Business-to-Business (B2B) and Business-to-Consumer (B2C) are two separate business models that are used by almost every existing business, company and enterprise to trade in any market, sector or industry worldwide. Firstly, let’s discuss regarding basic difference between these two business models and further shall know some features and categories.
Difference between B2B and B2C Models
B2C |
B2B |
| This model is based on a business selling goods directly to the consumer | This model is based on a business selling goods and services to another business or firm |
| They tend to purchase without thinking or pre-planning | They tend to decide on careful thought and pre-planning |
| There is usually only one person making decisions | The decisions are not made based on an individual |
| They tend to develop short-term customer relationship | They usually tend to maintain a long-term relationship |
| They have fixed prices | The prices vary with the market and other factors |
| They promote pre-delivery payments | They promote post-delivery payment |
| The deliveries are focused on speed rather than punctuality | The deliveries are focused on punctuality |
| In B2C the buying and selling cycle is short | In B2B, the buying and selling cycle is lengthy |
Business-to-Business (B2B)
It is a process in which a business makes commercial deals or transact with other businesses, to further expand and grow.
Features of B2B
- This kind of commercial deals or collaboration is found in companies or business that are sourcing materials for producing an output
- A business sometimes needs the support or services from another business for its operations and functioning, which is why the term ‘Business-to-Business’ is used
- An example for business to business is various businesses employing accountancy firms, which helps them to audit their finances and other transaction-related helps
- In business-to-business, the primary function of the company is to help or support the other organisation or firm by fulfilling their materialistic needs and operational requirements
The targeted audience of business to business is way different than other models present in the market scenarios. They target the business that need support to fulfil their needs of raw material or consultation with regards to business or to increase their sales and profit
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Categories of B2B
The business to business model comprises of two categories
a) Vertical B2B model
- These are the models which mainly focus on the manufacturing process
- Vertical business models have two different categories, named as upstream and downstream
- The most commonly found relationship is between producers and retailers. They can have a relation between the upstream suppliers, which forms a strong sales relationship
- A vertical website may be comparatively similar to an enterprise’s online site
- For example, we can take Dell, which is a well-established company which collaborates with upstream suppliers for meeting their requirement of microchips and printed circuit boards
- Through the website, the business can promote their products rapidly and more efficiently, which helps in the transactions, as they provide a clear picture of the products to the customer
- This website provides an overview or a clear picture of the product the retailer wants to sell, which attracts more and more customers and thus increasing the cash flow
b) Horizontal B2B model
Horizontal B2B is a transaction model for the intermediate trading market. It processes similar transactions from various industries on a single platform and creates trading opportunity for both the buyer and a seller.
- It involves companies that do not own the product and that do not sell the products
- It is an online solution to bring all the sellers and buyers together online. The advance platform helps buyers in finding information about sellers and the relevant information about the products via website.
Business-to-Consumer (B2C)
This term business to consumer is used when the products and services are directly sold to the consumers who are the end user of the products and services. Companies which are connected directly to the consumer are known as business to consumer (B2C). Let’s understand further the B2C model in detail.
Business to consumer was traditionally used for mall shopping, eating out at restaurants, pay per movies, and various activities which brought consumers directly to the seller. But with the rise of the internet, it created a whole new B2C business channel in the form of e-commerce or selling goods and services over the Internet
Many of the major companies survived the shakeout when all the businesses started converting to online sales by changing their business model.
Features:
- Any retailers who rely on B2C have to maintain good relations with the customer to ensure that they return. The companies have to elicit an emotional response to their marketing for customers
- Traditionally, many manufacturers sold their products to retailers with physical locations. Retailers made profit by adding the price they paid to the manufactures plus additional charges
- This changed once the internet came, new people in business arose that promised to sell directly to the consumer hence removing the middleman, the retailer and lowering prices
- B2C is now mostly referred to those companies which sell their products and services through the internet
- Online B2C became a threat to traditional retailers who profited from adding a mark-up to their prices