B2C e-commerce is a rapidly growing industry with unique challenges and opportunities. Discover key strategies and best practices to succeed in the competitive world of B2C e-commerce.
What is B2C E-commerce?
B2C e-commerce refers to digital commerce where an online business sells its products to the general public. The popular short-form B2C stands for ‘business to customers,’ also referred to as retail e-commerce. All the sales are made online. However, it doesn’t include shipping and logistics.
Shopify is one of the best B2C e-commerce examples and forerunners of the B2C e-commerce business model. As one of the booming industries, Statista has predicted a yearly growth of 56% per year, with an estimated global market cap of US$ 8.1 Trillion, within 2026. Currently, the global e-commerce B2C industry is valued at US$ 5.2 Trillion.
What is the Difference Between B2C and B2B in E-commerce?
B2C and B2B are the most popular business models, often used interchangeably. While B2C stands for business-to-customers, B2B expands to the phrase business-to-business. Here are some of the significant B2B vs B2C e-commerce differentiators one should know.
- B2B encompasses services and products, while B2C is limited to products.
- The customer journey for a B2B is filtered by several layers of decision-making, primarily by different individuals in an organization. B2C only witnesses the decision-making and consideration of a single individual.
- Corporate factors such as the Return on Investment (ROI) and the efficiency of an organization’s solution are considered in B2B. However, in B2C, individual results are weighed while creating an emotional connection with the product.
- Short-term purchases and impulse buying primarily define B2C. While in B2B, a long-lasting relationship is maintained.
- Engagement processes like sales calls, conferences, and networking parties are the bread and butter of B2B. On the other hand, B2C relies more on traditional engagement, such as advertising. However, with time, the mentioned gap is decreasing substantially.
- As cited by Foundry, 75% of the B2B buyers are C-level executives of a company. Furthermore, the designation of the buyer is considered for B2B marketing data analytics. However, e-commerce B2C targets the general audience, and the related data analytics does not wholly rely on buyer designation.
D2C vs. B2C
D2C is an acronym for the widely popular business model, Direct to Consumer. With the outbreak of COVID-19, the e-commerce industry has grown substantially. During this time, the D2C business model got its first big break.
D2C is a type of B2C retail sales strategy. In the case of both models, a product is sold directly to the end-user or the consumer. B2C and D2C are often considered the same, and for self-explanatory reasons. However, there are some nuanced differences one should be aware of.
- As the term ‘Direct’ suggests, a D2C business heavily relies on shipping and logistics since mediators are omitted. Products are sent directly to the customers. On the other hand, the B2C e-commerce model might depend on mediators such as retailers, wholesalers, and other seller models.
- A D2C business has more freedom in terms of pricing since the median seller model is negated. However, a B2C company has relatively less space when compared to its counterpart due to heavy reliance on several vendor models.
- The operational cost in a D2C model is a tad bit higher than that of a B2C business since the vendor models are replaced by a dedicated in-house or outsourced third-party company.
- A B2C e-commerce business has longer sales cycles when compared with a D2C model. It also results in higher transit times in a B2C industry, which can be included as a differentiating factor.
Benefits of B2C e-commerce
The benefits of an e-commerce B2C closely align with its digital attribute. While inheriting the advantages of traditional B2C commerce, it exhibits a more evolved approach.
- Reduced store cost: Previously, every business was required to have an offline or physical store that required significant upfront investment. The ability to replace the need for a physical store with an online counterpart saves one from a considerable upfront cost. Furthermore, the recurring cost of employees and store maintenance is reduced.
- High exposure: Unlike a traditional business, a B2C e-commerce brand is not limited by local traffic. Being in front of a global audience is a unique benefit every e-commerce B2C brand enjoys.
- Detailed and automated customer analytics: A good understanding of the end user is pivotal to the success of any brand. Owners of a B2C e-commerce brand now have access to advanced real-time data of their customers. It allows them to fathom their future customers’ needs and pain points.
The origins of B2C for E-commerce
E-commerce traces its history back to 1969, but e-commerce B2C officially started with the introduction of its major e-commerce service providers. Four years after the launch of world-wide-web (www), NetMarket made the first online transaction. In 1994, the purchase of Sting CD Ten Summoner’s Tale from NetMarket marked the unofficial beginning of B2C e-commerce model. An industry currently valued at US$ 5.2 Trillion, as per Statista.
Limitations of B2C e-commerce business model
B2C e-commerce has witnessed a fair share of criticism due to varying reasons. While the model is lucrative, most drawbacks are related to the evolving industry landscape.
- Return policies: Return policies vary from one B2C e-commerce company to another. As most companies have strict return policies, reverse mental conditioning is witnessed. Most customers are afraid to try new brands due to the lack of a transparent return policy. Some other facts, such as wrong product information on the website, also trigger such an issue.
- Increased chances of data theft and cyber attacks: Global exposure is one of the biggest USPs of the B2C e-commerce model. It further suggests that most people have access to the internet. With more data footprints in several e-commerce sites, the number of cyber-attacks has increased abruptly. It further paves the way for the risk of data loss, impersonation, theft of credit card details, and unlawful tracking.
- Shipping costs: The B2C e-commerce business model heavily relies on shipping and logistics. Furthermore, with cut-throat competition in the market, free shipping has recently acquired considerable traction. It leads to a decrease in the profit margin for every product sold. A solution to this issue is an apparent increase in the price or a well-negotiated contract with the shipping company.
B2C Storefronts Vs. Internet Retailers
The traditional business model required the manufacturer to sell their products to a physical retail store owner. Usually, the retailers mark up the products’ prices to ensure a steady profit flow. Location was considered a big issue, and the ones who owned a physical store were in an advantageous position. Similarly, after the internet revolution, the advantage belonged to the few companies that acquired a robust digital presence.
The concept might sound similar, but a B2C storefront must deal with several overhead expenses if internet retail is considered. Some of them are
- The cost required for the creation and maintenance of a physical store.
- Limitation to a specific locality.
- Less control over price since it was sourced from a manufacturer.
However, manufacturers were given a chance to cut through the cue after the fourth industrial revolution. It saw the creation of several brands owned by manufacturers who successfully sold products directly to the customers. Benefits such as low entry costs, global exposure, and better control over pricing played a pivotal role. It led to the gradual evolution of the entire industry, with a change in customer behavior.
Despite all the perks an internet retailer enjoys, e-commerce B2C comes with a new challenge. Unlike a B2C storefront, an internet retailer must ship the products to the given destination. Therefore, this resulted in the inclusion of shipping and logistics into the equation, which gradually became an inherent part of the internet retail product cycle.
B2C in the Digital World
B2C in the digital world is similar to a traditional business with a few crucial differences. A physical store is replaced by an online website, which costs a fraction of the latter. The perk of local marketing that accompanies physical stores has now evolved into a global presence.
The inclusion of shipping and logistics has been witnessed since B2C in commerce requires fulfillment through shipping. Apart from shipping and logistics, several areas have seen significant cost-cutting. Therefore, B2C in the digital space can be touted as a shallow barrier to entry model, where one has more control over the product’s pricing and colossal market exposure.
Types of B2C E-commerce
A direct seller is a product manufacturer looking to create and leverage an online presence. In such a case, one has more control over the pricing, and higher profit margins are usually witnessed.
Online intermediaries are the replica of a traditional B2C model with a slight twist. These are mediators who do not own the product themselves. They connect the manufacturer and buyer for a specific commission on every sale. Much like a traditional B2C model, the markup price is replaced by royalty.
An advertisement-based model refers to blog pages that combine organic content with banner ads. These platforms are very informative and often boast a high volume of traffic. Often touted as a media site, Huffpost can be considered a good example.
A community-based model is a platform that focuses on creating or bringing together a specific community. Once such a community is built, marketers and product owners can advertise their products. Meta is an example of a community-based model.
Do B2C and B2B E-commerce Have Any Similarities?
Similarity 1: Multi-channel matters
The current marketing landscape is best leveraged with a multi-channel approach. Each channel has evolved to engage audiences with different interests. Companies opting for a multi-channel approach get higher brand exposure. Furthermore, the presence of a B2C or a B2B company in other channels portrays their unparalleled dedication to serving better.
Similarity 2: People are people
The decision-makers of different companies are regarded as end users in a B2B setting. On the other hand, the general public is targeted in the case of a B2C approach. Nevertheless, the primary goal of any service or product is to solve the problems of the end users by understanding their pain points. Irrespective of the audience group, this product-solving psychology is similar to the compared business models.
B2C E-commerce Challenges
Some of the biggest B2C e-commerce challenges have cropped up due to the perk of availability. While providing lucrative growth opportunities, every e-commerce B2C owner can be expected to face the challenges mentioned below.
- Data theft and cyber attacks
- Product relevancy and findability
- Lack of traffic
- Providing a well-optimized mobile viewing experience