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From B2B to B2C

In April 2020, surging COVID-19 cases preempted a host of public restrictions, some of which forced businesses to close their doors. Widespread lockdowns resulted in a 10% decrease in retail sales — the lowest level on record. Individuals at every level of the supply chain were impacted, and numerous industries experienced significant disruption.


Retailers were unable to sell tangible product as a result of store closures. Manufacturers were forced to halt production as their suppliers failed to provide certain parts or materials. Wholesalers experienced losses as retailers were reluctant to accept any more merchandise.


These pandemic-related threats to global supply chains has prompted business owners to consider alternate channels. Manufacturers and wholesalers alike have looked to expand beyond buyer-to-buyer (B2B) sales channels to directly sell to consumers (B2C) in an attempt to improve margins, enhance the customer experience, and reduce their dependency on resellers, thus, simplifying the supply chain.


Why would a business pivot to B2C ?

“B2B” stands for “business to business,” and “B2C” stands for “business to consumer.” The two practices describe different end customers of a good or service.


The simple, principal reason why a wholesaler, manufacturer, or other business with a traditional B2B orientation would choose to adopt B2C sales channels is that B2C profit margins are much higher. E-commerce marketplaces like Amazon have made it incredibly easy for companies to sell directly to end users, thereby bypassing brick-and-mortar retailers.


E-commerce also provides increased visibility and sales, and allows your business to expand across various markets.


It is important to note, however, that B2C sales don’t entirely eliminate middlemen. For example, Amazon takes a portion of the seller’s profits, even though the item is going directly to the consumer.



B2B vs. B2C


Buyer Behavior

B2C shoppers - the end users - tend to make purchases based on perceived emotional benefits. They are purchasing with the goal of improving their lives, and not with the goals of generating profits or increasing margins. This ties into the immediacy of their purchasing processes, as B2C customers often don’t research products until the need arises.


It is important to note that B2C customers place value on social proof, such as celebrity endorsements, when purchasing. Pricing is also a key factor for B2C buyers, especially in an e-Commerce landscape.


On the other hand, B2B customers are purchasing with the goal of improving their business. Business purchases are typically subject to a rigid budget, are expensive, and are sometimes purchased in large quantities. Thus, there is a larger financial risk associated with business purchases. This prompts B2B buyers to first research products and services extensively, which slows the purchasing process.


Needs

Products and services fundamentally exist to offer a solution to consumers. In this sense, both B2B and B2C customers make purchases because they can see a product or service benefitting them in some way.


However, as mentioned previously, B2B customers are purchasing with the goal of improving their business, while B2C customers are purchasing with the goal of improving their lives. This is evident in the respective decision-making processes. B2B customers take a significantly longer time to purchase. They conduct research, explore your site, look for third party reviews, and finally, examine competing offers.


Sales Cycle


The B2B sales process is a more personalized experience. Business purchases are generally more expensive and subject to a more rigid budget. This forces B2B consumers to research options extensively to determine whether the product or service is right for their business, and whether it can be easily incorporated into the current system. This means that, generally, the B2B sales cycle is longer.


B2B consumers rely on information provided by sales or customer support teams, as well as reviews provided by previous customers. They may require multiple interactions to gather the details necessary for decision-making.


The B2C sales cycle is less predictable. While B2C purchases are generally characterized by a shorter sales cycle, B2C customers may also take weeks, months, or even a year to make a purchase, thus lengthening the cycle.


Customer Retention


Retention differs between B2B and B2C customers. B2C customers tend to shop around, especially in an e-Commerce landscape where unlimited options exist. B2B customers are less likely to shop around. Business purchases are a larger commitment than personal purchases, as they are characterized by a financial risk and a lengthy research process. When a B2B customer discovers a brand or company providing a product or service that aligns with their business goals, they may be more willing to make additional purchases in the future.


It is important to note that while a B2C target audience is likely much larger, only a small portion will be converted into paying customers. This makes it increasingly important to offer a personalized experience wherever possible.


It is also important to note that it costs fives times more to attract a new customer than it does to drive a repeat purchase. You can encourage repeat purchases by placing an emphasis on loyalty schemes, by offering discounts, or be recommending other products at checkout.


Volume of Customers


Sales volumes are higher in a B2B supply chain, as B2B often involves the sale of bulk series or inventory stock. However, there are generally fewer customers. In a B2C supply chain, there is a greater volume of customers. This volume must be managed by business holders to gain repeat customers and achieve brand loyalty.


One method of management is Customer Relationship Management, or CRM. A CRM system can give you a clear overview of your customers; their likes, dislikes, and histories. This tool can be used by marketers to prioritize customers despite large volumes.


Your Marketing Toolbox


Strong Social Media Presence

A strong social media presence translates into opportunities for advertising, customer service, and building of customer loyalty. Facebook, Twitter and Instagram together have billions of active users. This is advantageous to you as a business holder, as you are able to communicate your brand in an informal context.


Valuable Content Creation

Valuable content creation allows you to capture a greater audience. By providing useful information on the topic of your product or service, you are engaging your customer. This encourages the customer to continue moving through the purchasing process.


Valuable content creation is also an aspect of SEO, or search engine optimization. This means that your site is more visible to consumers who are looking for the products or services you offer.

Website Analytics


Finally, website analytics is a crucial component of B2C. This allows you to track the number of individuals who click on your site versus the number of individuals who become paying customers. Analyzing this ratio will help you determine whether your e-commerce channel is effective, or whether it’s consumer friendly.


CRM software can be used as a component of website analytics to organize large pools of data. CRM allows you to document consumer feedback, identify sales opportunities and manage marketing campaigns.


Final Thoughts


Business to Consumer represents a model where stages of the supply chain are eliminated. Manufacturers and wholesalers alike enjoy a plethora of benefits, including a decreased dependency on retailers, increased margins, and an enhanced customer service experience.

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