It’s undeniable that the evolution of eCommerce is blurring the lines between B2C and B2B companies. However, these business models still carry fundamental differences that need to be taken into account when designing and implementing digital commerce strategies. If you’re planning to expand business models, this is what you need to know.
While the definition of traditional business models hasn’t changed much in the last couple of years (B2B is still about businesses selling to businesses and B2C still means businesses selling to consumers), the universe of B2B and B2C continues to expand and evolve. A sweeping digital shift has blurred the lines of business models, with companies eager to find new customers and revenue opportunities. And indeed, B2B and B2C models have found common denominators over the years, especially as traditional manufacturers, wholesalers and distributors discovered how some B2C-like elements, such as omnichannel and personalization, were also a great fit for them.
In fact, a recent survey by McKinsey revealed that B2B companies have to embrace omnichannel and hyper-personalization strategies that were considered a typical B2C-only approach up to only a few years ago. At the same time, B2C can learn from its B2B cousin in terms of building long-term relationships with their clients, incorporating intelligent content strategies and unlocking lifetime value. Despite the synergies — and there are plenty! — B2B and B2C share core differences that set the tone in each strategy. If you’re looking at expanding from one business model to another, understanding these key differences is crucial to succeed in both.
B2B vs. B2C 101
Let’s start with an overview of the main differences between B2B and B2C models in digital commerce. Overall, B2B companies tend to achieve high-value orders from a narrower audience while B2C addresses more potential buyers with a lower value/order ratio. A typical B2B purchasing process involves many people and follows a more rational decision-making approach, focusing on long-term relationships and repeat business. On the other hand, B2C buying is more desire-driven and, while consumer-facing companies have evolved in the retention and loyalty aspects, there’s more focus on customer acquisition.
Now, let’s dive into what’s different between B2B and B2C across the customer journey.
Product data and catalogs
There are a few nuances in B2C and B2B in product data and catalogs. For starters, B2C companies usually have a single product catalog designed to offer a consistent experience to all consumers. There may be differences between locales or sub-brands but, overall, all shoppers should interact with one source of truth for product, inventory and pricing data, no matter the channels they’re engaging with the brand. At the same time, consumers aren’t as diligent with product information as business buyers, as they tend to be more focused on price and/or an emotional connection with the product or brand. Because customers order by item, brand and product name, SKUs and product identifiers aren’t as crucial in the buying journey as they are in a B2B context.
Managing product data and catalogs in the B2B space is inherently more complex. First, the visibility of SKUs and product codes is much more relevant to buyers within purchasing departments, who will often refer to these details on documentation throughout the buying process. This has a massive impact on the product discovery process: B2B buyers will scan every information available to corroborate the decision-making process, such as buyer guides, specs, FAQ pages, blogs and video demonstrations.
Compared with B2C, the B2B product discovery process is much more data-heavy, with a more detailed Product Description Page (PDP). Moreover, B2B product catalogs end up being extensive and carrying many customization and configuration options.
Gartner® research found that B2B customers who perceived product information as helpful were 2.8 times more likely to experience a high degree of purchase ease and three times more likely to buy a bigger deal with less regret. The lesson for B2B? Provide buyers with all the information they need across the sales funnel.
Another area impacted by these differences is the search function. B2C search is successful when it provides unbeatable relevancy and converts instantly. B2C search requirements may include hyper-personalization and AI-led optimizations to ensure consumers find exactly what they want. While B2B search should also be personalized and relevant, it's a lot about building an efficient path to purchase for the B2B buyer. Search and navigation work hand in hand to help users find their catalog's products fast or research across many available offerings effectively. B2B’s additional requirements include personalizing the search for each user type and indexing multiple product identifiers, attributes, measurements and even customer-specific part numbers.
B2C shoppers pay the listed price (unless there’s a discount, promotion or special offer), which is usually offered across all customers. Upfront and consistent pricing across all channels is crucial for B2C companies to avoid discrepancies and abandoned carts.
Meanwhile, B2B pricing has more room for negotiation and tiered or volume-based pricing, and usually even offers customized and complex pricing and payment schemes. It’s common for B2B players to have multiple pricing lists, each tailored to the needs of a specific customer segment, as well as the ability to “request a quote.” Automated pricing calculators based on order size to calculate volume-based pricing are usually helpful for B2B buyers.
Orders and checkout
We’re all familiar with the B2C ordering and checkout process: One-click ordering, wishlist options, the ability to add coupons and referral codes, gentle nudges to avoid abandoned carts and a wide range of payment options (e.g., e-wallets, credit cards, debit cards, etc.). In addition, the B2C experience is streamlined to convert as much as possible AND as fast as possible by boosting convenience. For example, checking out as a guest or creating accounts with minimal hassle, like using an existing Facebook or Google account, is usually possible.
While B2B is taking a page of the B2C playbook in terms of convenience, the fact remains that the B2B checkout process is more complex. Take into account:
Multiple layers of order approvals.
Billing and shipping combinations.
Baskets specifically curated for the customer.
Credit line validation and management.
Multiple accounts, budgeting and compliance.
The higher frequency of reordering is something to consider: Offering one-click reordering (or recurring order subscriptions) can simplify the process and increase retention. In fact, both B2B and B2C companies have been very successful with this feature!
While eCommerce is now the most effective sales channel for B2B, offering human and/or hybrid interaction models can win new business for B2Bs during the ordering process with product demos and video chats. B2C companies usually don’t have the scale to provide one-on-one interactions during the sales process (unless they’re automated via chatbots or offer a personalized shopping experience, such as in luxury fashion).
Lastly, B2Bs may require buyers to order a minimum order quantity (MOQ) or purchase commitments to buy an agreed volume over a contract period. Also, B2Bs operating with a Make to Order (MTO) or custom products don’t make the product until payment is received. B2C companies work the other way around: They prevent consumers from buying in bulk by putting a maximum quantity on high-demand items, like new gaming consoles and even baby formula. An alert message can be generated once the order quantity exceeds the set amount.
Payment options in a B2C webshop are usually credit cards, debit cards and bank transfers. Today’s consumers expect even more: Mobile wallets, COD (cash on delivery) and BNPL (buy now, pay later) are all payment methods that provide flexibility and convenience for shoppers. Adding bitcoin and cryptocurrencies may increase in the future as payment methods. The result is easy to guess: B2C companies can register a faster and higher conversion rate, as well as increase brand awareness and loyalty.
While more modern payment methods are catching on in the B2B world, the reality is that most companies opt for a traditional purchase order process of settling invoices through bank transfers. The BNPL model is widely used in B2B. Other options include Pay on Credit, credit cards (for smaller amounts) and ACH payments (automated payments, which connect well with B2Bs offering subscriptions). In addition, payment terms in B2B tend to be longer (30 days, 45 days or beyond).
Shipping and fulfillment
We’re all familiar with super convenient shipping options like one-day, same-day or even “under 1-hour” delivery (i.e., offered by some of the grocery players operating a hyperlocal delivery model). There are also a few online/offline 'combinations' available, such as BOPIS (buy online, pick up in-store), BORIS (buy online, return in-store) and ROPO (research online, purchase offline). Again, B2C experiences are all about maximizing convenience for shoppers.
The sheer size and complexity of B2B ordering are usually incompatible with such hyper-convenient options. Yet, B2Bs do provide a range of alternatives, such as LTL (less than truckload) freight carrier and warehouse pickup. What is crucial for B2Bs is the option to buy in bulk online and distribute that order across multiple warehouses.
Performance and speed
B2B and B2C need high performance and speed for eCommerce but for different situations. While B2C companies need to stretch online capacity to handle high traffic spikes from seasonal events like Black Friday & co., B2Bs need to handle much larger SKU counts and order volumes that may reach hundreds of thousands of items, containing many attributes for each. When considering that product inventory across multiple warehouses changes frequently, it’s easy to see that processing so much data flow at a breakneck pace is crucial for digital interactions in B2B.
Also, consider that B2Bs need to render product catalogs on the fly. Data must be retrieved in real-time to give buyers the information they need at the right time.
B2C platforms have one site per instance or may have multiple webshops for different locales and/or sub-brands. In B2B, offering customer-branded microsites and ordering portals for their key accounts is common, using the same underlying data model as another site.
Using a B2B eCommerce platform to create a customer-branded site can help customers who regularly buy equipment or clothing items for their employees. This allows their employees to self-service their orders, reducing miscommunications on sizing and options while allowing the customer to control which approved items their employees can select.
B2C webshops typically function as transactional platforms and excel in guiding users toward making purchases. In B2B, however, eCommerce is more than a sales engine with self-service capabilities to create and manage buyers, approvers, business units and so on. That’s why they usually provide B2B buyers with digital tools to manage post-sales activities, including returns, account finances, back orders, invoices and financial statements.
Storefront design and features
Digital storefronts for B2B and B2C have different requirements and goals regarding their frontend design. In B2C, the primary focus is creating a visually appealing and user-friendly website that attracts and engages shoppers with high-quality images, vibrant colors and an intuitive user interface. Also, they focus on creating brand awareness and promoting products through social media, email marketing and other channels.
While B2B storefronts do not have to be boring, they focus on efficiency over visual appeal. Usually, B2B frontends have a minimalistic design and prioritize features like bulk ordering, product discovery, customized pricing and integration with backend systems, as well as support for multiple user accounts with different levels of access and permissions.
B2C and B2B eCommerce need a flexible and scalable infrastructure to support a wide range of integrations, regardless if they’re from best-of-breed vendors, homegrown systems or a mix of both. An API-first approach is crucial to achieving seamless integrations.
Both models rely on various back-office solutions like PIM (product information management), ERP and CRM systems, as well as payment solutions, credit card processors, etc. However, B2B eCommerce platforms carry an extra layer of complexity surrounding integrations. They have to account for highly customized pricing, customer account hierarchies, catalog restrictions and purchase orders, invoices and credit lines.
In addition, B2Bs tend to rely on legacy systems and/or outdated versions, which makes integrations more complex. For example, integrating an eCommerce solution with a legacy ERP system may require integration via middleware solutions or cloud-based services like AWS and Google Cloud.
Advanced features, customization and data management
To complete the picture of what’s different between B2C and B2B, it’s safe to say that:
B2C companies require a robust platform with immense databases to store and process customer data in real-time. While B2C companies also need specific features, most of the commerce functionalities available today are already mature for brands and retailers to enjoy.
B2B players need advanced feature sets out-of-the-box to manage the quote process, multiple user permissions and approvals, portal customization/multi-site requirements, bulk orders and B2B payment options. While these seem straightforward enough, the reality is that many B2B players still cannot leverage those features straight out of a commerce solution provider, so they have to develop quite a bit themselves.
While both B2C and B2B require customization and extensibility, manufacturers, wholesalers and distributors usually require extreme customization during the buying process. As a result, B2Bs tend to over-customize their commerce platforms or opt for homegrown solutions to accommodate special needs, but those can be difficult and expensive to maintain over time.
Multiple business models, one commerce engine
If you’re expanding to new business models, regardless if they’re B2C, B2B and even D2C (direct-to-consumer) or B2B2C (business-to-business-to-consumer), leveraging one commerce engine instead of disparate platforms enables you to:
Avoid duplicate product content spread across multiple commerce platforms. The basic product information is likely very similar or even identical, regardless if you’re selling to businesses and/or consumers, so it’s more efficient and economical to leverage a single data source for product data and catalogs with one commerce engine.
Ensure digital and human interactions work seamlessly, with eCommerce complementing one-to-one relationships.
Create separate portals with adequate look and feel for specific market segments or locales.
Avoid data silos and fragmented analytics to achieve a complete omnichannel customer view.
Leverage the many synergies of B2B and B2C.
Forward-thinking leaders like Danone and Cimpress have leveraged commercetools Composable Commerce to implement new business models leveraging a flexible infrastructure. Danone, for instance, expanded from its B2C-first focus to B2B and D2C models with one commerce engine orchestrating all interactions. Cimpress also migrated its B2B and B2C businesses to commercetools to create multiple storefronts without limits and leverage synergies both business models share.
Is expanding to new business models on your radar? Explore how composable commerce can help you accelerate your multi-model strategy. If you're ready for a conversation, get in touch with us.