What does business-to-consumer (B2C) mean?

Business-to-consumer (B2C) transactions involve businesses selling their products and services directly to individual consumers. This model includes various industries like retail, ecommerce, hospitality, and entertainment, encompassing both small businesses and large brands, as well as brick-and-mortar and online retailers. B2C businesses have greater control over the customer experience, allowing them to target customers with customized marketing campaigns and refine product development. Online selling enables B2C brands to build loyalty through online communities and increase brand awareness through search engine optimization.

While many use B2C and direct-to-consumer (DTC) interchangeably, DTC is often considered a subcategory of B2C. It is distinct from business-to-business (B2B) ecommerce, where businesses sell to other businesses, such as software-as-a-service (SaaS) companies. B2C enterprises use channels like websites, social media, and physical stores to connect with their audience, drive sales, and foster brand loyalty, showcasing the fusion of commerce and consumer-centricity in the digital era.

What does business-to-business (B2B) mean?

Business-to-business (B2B) refers to transactions or interactions occurring between two or more businesses, rather than between a business and its consumers (business-to-consumer). In the multifaceted B2B landscape, enterprises engage in the exchange of goods, services, or information to support their operational needs, expansion goals, or value chain efficiencies.

B2B interactions encompass a spectrum of industries, ranging from manufacturing and wholesale to professional services and technology solutions, underpinning the global economy’s intricate framework.

What is a value proposition?

A value proposition is the unique promise of value that a business offers to its customers. It encapsulates the benefits and advantages of a product or service in a clear and compelling manner. It answers the fundamental question: “Why should a customer choose this product or service over alternatives?” A strong value proposition communicates the distinctive features, advantages, and benefits that set a brand apart from its competitors.

Why is a value proposition important to ecommerce strategy?

A compelling value proposition serves as the foundation of a brand’s online presence, guiding customers through the decision-making process and influencing their purchasing behavior. A well-crafted value proposition not only attracts potential customers but also helps to retain existing ones by reinforcing the brand’s unique selling points.

How does a strong value proposition drive action?

A strong value proposition has the power to inspire action among online shoppers. By clearly articulating the benefits and value that a product or service offers, it instills confidence and trust in potential customers, encouraging them to make a purchase. An effective value proposition resonates with the target audience, addressing their needs, desires, and pain points. It creates a sense of urgency and excitement, compelling customers to take action and engage with the brand.

What is DTC (direct-to-consumer) ecommerce?

DTC ecommerce (direct-to-consumer ecommerce; also referred to as D2C ecommerce) is a business model where merchants sell their products and services online, directly to their end customers, rather than involving third-parties like wholesalers, distributors, and large online marketplaces. By establishing a sales channel that involves selling directly to customers, direct-to-consumer brands can have greater control over the customer experience, paving the way for stronger customer relationships. 

Online sales & the customer journey of DTC brands

As opposed to brick-and-mortar stores, online stores allow consumers the convenience of purchasing products and services in a matter of minutes seconds, without having to travel to a physical store. Conducting business online also allows an ecommerce website the opportunity to increase brand awareness and build brand relationships through social media platforms. Customers may also find greater ease and convenience with managing their orders online via a customer portal or through strategies like transactional SMS.

Conducting DTC business allows brands to form direct business-to-consumer relationships with their end customers. A direct-to-consumer brand can shape the shopping experience for customers at every stage of the customer journey, and can also have more direct access to customer feedback and data. By strategically measuring this feedback and optimizing their business around key learnings, DTC brands can provide a highly customized experience that grows with their customers, leading to potential for increased engagement and higher customer lifetime value.

What is B2C?

B2C is an acronym for business-to-consumer, a retail model where businesses sell directly to consumers. B2C commerce is used by a wide range of companies, including both small businesses and large brands, as well as both brick-and-mortar and online retailers.

Because B2C businesses serve as direct sellers to their end customers, these brands have greater control over the customer experience. Their direct access to customer data enables them to target customers with highly customized marketing campaigns, and even can allow them to hone their approach to product development. When B2C brands practice online selling, they have the opportunity to strengthen brand loyalty by creating online communities around their products and services. They can also use marketing efforts like search engine optimization to reach a wider pool of potential customers, increasing brand awareness. 

Business-to-consumer vs business-to-business vs direct-to-consumer

Many people use B2C and DTC (direct-to-consumer) interchangeably, though some consider direct-to-consumer selling to be a subcategory of the B2C business model. B2C ecommerce should not be confused with B2B (business-to-business) ecommerce, where businesses sell directly to other businesses—for example, software-as-a-service (SaaS) companies.

What is an ecommerce merchant?

An ecommerce merchant is a business that sells products or services online. Ecommerce merchants conduct their business through online transactions made via the internet. By selling online, as opposed to (or in addition to) via a brick-and-mortar location, an ecommerce store has the potential to reach a more geographically diverse customer base and save time for customers in the shopping experience. However, online sellers also have unique needs, particularly surrounding ecommerce payments and security.

What is an ecommerce merchant account? 

An ecommerce merchant account is a type of commercial bank account that allows ecommerce businesses to accept and process online payments. To create a convenient and flexible payment experience for customers, an online business must be able to accept a wide range of payment methods, including multiple providers for credit and debit cards. Ecommerce merchant accounts provide a convenient user experience through seamless and secure payment processing. 

A merchant account provider can either take the form of a traditional merchant account or a payment service provider (PSP). When selecting ecommerce merchant services, it’s important to find a provider with strong integrations, security capabilities, and customer support options, as well as low fees and the ability to accept a variety of payment methods.

What is disintermediation?

Disintermediation refers to removing intermediaries from a process, distribution channel, transaction, or supply chain. It is informally known as “cutting out the middlemen.” As a business strategy, disintermediation allows producers to sell directly to consumers, and consumers to deal directly with those producers in return. This can lower prices around servicing customers, increasing the overall profit margin for a business. It can also give businesses greater control over the customer experience, as they have a more direct relationship with the end consumer. However, this strategy may at times increase shipping costs when businesses ship directly to individual consumers rather than a centralized location. 

Examples of the disintermediation business model 

Disintermediation occurs in a variety of industries and appears in a multitude of forms. While this concept originated in the financial industry, it is frequently used today with regards to online retailers and the DTC (direct-to-consumer) business model. Producers who choose to stop selling to third-party sellers and instead sell directly to customers are practicing disintermediation. When a traveler chooses to book hotel rooms directly from the hotel, rather than via a third-party hotel bookings website, this is also an example of disintermediation.

What is a one-time purchase?

A one-time purchase is when a customer makes a single purchase of a product or service via a one-time payment. For example, when you pay for the latest version of your favorite sneakers via a one-time fee, this falls under the one-time purchase category. Meanwhile, signing up for monthly fees in exchange for a gym membership falls under the recurring purchase category. 

Often, on an ecommerce website, one-time purchase options are displayed alongside subscription options for certain products. This gives customers the flexibility to choose the option that best fits their budget and other needs.

Combining one-time purchases & subscriptions

Although a one-time purchase option differs from a purchase made via subscription, subscription brands will often combine the two billing strategies within their business model. When subscription brands offer personalized one-time purchase options to their customers as a supplement to their existing subscriptions, this strategy is known as cross-selling. 

Best practices for cross-selling

Cross-selling is a valuable tactic that can increase average order value, customer lifetime value, and customer satisfaction. This strategy gives subscribers greater flexibility over their purchasing experience and provides them with targeted product recommendations that they may be more likely to enjoy.

When cross-selling, be sure to make the experience as convenient as possible for shoppers. Ensure they can access your recommendations on whatever device they’re using, be it a desktop computer or mobile phone. Offer cross-selling recommendations at multiple stages of the shopping journey, such as on the account page or customer portal, on product detail pages, and on the checkout page. Most importantly, personalize your recommendations to increase their likelihood of success, using customer segmentation to help back up your suggestions with data.

What is D2C (direct-to-consumer)?

D2C (direct-to-consumer; also written DTC) is an ecommerce business model where a merchant produces their own products or services and sells them directly to consumers. This differs from other business models, where third-party retailers or wholesalers can be used. Because businesses have a direct line to customers with the D2C model, direct-to-consumer brands typically have more control over their customer journey than traditional retailers, resulting in a more seamless and cohesive customer experience. Today, the D2C model is becoming increasingly popular among online stores looking to boost brand loyalty and customer retention.

Advantages for direct-to-consumer brands

With this business model, D2C brands have full control over the customer experience, including brand positioning, brand identity, product design, digital marketing, supply chain and shipping logistics, and more. What’s more, they also have direct access to customer data and feedback, allowing them to more effectively track product performance, customer satisfaction, and key metrics over time. Because of this, D2C brands have the potential to deliver a superior customer experience to traditional brands, as they have control over their entire process and can easily shift and adjust their offerings to suit their target audience.

What is market demand?

Market demand describes how much consumers in a particular segment want to purchase a certain product or service, making it an important consideration for ecommerce merchants. Market demand is determined by considering who those potential customers are and how many there are, the price they’re willing to pay for those goods and services, and the available market supply of those goods and services. It typically fluctuates over time based on a number of other factors, including time of year and unpredictable events that impact consumer behavior, such as a natural disaster. Supply and demand are closely related: As demand increases, prices increase, and as demand decreases, price decreases. 

Market equilibrium is when there is an equal balance of individual demands and quantities demanded. In other words, there is no over or under supply of goods or wildly fluctuating individual demand, resulting in a stable harmony for consumers and sellers. 

How to conduct market research for your ecommerce business

Researching market demand for your industry or sector is hugely beneficial for gathering key takeaways for your business such as pricing, managing inventory, forecasting, gathering information about customer response to certain products or services, and estimating how profitable your industry has the potential to be. Studying and analyzing trends in consumer demand is essential, as only studying demand for individual people or households may lead to inaccurate predictions and forecasting. 

A market demand curve can be represented on a graph by using price on a vertical axis and demand on horizontal axis. This typically shows a downward sloping line representing price increasing and demand decreasing. If quantity demanded increases when the price is lowered, the curve slopes upward.

Strategies for market demand research can include insightful analysis through social media surveys, tracking customer response to discounts on certain products, studying competitors, and keeping a pulse on topics and products trending on social media.

What is v-commerce?

V-commerce, or virtual commerce, is an ecommerce term that has a variety of possible definitions. It often refers to the buying and selling of goods and services with the help of virtual and augmented reality technology. Examples of this include augmented reality applications like virtual reality fitting rooms, shopping online via voice technology or voice assistants, and visiting “virtual stores” with the help of a smartphone or VR glasses. 

Alternatively, this term is sometimes used interchangeably with ecommerce. Some companies also use the term specifically to reference voice-powered commerce, or the buying and selling of goods and services via vocal commands on a compatible device. 

Voice assistant technology and online shopping

Voice assistant technology continues to grow smarter and more flexible. Natural language processing (NLP) and natural language understanding (NLU) allow virtual assistants to get smarter and smarter as they learn to accurately deduce what users want without getting stuck on how they say it. In other words, a voice assistant will be able to infer that asking, “Is it nice out?” means you’re interested in your local weather information. 

Online shopping through an artificial intelligence–powered smart speaker like Google Home or Amazon Alexa is growing in popularity with consumers and retailers as more and more homes become populated with voice assistant devices. 

For example, in the smart homes of the near future, shoppers could ask their voice assistant to buy more coffee from their favorite brand, seamlessly purchasing from the business’ virtual store and avoiding a need for a traditional retail trip to the store entirely.

What is click and mortar?

Click and mortar (also known as bricks and clicks, or the omnichannel business model) is a business model that combines both online and offline commerce experiences. For example, businesses in this category might enable customers to shop in both a brick and mortar retail store and via an ecommerce store. This integrated business model enables businesses to reach a wider group of customers while allowing customers the flexibility to shop and browse products using a variety of methods, independent of location. Because this model has so many benefits for both consumers and merchants, more and more retailers are employing the approach, from small business owners to large retail chains.

Benefits of the click and mortar business model

Transitioning to this business model can benefit both ecommerce and brick and mortar retailers. For ecommerce companies, adding a physical storefront can reduce digital marketing expenses and shipping costs while driving traffic to both their website and physical storefronts. For brick and mortar stores, integrating ecommerce strategies into the overall business strategy allows for the automation of certain business operations, such as customer service and inventory management. This model can also provide retail stores greater insight into consumer information and shopping data, influencing marketing strategies and allowing for more personalized approaches to the shopping experience both on their website and via their physical store.

What is omnichannel retail strategy?

An omnichannel retail strategy enables click and mortar business to seamlessly combine online and offline operations. This can include shopping for products in a physical store, browsing on mobile applications, and browsing on a website. The deeper the integration is among these various channels, the more seamless the customer experience will be, helping foster brand loyalty, boost retail sales, brand awareness, and more.