
This post will help you decide by covering everything you need to know about B2B2C and how it compares to other ecommerce models. We’ll explore what sets it apart, the benefits of adopting it, and more.
- What is B2B2C ecommerce?
- B2B2C vs. other models
- How B2B2C works
- Why B2B2C?
- Pros and cons of B2B2C
- B2B2C examples
- B2B2C solutions
What is B2B2C ecommerce?
B2B2C stands for business-to-business-to-consumer and is a business model where two companies provide complementary goods or services to reach the same end consumer. This business partnership frequently exists between a business that creates products or services and a business that handles the customer transaction — from customer service to orders, fulfillment, and shipping.
Many B2B2C models involve online retailers and marketplaces, like Amazon for physical goods or app stores for software and digital tools. Other examples of B2B2C models are partnerships between manufacturers and delivery service providers.
The business that provides the full B2B2C experience is an intermediary between manufacturers and customers. This position helps brands reach more customers efficiently, improves the customer experience, and boosts both companies’ revenue. The B2B2C model also creates new business opportunities for intermediary businesses and brand growth for both parties.
B2B2C has grown in popularity over the past few years due to big changes in the way customers find products and services online. The continued rise of remote work and social distancing concerns reinforce the need for this end-to-end model.
B2B2C vs. other models
B2B2C shares traits with other business models but it’s important to understand the differences so you can determine which is best for your business.
Business to business (B2B)
B2B is when a business creates materials, products, or services and sells them directly to other businesses. For example, a coffee manufacturer that only sells its products to a grocery store or a software company that designs tools for business use are both B2B businesses.
B2B models are the first step of the B2B2C process.
Business to consumer (B2C) and direct to consumer (D2C)
B2C and D2C business models both sell products or services directly to consumers. B2C businesses are usually the middle link in a B2B2C chain from a manufacturer to the end user, like the grocery store that buys products from several vendors to sell to consumers. B2C businesses were among the first to adopt ecommerce platforms and practices.
But ecommerce has made D2C businesses more popular as well. In a D2C model, manufacturers and vendors sell directly to consumers, without the retailer. Digital marketplaces have made it easier for vendors to connect directly with end users.
Channel partnerships are business arrangements where companies partner to provide a product that is re-branded or white labeled. For example, the grocery store that stocks a certain brand of coffee might also ask that manufacturer to produce additional products that get a generic store-brand label.
Channel partnerships are very similar to the B2B2C model because both involve selling a brand’s product through an intermediary. The key difference is that B2B2C relationships don’t mask either of the businesses involved. Consumers know that they are buying a product made by one business and delivered through another.
How B2B2C works
In a B2B2C model, the company in the middle sells a service to businesses and products to consumers. For example, an online retailer like Amazon sells its ecommerce store hosting to other businesses and its quick delivery services to the customers who purchase through their marketplace.
There are a few ways a B2B2C partnership can work, depending on the industries of both businesses.
- B2B2C retail. A B2B2C business can purchase another business’s products and sell them to customers through their own channels. The retailer handles every aspect of order fulfillment and customer service process.
- B2B2C service. A B2B2C business can act as a service provider for a retailer — offering conveniences like order fulfillment and delivery that the store does not normally provide. A common example is a third-party business that fills or delivers orders for restaurants and grocery stores. If the customer has any questions or concerns about their order, they take it up with the app’s customer service.
- B2B2C financing. Payment splitting services are another popular B2B2C arrangement. B2B2C businesses handle a customer’s entire transaction, offering various payment options, and processing the transaction. The B2B2C provider pays the manufacturer or retailer the entire amount, and the customer pays the B2B2C in installments.
The B2B2C model has many benefits for both businesses and their customers.
Benefits for the manufacturer
With a B2B2C model, manufacturers can increase their reach without overextending their current resources. Overhead costs to partner with a B2B2C intermediary are less than what they would spend to expand services or reach on their own.
Businesses that create products or services can also better focus on what they do best — creating goods their customers love. These businesses can outsource the majority of their customer transactions to a B2B2C to handle the ecommerce hosting, orders, fulfillment, shipping, and customer service.
Another key benefit for producers is access to more consumer data. For the B2B2C model to work well, both businesses need to share buyer data. Combined data helps them offer better customer experiences that lead to increased sales and brand growth for both parties.
Benefits for the distributor
Distributors are able to sell to consumers without having to develop their own products or goods. They can offer a wide variety of products without the investment of designing or creating them, resulting in a wider customer reach.
While some B2B2Cs only charge one party for their services — either the manufacturer or the consumer — others earn a bit from both. This allows some B2B2Cs to diversify income by generating revenue from two different streams.
These businesses also get access to important consumer data that they can use to make their customer-facing services and product offerings better. For example, an online retailer selling other brands’ products can use the manufacturer’s customer data to offer special discounts, tailored product recommendations, and more. The better the customer experience, the better the partner experience too.
Benefits for the consumer
Since a B2B2C business can increase the number and types of products they sell, the consumer gets access to a wide variety of products and brands all in one place. This allows the customer to conveniently compare prices for the same product from different manufacturers and brands.
Businesses sharing data benefits consumers as well. The B2B2C model improves the customer’s overall shopping experience with more personalized recommendations, like tailored offers, bundled products, and discounts.
Finally, B2B2C models offer more services to consumers. Most people can now get their favorite fast food meal delivered because of B2B2C businesses, and individuals who are busy or concerned about social distancing can get grocery orders processed and delivered.
Pros and cons of B2B2C
When considering a new ecommerce model, consider the pros and cons of each to find which one will help your business reach its goals. Below is a quick summary of the pros and cons of the B2B2C business model.
Pros of B2B2C
As discussed above, some of the biggest pros of choosing the B2B2C model include:
- Larger customer bases for manufacturers and producers
- Storage and shipping logistics outsourced
- A wide variety of products available in a single marketplace
- Savings and convenience for consumers
- More options for consumers
- Improved customer experiences with a brand and its products
- Scalability for both businesses in the partnership
- Brand recognition and growth for both businesses in the partnership
- Reduced overhead costs for the manufacturer or producer
Cons of B2B2C
No business model is without challenges. Here are a few difficulties that come with B2B2C models as well.
- Data sharing challenges can hinder marketing and sales techniques in B2B2C relationships and put many of the benefits at risk.
- Manufacturers rely on the intermediary to represent the product well, handle the entire transaction carefully, and provide excellent customer service that preserves and grows the brand.
- Manufacturers experience a slight reduction in profit margins since they’re paying for the B2B2C services.
- There are more stakeholders involved in decision making, which can slow processes.
Here are some examples of B2B2C businesses to help you see this model in action:
Amazon — a B2B2C retail example
Amazon is one of the most popular B2B2C businesses. The company sells ecommerce hosting to a variety of manufacturers and brands and houses a large stock of products in warehouses around the country.
Other businesses benefit from a wider audience than most could ever create on their own. Customers who buy through Amazon often get expedited shipping options, 24/7 customer service, and more.
Instacart — a B2B2C services example
Instacart sells its end-to-end order fulfillment services to grocery stores and other retailers. Instacart’s local shoppers put orders together, communicate with customers about out-of-stock options and other issues, and check out. Then they or another delivery person drops off the order directly to the customer’s door. Any questions or concerns about their order from a particular store are diverted through Instacart’s customer service.
This allows customers to do some of their most time-consuming shopping on the Instacart app wherever they are. It also allows grocery stores and retailers to offer order fulfillment and delivery without building those processes.
The App Store — a digital B2B2C retail example
Apple offers a marketplace for software developers to sell apps compatible with iOS and MacOS. Apple users can search for tools they want and download apps that meet their needs. Anytime someone purchases an app, the developer makes money and Apple takes a percentage.
Developers and creators are able to get their software to a wider audience and users get a large selection of apps and tools to choose from.
Katapult — a B2B2C financing example
Katapult is one of many ecommerce financing services available for larger purchases. When a manufacturer partners with Katapult, the icon appears as a financing option on their product pages. When a consumer makes a purchase, Katapult pays the manufacturer and the shopper pays Katapult in installments.
Businesses with higher priced items — like furniture, electronics, or automotive manufacturers — are able to sell to a wider audience when they can offer more flexible financing options. Consumers get quicker access to products than if they had to save money before purchasing.
Kayak — a digital B2B2C services example
Kayak is a travel booking site that hosts listings for different hotels, motels, and other accommodations, as well as flights, cars, and experiences. Customers can book all these services through Kayak’s site or app and manage their reservations.
The companies that host the accommodations get a wider audience and they can outsource booking and customer service. Consumers benefit from side-by-side pricing comparisons for all of their travel needs.
When a B2B2C relationship is streamlined and both businesses perform well, everyone benefits. Manufacturers expand, intermediaries sell more, and consumers get greater customer experiences.
If you’re a manufacturer or retailer that’s ready to expand, consider how partnering with a B2B2C company might help grow your reach faster and easier than adding services or marketplaces of your own. If you’re a growing B2B2C, look for businesses that support the same target audiences as the ones you already serve.
Adobe Commerce has everything you need to build and scale a B2B2C ecommerce business. With Commerce, you can build your online store, track inventory, and manage every stage of the customer journey. This platform also integrates seamlessly with online marketplaces, like Amazon, thanks to its Amazon Sales Channel extension.