With eCommerce platforms on the rise, there are new and effective business models that are changing the ways sellers used to sell their products. The big shift is mainly in the B2B business model where new sales models are turning out to be more effective.
The two relatively new sales models which are getting a lot of hype are D2C and B2B2C.
In this guide, we will help you understand the B2B business model, the Direct-to-Consumer(D2C) business model, and the B2B2C (business-to-business-to-consumer) model.
By understanding these sales models, you can take a different and more efficient approach for sales and profits for your B2B eCommerce platform.
B2B vs D2C vs B2B2C: Understanding the Different Sales Models
When you hear about B2B, D2C, or B2B2C, they are mainly the sales models for any B2B eCommerce platform or any B2B business model. While the B2B sales model has been around for a while, D2C and B2B2C are relatively new and popular because of the rise of eCommerce platforms.
With the ability to sell products online with no barrier and no middlemen, B2B businesses now have the power to sell products and services on their own or have VARs(Value Added Resellers) sell their products or services with more value.
The new business models combined with eCommerce platforms have increased the selling range of the B2B sector and increased their growth significantly.
Let us understand each of the business models individually and then you can select the right one for you.
B2B Sales Model: The Classic
The very first sales model for any B2B business is B2B of course. In this model, the trade typically happens between two businesses.
The B2B business model is crucial for the supply chain as one business provides the raw materials and services to another business which then uses the raw materials to make a product or service for the consumers. In the B2B sales model, the product is designed for a corporate customer.
For example, think of a big company like Apple.
“To assemble and manufacture their smartphone, they need a lot of companies that could provide them the people and hardware resources to assemble and manufacture smartphones. Apple uses camera sensors from Sony on their latest iPhone 13 series. Similarly, TSMC makes chips for Apple. When the phone is released, it does not have any branding of Sony or TSMC but Apple sells it with its logo and brand name.”
This is one of the examples of B2B where Apple has B2B relations with TSMC and Sony.”
Advantages of B2B Sales Model
- Stability: By providing raw materials and resources to businesses that primarily interact with customers, the B2B sales model provides stability to the entire market.
- Scalability: Normally, the businesses that interact with consumers do not have the resources to do their product outsourcing and expand. The B2B businesses provide them with the raw material and services that help them to scale their business.
- Reduced Costs: The supply chain management of B2B eCommerce is just phenomenal and with that, the B2B businesses always provide very reasonable and effective rates for raw materials and services.
D2C Sales Model: No Middlemen
The Direct-to-Consumer D2C business model has been around for a while but it has gained a lot of popularity with the rise of the B2B eCommerce platforms. In this sales model, a business directly sells its products to the customers. By eliminating the middlemen such as resellers, wholesalers, etc. this business model has started an entirely new process of fair trade.
When businesses take the resellers and wholesalers out of the equation, they can sell their products directly to consumers at many affordable prices. This results in better sales for the business and affordable products for the customers.
This model has been only more successful because of the B2B eCommerce platforms. Back in the days, the B2B businesses were so occupied by the corporate businesses that they hardly had any resources to attend to normal consumers.
But with eCommerce platforms, now any customer can directly buy from a website the process is just seamless. The D2C model is quite popular these days and many businesses are now adopting this model.
As per a report, 61% of companies say they see evidence that manufacturers, distributors, and wholesalers are starting to sell D2C.
Advantages of D2C Sales Model
Power to both Businesses and Customers: This sales model empowers the customers to buy raw materials and services directly from the business. It is particularly good for entrepreneurs and small businesses that do not have the big sales numbers to attract a B2B company directly.
Cuts Costs: By eliminating the middlemen like wholesalers and resellers, the B2B companies are now able to sell their products more efficiently and at more affordable prices.
Expanded Market: With the ability to sell products to anyone, the B2B companies can easily expand their markets and reach out to a far wider customer base than they normally would.
So What’s the Catch?
The D2C business model seems to have a lot of good qualities. It leaves you wondering why every B2B organization isn’t using it, right? Well, there are a few limitations of this model.
The reason why all B2B organizations don’t use it is that not all B2B organizations provide products and services that are usable or feasible to any normal consumer.
Generally, B2B organizations provide raw materials that need processing and manufacturing before they can be finally used.
For example, you can buy a camera sensor from Sony as a normal person but you can’t do anything useful with it. For it to work, it will require housing, a lens, an image processor, and a lot of other things. So this model isn’t exactly useful and sensible for all the B2B businesses.
B2B2C Sales Model: The eCommerce Hybrid
Finally, we have the B2B2C (business-to-business-to-consumer) model. This is the newest of the three business/sales models we have discussed so far. Think of it as a hybrid of B2B and B2C business models.
The origins of this business model can be traced back to the introduction of eCommerce. With the rise of eCommerce, the B2B2C sales model has also gained a lot of popularity.
In this business model, a B2B business usually partners with a consumer-oriented business to expand and reach new markets.
Let’s understand the B2B2C sales model with an example. Assume that there are two businesses Business A which is a B2B organization providing different types of products and services.
Then there is Business B which owns an eCommerce platform with a great reach. If Business A and B were to adopt the B2B2C sales model then Business A will pay Business B to get leads and sales data from Business B’s website. Then business A will use the data to get more potential customers. On the other hand Business, B gets to provide its customers with more products and services. Overall, this results in more expansion and sales for both of the businesses.
For this business model to work, two like-minded businesses with the same values and goals must collaborate.
Advantages of B2B2C Sales Model
More Value for Customers: When two businesses work together to attract a customer, the customer gets the best value for products and services. This model also ensures that the customers get the best quality products and services.
Collaboration of Businesses: The collaboration of two like-minded businesses can produce some great products and services. This is good for the customers and everyone in general.
Customized Products and Services: When two businesses combine their resources, they can provide you with a wide range of customized products and services. This brings a lot of new customers to your B2B eCommerce platform.
So that was all about B2B vs D2C vs B2B2C. The D2C and B2B2C are the new sales models for B2B businesses that enable sellers to sell their products more efficiently. The success of these business models can be attributed to the wide range of customer base they can reach with a B2B eCommerce platform. Depending on the type of business you are and whether your products or services need wholesalers or resellers, you can opt for either D2C or B2B2C and increase your reach remarkably.