A B2B company is one that offers services and products only to other businesses, with B2B literally standing for “Business to business”. A B2C company on the other hand offers services and products straight to individual customers. They are very different business models that deal with very different types of customers.
Exploring the B2B and B2C difference
The difference between the two business models is not as confusing as it might initially seem. For example, an individual who makes quality wood products has two business models in which to use to sell them. He or she can either find a retailer that will be willing to carry their products and sell them in bulk to them, which would be making use of the B2B commerce model, or set up their own website or shop and sell directly to individuals, usually at a higher price, which would be making use of the B2C commerce model.
Is B2B or B2C better?
There is nothing inherently superior about either the B2B or B2C model, though they both have their own particular advantages and disadvantages and the majority of businesses will be better suited for one or the other.
B2B may be a better choice for a business that makes a lot of products that need to be warehoused, allowing the business to take part in bulk shipping and nurture relationships with other businesses all over the world.
Businesses that deal with smaller numbers of products, or products that have a limited lifespan, may be better making use of the B2C model. B2C businesses tend to be reliant on a larger inventory turnover ratio, where they may be higher profits for individual items, but more work is required in order to sell the same number of products.
The difference is the customer
The nature of the customer is the primary difference between a B2B business and a B2C business. B2B will sell products to businesses that then sell them on again, while B2C sells products straight to the end customer.
Why B2B is more complex than B2C
B2B commerce tends to be more complex than is the case with B2C commerce. B2B buyers need to consult with several departments prior to purchasing, while B2C consumers are only concerned with themselves.
B2B buyers have to take a long-term approach, which requires more research, while the B2C consumer often buys for emotional reasons or on impulse.
B2B buyers are also often dealing with high-value purchases, magnifying the risks involved. B2B buyers also tend to be repeat purchases, making the long buyer lifecycle an important consideration, while B2C consumers may only buy a product once.
B2B buyers also have a tighter remit as their buying decisions are done on behalf of entire companies.
B2C companies also have more competition and need their products to stand out from the crowd more than is sometimes the case with B2B.
Whether B2B or B2C is the better business model for a particular company will be dependent on the industry it is part of, its own particular infrastructure and the goals of those in charge of the company.