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. This image is what the majority of people think of when they hear the term e-commerce, but mention B2B e-commerce or B2C, C2C or C2B and their eyes might glaze over. With e-commerce thriving across most sectors, let’s take a look at the main models in operation today and how they differ from one another.
B2C vs B2B e-commerce
A business to consumer interaction is how we traditionally see commerce. While this market is growing online, the majority of transactions still take place offline in bricks and mortar establishments, the balance, however, is shifting. The B2B e-commerce model, businesses supplying goods and services to each other, is also an age-old concept. E-commerce is a nuanced, multi-faceted world, with different approaches optimal, depending on who is interacting with whom.
Key difference – #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 business to consumer 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.
Key difference – #2 – Marketing
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.
Key difference – #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.
Less traditional e-commerce models – C2C vs C2B
Most people will have a broad understanding of how B2B e-commerce and B2C e-commerce operate, from their own experiences online or on the high street. With consumer to consumer e-commerce and consumer to business e-commerce models, they may have less of an intuitive understanding of how they function.
Consumer to consumer
It may not be the first model that springs to mind when considering the different forms of e-commerce, but it is an age-old formula that just about everyone understands. Auction houses and classified ads provide the historical context for the C2C online marketplace. eBay and Craigslist serve as two prominent examples of platforms successfully bringing this interaction into the digital age.
This model’s success depends on its commission from each transaction and thus needs a high volume of users to be profitable. While there are examples of global success, there are many more stories of failed models, which proved unsustainable due to a lack of users or security issues.
Consumer to business
Perhaps the least obvious model, but again, one that has well-known use cases and success stories. This interaction is when a consumer provides goods and services to a business, allowing the company to extract value from the consumer and vice versa. This can be done in the form of providing data to the company through reviews or affiliate marketing channels. A prime example of this model in action is reverse auction sites where consumers list the price they want to pay for a product. Also on sites such as Upwork, where consumers offer their services to businesses, in an inverse of the usual relationship between the two.
What is the best approach?
E-commerce is clearly a broad church. Developing a platform that best serves your end user and creates a positive experience is pivotal, regardless of the function of your business. Many specialist software developers offer free consultations on what type of custom e-commerce platforms they can develop and how they can tailor it to your business’ own nuances.
In today’s ever-evolving market, many companies find that they need to operate across more than one of the models that we have looked at and developing and operating separate platforms can become a strain on resources. A manufacturer that primarily operates in the B2B e-commerce market, may find that appealing to consumers as well, albeit at greater quantities than normal, can allow them to benefit from even greater economies of scale.
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.