B2B2C stands for business-to-business-to-consumer. This business method arose as a disrupter that came out of growing ecommerce opportunities. Prior to this, businesses sold products as business-to-business or business-to-customer.
Where the line isn't clear between those traditional models, B2B2C rests. It's not a distribution model where goods go from one business to another business to the customer—although some relationships that include those transactions can be B2B2C.
Consider, for example, the cereal you find in a grocery store. General Mills makes the cereal, and the product goes through the manufacturing and distribution channels to arrive on grocery store shelves throughout the country. This isn't really a B2B2C relationship.
In a true B2B2C relationship, Business A partners with Business B on a deeper level than simply providing goods for end customers. The businesses share customer data and benefits such as brand awareness and increased customer loyalty.
Comparing B2B Models to B2C and B2B2C
To better understand B2B2C business models, look at where the lines tend to be drawn between it and B2B business models and B2C business models. Remember that the lines are constantly blurring, and there can be overlap.
You might notice that ecommerce businesses can be B2B companies, B2C companies, or B2B2C companies. Some ecommerce businesses, like Amazon, do a bit of all three.
B2B2C is not just a channel partnership
Because the lines are fairly blurry, it can easily get confused about what is and isn't a B2B2C model. The existence of distribution channels, intermediaries, or even channel partnerships doesn't automatically make for a B2B2C business.
Typically, B2B2C models are about more than just pushing products through to the end users. There's a symbiotic relationship between the partners involved. To understand what B2B2C might look like, consider the example of Handy.
Handy is a company that offers cleaning, home installation, and renovation services. However, in the business's early days, most marketing focused on cleaning. It was easier to connect B2C with people who needed cleaning services because that is a recurring service homeowners and others need frequently.
Things changed when Handy started installing furniture in partnerships with Walmart and Wayfair. It moved from a B2C business to a B2B2C business. Walmart and Wayfair benefited by selling more products to end customers who wanted the products and installation services. Handy benefited from growing sales and increased awareness of its other service lines.
What Are Some Benefits of the B2B2C Business Model?
The example of Handy demonstrates how physical and online retailers can benefit from B2B2C models. Here are a few other benefits for everyone in the relationship:
- Lower customer acquisition costs: Handy didn't have to pay for online marketing, or chase leads to score thousands of new customers. Instead, it offered a service that Wayfair and Walmart couldn't offer customers themselves. Often, the result of B2B2C relationships is increasing acquisitions at decreasing costs.
- Increased exposure and opportunities, even for small businesses: B2B2C partnerships can increase brand recognition for one or more companies involved. Consider the case of the buy now, pay later (BNPL) credit platform Affirm—without its relationship with B2B2C ecommerce platforms, no one would know what it was.
- Better customer experience on ecommerce websites: Digital retailers and other businesses can easily integrate greater flexibility and additional services to up the ante on customer experience — without investing in new products or R&D themselves.
- Direct access to consumers: Most B2B2C businesses end up with some direct access to consumers, even if a partner business first acquired the customer. This lets the businesses continue to engage with and sell to the customer. For example, once someone makes an ecommerce purchase with Affirm, they're also an Affirm customer. Affirm can market other financing services to them.
- More sales channels: Because B2B2C partners share access to customers, these relationships create new sales channel opportunities for one or more businesses.
What Are Some Limitations of Business-to-Business-to-Consumer Models?
B2B2C models can be complex to set up and operate. In many cases, they rely heavily on digital transformation and an ecosystem with ample automation and other technologies.
At least one of the businesses in question—typically the ecommerce platform, in relationships that involve one—must have a high level of digital maturity. It must have complete control over its processes and customer data to successfully integrate a partnership.
B2B2C also requires partners that are not in a competitive relationship. The Handy example works because Walmart and Wayfair didn't want to offer installation services for customers for various reasons. Neither company offers cleaning and renovation services, but they sell items that might be helpful with such services. This is a great recipe for a B2B2C partnership.
Examples of B2B2C Partnerships and Models
Handy and Affirm are just two examples of B2B2C relationships that work.
Another is Instacart, which offers delivery services in conjunction with grocery stores. The grocery stores are already set up to provide goods to customers. Most major chains aren't set up to deliver those goods to people's homes, so Instacart, grocery stores, and consumers benefit from this relationship.
When it comes to online marketplaces taking advantage of B2B2C, one great example is the Apple App Store. With this model, Apple creates an ecommerce solution and partners with thousands of individual app development businesses.
Both Apple and the developers make money from each sale, but without the centralized App Store, the developers would have a harder time connecting with consumers and selling their products.
Is B2B2C Right for You?
Yes, a B2B2C relationship has many advantages, including better customer experiences and access to new customers. However, this isn't the right step for every business.
Before you jump into a B2B2C model, consider the following questions:
- What are the business goals associated with seeking a B2B2C relationship?
- Do you have a solid plan to implement this model?
- Is your platform digitally mature enough to support B2B2C?
- How will the changes impact your customers, and how will you communicate with them?
Are there other concerns you consider important to address before moving into B2B2C ecommerce? Let us know in the comments below.
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