Perhaps you are interested in entering the thrilling and potentially rewarding world of eCommerce. Starting your very own business and reaching for a massive audience of online shoppers is always an exciting prospect. However, if you are serious about embarking on this path, there are some questions you must answer before you can truly begin.
One of the foremost questions concerns the type of customer you wish to target, and your business will likely fall into one of two traditional business models based on this one factor. The business-to-business (B2B) model would see you selling to other businesses, or taking on other businesses as clients. Alternatively, the business-to-consumer (B2C) model entails selling to individual consumers instead.
Both are potentially lucrative, and both have their advantages and their drawbacks. The differences between them will define much, if not everything, about how you can run your business and how you should do so. It is a big choice, and one that is yours to make as the owner of your enterprise. You will need to determine which model is right for you based on your own preferences.
To help you make the best decision for yourself, here is some information and guidance on the classic comparison of B2B eCommerce vs. B2C eCommerce.
One significant difference between B2B and B2C eCommerce is the purpose that the customer has for visiting the store. Understanding why someone would want to enter your website will inform your methods for attracting the kind of clientele you desire. Keep this in mind, because strategies that might prove highly effective for one model may not necessarily pay off nearly as well for the other.
The average consumer may have many different reasons for going shopping, whether online or offline. They may be looking for something to make life more convenient. They may want an ideal gift for a loved one, or a treat for themselves. It may even be that they do not want at all, but rather need something for their work or for their way of life. You can orient your marketing, your inventory, and your website’s structure towards appealing to your target customers’ whims or catering to their needs.
In contrast, business customers, by their nature, always have a professional motivation when shopping online. The management at these companies usually designates certain employees to seek out products and/or services on the company’s behalf. For the most part, people in these positions do not view their shopping as anything more than an aspect of their work. Moreover, they are usually on a budget. Looking for the best deal is a greater priority for business customers than for most consumers.
Interacting with Your Customers
All this brings us to how much each model requires you to directly interact with your customers, and in what ways. You and your employees will be required to do so regardless of your business structure. With that said, the two models are on opposite ends of this spectrum in terms of how often this will happen.
A good rule of thumb would be that if you have the resources to hire and pay employees, you will be more capable of running a B2B business. Almost all businesses of this type get in touch with their customers on a weekly basis, if not daily. This starts with the negotiation process, when the potential clients are still considering a partnership and both businesses work together on an agreement. That process can last a long time, requiring a great deal of back-and-forth discussion.
This high degree of interaction does not end once they agree to become a customer, either. Communication is essential from every point afterward, from onboarding to purchasing goods and services to order fulfillment. Phone calls and email exchanges over customer support and tech support may be frequent to the point that remote meetings are regularly scheduled. Though some customers will be more hands-off than others, this is just the nature of business-to-business relationships.
Consumers, on the other hand, will not reach out to businesses nearly as often. The B2C eCommerce website’s interface is designed to give them everything they need — or at least, it should be. The “About” page, FAQ sections, and similar pages should provide customers with essential information about your business. The category pages, product pages, and blog posts allow you to go into even more detail on your inventory.
Of course, if customers have questions and cannot find the answers on your website, they need some way of reaching out. Almost every online store lists contact information that allows visitors to email, call, or chat with customer service representatives. This is typically the only way that B2C business owners and employees will interact with their audience. Of course, providing excellent service in those moments is just as important for B2C enterprises as it is for B2B enterprises.
The Size of Their Base
More customers buying more products always translates to more money, and with the B2C system, you can never have too many. eCommerce stores of this nature strive to reach as many people as possible. Even when they focus on a specific niche, they tailor their site and their promotions to a large audience within or crossing over with that niche. Thanks to their model, these businesses are capable of profiting from a small percentage of regulars and a larger percentage of one-time buyers. Retention is certainly ideal, but it is not a requirement for success.
This is not always the case for B2B companies. As we mentioned earlier, B2B businesses often require much more work to gain customers than B2C ones. This process, which may require significant negotiating and dialogue, can be quite protracted and effortful. Even after winning them over, you may need to stay in constant contact with them. You might even need to assign specific employees to specific clients as their dedicated customer service representative, tech support person, or marketing mastermind. All of that work means that many B2B businesses have their limits on how many clients they can take on at any given time.
Of course, that limitation is not necessarily bad. Each successfully maintained client relationship can prove greatly rewarding. Each renewed contract represents regular payments, which means a steady source of revenue. Eventually, you may build up enough resources that you can hire more employees and add more clients to your roster. This is something that B2B and B2C enterprises have in common: they can attract and service more customers as they grow in scale.
Potential for Sales
We must be upfront about this: B2B companies can be significantly more profitable than B2C retailers. The research company Frost & Sullivan famously predicted in 2015 that in five years, the global B2B online market would generate almost seven billion dollars in revenue. They expected this massive amount to be double that of the B2C online market at the time.
Of course, this is almost certainly because the overwhelming majority of individuals have substantially less buying power than a company. The transactions between a supplier and its business client can be massive. This is because the client needs what the supplier has to survive. Even though they often purchase products in bulk and chase every opportunity for a discount, sales could be worth tens of thousands of dollars. This just depends on the size of both businesses and the amount of goods or services purchased.
B2C websites, on the other hand, may make much less money from each transaction. Products may go for only a few dollars each, and consumers do not often buy them in bulk. This is why these retailers need to work so hard to attract such a broad audience. No single client will boost them to significant profits, and each individual is only willing to spend so much on a company’s products at a time. This is very different from B2B eCommerce, where having only a few clients can be a viable business strategy.
The flipside to this is that such a strategy only works if B2B clients are large and loyal enough. In this regard, losing one customer to a competitor is a much harsher blow for a B2B company than a B2C one. Websites in the latter category may see thousands of visitors each day. Even though only a small percentage of them may complete the checkout process, that can be enough to pay off.
To put this in a different way, consider the difference between a pile of boulders and a pile of pebbles. Remove one boulder from the former and it may collapse. Add enough pebbles to the latter and it can rival the other pile in size.
What’s Right for Me?
There is no correct answer to whether B2C or B2B is a better model. The latter can be much more profitable than the former, but financial success is definitely possible with the former. B2C enterprises may have a smoother and simpler time running their store without the need for constant communication with customers. On the other hand, B2B business owners may find that building those relationships over time is emotionally, professionally, and financially rewarding. Moreover, both models may require you to expend a great deal of effort and invest a lot of resources just to get the store off the ground.
In the end, what is right for you depends entirely on your own preferences. If you like a store that can succeed with a more hands-off approach, or if you like the idea of helping people by providing great products, then B2C may be ideal for you. If running a business is your favorite way life, or if you do not mind making it your life for the potentially enormous profits, then try B2B. You can even run a store that caters to both consumers and businesses, which presents its own challenges and rewards.
No matter which business model you choose, you can find success and happiness in the world of eCommerce. You just need to be flexible, sharp, confident, communicative, and enthusiastic. Perhaps more than anything, you also need to be able to consider all your options, weigh their positives and negatives, and be decisive.
Author: Jimmy Rodriguez
COO & Co-founder @ 3dcart. focused on helping internet retailers succeed online by developing strategies, actionable plans and customer experiences that grow and improve performance.
Find me on: https://www.3dcart.com