What is Business-to-Consumer (B2C)?
Business-to-consumer – “B2C” – refers to commerce between a business and an individual consumer.
While it applies to any type of direct-to-consumer selling, it has come to be associated with online selling, also known as ecommerce or etailing. Ecommerce took off significantly in the late 1990s, with the 1998 holiday shopping season identified as the first “e-tail Christmas.” That year, Amazon surpassed more than $1 billion in sales for the first time.
In recent years, the growth in business-to-consumer online sales has created significant challenges for traditional “brick-and-mortar” businesses and services that are losing in-person sales to online competitors.
As a result, many brick-and-mortar businesses are establishing their own online presence to stay competitive. This has created opportunities for consumers, who can now enjoy the convenience of online ordering while saving on shipping expenses with certain retailers by picking up or returning orders to the online retailer’s brick-and-mortar stores.
Business-to-Consumer Sales Models
In online business-to-consumer sales, there are generally five business models.
1. Direct Sellers
This is the type most people are familiar with – they are the online retail sites where consumers buy products. They can be manufacturers such as Gap or Dell or small businesses that create and sell products, but they can also be online versions of department stores selling products from a wide range of brands and manufacturers. Examples include Target.com, Macys.com, and Zappos.com.
2. Online Intermediaries
These “go-betweens” put buyers and sellers together without owning the product or service. Examples include online travel sites such as Expedia and Trivago and arts and crafts retailer Etsy.
3. Advertising-Based
This approach leverages high volumes of web traffic to sell advertising which, in turn, sells products or services to the consumer. This model uses high-quality free content to attract site visitors, who then encounter online ads. Media outlets that have no paid subscription component, such as the Huffington Post and Observer.com, are examples.
4. Community-Based
This model uses online communities built around shared interests to help advertisers market their products directly to site users. It could be an online forum for photography buffs, people with diabetes, or marching band members. The best-known example is Facebook, which helps marketers target ads to people according to very specific demographics.
5. Fee-Based
These direct-to-consumer sites charge a subscription fee for access to their content. They typically include publications that offer a limited amount of content for free but charge for most of it – such as The Wall Street Journal – or entertainment services such as Netflix or Hulu.
Businesses selling directly to consumers should take into account how their target customers like to shop and buy products like theirs as they explore various business-to-consumer options, whether those possibilities involve in-person or online transactions.