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What is 'Business to Consumer - B2C'

Business to consumer (B2C) refers to the transactions conducted directly between a company and consumers who are the end-users of its products or services. The business to consumer as a business model differs significantly from the business-to-business model, which refers to commerce between two or more businesses. While most companies that sell directly to consumers can be referred to as B2C companies, the term became immensely popular during the dotcom boom of the late 1990s, when it was used mainly to refer to online retailers, as well as other companies that sold products and services to consumers through the internet.

BREAKING DOWN 'Business to Consumer - B2C'

Although numerous B2C companies fell victim to the subsequent dotcom 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.

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. Traditionally, B2C referred to mall shopping, eating out at restaurants, pay-per-view and infomercials. However, the rise of the internet created a whole new B2C business channel in the form of e-commerce or selling goods and services over the internet.

Businesses that rely on B2C sales must maintain good relations with their customers to ensure they come back. Unlike business to business (B2B), businesses that rely on B2C must make the consumer have an emotional response to your marketing. In B2B, marketing campaigns are geared to show value of the product or service.

Internet Retailers Continue to Threaten Traditional B2C Storefronts

During the 1990s, the dotcom era had arrived and brought a new technology that changed the world. During the subsequent bust, most businesses were fighting to get a web presence in order to reach a whole new demographic of consumers. Decades from the dotcom revolution, B2C companies with website presence are continuing to dominate over their traditional brick-and-mortar competitors. Companies such as Amazon, Priceline, Zappos (bought by Amazon in 2009), eBay and Victoria’s Secret are survivors of the early dotcom boom, but have gone on to expand upon their early success to become industry disruptors.

After Dotcom Success, B2C Companies Look to Next Area of Growth: Mobile

Decades after the e-commerce boom, B2C companies are continuing to eye a new growing market: mobile computing. With smartphone apps and traffic continuing to see year-over-year growth, B2C companies have been shifting attention to mobile users and capitalizing on the popular technology. Throughout the early 2010s, B2C companies were rushing to get out mobile apps, just as they were with websites decades earlier. In short, success in a B2C model is predicated on continuously evolving with the appetites, opinions, trends and desires of consumers.

B2C Business Models in the Online World

There are typically five types of online B2C business models that most companies use online to target consumers: 

  1. Direct sellers: The most familiar kind of model, where people buy goods from online retail sites. These can include manufacturers or small businesses or simply online versions of department stores that sell products from different manufacturers. 
  2. Online intermediaries: These are liaisons or go-betweens who don’t actually own products or services that put buyers and sellers together. Think of sites like Expedia, Trivago or Etsy.
  3. 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, therefore, sells goods and services. An example would be media sites like the Huffington Post, a high-traffic site that mixes in advertising with its native content. 
  4. Community-based: Sites like Facebook, which builds online communities based on shared interests, help marketers and advertisers get their products directly to consumers. Websites will target ads based on users’ demographics and geographical location.
  5. Fee-based: Direct-to-consumer sites like Netflix will charge a fee so consumers can access their content. Sometimes, the site can 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. 
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