B2B2C Business Model

For Consumer based startups, with a constant increase in the Cost of Acquiring customers, there has been a good development with the B2B2C business model. One must be aware of the B2B model, short for the Business-to-Business model, which means a business enterprise sells its goods or services to another business enterprise only. Another business model is the B2C model, short for the Business-to-Consumer model, where a business enterprise sells its goods or services directly to the end consumers without involving any other business entity. So, now comes the latest development, the B2B2C model, short for the Business-to-Business-to-Consumer model. Well, this might be a new term for most of the people but this is being practiced for decades. As the name suggests, this model includes two different business entities and the end consumer, all in one business model only.

So, the B2B2C model is basically a business model where the main business, the manufacturer or creator of a good or service doesn’t cater its products to the end consumers but involves a third party, i.e., another business entity to do so. This is how a single business model involves two different business entities and the end consumer. This model is gaining enormous popularity and there are several business giants already following the same model. One of the best and easy-to-understand names is Amazon. Today, we all know about Amazon, but do we know that it is a B2B2C model business. Well, if we didn’t, now we do.

Explaining the B2B2C model with an example –

We all know that we can find almost every kind of good, of almost every brand on Amazon’s website, and this is how this B2B2C model works. Suppose there is a newly emerging clothing brand named ‘Brand A’ and it wants to sell its clothes directly to the end consumers but it is unable to do so because of a few of many possible reasons like 1. It is new in the market and hence lacks popularity; 2. It doesn’t have a proper chain system for delivering its products to end consumers or any other reason. To overcome these and to reach the end consumers, it involves another business entity who is already established in transporting the products from the manufacturer directly to the consumers, and who also has a large customer base. In our example, let’s consider the 2nd business as amazon. So, now the existing customers of amazon can see the products of Brand A and if they wish, they can order and get the same delivered at their doorstep. This way, the customers will also get aware of a new brand in the market and the main or 1st business will also get its motive fulfilled, which, in our case, was to reach the consumers. And as time passes, the new brand gets popular among the consumers and if it is of enough worth, it can also start its own operations which will reduce the involvement of 3rd party (here, amazon) between the manufacturer and the consumer and will ultimately help them reduce the cost as well, as these 3rd party businesses charge a commission from the manufacturer as well as from the customers on every order.

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Gautam Sachdeva | Vibhaur Johri