What are the differences between B2B and B2C?
There are many differences between B2B (business to business) and B2C (business to consumer) business models – including markets, sales cycles, products, marketing strategies and legislative requirements. This guide covers eight key differences between B2B and B2C.
What is business-to-business? (B2B)
Business-to-business, abbreviated to B2B, is a business model that involves selling your product or service to other organisations, rather than to individual consumers. Businesses in this category can sell anything from consultation services or software to raw materials or wholesale products.
Examples of B2B businesses
Examples of B2B businesses don't need to fit into a specific category – the unifying factor is who they sell to, not what they sell.
These are all examples of B2B businesses:
Businesses that supply software solutions and cloud data services for professional use
Manufacturers that sell bulk goods to distributors or retailers to on-sell to consumers
Professional service providers, like accountants and consultants, who specialise in business services
Providers of equipment and machinery for manufacturing
Marketing or branding agencies
What is business-to-consumer? (B2C)
Business-to-consumer or business-to-customer (B2C) companies sell products or services directly to individual consumers typically in brick-and-mortar stores, online or a combination of the two.
Examples of B2C businesses
Here are some examples of B2C businesses:
Retail stores that sell clothing, homewares, electronics or any other product
Grocery and convenience stores
Restaurants and cafes
Car and vehicle rental companies
Streaming services such as Netflix and Spotify
8 key differences between B2B and B2C
The key differences between B2B and B2C business models include their target markets, marketing approaches, the length and complexity of their sales cycles, and their sales volumes.
1. Target audience or market
Target audience or market is one of the most important differences between B2B and B2C businesses. B2Bs market and sell to businesses – usually via an internal decision-maker or purchasing team – while B2C organisations target individual consumers.
Of course, it's a bit more complex than that. In both B2B and B2C companies, your audience can be segmented into groups for more specific targeting. B2B models tend to segment their audience by industry, location and business size, while B2C may segment by demographic data, geographic location and browsing behaviour.
For example, if you run a B2B company selling inventory management software, your target audience could be wholesale and distribution businesses with 50-300 employees, based in New Zealand or Australia.
2. Marketing strategies
B2B and B2C businesses also use different marketing strategies to promote their products and services.
B2B marketing tends to showcase business expertise and points of difference through case studies and detailed product specifications. This type of business also leans on networking and word of mouth more than a B2C organisation, using recommendations and personal introductions to find an 'in' with a new company. Because the sales cycle in a B2B business tends to be more drawn out, part of your role as a business owner is building long-term relationships with clients, with the aim of moving them down the sales funnel to purchase.
B2C marketing tends to involve less individual relationship building. While there’s often no direct contact between you and your customer, you may use personalised messaging to target specific customer groups. Marketing to consumers also tends to focus on brand perception over product value; for example, a B2C clothing company might emphasise trends, rather than concrete facts about materials and garment quality.
3. Sales cycle
The length and complexity of the sales cycle can vary significantly between B2B and B2C businesses, which means managing sales in different ways.
Because B2B sales may involve high volumes, high values, ongoing contracts and multiple decision-makers, they tend to be longer and more complicated. Your sales process may involve a multi-stage sales pipeline, pitch meetings and proposals, demos, contract negotiations and other back-and-forth – even custom solutions in some cases.
The B2C process is usually shorter and simpler. While some B2C businesses sell high-value products that involve a longer sales cycle, most sales are relatively small and quick, with individual consumers making the purchase decisions.
4. Customer relationships
Customer relationships are equally important for B2B and B2C but for different reasons.
With a longer sales cycle and a higher level of investment for the customer, relationship building is crucial for B2B sales. Your salespeople and business owners work closely with clients from the beginning, developing trust and rapport that will carry through the entire business relationship. This type of business often involves ongoing support and adjustments to the product or service offering, which is easier when there's a strong business-client relationship to draw on.
If you manage a B2C business, relationship-building is just as important but may be less personal (depending on the type of business you operate). Instead of a one-on-one relationship between salesperson and customer, relationships and trust may develop through marketing and eDMs, branding and social, and in-store or online customer service experiences.
5. Customer order volumes
Customer order volumes are another key point of difference between B2B and B2C business models.
Most B2B sales are higher volume – and higher value – with fewer transactions. The sales process may be long and slow compared to B2C operations, but the result makes it worthwhile, whether you're selling raw materials in bulk, wholesale products for retail sale, or software solutions.
If you run a B2C business, the opposite is true. Instead of a few big sales every week or month, this model relies on a high volume of smaller transactions from a large pool of customers.
6. Warehousing and storage
Warehousing and storage or fulfilment used to be more common in B2B, particularly in manufacturing and distribution. Now, the direct-to-consumer sales model means some B2C businesses also rely on large-scale warehousing.
If you manage a B2B company, you might store imported products, raw materials or finished goods produced by your business temporarily, before they're shipped out to clients in large quantities.
In B2C operations, warehouses may be used to keep products in an accessible location before they're ordered in your ecommerce store. When a customer makes an order, it's picked, packed, and shipped out with help from a warehouse management system. Depending on your product and where it's manufactured, you may also use the help of a fulfilment centre or dropshipping company.
7. Pricing strategies
Pricing strategies vary between B2B and B2C companies, too.
B2B businesses tend to use segmented pricing, offering different prices based on company size or the volume of product. For example, if your business sells wholesale wine, you offer a lower price to retailers that buy more cases. Similarly, service-based businesses often offer price breaks to customers that book a certain number of services.
B2C companies have traditionally used static pricing – offering a product or service at the same price for all customers – but that's changing. Some B2C businesses, particularly in the hospitality and travel industries, now use dynamic pricing to vary prices and optimise profitability. If you use this model, you tweak pricing based on a number of factors, including time, channel or competitor prices.
8. Consumer guarantees
Australian Consumer Law (ACL) covers B2B and B2C transactions, but there are differences in how the rules apply.
Under the ACL, protection for individual consumers is standardised. B2C businesses must provide goods and services at an acceptable quality, fit for purpose and matching the description on your website or packaging. If a product doesn't meet these standards, you're required to offer a refund or replacement. In some cases, you may need to provide compensation if a customer suffers damage or loss as a result of your product or service.
B2B sales are covered by the same act, but the rules are slightly more flexible. This is because businesses can negotiate their own contract terms, which offer customised protection and recourse if a sale goes wrong.
B2B vs B2C FAQs
What are the differences between a B2B and B2C product?
The main difference between a B2B and B2C product is who the product is sold to. Businesses may sell to other businesses (B2B) or to consumers (B2C). It’s important to note that these businesses may sell the same products, but their target audiences, marketing strategies, sales cycles and pricing vary.
B2B companies are more likely to sell raw materials for manufacturing, business solutions, and wholesale goods for resale. B2C operations usually sell finished products directly to the consumer, like electronics, groceries, clothing or homewares.
Are B2B or B2C sales more profitable?
Both B2B and B2C business models can be very profitable, as long as you manage your business effectively. Individual B2B sales tend to be higher value than individual B2C sales, and businesses are likely to procure goods and services in larger volumes.
What is the difference between a B2B and B2C customer?
The key difference between B2B and B2C customers is that one represents a business, while the other is an individual consumer. There are also differences in their purchasing behaviour, decision-making and requirements.
For example, B2B customers tend to focus on long-term product value, ongoing support services and how a purchase fits into their operating budget. Individual B2C customers are less formal, often making decisions based on emotion and perceived value, rather than concrete product differences.
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