“I always avoid prophesying beforehand because it is much better to prophesy after the event has already taken place.” — Winston Churchill
In reference to the above quote by Churchill, predicting the future is often a fool’s errand. No one can see tomorrow.
However, if the current trends and patterns are anything to go by, the future of the commerce industry as we know it is quickly and advertently going digital. According to experts, eCommerce stands at 10 trillion dollars and is expected to grow at a compound annual growth rate of 4.7% from 2020 to 2027. This means that eCommerce is the future for both B2B eCommerce and B2C eCommerce models.
Hence whether you are an aspiring business owner or a seasoned one, it is important to have a good grasp of the differences between B2B and B2C eCommerce business models.
B2B vs. B2C
A B2C (Business-to-customer) is a business model that sells products or services directly to the end consumer. Examples include:
On the other hand, a B2B (Business-to-business) business model sells its product or service to other businesses. Examples include:
Although the differences are as clear as day and night (discussed in detail later), it is not always a clear cut between the two models. Sometimes there is an overlap.
For example, a B2B business will likely not turn down an order because it came from an end-user instead of a company. Also, there are many cases of a business purchasing goods and services from a B2C company, only to rebrand the products and sell them as their own.
With that said, here is a breakdown of 10 key differences between a B2B and a B2C eCommerce business that you should know.
10 Key Differences Between B2B & B2C eCommerce
The Complexity of the Purchasing Intent and the Decision-Making Process
In a B2C market, the buyer decision is mainly driven by a single individual’s emotions. A purchase occurs only when the consumer feels the emotional need to purchase the product or service.
For example, Apple has found a way to benefit from the consumerism phenomenon. They use people’s emotional need to be seen with the latest and the greatest to fuel their retail business. And it is working like a charm.
In addition, In a B2C market, consumer emotions drive compulsive, unplanned, and sporadic spending that accounts for the biggest chunk of the sales. A person will walk into a supermarket to buy bread but walk out with three more items.
Compared to this, B2B eCommerce buying intent is a lot more complex. A purchase is made based on rationality and logic. The buyer has a lot to consider before deciding to buy: profit to the business, the long-term benefits of the purchase on the business, the options available, etc.
Also, for most B2B customers, it is more than just deciding to make a purchase. There is an elaborate purchase process that involves more than an average of seven stakeholders.
Here is an example of an average company’s purchase process;
The Marketing Approach
For the two markets, the marketing approach is entirely different. The channels are different, as well as the way you engage the customers. This is mainly due to the difference in the needs and decision-making process of each model.
For example, in a B2C market, conversion is king. So there is a lot of emphasis on visual and emotional appeal. This is why B2C eCommerce businesses focus heavily on visual advertising, targeted content curation, and sometimes utilize social influencers to drive their products and services.
In the B2B market, however, the key focus is to generate more leads. So instead of paying for ads on social media platforms like Facebook, the focus is to network on professional platforms such as LinkedIn.
Also, instead of pushing the products out through social influencers, the businesses focus on getting direct contacts to the customers so that the sales team can get in touch with the customers one-on-one.
Breadth of Audience
This is one of the main differences between B2B and B2B eCommerce models—the size of their customer base.
Depending on their niche, a B2C company strives to reach as big of their audience as possible. For example, a B2C eCommerce in the sports field will use all available means to reach as many athletes as possible.
A B2B eCommerce business has an audience a lot more narrow. They have a smaller number of customers, and therefore, their target market is very straightforward.
Customer Lifecycle, Long-Term vs. Short-Term
B2B sales thrive on long-term, well-cultivated relationships. Direct consumers can see a very appealing advertisement online, log into your website and make a single purchase, never to return. Next time they have the same needs, they will probably purchase after watching a different advertisement from a competitor.
On the other hand, in a B2B model, once you have built a good foundation with a customer, the relationship is likely to last for years.
This is partly due to the potential customer’s internal purchase authentication process and the decision-making process. The decision is directly linked to the customer’s company-wide long-term goals and therefore requires better-developed relationships.
Average Price Point: Different Transaction Volumes
The Average Order Value (AOV) of a B2B eCommerce purchase is much larger than a B2C eCommerce order. On average, the AOV of a B2B order is estimated to be at least seven times more than a B2B order.
This means that a B2C business may need to serve a few thousand more customers to match a single B2B sale. It is not unlikely to see a small B2B business serving only a few customers but making a higher profit than a mega B2C business.
As such, the pricing between the two models is very different. In a B2B eCommerce model, the pricing is more complex and, in many instances, negotiable depending on various factors. This is not the same in a B2C model, where prices are always fixed, and consumers rarely have room to negotiate.
This illustration by Christoph Janz gives a very vivid picture of how different the pricing model between the two models looks.
For a B2C eCommerce model, everything about their brand is aimed at attracting the customer. Hence, their main focus when growing a brand is to create something that is visually appealing to the users.
For example, a hair extension niche B2C website uses more captivating language and adds more visually appealing photos to capture a customer’s attention.
See this website snippet from American Hair Shop, for example:
On the other hand, a B2B web application focuses more on the value of the information their client needs than the site’s visual appeal.
As such, their websites (and brand) is much more conservative than their B2C counterparts.
Here is an example of a hair extension manufacturer website;
In addition to the site’s visual appeal, B2C customers need a more elaborate customer interface on the seller’s website. This means they want to search, filter, and sort search results before settling on a specific product.
In this regard, the simpler, the better. With their busy schedules, B2C customers do not have the time to comb through pages of unrelated products.
Although B2B customers need the same functions when searching for products, they are more relaxed and will do just fine with a brochure in an email.
Payment and Order Cycle
In a B2C model, a customer makes an order and uses an instant payment method like a credit card. Once the order is confirmed, the customer expects the product to be delivered safely, reliably, and in the shortest possible time.
Compared to a direct consumer, businesses have more flexible delivery expectations, which depend on order processing, approval, production of the order batch (depending on the order size), packaging and shipping expectations, etc.
In addition, businesses expect to have more than one payment option. A B2B business must have a broader range of payments options and should handle unique pricing constructs to accommodate all their customers.
A B2C eCommerce offers customer service to their customers while a B2B eCommerce offers account management. As such, there are very distinct customer relations management expectations.
In a B2B model, relationships are already established, and customers are now considered accounts. These accounts have designated account managers who are tasked to be at the beck and call of the customer.
In a B2C model, however, the purchase is driven by emotions, and the relationship tends to be more transactional than personal. Most times, the B2C customer service provider does not even know the name of the person on the other end.
The Information Required: Logic vs. Emotions
Based on the needs of both models, the type of information needed for each is different.
A B2C customer needs to feel emotionally good and understand how the product will benefit them personally before making a purchase. The customer is actively seeking relatability that feeds into their emotions. Thus, the information the B2C business put out needs to be emotional and provide personalized solutions to their customers.
On the other hand, B2B customers are more logical than emotional. This means that the information needs to be logical and have well-detailed product specifications.
Putting It All Together: B2B vs. B2C eCommerce
While most B2B and B2C business dynamics are the same, it is crucial to also keep the differences in mind.
For example, if you plan to transition from a B2C to a B2B model, it is important to consider upgrading your website and the whole brand in general. It will give you an upper hand when you start dealing with bigger and more professional B2B clients.
And when seeking the best, it is always crucial to find a company with enough experience and a solid portfolio to guide you through.
At Pivofy, we create exceptional, high-performing, and results-oriented B2B eCommerce websites on Shopify PLUS.
Contact us today and migrate your company to eCommerce within a guaranteed period of 60 days.