Could B2B2C transform your B2B business?
Traditionally, B2B and B2C are two separate entities. For many companies, this still works – and will continue to work – perfectly. The online world is changing though. With all the exposure they receive to ever-developing technology, many end consumers now expect more. To understand these end consumers’ needs more fully, some B2B businesses are working towards including them, as well as serving their normal distributors/wholesalers and retail partners, into their model. Implementing this B2B2C (business-to-business-to-consumer) or B2X or B2E (business-to-everyone) model is not necessarily right for everyone. It requires creativity and innovation and could well give you an edge over your competitors.
The definition of B2B2C
B2B businesses like manufacturers and wholesalers have traditionally been one or more steps away from the end consumer. They simply deliver their goods to their B2B customers, with those customers retaining the end consumers’ data and loyalty.
B2B2C combines the business-to-business (B2B) and business-to-consumer (B2C) models. As per the diagram below, this allows manufacturers and wholesalers direct access to their end consumers in one of two ways, either:
- Partnering with the B2B customers; or
- Going to the end consumer directly.
The B2B2C model in more depth
The B2B2C model can take many different forms and the form you choose really depends on your industry, your products, your systems and how innovative you are with partnering in your industry.
These are some of the possibilities:
1. Normal B2B
In a traditional B2B model (as per number 1 in the diagram below), your business – let’s call it “The Company”- sells to B2B customers. These B2B customers may be retailers with direct access to the consumer (as in the diagram), or there may be one or more further steps in the process. The retailer holds all customer information and loyalty.
Totalsports is a good example. The end consumer is loyal to Totalsports and buys their sport equipment there. Totalsports keeps track of and analyses their data, such as whether they buy Nike or Asics running shoes, or a Dunlop or Slazenger tennis racket. Nike and Dunlop do not have visibility of the customer’s buying patterns, price sensitivities or product preferences. Of course, Nike and Dunlop get valuable information from the buying patterns of Totalsports, but this data doesn’t come directly from the end consumer.
2. Direct B2C
One sure and fast way for The Company to enter the B2B2C model is to add a B2C channel, as in number 2 in the diagram above. This channel could be your own B2C e-commerce site or a bricks-and-mortar shop that sells directly to the consumer under your brand name.
For example, South Africans can buy directly from Nike’s local online shop and there are Nike outlets around the world (in South Africa these are mostly factory stores).
This immediately gives you access to information about the end customer, including product needs and preferences, pricing sensitivities and buying behaviour, as well as all marketing channel and sales data.
This model is working well for some of our B2B clients, like Plumblink, for example. For some of our other B2B customers though, their dealer system complained about being undercut and excluded long term. Proceed with caution if you are considering implementing this model or you may end up with channel conflict.
3. Partner ecosystem
Another way to implement B2B2C is to collaborate with long-term business partners. This allows you to control your own brand, as well as to retain customer data and communication channels.
This collaborative process of sharing data, marketing and sometimes business processes can be done offline, but it is much more efficient and effective to build this ecosystem online using e-commerce and other integrated software.
As you integrate information sharing into your system, everyone benefits. You can fine-tune or expand your offerings, and the entire ecosystem becomes more competitive. This method builds high barriers to exit for your partners. It also helps you to tap into many revenue streams, hedging your risks.
There are many innovative ways to do this, depending on your product and industry (see some examples below). As always, understanding who you are selling to is crucial.
For more information on how to build an ecosystem using our e-commerce solutions, read about our B2B 123 approach
Traditionally, the B2B2C model has worked very well in insurance, and a good example of a brand that has built a partner ecosystem is Hollard. See all their partner systems below:
When does B2B2C work?
If you’re considering implementing B2B2C, the relationship needs to benefit both your own business (The Company) and your B2B customers’ (those selling to the end consumer). Let’s examine the key elements that need to be in place for B2B2C to work:
For The Company, wanting to implement B2B2C:
- Your B2B customers should be willing and able to give you access to consumers who might be interested in buying your products.
- What you offer should not be “white label”. Instead your products and brand should eventually be well recognised in their own right by end consumers.
- You should have direct access to the end consumers’ data. This makes it possible to tailor your products and services to more closely match customers’ needs, expectations and behaviour now, and then to scale up over time.
For The B2B customer – selling to the end consumer:
- Your B2B customer needs to be willing to sell a wider range of products or services than is perhaps dictated by their core business. These extra products and services should add value to their normal offerings and to their customer (the end consumer).
- Your B2B customer needs to have no interest in entering your industry themselves. They choose to rather take advantage of what you, The Company, are offering, at little or no risk to them.
- Your B2B customer needs to make good money from the deal. This will incentivise them to sell more of the products and services offered by you, The Company.
If the points above apply to you, B2B2C may well take your business to the next level. In a nutshell, your business, The Company, gains access to a wider market. In turn, your B2B customer gains credibility and makes its customers happy by selling a more extensive range of products, plus it makes a profit from the mark-up.
Some examples of B2B2C models
Here are a few examples of how companies have approached the B2B2C model for their circumstances and industry:
Plumblink’s main customers are plumbers and builders (B2B). You may notice that their stores and e-commerce site have changed recently to reflect this main focus. However, it’s still very easy for B2C or even walk-in customers to buy from Plumblink stores or from their website. They use both the number 1 and 2 models in our diagram above, with a slight tweak as their ‘bakkie plumbers and builders” (still B2B) use their outlets to pick up goods.
In the financial services industry, products are owned by large financial service providers or insurers, such as Discovery or Sanlam. They are sold through financial advisors (B2B), both independent and in-house, who are trained to assess a client’s situation and recommend suitable products for them.
These other examples from EY Consulting show how getting directly involved with customers (B2C) allows you to better respond to their needs and to innovate:
If your business manufactures aircraft engines, you will mostly be selling B2B to plane manufacturers. To enter the B2B2C model you may buy a B2C engine maintenance business, expanding your offering to become an after-sales service provider to the airlines. You add an extra income stream and also get direct access to data from those end customers. That may allow you to adjust the parts you make or expand into new areas of business.
If your company makes paint and sells it to car manufacturers, you have a pure B2B business. When you also use that paint to offer a painting service directly to car owners (B2C), you become a B2B2C business. You can charge more for the painting service than for the paint as it’s higher up the value chain. If you then improve the quality of your paint as a result of what you learn from painting cars, you also add value for your original B2B customers, the car manufacturers, who can then provide a better product to their customers.
Another way to leverage your partner ecosystem is to monetise B2C data. For example, if you make nuts and bolts that you sell to tyre companies (B2B), you could embed performance sensors in them, essentially creating a new product i.e. data from the end consumer. You can use that data yourself to improve your tyres or you could partner with an insurance company (a B2B) who can offer discounts to drivers (B2C) who maintain their cars well.
Or you could go higher up the value chain and use those sensors to predict when tyres need maintenance or replacement. Then partner with a tyre company to offer a subscription that lets customers know when to come in for a tyre service or replacement, based on the data you’ve gathered. Then you are selling safe driving, not just nuts and bolts.
The only limit to how you apply this model is your imagination.
The bottom line
When you implement B2B2C in your business, you gain access to your partners’ retail network and to data about your end consumers. This is critical as business success is no longer simply dependant on selling good products at good prices.
As Mariusz Serafin, Head of Marketing and E-Commerce, Lancerto SA, said: “I remember a time when product + characteristics = benefit. Today it’s all about how consumers feel. It’s feelings and related emotions that are gaining importance, rather than products themselves”.
Customer experience trumps everything, and so your objective in considering a B2B2C model becomes: “how can I help the end consumer, and hence my business customers, buy more from me”. The idea is to create a win-win-win.