The business-to-business (B2B) and the business-to-consumer (B2C) models have led commerce for many years, even before these terms were created.
The B2C model is split into two types. Traditional B2C involves selling products to consumers through retailers, while direct-to-consumer (DTC) cuts out the retailer, selling directly to consumers without any intermediaries. With the rise of peer-to-peer retail on platforms like Facebook Marketplace, there’s even consumer-to-consumer (C2C) commerce.
But another model is taking hold in commerce. Businesses are now reaching consumers through a B2B2C model. This involves platforms, aggregators, and partner businesses; enabling retailers, restaurants, and service providers to reach a wider audience. Keep reading to learn everything you need to know about this emergent business model.
What is the B2B2C business model?
B2B2C stands for business-to-business-to-consumer. It’s a business model in which one company sells a product or service to another company. The product or service enables the second company to better sell its own products or services to end consumers, with both brands participating in the transaction. Unlike a channel partnership, in which a brand sells its products to a retailer for resale, the B2B2C model gives both business partners direct access to the end consumer.
In B2B2C, Company A provides a service (like a tech platform or financial product) that allows Company B to expand its business by making more sales. Importantly, the consumer is aware of both brands’ involvement.
A reservation platform, for instance, sells its software to restaurants, which use it to reach customers and get reservations—with both brands visibly part of the process from the consumer’s point of view. This benefits both brands. Users of the reservation platform discover the restaurant when looking for dining options on the app. The restaurant’s customers may be redirected to the reservation app when they book their next dinner.
Real-world examples of the B2B2C model
To make the concept concrete, let’s look at a few examples of B2B2C models in action that all share the same pattern: One business integrates its offering into another business’s platform or channel, and both benefit by serving the end customer together. Here are some examples:
Instacart
Instacart is a grocery delivery platform partnering with retailers to bring products—from eggs to eye drops—to consumers’ doorsteps. A local supermarket can list its inventory on Instacart’s app, allowing shoppers to buy groceries online.
Instacart sells a software and logistics solution to the grocery store, enabling on-demand shopping and same-day delivery—services that would require significant investment for the grocery store. All the while, Instacart earns fees and collects data from those customers. Over time, Instacart can develop brand recognition and affinity among customers, independent of the retailers selling products via the app.
Shop Pay
While Shopify is largely a B2B company, it has B2B2C services within its ecommerce ecosystem: Shop Pay and the Shop app.
Shop Pay is a fast, one-click accelerated checkout and wallet. Shop Pay offers seamless integration into checkout pages, facilitating higher conversion rates. Merchants benefit from better conversion and more sales, and Shop Pay can build its own brand reputation among customers.
At the same time, Shopify also builds a consumer audience it can connect with directly via the B2B2C Shop app. Shop is a consumer-facing shopping app that aggregates products from Shopify merchants in one place. For merchants, opting into the Shop app means opening a new sales channel—your storefront and products become browsable alongside other brands, increasing discoverability. Meanwhile, Shopify’s convenient app becomes a go-to shopping destination in its own right.
OpenTable
OpenTable provides an online reservation system connecting restaurants with diners through the OpenTable platform. When foodies see the option to book a table at their favorite local Mexican restaurant through OpenTable, they’re interacting with two brands at once—the restaurant and OpenTable. The restaurant can fill seats without building its own reservation technology, and OpenTable gains a user who might make future bookings at other restaurants in its network.
OpenTable is solving a problem for restaurants (managing online bookings and reaching more patrons) and accumulating a base of customers who directly use OpenTable for discovery and reservations.
B2B2C vs. B2B
The big difference between B2B2C and traditional B2B models lies in customer ownership and the power dynamics between businesses. If a beauty brand sells products via Instacart, both brands engage with the customer directly, and Instacart gets a dedicated user base including the beauty brand’s customers.
By contrast, a traditional B2B arrangement might involve a beauty brand selling products to a makeup artist. They in turn use the products in the services they offer. The end customer uses the products, but the beauty brand has no access to customer data.
In a B2B2C arrangement, both partners share customers. In a traditional B2B model, only the second company interacts directly with customers.
B2B2C vs. white labeling and private labeling
White label and private label manufacturers are both B2B businesses whose identity remains invisible to the end user, as their offerings are rebranded as the retailer’s. For example, a big-box retailer might sell store brand cereal manufactured by a major food brand. To shoppers, the manufacturer’s identity is invisible. This is simply a B2B supply chain with a private label.
A B2B2C partnership, by contrast, puts both brand identities in front of the consumer—and it can because the two brands are each offering something different to the consumer. The two companies are openly working together, usually in a co-branded or integrated way. In B2B2C, the first business isn’t just a silent supplier, it’s a visible partner gaining its own relationship with the end consumer.
Advantages of partnering with a B2B2C company
The two businesses in a B2B2C arrangement enjoy some overlapping benefits. A successful B2B2C partnership can expand a brand’s reach and add entirely new infrastructure that would have taken years to build independently. Here’s what makes the B2B2C model compelling for brands:
Reach more customers
The most obvious benefit of working with a B2B2C service provider is gaining access to its growing customer base. While you are sharing ownership of your customers with the B2B2C business, you’re also gaining a new discovery channel to expand your own reach.
For example, a specialty grocery store partnering with Instacart can also gain new customers who discover it through the delivery app. Suddenly, the store can reach busy customers who may have never discovered their retail location but are actively searching for products on Instacart. There may also be opportunities for co-marketing strategies, like joint promotions, co-branded campaigns, or even events you run together.
Offer customers convenience
When a company partners with a B2B2C service, the result is often a faster, easier shopping experience for consumers, which can lead to higher levels of satisfaction. Shoppers even say they’re willing to pay about 5% more for added convenience. By making your product more accessible via a complementary partner, you’re delivering ease and added value to win over today’s “I want it now” customers.
Build credibility and trust
If your B2B2C partner succeeds in delivering a great customer experience, some of that affinity and trust can rub off on you. A new coffee shop delivering through Grubhub benefits from the platform’s good reputation and seamless payment system.
Disadvantages of partnering with a B2B2C company
When a B2B2C company is partially responsible for your customer experience and revenue, you can encounter some drawbacks:
Slimmer margins
Nothing comes free, and partnering often means sharing revenue. You might have to pay a subscription fee and commission on sales to the partner platform.
For example, Amazon (which functions as a B2B2C company by allowing sellers to list products on its marketplace alongside those of other businesses) can take up to half of its third-party sellers’ revenue on average once all fees are tallied.
Even if your scenario isn’t that extreme, you may experience lower profit per sale than you would when selling on your own. Although a lower profit per item may be made up for by a significant increase in sales.
Differentiation difficulties
Being on a large platform or part of another company’s offering means you’re one of many. If you sell your specialty groceries on Instacart, for example, your products could sit right next to competitors’ or to a downmarket retailer, which risks tarnishing your brand image.
Limited control over customer experience
A consistent customer experience builds loyalty. If customers have a poor experience with your partner—whether that’s slow delivery or poor customer service—the frustration can reflect back on your business, even if it’s outside your control. A restaurant might get negative reviews because of a delivery driver’s mistake, for example. Since customers see both brands as part of the overall shopping experience, problems with one partner can tarnish your brand reputation and impact your customer relationships.
B2B2C FAQ
What’s a popular example of a B2B2C company?
Instacart, a grocery delivery service, is a popular B2B2C business model example; it partners with businesses to offer delivery services to consumers (connecting stores to end shoppers). Similarly, food delivery services like Uber Eats work as B2B2C platforms, partnering with restaurants to deliver food while the restaurants maintain their brand identity. In these examples, the two brands effectively co-own customer relationships.
Is Shopify a B2B2C company?
In some respects, yes, Shopify has B2B2C elements through Shop Pay and the Shop app. Shoppers recognize and interact directly with Shopify’s services while shopping at individual merchant stores, creating a shared customer relationship between Shopify and the merchants.
What is C2C?
C2C stands for consumer to consumer, a business model where individual consumers sell directly to other consumers, typically via online platforms like eBay and Facebook Marketplace.
