What is the B2B2C model? Meaning, companies, and examples - LogRocket Blog (2024)

B2B2C, or business to business to consumer, represents a new approach in product management and business models. It combines the traditional B2B (business-to-business) and B2C (business-to-consumer) methods in that businesses partner with each other to develop and deliver products to end consumers.

In this guide, we’ll define the B2B2C model, the benefits of embracing this approach versus B2B and B2C, and best practices for implementing B2B2C strategies in your organization.

What is the B2B2C model?

B2B2C is a model in which a business sells its product to the end customer through third parties (another business) or by collaborating with other businesses. Under the B2B2C business model, businesses partner under contractual terms to bring products to market, effectively combining the B2B and B2C frameworks.

A common example of B2B2C is an ecommerce marketplace. In the following sections, we will explore some examples in detail of strategies employed by successful B2B2C companies.

Benefits and challenges of the B2B2C approach

Engaging with the B2B2C model is, indeed, a strategic decision that can accelerate a company’s growth while fostering lasting relationships with customers. The best results come from seeking out collaborative efforts that result in shared success, bringing together businesses and customers in a mutually beneficial ecosystem.

The B2B2C business model has emerged as a dynamic, versatile strategy that holds immense promise for businesses. But before you consider whether to adopt or transition your business toward a B2B2C model, you should carefully consider the risks and rewards associated with this strategy.

Benefits

This approach brings forth numerous benefits, particularly in distinct contexts that demand more agile and strategic solutions:

• Broadened market influence — B2B2C enables you to tap into larger customer bases with the aid of another established business platform. This synergy translates into more streamlined go-to-market strategies, exponentially amplifying your market reach
• Varied revenue opportunities — With the B2B2C model, businesses have the opportunity to step out of their comfort zones and explore a myriad of platforms and partnerships. This strategy fosters a mutually beneficial environment, allowing revenue growth and diversification for all involved parties
• Superior customer experience — Often, the collaborating business boasts an impressive market presence and sophisticated customer service framework. By selling products on such a platform, companies can ensure that their customers receive an enhanced, superior experience
• Cost-effectiveness — Another allure of the B2B2C approach is the significant reduction in overheads. With the luxury of an already-established platform, your business can cut back on expenses related to branding, marketing, and administration. Consequently, you can invest more resources in designing and creating the perfect products for your customer base

Challenges

While the B2B2C model offers numerous benefits, it also presents some challenges:

1. Balancing conflicting needs — Businesses selling their products on partner platforms must manage the needs and requirements of both end customers and the partner business. For example, end consumers may demand faster time to market, but the platform may not offer this capability
2. Reduced control over the end customer relationship and experience — Partnering with another business can result in diminished control over the end customer relationship or experience. The product business must accept what the partner business offers, which may or may not align with their desired customer experience
3. Reduced profitability — Partner fees and other costs associated with collaboration may decrease the profitability of the product business

B2B2C vs. B2B and B2C

The B2B2C model evolved from business-to-business (B2B) and business-to-consumer (B2C) product management. B2B primarily focuses on products built by businesses for consumption by other businesses (e.g., Twilio, an API-based messaging platform used by companies to build real-time messaging capabilities), while B2C targets products meant for adoption by end customers (e.g., Apple phones purchased for personal use).

B2B2C is a hybrid of these two models. Below, we outline some similarities and differences between these three product management models:

Similarities

First, let’s explore some ways in which B2B, B2C, and B2B2C are similar from a product management perspective. All three models:

• Aim to develop products or provide services targeted at specific customer bases (be it a business or an end customer)
• Involve at least one business entity
• Require digital capabilities

Differences

The table below outlines the major differences between B2B, B2C, and B2B2C product management:

Real-world examples of successful B2B2C companies

In recent years, particularly since the mid-2010s, there’s been an appreciable upsurge in successful companies that have harnessed the power of the B2B2C model. By transcending the conventional boundaries of B2B and B2C models, these firms have managed to carve out a unique space for themselves across diverse industries.

From the realm of ecommerce to sectors like ridesharing, vacation rentals, and technology services, the B2B2C approach has proven its value time and again. Let’s take a closer look at some companies who’ve leveraged the B2B2C model successfully and consider the strategies that have propelled their growth:

• Ecommerce titans: Amazon, Alibaba, and Shopify
• Uber: Revolutionizing the ridesharing industry

Ecommerce titans: Amazon, Alibaba, and Shopify

Amazon, Alibaba, and Shopify, three of the most dominant players in the hypercompetitive ecommerce industry, have capitalized on the B2B2C model in remarkable ways.

The common business strategy among these behemoths is to furnish robust retail platforms where other businesses can showcase and sell their products to end customers directly. This enables them to sidestep the enormous costs and challenges associated with building their own ecommerce platform, marketing endeavors, and other operational considerations.

But the benefits extend beyond cost savings. The B2B2C model these giants offer allows businesses to gain exposure to a much broader customer base, which would be significantly harder to achieve independently. Hence, their success lies in offering a shared value proposition to both businesses and end customers alike.

Uber: Revolutionizing the ridesharing industry

Another example of an exceptional B2B2C strategy is Uber. The ridecharing giant’s groundbreaking app provides a seamless platform for drivers to sign up and generate income by offering rides to members utilizing the Uber app.

Uber’s genius is twofold. It:

1. Creates a pathway for drivers to augment their profitability by tapping into a vast customer base, something far beyond what individual drivers could ordinarily access
2. Grants customers easy access to a network of reliable, vetted drivers, thereby simplifying the process of securing a ride.

In each example described above, the success of these B2B2C companies stems from their ability to create an environment where businesses can conveniently reach and serve their customers. Meanwhile, end consumers receive enhanced services.

This two-pronged approach forms the heart of the B2B2C model, paving the way for innovative business strategies that benefit all parties involved.

Developing and implementing B2B2C strategies

Whether your business is considering transitioning toward a B2B2C model, launching a new B2B2C product, or simply trying to optimize existing strategies, a deep familiarity with the model is crucial to keep up with an increasingly diverse and complex business landscape.

The B2B2C model offers a unique opportunity to capitalize on the strengths of multiple entities, orchestrating a synergy that can drive remarkable growth. However, harnessing this synergy requires a keen understanding of the interplay between various stakeholders — namely, the platform business, the product or service provider, and the end consumer.

Let’s zoom in on three core aspects of developing and implementing B2B2C strategies:

• Understanding the needs of businesses and consumers
• Creating value propositions
• Building strong partnerships

Understanding the needs of businesses and consumers

In a successful B2B2C strategy, the ability to accurately discern and address the needs of all stakeholders is paramount.

As a product manager, your role is pivotal in ensuring this understanding permeates your strategy. This means gaining a deep insight into the goals, needs, and expectations of the platform business, the product or service provider, and the end consumer.

The ability to simultaneously cater to diverse sets of needs — from functionality for businesses to user experience for consumers — is what sets apart the truly successful and visionary B2B2C companies and products/services.

Creating value propositions

A well-defined value proposition is the cornerstone of any effective B2B2C strategy.

It’s the product manager’s job to sculpt value propositions that resonate with all the parties involved. The platform business needs to be assured of its market reach, customer base expansion, and enhanced marketability. The product business should find value in the offerings they can effectively deliver to a wider audience. Meanwhile, customers should perceive clear benefits that trigger their purchasing decisions, ultimately driving sales and profitability.

Building strong partnerships

The B2B2C model inherently hinges on collaborations between businesses. For this model to truly flourish, product managers need to construct a robust framework that fortifies these partnerships. This encompasses aligning interests between partners, devising mechanisms to generate mutual benefits, and establishing contractual agreements that foster a balance of trade-offs.

It’s through these strong partnerships that a B2B2C strategy can thrive and sustain in the long term.

Conclusion

Understanding and implementing B2B2C strategies can be an invaluable skill set, opening up a new world of growth and profitability for product managers in ecommerce and beyond.

The ability to successfully integrate the needs of businesses and end consumers, create compelling value propositions, and foster strong partnerships is a vital component of the B2B2C playbook. This blend of strategies can propel your company into a new era of success.