B2B2C: Pros and cons

The business-to-business-to-consumer (B2B2C) model has its pros and cons. While it's a great way to increase brand awareness and visibility, reach new markets, and increase sales by leveraging a partner's customer base, it can also impact profit margins and muddy the waters around who's responsible for the customer experience.

What is business to business to consumer (B2B2C)? 

Business to business to consumer (B2B2C) is a commerce model that describes when a business sells its products or services to another company, which sells them to its customers. It's a mutually beneficial relationship. For Business A, it's a way to reach new markets or sales channels by forming partnerships and leveraging the distribution channels of those partners. For Business B, this model can help you scale your business without investing capital into developing additional products or services.

How does B2B2C work? 

B2B2C works by using a business partner to sell your products or services to consumers you may not have been able to reach otherwise. The way B2B2C works can differ depending on the industries of both companies in the partnership, but here's a basic example of a B2B2C relationship:

• Business A sells products (usually wholesale or in bulk) or enters a service partnership with Business B.

• Business B is either a retailer or reseller who sells Business A's products or services to its customers. 

B2B2C vs other business models 

B2B2C versus other business models – what's the difference between B2B2C, B2B, B2C and D2C?

B2B2C vs B2B

Business to business (B2B) refers to one business selling to another – Business A sells Business B products or services directly. This differs from B2B2C, where Business B, likely a distributor or retailer, would sell its customers Business A’s products or services. 

B2B2C vs B2C

Business to consumer (B2C) is when a business markets and sells to consumers. In contrast, in a B2B2C model, Business A might make products and sell them through a local retailer, Business B. In a B2B2C partnership, Business A doesn't directly sell products or services to the consumer.

B2B2C vs D2C

The direct-to-consumer (D2C) model has similarities to B2C – the product goes directly to the consumer. However, the most significant difference is that no retailers, wholesalers or distributors are involved. A manufacturer may choose a D2C model and sell directly to customers via their online store. Under the B2B2C model, the goal is to reach end consumers via another business, such as a retailer or wholesaler. 

Pros of the B2B2C model

There are many pros of the B2B2C model – for both businesses and consumers. 

Exposure to larger customer bases 

Exposure to larger customer bases is a big advantage of B2B2C. When you partner with other businesses, you gain access to their customers and sales channels. These may be in new markets you've never explored, increasing brand visibility.  

Improved business growth 

Improved business growth for both parties can come from forming B2B2C relationships.  On top of reaching a broader audience and increasing sales, you can reallocate resources from B2C sales to focus on customer experience and product quality – all things that drive revenue and profit growth. 

Savings for consumers 

Consumer saving is one of the benefits of B2B2C. Using Uber Eats as an example, through B2B2C, the app increases the types of cuisine and number of food outlets a consumer can access – all from one place. This means customers can compare prices for the same or similar products from different businesses. 

Scalability for both businesses 

Another benefit is the scalability of both businesses in a B2B2C partnership. Instead of doing everything on your own, working with a partner allows you to scale to maximise profits – without adding more resources to develop new products or services or invest in new distribution channels.

Reduced overhead costs 

Reduced overhead costs through the B2B2C model might lower logistics costs. Say you're a grocery store and you partner with a delivery service. You won't need to invest in trucks or drivers or manage logistics to offer delivery to your customers. For the delivery service, there are substantial cost savings, too. It won't need to worry about food storage facilities, and through economies of scale, it can use its delivery network to deliver groceries from multiple companies. 

Convenience for customers

Convenience for customers – the B2B2C model means customers can deal with one company for multiple services, making shopping more accessible and straightforward. Using the same grocery store example, a customer can order the weekly shop online without stepping foot in the store, and they can also benefit from fast delivery. 

Cons of the B2B2C model

Like all business models, the B2B2C model has some cons – you'll want to determine whether the advantages outweigh these disadvantages before getting into a B2B2C partnership. 

Lower profit margins 

Lower profit margins – while working with another company gives you access to a new customer base, that partner will require commission and may add fees that further reduce your profits. You need to consider whether the increase in sales from the partnership exceeds lower margins. 

Reduced control over customer relationships 

You'll have reduced control over customer relationships. In a B2B2C partnership, the intermediary business is the one that connects directly with customers, meaning you have limited control over the customer experience once orders have left your business. Your partner may also choose to sell products or services from your competitors to provide its customers with more options.

Lower efficiency with more stakeholders involved 

With B2B2C, there's lower efficiency with more stakeholders involved. Collaboration, communication, and good relationship management are critical when more people are involved in your supply chain, including order fulfilment and delivery, to ensure issues don't impact customer satisfaction.

Business to business to consumer (B2B2C) use cases 

B2B2C use cases have diversified over the years, particularly with the introduction of online shopping. 

Here are three common uses cases of B2B2C:

Ecommerce

Ecommerce allows manufacturers and suppliers to sell their products through B2B2C partnerships with online marketplaces, allowing them to reach more customers worldwide quickly with minimal cost. It's a mutually beneficial relationship for the marketplaces because those manufacturers and suppliers often pay for other services like warehousing, fulfilment and dropshipping. 

Food and beverage industry

The food and beverage industry has many examples of profitable B2B2C relationships. Food delivery services like Uber Eats and Deliveroo let customers order food items from restaurants, supermarkets and liquor stores near them and have them delivered. This arrangement lets those businesses offer home delivery through a third-party provider without investing in delivery vehicles or hiring additional staff. 

Retail industry 

For the retail industry, B2B2C partnerships provide a way to offer customers online ordering and expedited shipping services. For brick-and-mortar stores, this could be listing and selling products through an online marketplace. Retailers must have inventory management software to track stock levels. Still, it can be a small investment compared to the number of potential customers you can reach. 

Real-world B2B2C examples 

Here are three real-world examples of B2B2C:

Amazon 

Amazon is an online marketplace that uses a variety of business models, including B2B2C partnerships with manufacturers and suppliers. While it's best known for its B2C operations – selling products online and shipping orders to customers – Amazon also offers services such as sales, warehousing and order fulfilment for third-party sellers. You can use Amazon's marketplace to sell your products as an online retailer. At the same time, Amazon takes care of order processing and delivery through its fulfilment centres. 

Airbnb 

Airbnb is another real-world example of B2B2C. Airbnb lets accommodation providers like landlords, hotel operators and property managers list their properties on its platform for a fee. At the same time, it takes care of connecting travellers with accommodation options worldwide that suit their needs and travel plans. 

App stores 

App stores are one of the earliest examples of B2B2C. App stores like Google Play Store or Apple's App Marketplace are platforms developers can use to sell their mobile apps to users. Both providers generate revenue from their respective app stores while enabling developers to reach millions of potential customers worldwide. 

B2B2C FAQs 

What is the difference between B2B2C and marketplaces? 

The difference between B2B2C and marketplaces is subtle because marketplaces are an example of the B2B2C model in action. A manufacturer (Business A) can sell its products through an online marketplace (Business B) to customers (consumers). Where marketplaces differ from B2B2C is they can also facilitate transactions between businesses and customers through other models like B2C. 

What is the difference between B2B2C and channel partnerships? 

The difference between B2B2C and channel partnerships is that under a B2B2C model the two businesses work collaboratively and the end customer knows which company their product or service originated from. A channel partner is focused on marketing and distributing a product or service on behalf of a manufacturer or producer. However, the end customer may not be aware of who the original manufacturer or producer is. 

Get support from MYOB – whatever business model you choose.

For many B2B and B2C businesses, finding the right B2B2C partners can effectively expand your reach and scale quickly with minimal investment. Whichever models underpin your business, you need a robust accounting platform to track your financial performance, like MYOB Business. That way, you can focus on higher-value tasks like improving customer service and all the other work involved in running a small business.

Get started with MYOB today. 

Disclaimer: Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.