The e-commerce industry has a number of phenomena, elements and segments that can make things difficult to comprehend and understand the working of the industry. B2B and B2C are such segments of the e-commerce industry as well that can get us really confused sometimes.
While most individuals in the business and commerce industry can understand the difference with no hiccups at all, for some of us it can get pretty confusing. And that is exactly why we have worked out the difference between two very common segments of the business world: B2B and B2C.
But before we come to the difference between B2B and B2C, let’s start with the basics: What does B2B and B2C really mean? Read below to understand the two concepts and how both are different from each other.
What does B2B mean?
B2B or Business-to-Business is a category of e-commerce in which the exchange of goods, services and information and related transactions are carried out between businesses. The B2B transactions usually take place either between two companies, retailers, wholesalers and retailers, organizations, and more.
The participating organizations in the B2B model hold similar authority, position and decision-making power and both get benefits in one way or the other. B2B exchanges are carried out through different types of websites including products supply and procurements exchange platforms, company/organization websites, information websites, vertical industry portals (also known as the specialised portals), and brokering websites.
In the B2B business model, one business sells their services or products to another business and these transactions are carried out through different departments or buying committees. The B2B model is important for the sustenance of all businesses as each business requires certain services or products to operate effectively and grow.
Here’s an interesting statistic: According to reports by the CMI, 78% of the total B2B business use lead conversions as a measure of their performance.
What does B2C mean?
B2C or Business-to-Consumer is that category of e-commerce where the exchange of goods, services, and information, the process of buying and selling is conducted between businesses and consumers. The consumers are the end-users of the goods and/or services that are bought and sold. The sales are done directly to the consumers and there are no intermediary parties involved in the model unlike B2B.
B2C further comprises mainly 5 models for targeting and approaching consumers online. These models are: direct sellers, advertisement-based models, fee-based models, community-based models, and online intermediaries.
The major differences between The B2B and the B2C are with regard to the transaction costs and size of the purchase, the sales processes and the decision-making parties that carry out the business transactions. B2C transactions tend to be more spontaneous and impulsive and the sellers tend to use more emotional triggers to motivate the consumers to buy the products.
Businesses working on the B2C model tend to focus on ongoing market trends and the buying habits of the consumers. Monitoring their competitors’ practises is also important for them to ensure they stay on top of their game. For example, according to reports to Statista, over 132 million people are likely to resort to voice assistants in their searches in 2021 and the B2C businesses have started using voice assistants to connect better with their customers.
How is B2B different from B2C?
Now that we have understood the basic meaning of the B2B and the B2C models, let us now explore the differences of the two models. Some of the major ways in which B2B is different from B2C are given below:-
Transaction costs and size
According to the research and reports by deconetwork.com the worth of the B2B marketplace in comparison to the B2C marketplace is 1.5 to 1.7 times more. The AOV or the Average Order Value is the primary reason for this difference. The B2B AOV tends to be about seven times more than that of the B2C AOV and the transaction size tends to be much bigger in case of B2B.
A simple understanding of the same would be that the products in B2C are directly sold to the consumers while in B2B, sales are between businesses. More often than not, products may be bought on a wholesale basis. For this very reason, the transaction costs and size in B2B models are more than in B2C. For example, the size of purchase is much bigger and more expensive when selling computer systems to a business or company as compared to individual customers.
Decision-making process and parties
A key difference between the B2B models and the B2C models is the decision-making process and the parties that make these decisions. The intent and the reasons for the purchase also differentiate the two concepts. Purchases of the B2C kind tend to be more impulsive and the decision-making parties are the end-users or consumers. The purchases in the B2C model are usually a result of want as compared to need and are more emotionally-driven. However, consumers may take more time in reaching the final decision when the product or service is expensive.
The B2B purchases are generally more considered and rationally-driven purchases that are rarely driven by impulses. The decision is taken by more than one person and the transaction takes place after several sign-offs from a business’s stakeholders. Besides, the transactions in the B2B model are also based on a set of rules and guidelines and the evaluation is done on the basis of the ROI. The duration of the transaction is also much longer than in B2C and depending on the size of the transaction, the time taken to complete the purchase may take longer.
Lifecycle of Customers
The lifecycle in case of customers of both the models are similar in many ways. They have the same processes such as product and brand awareness, engaging customer interest in your services and solutions, and ensuring the customers make the final purchase. These processes are important for customer retention.
However, the key difference when it comes to the customer cycle is the support and effort in the sales of the product. Businesses generally put in more effort, investment, and support in sales made directly to the customers. The lifecycle of the customers in the B2B model tend to be much longer than the customer lifecycle in a B2C model because mostly the B2B purchases tend to last longer between businesses.
Branding is another area where the B2B and the B2C models are significantly different from each other. Branding practices are more common in the B2C retail markets and the B2C businesses put in more efforts in branding than their B2B counterparts.
The B2B e-commerce websites tend to be more conservative while the B2C websites are more diverse in their nature. This can be determined on the basis of the type of content on their platforms, colours used for their brand, and the imagery used. All these factors are important to meet the expectations of their customers and to attract them towards their brand.
We hope that the article helped you understand the basic differences between the B2B and the B2C models in the e-commerce sector. Tell us of any more differences you have observed between the B2B and the B2C models in your day-to-day life in the comments section!
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