B2B Vs B2C (With Definitions, Examples And Differences)
By Indeed Editorial Team
Published 27 September 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Business-to-business (B2B) refers to a company that directly sells its goods or services to another organisation, whereas a business-to-consumer (B2C) company offers this to individual clients. While a B2B company focuses on building relationships with other businesses, a B2C company attempts to develop a strong customer base. Learning the distinctions between these two models can help you understand them better and find out the benefits of each one. In this article, we provide a useful B2B vs B2C guide, discuss their differences and share some examples.
B2B Vs B2C
Below is a B2B vs B2C guide to help you understand the models better:
What is B2B?
B2B is a linear, channel-driven model focusing on working with businesses. In B2B, one enterprise offers products, services or information to another directly. Both companies have similar power to conduct negotiations. Friendly, presentable and convincing sales teams focus on relationship building, which they employ along with their strong communication skills to conclude profitable agreements with clients.
What is B2C?
B2C is a consumer-centric model that focuses on selling products directly to customers. Companies with these operations may have varied organisational structures and multiple business mediums. Online shopping or e-commerce is an example of this. A company using this model offers an affordable channel for consumers to make their purchases. This results from the absence of a middleman, lowering the prices of products and maintaining the profit margins of a seller. Efficient marketing teams prepare excellent product advertisements to make a B2C company profitable and gain a competitive advantage.
Examples Of B2B And B2C
Below are some examples of each of these models:
One of the core business functions of wholesale enterprises is to manufacture and sell in bulk. For instance, suppose there is a company that manufactures audio parts and markets these to other businesses that build speakers and sound systems. In this example, the wholesaler is selling its products, and retail enterprises are making the purchase, where these retailers may then sell their audio products to consumers. Therefore, the wholesaler has a B2B operation, while the retailer is a B2C organisation.
B2B service providers
Some enterprises offer solutions to their clients, such as security, technology and finance solutions. These personalised solutions are often services that fulfil the varied requirements of clients. For instance, suppose there is an accounting firm that has plans to expand its business outside the city. To accomplish this, the firm's sales and marketing teams develop promotional campaigns. They send emails, write blogs and update social media channels, while the other members of the team present seminars to gain bigger clients. In this example, the firm works with other companies, which makes it a B2B service provider.
B2C direct seller
Direct sellers market products or services directly to consumers. To sell their products, they may utilise a physical store, a website or a mobile e-commerce application. For instance, suppose there is a nutraceutical brand that produces and sells various health supplements. It sells directly to consumers via a website and mobile application to eliminate the requirement of a wholesaler or other intermediaries. This helps the brand to register more profits. In this example, the brand is a B2C company, as it only sells its products to customers.
Fee-based B2C company
Having a fee-based B2C business means that the company charges visitors to access its premises or visit its website to use its products or services. The fee structure may vary, depending on the business model. For instance, suppose there is an internet service provider (ISP) that offers broadband to a locality. People opting for the ISP's broadband pay a monthly or yearly subscription. In this example, the ISP has B2C operations, as it is delivering services directly to users.
Differences Between B2B And B2C Operations
Below are some key differences between the two operation models:
Flexibility in pricing
A B2C company often follows a static pricing system. This means that if two customers intend to buy a product or service, irrespective of the time or day, the company offers them the same price. In comparison, pricing flexibility is greater in B2B operations, as there are deals between two organisations. These deals typically vary in price, largely based on negotiations. A B2B company focuses on building long-term relationships with its clients, so in this model, customers may get special prices.
Flexibility in structure
There is more flexibility in sales options when a company has a B2B operation. These companies often have employees who are responsible for managing personalised client accounts. There may be multiple rounds of negotiations, where the seller and buyer discuss the offer extensively before agreeing. The seller may also reduce prices if it benefits both business entities. These deals can involve selling and buying products in a bundle, which may result in a significant overall sale. In comparison, the transactions of a B2C company may be impersonal due to their typically being no salespeople involved.
Long-term buyer commitment is another factor that influences prices. If a client is ready to make such a deal, the seller may offer exclusive contracts in addition to great prices. This factor is absent in B2C operations, as a seller seldom presents these terms to its customers. This is also the case because an individual consumer has no requirement for a sales representative to buy a product from a shop or website.
Impersonal and personalised online sales
Out of the two models, impersonal online sales are more prevalent in B2C companies. They efficiently utilise websites or mobile applications to sell their products or services. They reach potential customers and expedite the selling process by letting customers make purchases quickly using online portals without having to visit physical stores. B2B companies also use the internet, but mostly to publish pricing, share products and post contact information. The latter is more personalised, with stakeholders and decision-makers meet to conclude deals.
Before acquiring a client, the sales team of a B2B company conducts in-depth research to learn more about the client, their requirements and business goals. The sales team representatives arrange meetings to talk about their organisation's package and compare it to what their competitors are offering. Research is a significant part of these sales because it may prove profitable to both the buyer and the seller. There exists a discretionary input given by multiple professionals, along with large transactions that are part of these sales.
In a B2C transaction, an individual's product or service research may have limitations. For an individual consumer, research targets product features or what other brands offer at the same price. In addition, many clients purchase due to an emotional response, immediate requirement or convenience.
B2B sales focus on practical considerations. In this model, a buyer buys a product or service based on their requirements. For instance, there may be discounts, coupons or sale offers that encourage consumers to make purchases. These sales focus on making purchases logically and assessing how a product may benefit business operations. Conversely, a B2C model focuses on consumers who buy from an emotional response. This is one of the most important deciding factors for a consumer to make a non-essential purchase.
Another key difference between the two operations is utilising conventions for conducting trade. Although some B2C companies may take part, typically, B2B companies make the most of conventions and trade fairs. These conventions are an important marketing strategy for B2B companies, as they display their goods or services and offer interactive product presentations.
There are many representatives of businesses who attend such conventions. They review products or services and ask the sellers questions to understand the features of varied commodities better. They also connect with sales team members. Once the fair is over, the two parties may choose to discuss an agreement and conclude it if the deal is favourable for both business entities.
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