B2B vs B2C: What Is the Difference Between the Two Models?

A new business needs to define its business model clearly in order to build and grow effectively over the long term. Many different business models exist today, each with its own characteristics, and businesses and startups need to know them to choose the right business strategy. Among them, the two models B2B and B2C are getting a lot of attention. Let's Mona look at these two business models and how they differ in the article below.

About B2B

What is B2B?

B2B is short for Business To Business. It refers to business, trading and transactions between one company and another. It covers e-commerce activity as well as real-world transactions, from consulting and quoting to signing contracts and buying and selling products and services.

As more and more businesses choose to use e-commerce websites as their main payment methods , the B2B model keeps growing. In recent years, the share of websites aimed at businesses and organizations, compared with websites aimed at consumers, has risen to between about 76.4% and 84.4%.

B2B business models

Based on the nature of the business and how it operates, the B2B model splits into 4 main types:

Seller-oriented B2B model

This type of B2B is very common in Vietnam. A company owns the e-commerce site and supplies goods, products and services to a third party, such as consumers or retail and manufacturing businesses. These businesses therefore usually supply products in medium to large quantities.

Buyer-oriented B2B model

This model is less common in Vietnam, because most Vietnamese companies want to sell their own products to partners. In many other countries, though, it works well. The businesses import products and goods from manufacturers. Sellers then log into the website to get quotes and distribute those products.

Intermediary B2B model

This model acts as a bridge between buyer and seller. Transactions happen through an e-commerce marketplace. It is very common in Vietnam, with names such as Lazada, Tiki, Sendo and Adayroi…

Any company or business that wants to sell its products sends them to this intermediary channel to advertise and distribute. Individuals and organizations that want to buy browse and order, protected by the intermediary and bound by its rules.

Collaborative commerce B2B model

Similar to the intermediary B2B model, but collaborative commerce is more centralized and owned by several businesses. It appears as electronic trading platforms such as online markets, e-marketplaces, commercial exchanges, internet exchanges and trading communities…

About B2C

What is B2C?

B2C is short for Business to Customer. It is a very common business model in e-commerce. Unlike B2B, where the parties to a transaction are businesses, B2C is a transaction between a business and customers, who are consumers.

The purpose of the B2B model is to give businesses the best solution to improve their operations, while the purpose of B2C is to satisfy consumers' needs. In short, B2C is aimed at individual consumers, not at organizations or units.

B2C business models

Direct seller

This is the most common B2C model today and the one most people know. Customers buy from online retail stores. The seller can be a company, a business, a small manufacturer, or simply a general store selling goods from many manufacturers online.

Online intermediary

In this model you do not own the product. You are only a bridge connecting buyer and seller, the people who actually own the product.

Fee-based B2C

Netflix is an example of this B2C model. It charges users who want to access the content it manages. Sites like this usually offer some free content too, but it is fairly limited. To watch a richer, more complete range of programs, you have to pay the provider.

Community-based B2C

Social media platforms such as Facebook, Lotus and Instagram are typical examples of this B2C model. They build an online community by bringing together people with the same needs and interests. This lets a company's marketing team promote and sell products directly to consumers.

Advertising-based B2C

In this model, the operators let users access a website with free content. The traffic those users bring becomes the tool the business uses to promote its products and services.

How the two business models differ

B2B and B2C are the common business models that make the market economy run as it does today. They are two completely different models with different characteristics. People in business need to understand them and tell them apart.

Differences between B2B and B2C

B2B is a business selling products and services to other businesses, while B2C is retail from a business directly to consumers. The differences show up in specific points such as:

• Volume of goods per transaction: B2C deals in small quantities for the needs of individual customers. B2B deals in much larger quantities.

See also: Personal selling (Personal Sales): pros and cons

• Transaction process: B2C has a very simple, fast process: the customer pays in cash and takes the goods right away. B2B has a fairly complex process with many intermediate steps. B2B companies go through negotiation and price bargaining while building long-term trust with the customer.

See also: Secrets to building customer trust and loyalty

• Reaching customers: B2C reaches customers with large data sets and higher conversion rates. B2B companies, meanwhile, need strong persuasion skills to get customers to buy their products and services.

See also: 5 simple steps to define a customer profile

• Conditions for building a brand: B2B calls for building a long-term, mutually supportive relationship, while B2C relies on good advertising and promotions.
• Value of each transaction: Profit per B2C transaction is much smaller than in B2B, because B2B order quantities and values are much larger.

As you can see, both business models have their own pros and cons. Depending on needs and how they are carried out, each can bring a certain profit to businesses and investors. To apply B2B and B2C fully and get the most from their potential and advantages, besides studying each model closely, you can also turn to the support of sales management software popular today, such as: MONA Ecommerce, POS365, and others. These sales software packages are built with useful feature sets that cover what is needed to run and optimize the main types of business today. They help a business stay “ontrack” and grow revenue effectively.

That covers the basics of the B2B and B2C business models. Both models are still growing, and each has its own strengths. To grow with this trend, businesses need a clear strategy and the right direction. We hope this gives you a more concrete view of the 2 business models and how they differ.

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• What is B2E? The B2E model in e-commerce
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