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Economies around the world rely on people and businesses doing business with others. Money is exchanged for goods or services, generating tax that governments can spend on services and infrastructure.
And within the business world, companies and people will do business with each other in different ways, with organisations using different business models to be successful. As such, there is a lot of terminology that can be daunting to people new to business but thankfully, it’s easy for most people to pick up.
Some of that terminology includes terms like B2B and B2C. This article takes a closer look at what they mean and how they are different from each other.
What is a B2B Business?
B2B is an acronym for business to business, and it works just as it sounds. All around the world, businesses have opened up to serve other companies, selling their products and services directly to businesses rather than the end user. Indeed, entire industries have been created just to support other, larger industries.
Examples of a B2B Business
The variety of B2B relationships is hugely varied and found in just about any industry you can think of. A few of the most common examples include:
- Clothing Manufacturers: It’s no secret that fashion labels often source their clothing from the same factories as their competitors. How much profit the buying company will make depends largely on the brand rather than the product. Regardless, these factories pumping out clothing and other products for global fashion labels are a prime example of a B2B relationship.
- Consultancy Services: You can find companies that offer consultation services on many business topics. For example, a consultancy service might offer advice on how a company can cut costs, or maybe a company needs consultation with planning a new product they have little experience with. The consultancy benefits from the pay, and the consultee company benefits from the guidance they receive.
- Vehicle Parts: While cars are typically constructed in a factory, many of the parts are made elsewhere. For example, cars have springs, washers, windows, and so many other parts that are made by a 3rd As such, a web of companies can benefit from working with each other and large, intertwined supply chains have evolved.
- Digital Marketing: As a Digital Marketing Agency we mainly deal with B2B as our clients are usually registered businesses in Thailand or Internationally.
What is B2C and B2B2C?
Of course, the B2B model is not the only type you will encounter in business. There are numerous other varieties, and two of the most common are B2C and B2B2C, which mean the following:
B2C is an acronym for business to customer. As the name suggests, the model involves businesses selling directly to the end user rather than to another company. Examples include virtual or physical stores where the end user can purchase goods directly. Other examples include the food and beverage industry, where customers are served and entertained in exchange for revenue.
B2B2C means business to business to customer. This type of business model involves a 3rd party selling a product/service from another company. Examples include online food delivery services such as Food Panda or Grab, that picks up food from a restaurant and delivers it directly to the customer. This model means customers have convenient meal delivery services, while the restaurant gets more business, and the delivery service earns a commission on each order.
Difference Between B2B and B2B2C
A B2B business model involves two businesses benefiting from each other. Considering that most products will end up with the end user regardless, some might wonder what the difference is between B2B and B2B2C.
The key difference between the two models is that the intermediary company (e.g., Uber Eats) is selling a company’s final product to the seller directly. So, for example, while a spring company can help make suspension parts for a car, the spring is not the product that’s sold to the end user. Instead, the spring is a component of the final product (the car).
You’ll also find that B2B2C models are used by eCommerce stores in most cases, with the product sold directly to the customer over the internet. This is made easier by the fact that eCommerce uses digital transactions every time, making it easier to calculate and manage commissions etc.
The key differences between B2B, B2C, and B2B2C are down to who is selling what and to who. And while there will still be many similarities, there are also some key differences. For example, how you market your product will vary considerably, whether you’re trying to sell to a large company or to the end user.
Regardless, B2B, B2C, and B2B2C are blanket categories that cover a vast range of business types, from convenience stores to major manufacturers. And in many cases, different businesses can become closely entwined with each other, creating sprawling networks of companies that contribute to an overall industry. And if you open a company, it is almost certainly likely to follow one of the three business models we’ve mentioned here.