What is Business to Consumer (B2C)?

Discover more about Business to Consumer - what it means and how it affects your business. Includes an overview and frequently asked questions.

Updated on July 15th, 2020

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Business to Consumer (B2C) refers to the process of a company selling products and services directly to the consumers who are the ultimate buyers of its products or services. This business model is generally found in manufacturing, hospitality, beauty, and foodservice industries.

Understanding B2C:

Business to consumer sales are often seen as everyday transactions. For example, when you eat out at a restaurant, purchase a new phone or clothing item, or pay for gas, you are performing a B2C transaction. However, over the last decade, the rise of technology has changed the way B2C transactions are performed. Now, consumers can easily get online and purchase everything from books to video games to food and hot beverages.

Examples of B2C Transactions:

  • Businesses in the beauty industry often perform B2C transactions. For example, when a customer walks into a hair salon and requests to have their hair done, the salon is performing a service for a fee. This is a B2C transaction because the customer is the ultimate buyer.

  • Technology companies like Apple and Samsung rely on B2C transactions to make a profit. Besides selling products and services to other businesses, they also perform B2C transactions when they sell their products (smartphones, tablets, etc.) to consumers.

  • Hospitality businesses perform B2C transactions every day. For instance, when a restaurant owner provides food and service to consumers for a fee, they are performing a B2C transaction. While restaurants will often perform B2B transactions as well, they are dependent on their B2C sales to make a profit.

Examples of B2C Companies:

Netflix.

Netflix is an online streaming platform that provides its service to mass-market consumers. With a monthly subscription, consumers gain access to a wide range of movies, documentaries, and television series. The company also produces original content for consumers. By offering curated and self-produced content to viewers, Netflix is performing a B2C transaction.

Amazon.

Amazon is a multinational technology company that specializes in e-commerce, cloud computing, digital streaming, and artificial intelligence. When consumers purchase Amazon products like Alexa, they are performing a B2C transaction. In addition, consumers pay for Amazon's online service.

Starbucks.

Starbucks is a retail company that sells specialty hot beverages, cold drinks, and food to its consumers. This is an example of a B2C company that relies on its consumers to make a profit.

H&M.

H&M is a retail store that sells clothing to mass-market consumers across the globe. H&M markets their clothing, home decor, and beauty products to consumers, who would then purchase an item and complete the B2C transaction.

Spotify.

Spotify offers a subscription-based music streaming service to mass-market consumers. With this service, consumers gain easy access to millions of songs, the latest albums, and podcasts.

What challenges do B2C companies face?

The biggest challenge of the business to consumer model is that businesses must maintain good relationships with their customers to ensure they remain viable. This means they'll need to maintain a steady flow of sales. For example, if consumers decide to stop buying food and beverages from McDonald's, the B2C company would not be able to operate.

In addition, the B2C model has more limitations than the B2B model. For example, a company like Apple can sell technology to businesses and smartphones to consumers, making it a B2C and B2B company. However, for B2C businesses like restaurants, salons, or hotels, the only way to make a sale is by appealing directly to the every day consumer.

How To Make B2C Sales As A Small Business:

1. Use different sales strategies.

Your sales strategy is the method you choose to improve sales and lead generation. There are a variety of sales strategies available, including the discount or "freebie" strategy, where you offer consumers a free demonstration or discount, or the customer-focused strategy, which includes mapping out the customer's journey and adjusting your sales approach to meet their needs.

2. Advertise your business.

The traditional forms of marketing a business are ideal for B2C companies, especially for businesses like restaurants, salons, hotels, flower shops, and retail stores. Advertise your services in local news outlets, hand out business cards, and create promotional products. In addition, you can hang up wall displays, posters, and distribute flyers to showcase your business's latest specials or new products.

3. Use social media.

For B2C companies, potential leads can be found in person or online. By using your social media activity and influence, you instantly gain access to a mass-market of consumers. In addition, if your business is operated online like Netflix and Hulu, most of your advertising should be online.

Start by making sure your business's social media accounts remain active, with regular updates about the latest products and services you offer. Most businesses open accounts on Facebook, Twitter, Instagram, and LinkedIn.

4. Invest in CRM software.

Customer Relationship Management (CRM) software is generally used to manage business-to-consumer relationships, despite its appeal to many B2B companies. With this software, businesses have access to customer data and business information, allowing management to track leads, employees, marketing strategies, and sales transactions.

Our Recommendation:

For businesses that require an affordable and feature-packed CRM software, we recommend our top pick HubSpot. With this software, you gain unlimited access to everything your business could need to organize, track, and manage leads and customer relationships.

B2C e-Commerce:

B2C e-commerce refers to an online-based business model where businesses facilitate sales transactions with consumers. With the rise of technology, many businesses are opting to open an online store instead of a physical store. Whether it's online retail stores or streaming services, anyone can get online and purchase an item or service directly from a business.

For example, if you buy a clothing item or book a hotel room online, you are instantly conducting a B2C e-commerce transaction. The benefits of B2C e-commerce include global reach, low overhead costs, and access to trackable data to better understand the customers' needs.

FAQS:

What is the definition of business to consumer?

The business to consumer model refers to transactions between businesses and consumers. In this model, a business will sell their products, information, or services to consumers.

What is a business to consumer example?

When a business sells their products or services to a consumer, they are performing a B2C transaction. For example, when someone purchases a coffee from Starbucks, they are conducting a B2C transaction.

What are the benefits of the business to consumer concept?

  • B2C businesses are able to attract online consumers, widening their reach and reducing overhead costs.
  • The B2C model attracts a vast and varied target market. This results in more sales than both B2B and B2G models.

What is the difference between b2b and b2c sales?

A B2B businesses sells products and services to other businesses, and a B2C businesses sells products and services directly to consumers.