A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.
- B2B2C in a nutshell
- Did you know Google was a B2B2C?
- Why not go directly to consumers?
- How does a B2B2C relationship look like?
- What are the premises of a B2B2C relationship?
- B2B2C marketing done right!
- B2B2C FAQs
- What is the difference between B2B B2C and B2B2C?
- What is B2C2B?
- What is a B2C example?
- What is a B2B example?
B2B2C in a nutshell
In the business world, the difference between B2B vs. B2C businesses often seems clear and straightforward. However, there is a third kind of business model, primarily based on what might seem like a B2B strategy. However, the final aim is to build a B2C company over time.
Did you know Google was a B2B2C?
One of the deals that made Google the tech giant it is today was the deal with AOL. At the time AOL was a tech giant, while Google was still in its infancy.
While the search engine from Mountain View was snowballing, it still missed the first-scaler advantage that would have given it the dominance of the search industry.
Google was already a consumer product. However, it needed to pass first through a set of bottlenecks to gain access to consumers. In addition, the more data Google gained over time, the more it got better.
And the more consumers knew about it; the more Google would be less reliant on distribution channels like AOL. This is not to say that Google took advantage of AOL.
Quite the opposite, Google offered to AOL a minimum guaranteed of revenues, and it bought a stake into the company.
Let’s analyze the basis of this B2B relationship, which will then trigger the B2C opportunities. For the sake of this discussion we’ll call:
- B1: the business trying to enter the consumer market via another business
- B2: as the intermediary between B1 and consumers
- C: as the consumers in that industry
Why not go directly to consumers?
In reality, going after the consumers is the dream of many, but a few make it. The consumer market seems to be biased more than any other toward the winner-take-all effect.
Source: Sapphire Ventures
In a study by Sapphire Ventures on the exits in the consumer vs. enterprise since 1995, the latter seems to have generated $825B compared to $582B in the tech consumer space.
An exit is a strategy where the venture capitalist or investor liquidate its funds in a previously invested startup, and it usually measures the ROI for the investor.
In short, from 1995-2016 there were 4,600 exits in enterprise tech and over 2,600 exits in consumer tech.
This means that starting from a B2B, an enterprise business allows at least three advantages:
- risk reduction
- a more predictable growth path
- easier financing as more investors can liquidate their position via an exit
How does a B2B2C relationship look like?
A B2B2C business model relies on a tight relationship between the B1 that wants to access consumers and B2, which instead has already access to the consumer market.
As it might not make sense for B1 to enter the consumer market, it will make sense to find the key players that can help it open it.
A partnership between B1 and B2 has – I argue – three main features:
- it is not a white label: if it was a white label, final consumers would not recognize the product and brand over time
- it has direct access to consumers’ data: many software as a service, and digital tools in general benefit from network effects. In short, the more data they have about the people using it the better those tools will get for each new user. If the business entering the consumer market via another business didn’t have access to their data, it wouldn’t be possible to benefit from network effects and scale up over time
- it gains brand recognition: not only the B2B2C business will have access to consumers data, but its brand will be pretty visible to them. Thinking back to the Google deal with AOL where it got powered by Google searches, more and more people could recognize Google over time, at the point that it became a verb
What are the premises of a B2B2C relationship?
A B2B2C business starts with a few key partners, which are other businesses that can help it gain access to consumers. This relationship has to be highly beneficial to the business that has access to the consumer market.
It might look like a joint venture in practice, with a tight-knit that makes the incentives in favor of the business partner to distribute the product of the other business which doesn’t have access to consumers.
Indeed, I argue – this kind of partnership has to have a few key elements:
- willingness to offer a wider portfolio of products or services: often customers might ask B1 for products or services that are not in its portfolio. B1 can make its customers happy by having your product or service featured. Going back to the Google deal with AOL, at the time search was seen as a secondary service, yet it was nice to have features for consumers. Google worked 10x better than its competitors and it made sense to offer searches powered by Google through AOL
- price convenience: another key element is the convenience in distributing the product or service of B1
- an economic opportunity: a very important element is about economic opportunities created for the business which helps access the consumer market. Indeed, if the product or service of B1 makes B2 able to expand its offerings to consumers. That opportunity is too good to be given up and this makes B1 in a position of sealing that relationship. Also, if B2 is driven by an economic opportunity, the chances that it will distribute the service provided by B1 will be higher. Indeed, one of the greatest pitfalls of a B2B2C business might be the lack of push and distribution from its partners
- not interested in entering directly that industry: another reason why B2 might want to use B1 service to its consumers it’s because it doesn’t have any interest in entering that industry. Going back to the AOL deal example, the company didn’t have any interest in entering the search industry
- a very good deal: last and important ingredient is about offering a deal that is too good to refuse. This deal is a marketing expense on the side of B1 to acquire consumers’ market share. On the other hand, it is for B2 a great opportunity to grow the business with no costs and risks
B2B2C marketing done right!
On the one hand, you want to have a structured sales force able to perform account management for those businesses acting as intermediaries to the consumer market.
On the other hand, you need to invest resources in branding and marketing efforts. This will allow your business to be recognized by consumers over time. In this way, consumers will act as a push that will make your entrance in the B2B space easier.
While this process might seem simple in theory, it is quite complex in practice. But in this article, we analyzed the few key ingredients, which should give you enough information to get started.
Resources for your business:
- Successful Types of Business Models You Need to Know
- What Is a Business Model Canvas? Business Model Canvas Explained
- Blitzscaling Business Model Innovation Canvas In A Nutshell
- What Is a Value Proposition? Value Proposition Canvas Explained
- What Is a Lean Startup Canvas? Lean Startup Canvas Explained
- How to Write a One-Page Business Plan
- What Is Business Development? The Complete Guide To Business Development
- What is SEO Hacking? How to Steal Featured Snippets with These SEO Hacks
Handpicked popular case studies from the site:
- The Power of Google Business Model in a Nutshell
- How Does Google Make Money? It’s Not Just Advertising!
- How Does DuckDuckGo Make Money? DuckDuckGo Business Model Explained
- How Amazon Makes Money: Amazon Business Model in a Nutshell
- How Does Netflix Make Money? Netflix Business Model Explained
- How Does Spotify Make Money? Spotify Business Model In A Nutshell
- The Trillion Dollar Company: Apple Business Model In A Nutshell
- DuckDuckGo: The [Former] Solopreneur That Is Beating Google at Its Game
What is the difference between B2B B2C and B2B2C?
The key stands in the profile of the key customers and how they make the purchasing decision. Opposed to a B2C, in a B2B, the customer is usually an organization. Thus, a group of people makes the purchasing decision. In a B2B2C model, the product is delivered by another company.
View more on FourWeekMBA
What is B2C2B?
In a B2B2B model, a company will target employees within the desired organization, as an alternative to existing products. In some cases, the basic service is offered for free, so that those corporates within the desired business will promote the service within the company. Think of how Slack offers a free basic version that can be upgraded for morse users. In this case, Slack provides a valid alternative to the internal company’s chats.
View more on FourWeekMBA
What is a B2C example?
In a B2C model, a business deals with consumers. Examples of B2C include companies like Apple and Amazon, which usually sell to consumers. The B2C model offers a product or service which is wired toward a broader market compared to B2B, and it has different structure and characteristics.
View more on FourWeekMBA
What is a B2B example?
In a B2C model, a business deals with other companies. Examples of B2B include companies like Salesforce and Dropbox, which usually sell to other businesses. The B2B model offers a product or service which is wired toward a smaller set of customers compared to B2B which has different features.
View more on FourWeekMBA