The term business-to-consumer (B2C) refers to the process of selling products and services directly between consumers who are the end-users of its products or services. Most companies that sell directly to consumers can be referred to as B2C companies.
B2C became immensely popular during the dotcom boom of the late 1990s when it was mainly used to refer to online retailers who sold products and services to consumers through the Internet.
As a business model, business-to-consumer differs significantly from the business-to-business model, which refers to commerce between two or more businesses.
Business-to-consumer (B2C) is among the most popular and widely known of sales models. The idea of B2C was first utilized by Michael Aldrich in 1979, who used television as the primary medium to reach out to consumers.
B2C traditionally referred to mall shopping, eating out at restaurants, pay-per-view movies, and infomercials. However, the rise of the Internet created a whole new B2C business channel in the form of e-commerce or selling of goods and services over the Internet.
Although many B2C companies fell victim to the subsequent dot-com bust as investor interest in the sector dwindled and venture capital funding dried up, B2C leaders such as Amazon and Priceline survived the shakeout and have since seen great success.
Any business that relies on B2C sales must maintain good relations with their customers to ensure they return. Unlike business-to-business (B2B), whose marketing campaigns are geared to demonstrate the value of a product or service, companies that rely on B2C must elicit an emotional response to their marketing in their customers.
B2C Business Models in the Digital World
There are typically five types of online B2C business models that most companies use online to target consumers.
- Direct sellers. This is the most common model, in which people buy goods from online retailers. These may include manufacturers or small businesses, or simply online versions of department stores that sell products from different manufacturers.
- Online intermediaries. These are liaisons or go-betweens who don’t actually own products or services that put buyers and sellers together. Sites like Expedia, Trivago, and Etsy fall into this category.
- Advertising-based B2C. This model uses free content to get visitors to a website. Those visitors, in turn, come across digital or online ads. Basically, large volumes of web traffic are used to sell advertising, which sells goods and services. Media sites like the Huffington Post, a high-traffic site that mixes in advertising with its native content is one example.
- Community-based. Sites like Facebook, which builds online communities based on shared interests, help marketers and advertisers promote their products directly to consumers. Websites will target ads based on users’ demographics and geographical location.
- Fee-based. Direct-to-consumer sites like Netflix charge a fee so consumers can access their content. The site may also offer free, but limited, content while charging for most of it. The New York Times and other large newspapers often use a fee-based B2C business model.