Business-to-business-to-consumer (B2B2C) models are partnerships that enable companies toreach more consumers, accelerate business growth and offer new services by working withother companies. B2B2C relationships are extremely common. Millions of manufacturers workwith online marketplaces that not only sell their products but also fulfill orders. Mobileapp developers almost universally sell through app stores. Retailers partner with servicesthat offer convenient online shopping and home delivery to consumers. Here’s a deepdiveinto how B2B2C relationships work, their advantages and disadvantages and key examples fromdifferent industries.
What Is Business to Business to Consumer (B2B2C)?
B2B2C describes a relationship in which a company partners with another company to reach abroader audience of consumers or offer them a service that it cannot cost-effectivelyprovide on its own. For example, supermarkets partner with online grocery shopping anddelivery services. The supermarkets can sell more food by appealing to consumers who wantthe convenience of online shopping and delivery. The delivery services might generaterevenue through one or more methods, such as sales commissions, delivery fees, subscriptionsand advertising. The specific way in which the service provider makes money varies dependingon the type of B2B2C arrangement.
The arrangement in this example is considered a B2B2C model because it uses abusiness-to-business (B2B) arrangement between the supermarket and delivery provider toprovide a service to consumers (B2C). B2B2C business models have become widespread. OtherB2B2C services providers include online marketplaces, app stores, reservation services,insurance brokers and installment payment services, such as buy now, pay later (BNPL) firms.
Key Takeaways
- Business to business to consumer (B2B2C) describes business relationships in which twocompanies partner to offer services to consumers.
- Examples include relationships between grocery stores and delivery services to offerconsumers online shopping and home delivery. App stores and online marketplaces are alsoexamples of products/services delivered to consumers via B2B2C relationships.
- Advantages of B2B2C include increased revenue and customer convenience.
- Potential disadvantages include lower profit margins and reduced control over thecustomer relationship and the customer experience.
Business to Business to Consumer Explained
B2B2C models have become popular because of the benefits they can provide to all thebusinesses involved — and to consumers. Developers can offer innovative new apps tomillionsof users through app stores, which take a cut of revenue. Restaurants can sell meals tocustomers who want restaurant-quality food at home by partnering with startups that offeronline ordering and delivery. The delivery platforms generate revenue by providing thoseservices and acquiring a substantial customer base in the process.
A B2B2C model involves a close partnership between two companies to bring products orservices to people. In the example of the restaurant delivery platform, the customer ordersfrom the delivery service; the delivery service handles payment, passes the order to therestaurant and transports the food to the customer. Each partner in the relationship canfocus on its core competencies. As in most B2B2C models, the delivery provider is offering aservice that is not cost-effective or practical for the restaurant to offer on its own. Thedelivery platform aims to build a viable delivery business through economies of scale— byproviding services for many restaurants. Some service providers and cloud ERP solutions also provide retail predictiveanalytics services modules based on the data theygather. Over time, a customer may form a broader relationship with the delivery servicebecause they perceive the delivery service as their go-to resource for ordering takeout foodfrom a variety of different restaurants.
B2B2C relationships differ from traditional B2B and B2C models, and companies can use allthree models. In a B2B model, a business sells its products to other businesses. Thosecustomers could be companies that use the products internally, or they could be distributorsor retailers that buy and resell the products. In a B2C model, a company sells direct toconsumers. With successful B2B2C relationships, two companies typically partner to bringproducts or services to consumers that neither company could cost-effectively provide on itsown.
Comparing B2B, B2C and B2B2C Business Models
| Acronym | What it stands for | Definition | Example |
|---|---|---|---|
| B2B | Business to business | A transaction between two businesses. | Manufacturer selling to retailer, or company selling business softwareto another company. |
| B2C | Business to consumer | Business sells to consumers. | Retailer or manufacturer sells direct to consumers in physical store oronline. |
| B2B2C | Business to business to consumer | Two businesses partner to offer goods or services to consumers. | Grocery store partners with ordering/delivery service to offer consumersonline shopping and home delivery. |
Advantages and Disadvantages of B2B2C Business Model
B2B2C business models have become established in many different industries because theyoffer a wide range of potential advantages. But they also come with complex considerationsand risks, including potential issues about which partner owns the customer relationshipand/or the customer experience.
Advantages of the B2B2C model
Advantages of the B2B2C model include:
Faster business growth. Companies can accelerate revenue growth byentering into B2B2C relationships. For example, startup manufacturers can displayinnovative products to millions of potential buyers by listing them on onlinemarketplaces. Companies may encourage more customers to buy their products bypartnering with services that offer a buy now, pay later option at checkout.
Lower capital investment and operating overhead. Businesses canminimize costs by leaning on their B2B2C partners to provide services. For example,a grocery store that partners with a delivery service doesn’t need to buydeliverytrucks, pay drivers or manage delivery logistics. The delivery services companydoesn’t need expensive facilities to store food. The delivery service alsolowerscosts through economies of scale because it can use its delivery network to deliverfood from many different companies.
Brand credibility. Startups may increase their credibility withpotential customers by partnering with companies that consumers already trust. Forexample, consumers know that an app offered through a smartphonemanufacturer’s appstore has been vetted by the manufacturer.
Greater convenience for customers. B2B2C partnerships helpcompanies make shopping more convenient for consumers by providing services such asfast delivery and online ordering.
Focus on core expertise. Delegating functions to B2B2C partnersfrees companies to focus on their core expertise. For example, manufacturers candirect all their energies into creating innovative products, leaving sales and orderfulfillment to partners.
Customer acquisition. Depending on the relationship, one or both ofthe partners may be able to reduce customer acquisition costs and improve other key customer-related financial metrics. Forexample, startups offering specialized B2B2C services can build a customer base atrelatively low cost. When consumers want to order online from a restaurant orgrocery, they need to create a customer account on the delivery service’swebsite.As a result, the delivery service gets to add a new customer without incurring anymarketing cost.
Disadvantages of the B2B2C model
Potential drawbacks of B2B2C partnerships include:
Reduced control over the customer relationship. When companies useB2B2C partnerships to deliver products or services to customers, they typically lettheir partners form relationships with those customers, too. The partner may thensell other products to those customers, including products from the company’scompetitors. For example, customers may sign up with an online grocery deliveryservice with the intention of ordering food from their neighborhood supermarket. Butonce they’ve registered with the service, they can use it to buy food fromotherstores, too.
Customer-experience concerns. Companies that use intermediaries toprovide services also rely on them to help ensure a good customer experience. If aconsumer orders a restaurant meal through an app and the food arrives cold and late,the customer experience is tarnished, even though the restaurant isn’tnecessarilyto blame.
Lower profit margins. B2B2C partners may charge fees that reducecompanies’ profits. For example, app stores take a commission each time aconsumerpurchases an app. Companies need to weigh the disadvantage of lower margins againstthe increase in sales gained from the B2B2C partnership.
Reliance on partner marketing. Companies that use B2B2C partners tosell their products rely, to some extent, on how the partners present their productsto customers. For retailers that sell through online ordering and deliveryplatforms, traditional approaches such as in-store promotions and product displaysmay be ineffective because customers are simply unaware of them.
Integration effort. B2B2C relationships usually require effort tocoordinate with partner companies. Retailers partnering with online deliveryplatforms must periodically send them updated inventory availability and pricingfrom their enterprise resource planning (ERP)systems, for example.
B2B2C Industry Uses
Business-to-business-to-consumer models have spread through multiple industries, but theyare particularly popular in ecommerce, retail, food and beverage, and brokerages.
Ecommerce
The B2B2C model is prevalent throughout ecommerce and omnichannel experiences. Many manufacturers andother suppliers sell through B2B2C relationships with online marketplaces that provideservices ranging from listing products and processing payments to warehousing and dropshipping. Thesemarketplaces enable manufacturers and other suppliers to reach a huge audience quickly andwith minimal cost. In addition, many companies selling online take advantage ofrelationships with installment payment services, such as Affirm and Klarna, that allowcustomers to pay for purchases over time.
Retail
Established retailers with brick-and-mortar operations enter B2B2C partnerships withcompanies that offer services such as online ordering and shipping. This typically requiresthat retail systems provide up-to-date inventory informationto these services, enabling the services to display accurate information about what’savailable and how much it costs. The services work with retailers that sell a diverse rangeof goods, including food, electronics, office supplies, craft supplies and sports equipment.In addition, many brick-and-mortar retailers sell through online marketplaces.
Food and Beverage
Food and beverage is a retail subsector in whichthe B2B2C model has become particularly well established. Restaurants, groceries, wine andliquor stores, and providers of cook-at-home meal kits all partner with services that enableconsumers to order items and have them delivered. The arrangement lets food and beveragecompanies offer home delivery with minimal capital and resource investment. Such investmentscan sometimes be onerous: Legal delivery of wine in the U.S., for example, requirescompliance with a large and complex array of regulations dependent on both the destinationstate of the delivery and the state of its origin.
Financial Brokerages
Although stock, bond and insurance brokers predate terms like B2B2C, they nonetheless fitthe model exactly. Insurance brokers, for example, partner with large insurance carriers tooffer their products and then select among them for those that fit the needs of anindividual customer. Often, the broker becomes the customer’s trusted provider, asopposedto the insurance carrier or, in the case of equities markets, the mutual fund orshare-issuing company.
Business-to-Business-to-Consumer (B2B2C) Examples
Some of the best-known examples of B2B2C models are grocery delivery services, app storesand online marketplaces:
Grocery delivery.
Instacart is one of the best-known delivery companies, providing online ordering anddelivery services for hundreds of thousands of businesses and millions of consumers acrossthe U.S. and Canada. It’s best known for grocery deliveries, but it has expanded toworkwith a variety of other retailers, including pharmacies and electronics stores. It workslike this: Retailers provide inventory information to Instacart, which publishes theinformation on its website and app. Consumers log in to Instacart and choose and purchasegoods from their selected retailer, paying with a credit card or digital wallet. Orders are then picked by apersonal shopper and delivered, or consumers can pick up their purchased items from thestore. Customers pay for the service on a per-delivery basis, or with a monthly or annualsubscription plus additional fees.
App marketplaces.
App stores are among the earliest and most prominent B2B2C examples. Apple’s app storeisunique in that developers must use it if they want to sell mobile apps for iPhones or iPads,which is not the case for Google Play/Android phone apps. Both providers review all appssubmitted for distribution, in part to ensure a safe experience for users. The app storegenerates billions of dollars in annual revenue for Apple, while enabling developers toreach millions of potential customers worldwide.
Retail marketplaces.
Online marketplaces such as Amazon, Alibaba and eBay operate using a variety of businessmodels, including B2B2C partnerships with manufacturers and other suppliers. For example,they may list products and manage payment for suppliers that are then responsible forshipping the products to customers. Companies need to carefully consider their strategy for these marketplaces,due to their disruptive impact across multiple industries.
Level Up With Unified Omnichannel Commerce in NetSuite
NetSuite’s SuiteCommerce ecommerce solution helps companiesoffer engaging online experiences that increase web traffic, attract shoppers and driverevenue and profit. Companies can support B2B, B2C and B2B2C models — including ecommerce platform sales — from a singlesolution,with a unified real-time view across customer, order, inventory and other vital businessdata. This makes it easier for smaller businesses to diversify rapidly and adapt to newbusiness models and sales channels. Companies can offer personalized omnichannel experiencesthat let shoppers easily discover, learn about and purchase products; add reviews; and sharecontent across social networks. Because SuiteCommerce is one module in an integrated suiteof cloud ERP applications, companies can eliminate the need to blend disparate systems forecommerce, POS, inventory and order management, marketing, customer service and financials.
Business-to-business-to-consumer (B2B2C) partnerships can help companies accelerate businessgrowth, offer new services and increase convenience for consumers. Companies need to weighthe advantages of B2B2C against potential impacts on profit margins and customerrelationships.
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B2B2C FAQs
Why don’t businesses just go directly to consumers?
In many cases, B2B2C offers businesses several advantages over selling directly toconsumers. By using B2B2C partners for online sales and/or delivery, companies can avoid thecost and complexity of performing those functions themselves. They may be able to offerservices that they cannot offer on their own. Businesses also may be able to reach a widerset of customers by partnering with other companies.
What’s the difference between B2B2C and white labeling?
In a B2B2C model, customers are aware of the business partner they’re using, and theygenerally form a relationship with that company. For example, consumers using a deliveryservice platform to order food from a supermarket create accounts with the delivery serviceand become customers of that service. With white labeling, the provider of the product orservice is usually invisible to the customer. For example, many companies use third-partywhite-label services to provide online chat sessions to customers. The customersaren’taware that the service comes from a third party, and they don’t have to register withtheservice provider.
Is B2B2C the same as channel partnerships?
B2B2C is not the same as typical channel partnerships, such as selling products throughdistributors. A distributor buys products from a supplier and then resells them tocustomers. In a B2B2C model, the intermediaries generally don’t buy and resell theproducts.Instead, they partner with the original supplier to sell the products, deliver them orprovide other services. However, value-added reselling arrangements, such as technologysystems integrators that add design and installation services to a vendor’s productsorinsurance brokers that tailor a large carrier’s offering to the needs of anindividual, canbe considered B2B2C models.
How do B2B2C companies market to consumers?
Some B2B2C companies act as intermediaries between suppliers and consumers, marketing theirservices through advertising or other methods. The companies also offer a variety ofsuppliers’ products to consumers on their apps or websites; some accept paidadvertisingthat promotes products from those suppliers.
What is meant by B2B2C?
B2B2C is a type of business relationship in which one company relies on another to provideservices to its customers. For example, an app developer relies on an app store to sell anddistribute its software to customers.
What is the difference between B2B, B2C and B2B2C?
B2B means businesses are selling to other businesses. B2C means businesses are selling toconsumers. B2B2C combines both B2B and B2C. Here’s an example of a B2B2C arrangement:Anonline ordering and delivery platform offers its services to supermarkets (B2B); thesupermarket can then sell produce online to consumers via the platform (B2C).
What business model is B2B2C?
B2B2C is a type of business model in which companies partner to offer products or servicesto consumers. For example, a restaurant may partner with an online ordering and deliveryplatform to enable consumers to order online and have food delivered to their home.
Is Amazon a B2B or B2C or B2B2C?
Amazon operates a variety of business models, including B2B, B2C and B2B2C. It is best knownas a B2C company — it makes, buys and stocks many different goods in enormouswarehouses,sells them online and ships them to customers. It also operates as a B2B company, sellingsupplies to businesses. Finally, Amazon offers B2B2C services such as sales, warehousing andfulfillment for many third-party sellers.
