B2B, B2C, B2B2C oh my!

Online Commerce

In the olden days, digital commerce had a "dividing line"... Businesses that sell to other businesses (B2B) and businesses that sell directly to consumers (B2C). In the recent decade or so, another model has emerged which are businesses that a) sell to both b) partner with other companies for portions of the solution.

B2B - generally B2B solutions are geared around selling large quantities (or very specialized/custom products) wholesale to customers who either a) use the products in the course of doing their business (think a robot supplier for an automaker). or b) resell the products to consumers in a retail setting (think a manufacturer who make soap and sells it to retailers).

Often what happens is that folks don't differentiate the nuance on what B2B actually means. For example, if a manufacturer sells a multi-million dollar tool to another manufacterer/service provider (think robots, earth moving equipment, airplane avionics testing gear) etc, these are generally relatively rare sales that have a tendency to have a long lead time.

However, there is another large group of B2B companies that sell high volume commodity items to consumers (think soap, toothpaste, dogfood, generally consumer packaged goods). These brands have an interesting opportunnity to sell both to retail outlets, but also directly to customers. Conversly, retailers (think big box retail, gas stations, drug stores) also have an opportunity to sell products they don't necessarily stock in thier stores to consumers and have "someone else" fulfill the product (think drop shipping/outsourced fulfillment models).

B2C, on the other hand, are companies/brands that sell and target end consumers of their product. Sometimes they actually manufacture the product, but generally they are focusing on merchandising, marketing, and fulfillment not manufacturing. These companies are the "customers" for pure B2B companies and historically have owned the consumer relationship. This is largely (IMHO) an artifact of the historical relationship where wholesalers sold bulk products they manufacture (build a great brand/product) versus creating an environment to foster sales to consumers (build a great storefront and place for consumers to discover products).

More commonly, there is a new model that is actually "both"...it's called B2B2C (business to business to consumer). What's really interesting about this is it's expansion of scope beyond a single transaction and the endorsement that "it takes a village" to support a customer. What's more interesting is that when you talk to folks about what B2B2C and/or strategies, this is almost universal confusion.

This confusion arises because depending on your core business, what B2B2C looks like can be very different. Some examples:

• I am a manufacturer of toilet paper, I run advertisements, have billboards, and sell pallets or trailers of products. Typically one order is for thousands, if not millions of units of product. I actually have never interacted directly with a customer...except for the time we accidentally produced TP with poison ivy in it...OMG that was difficult. I now want to sell directly to my end customers and provide them with reliable delivery options and customizable products. I've partnered with a large retail chain to actually ship product from the store nearest my customer to supply reliable delivery, but also partner with a company that takes a graphic that a customer supplies and prints it on toilet paper. I own the customer relationship and collect all the money and handle customer service, but I rely on two different partners for two different ways a customer wants to interact with me.
• I'm a large retailer, I want an endless shelf of product, but my brick and mortar stores/distribution centers have limited capacity. Because of this, I partner with many manufacturers to get their products on my digital shelf. I rely on them to fulfill products that aren't stocked in my store, but also can sell thier products in my retail digital storefront and fulfill from my (often cheaper) wholesale product inventory sitting on my shelves.

As you can see, these two archetypical businesses have very different focus, but are arguably both within the B2B2C ecosystem. The important development is "who owns the customer relationship". Historically, retailers owned this relationship and would rely on wholesalers to supply product, but more and more the lines get blurred because there is a very low barrier to entry.

My core point is that B2B2C is not a monolithic "way of doing business" but more a philisophical understanding that there are many players in a particular retail transaction and and acknowledgement that it is often wise to let each player play to the strength they have in a particular part of the customer shopping/purchase experience, rather than try to do "everything".