Key Differences between B2C and B2B eCommerce to Ensure You Clear and Effective Business Strategies
According to a recent study, 69% of Americans have shopped online, citing the ability to shop anywhere, be it from a bed, from work, from the bar, even from the bathroom, as the biggest appeal of online shopping. Let’s take a look at B2C and B2B ecommerce – the two main ecommerce models in operation today and how they differ from one another.
Overview of B2C and B2B Ecommerce Models
What is B2C ecommerce?
A Business-to-Consumer is a form of business in which the purchase and sale takes place on the internet, of course, customers here are individuals who purchase goods for normal consumption purposes, without generating further transactions. You go online to buy an outfit from an online fashion shop, or you buy a phone from an online store to use, for example, is a B2C model.
To operate this model, businesses, companies and shops need to make an online sales channel such as a website, a Facebook fanpage, or a Zalo. Due to the relatively simple nature, without high technical requirements, as well as the legal and negotiating relations, any business or store can choose B2C as its main business model.
The main feature of B2C ecommerce model is its customer is an individual user. These users only need to go to the internet and buy products to serve their needs but not generate additional transactions. Because of individual users, there is no need to negotiate too much between the two sides. Because all conditions of purchase, prices, policies, returns and goods are updated in details on the sales website.
For example, if you create a website to sell groceries, you only need to upload pictures, product information, prices, shipping terms, online payment, etc. Your customers will visit the website and follow the instructions to place an order. The remaining work is just sitting at home and packing for customers, with no extra effort.
A Business-to-Business is a form of business in which trading activities between the two businesses take place on e-commerce trading floor, or ecommerce channels of each enterprise. When the B2B business model is called, that is, when a customer purchases from a business, the company will continue to use that product for resale to end-user customers.
The customer in the B2B model here is not an individual, but a company, a business, a store, so the value of the contract, the order is often very large, can not be traded on the ecommerce site but is required to sign an external contract (in case of necessity).
The most common B2B ecommerce trading sites can include Lazada, Tiki, Adayroi, Shopee, etc. in Vietnam market, etc. and Amazon, Taobao, Alibaba, Ebay, etc. in other countries. Any business that needs to sell goods can go to the sites and also those who want to buy. It is the trading activity under the auspices of the exchange, so fraud and fraud are very unlikely, bringing openness and transparency.
The next popular B2B model is the one that specializes in distributing goods, in simple words, wholesale. This model is more popular in fashion and apparel industries, with many websites selling wholesale clothes all over the country. It can be considered almost a wholesale market like an offline business model in the traditional way. Shops and small shop owners across the country will go to the site of that garment factory, select products, quantity books, prices and then proceed to pay for the order.
Almost every industry has an ecommerce website like this. This can be considered the most popular B2B model in Vietnam today, than the intermediate B2B model. Because the psychology of the business when they often want to contact, meet their customers directly rather than coming through a third party.
5 Key Differences between B2C and B2B Ecommerce
1. Customer profile
A typical consumer wants a streamlined shopping platform, it stands to reason that if convenience is a major attraction of shopping online, buyer friction has to be kept to a minimum. We have all experienced a buggy shopping cart on a website or a cumbersome check-out system. With a B2C relationship, the buyer is typically one person and the aim is to get that person to the check-out entering their credit card details, as efficiently as possible.
This is not the case in B2B e-commerce, the buyer is motivated by professional reasons, it’s their job to find a supplier. The primary focus for them is the bottom line, rather than convenience. A single consumer has complete domain over their credit card, while a buyer might need approval from a committee or manager.
Often B2B platforms allow multiple accounts from a business, with a managerial account to give final approval to a transaction, after they are satisfied with the nuts and bolts of the deal.
2. Business negotiation
Selling an outfit, a phone, a perfume bottle, you don’t need to negotiate too much with your customers, that’s the difference when applying a B2C ecommerce model because the terms already exist. It doesn’t matter whether you buy it or not, there are still other customers. But if you apply the B2B business model, you need to know how to negotiate skills, such as negotiating prices, quality of goods, the regime of payment, shipping, debt collection and so on.
3. Customer relationship
A B2B e-commerce model relies on long-term relationships with customers, once happy with their suppliers, a business will often re-order multiple times. This means the platform needs to be tailored to make reordering as convenient as possible. While this should also be implemented in B2C platforms, the sporadic and one-off nature of transactions means relationships between the supplier and customer are more fleeting.
The long-term dynamics of a business to a business relationship means that as customers, businesses have a much greater lifetime value compared to a retail consumer. The vastly greater average price point of B2B vs B2C e-commerce transactions reinforces this dynamic. While harder to convert into sales, a business will potentially order greater quantities, at a higher price point for a longer period of time.
4. System integration
For successful online business, ecommerce website needs to be fully integrated to the system of the business. However, if you do business with a B2C model, your website will not need to be integrated with too many complicated selling features, but vice versa, when you have a B2B model, you need to integrate a complicated trading system because you can’t always take good care of your big customers with automated systems, like email, quotes, payment gateways, contracts, shipping, etc. Make sure the system always operate automatically without human supervision!
5. Marketing strategy
The B2B e-commerce model typically has a narrowly focused target market, for example, Airbus will seek to appeal to airline companies or defense departments and will need to tailor their customer interaction appropriately. A B2C business will have a much broader demographic, targeted to young mothers or basketball players perhaps, but casting a much wider net.
It is clear from this example that there is no catch-all approach to e-commerce. When a buyer from a business is sourcing products or services, we can assume he will be knowledgeable about the benefits and will instead be focused on the product’s features. Whereas a high-street consumer is much more emotionally driven, which means the benefits of the product should be clearly displayed and easily digested on the platform.
Hopefully, this article will help you better understand the two ecommerce models B2B and B2C. Regardless of the business model, you need an online sales channel, we always recommend that you create a perfect website as the main sales channel, and the remaining channels should use it as a platform to capture potential customers, then marketing will be much better.
Indeed B2B customers increasingly expect to receive the consumer experience, simple features like a search function and an around the clock support desk have become the norm. Industry giants Alibaba, lead the way in B2B e-commerce, without losing out on the B2C market. The crucial factor remains the end user experience. Developing a platform, that is intuitive for the user and integrates with existing systems, is a necessity in the e-commerce market.
For over 7 years, fram^ has been making a name for itself as a reputable and trustworthy custom software development company, especially in eCommerce development services that serve all purposes. We cater to your every need in operating business online, from consultancy, website building to post-deployment maintenance and support. Contact us today whether you have any questions or want to explore how we can help you!