Business to Consumer (B2C) Definition and Examples (2023) - Shopify (2024)

The business-to-consumer (B2C) model is a widespread form of commerce, where businesses sell products or services directly to individuals. The structure underpins everyday transactions, from buying groceries to online shopping.

This article breaks down the definition of B2C and how it differs from other sales models, such as business-to-business (B2B). Read on for examples of B2C strategies and the benefits of this approach to retail.

What is business to consumer (B2C)?

B2C, or business to consumer, is a type of commerce where a business sells products or services to individual consumers.

When you shop at a grocery store, browse an ecommerce clothing website, or visit a coffee shop, you’re engaging in B2C commerce.

The term B2C is widely used to refer to all kinds of businesses that sell products to the consumer market, including:

• Manufacturers that sell products via a website or brick-and-mortar store
• Consumer service providers
• Retailers that source a range of products for consumers

Sometimes, the term B2C may be used more strictly to describe businesses that only sell their products directly to consumers, with no middle person or third-party retailer facilitating the sale.

💡 A consumer is a person who purchases products or services for their own use.

How is B2C different from business to business (B2B)?

B2C companies focus on selling products and services directly to consumers, while business-to-business (B2B) companies serve other businesses.

Examples of B2B businesses include wholesalers, shipping companies, and software companies.

B2C is the most popular business model for those building an ecommerce store. Other business models include consumer-to-consumer (C2C) marketplaces, and consumer to business (C2B), where consumers sell content, advertising space, and other assets to businesses.

Understanding business to consumer (B2C)

The rise of B2C is tied to the growth of ecommerce and Amazon in the late 1990s. The 1998 holiday season (known as the first e-tail Christmas) saw $1.5 billion in online sales, popularizing the practice of businesses selling directly to consumers over the internet.

With no retailer markups or agent commissions, B2C online retailers could offer more competitive pricing to consumers. This sparked the shift in shopping habits toward ecommerce that continues today, persuading traditional brick-and-mortar businesses to establish an online presence.

Amazon’s expansion from an online bookstore to a global marketplace illustrates the potential of B2C. By following consumer demand and serving it directly, Amazon has grown across markets and now offers B2C services like streaming entertainment and cloud storage.

5 online B2C sales models and examples

B2C companies vary significantly, particularly online, where businesses look to monetize content and find new ways to reach consumers. In online B2C sales, there are generally five business models:

1. Direct sellers
2. Online intermediaries
3. Advertising content
4. Community-based
5. Fee and subscription

1. Direct sellers

In this B2C model, customers purchase products or services directly from a seller’s ecommerce website or app. They can be national manufacturers or small local businesses.

Online department stores such as Amazon and Zappos are also B2C direct sellers. While they list or buy products from other businesses, they sell directly to consumers.

Examples of B2C direct sellers

• Allbirds sells sustainably made shoes directly to consumers through its website.
• MVMT cuts the cost of high-quality timepieces by selling directly to consumers online.
• Gymshark, the fitness apparel and accessories brand, sells workout clothing and fitness accessories to consumers.

2. Online intermediaries

Intermediaries put buyers and sellers together. Instead of owning a product or service, they leverage marketing and search engine optimization to match interested consumers with vendors.

Examples of online intermediaries include travel websites such as Expedia, Trivago, and the price comparison platform Google Shopping.

Many comparison sites use metrics such as price and reviews to aggregate the “best products” for consumers, making it easier to discover deals.

Online intermediaries engage in B2B sales by charging commissions from vendors and selling advertising space—but their end-consumer is the individual.

Examples of B2C online intermediaries

• Bookshop supports independent bookstores by connecting them with consumers online.
• Farfetch’s platform connects consumers with more than 700 boutiques worldwide.
• Houzz connects homeowners with home professionals, from architects to interior designers.

3. Advertising content

An advertising-based B2C approach connects businesses to consumers through popular content. This model uses free content to attract visitors to a website or social media channel where they’ll encounter products.

An ecommerce business running ads on platforms such as Facebook, Instagram, and YouTube falls under the B2C advertising umbrella.

Advertising-based businesses can also target B2B commerce by creating advertising space for other businesses. Examples of B2B advertising businesses include HuffPost and Observer, which create popular content for the purpose of selling advertising opportunities.

Examples of advertising-based B2C businesses

• With sponsored filters, posts, and stories, Snapchat and Instagram provide platforms for businesses to advertise products to consumers via engaging content.

4. Community-based

This B2C business model involves online communities built around shared interests. Advertisers help businesses market their products directly to these relevant consumers. It could be a forum for photography buffs, people with diabetes, or marching band members.

The best-known example is Facebook, which helps marketers target ads to people according to their activities and interests. There’s also a growing number of community-based websites and apps where businesses can advertise.

Examples of community-based B2C businesses

• Pinterest lets businesses advertise products to interested consumers through sponsored pins.
• Ravelry is a community for knitters where yarn companies and pattern designers can engage with consumers.
• A social network for athletes, Strava allows fitness brands to engage with consumers.

5. Fees and subscriptions

These direct-to-consumer sites charge a subscription fee for access to content or consumable products.

Many subscription publications and streaming services incorporate B2B and B2C into their business model. Streaming service Hulu, for example, places advertising space throughout content and sells it to businesses.

Examples of B2C subscription businesses

• Disney+ is a streaming service that charges monthly fees for access to a library of films and shows.
• Mindfulness and meditation app Headspace charges monthly fees for access to its premium content.
• Splash Wines lets subscribers curate cases of wine and have them delivered at a discount.

B2C vs. B2B: Key differences

These differences highlight the unique approaches required for success in B2B and B2C business models. Understanding these distinctions can help businesses effectively tailor their strategies to their target market.

Making sales

• B2C sales are typically smaller and made by individuals. The sales process involves fewer steps and can be near instant (e.g., contactless payments).
• B2B sales require research and approval from multiple stakeholders. The sales process may take longer and involve bespoke product customization.

Marketing

• B2C marketing may include advertising focusing on a product’s emotional or social benefits. Brand power plays a significant role in B2C commerce.
• B2B marketing can be more features-based and geared toward specific clients. However, B2B marketing is shifting toward B2C trends. For example, 95% of brands using B2B influencer marketing say that it helped them achieve marketing goals.

Pricing and payment

• In B2C, consumers pay the same price for the same products.
• With B2B pricing, businesses negotiate prices and payment terms and may not pay immediately in full.

Benefits of B2C

Let’s take a look at some of the benefits of B2C.

Lower prices

Direct-to-consumer businesses often charge lower prices, as they don’t need to work with and pay third parties.

Reach

Ecommerce allows B2C businesses to stay continually open. Online B2C companies can also reach customers globally. Even small businesses with a local brick-and-mortar presence can use a commerce solution like Shopify to sell and ship products internationally.

Customer data

Valuable customer data can strengthen a business’s marketing strategy. When you sell directly, it’s easier to collect and analyze ecommerce data like conversion stats, email addresses, and customer behavior patterns.

B2C challenges

While the B2C model offers benefits, it also presents challenges. Here are some common hurdles and how businesses can overcome them:

Creating a user-friendly website

A well-designed, easy-to-navigate website is crucial for B2C companies. Shopify offers a range of customizable themes and an intuitive interface that makes managing an online store easy.

Handling payment processing

If you’re selling directly to consumers, checking out needs to be as easy as possible. Consumers demand multiple payment options and often expect small businesses to provide the same flexible payment and shipping services as large retailers.

To help, all Shopify plans include a secure, high-converting online checkout that supports multiple payment options. There’s also a simple POS system for serving consumers in brick-and-mortar stores.

Mastering SEO

To rise to the top of search engine rankings, businesses need to optimize their content for SEO. That means regular content creation and managing a portfolio of current content.

B2C: The future of business

Business-to-consumer models continue to drive innovation—changing how shoppers find and buy products. With the advent of ecommerce, businesses gained the ability to reach a global audience and sell 24/7 without the help of third parties.

Global B2C ecommerce sales are expected to reach $8 trillion by 2026. Join the B2C revolution with a free trial of Shopify’s ecommerce tools.