B2C, or business-to-consumer, is the type of commerce transaction in which businesses sell products or services to consumers.
- In the B2C markets, consumer behavior is the primary driver.
- When you understand what customers want and how to motivate them to make that purchase, you'll have success. That drive is what built the B2C sector, but that means it's also one of the major challenges for any business entity working in B2C.
- Identifying what customers want and deciding how to distinguish your products or services from those of other vendors are major interests for market research and R&D divisions in the 21st century.
What is B2C?
B2C, or business to consumer, is the type of commerce transaction in which businesses sell products or services directly to consumers. Traditionally, this could refer to individuals shopping for clothes for themselves at the mall, diners eating in a restaurant or subscribers deciding to get pay-per-view TV at home. More recently, however, the term B2C refers to the online selling of products, or e-tailing, in which manufacturers or retailers sell their products to consumers over the internet.
Of the four models, B2C is the best known among most people. If you've ever purchased an item online for your own use, you've e-tailed. Pretty much any product can be sold through e-tailing, also known as virtual storefronts. The concept was first developed in 1979 by Michael Aldrich, an English inventor who connected a television set to a transaction processing computer with a telephone line and coined the term "teleshopping."
Evolution of B2C
As the internet grew in the 1990s, hundreds of thousands of domain names were registered. The potential for e-tailing was seen early on in books such as "Future Shop: How Technologies Will Change the Way We Shop and What We Buy" (1992), which predicted the coming e-commerce revolution. There were, of course, security problems. When Netscape developed Secure Socket Layers (SSL) encryption certificates, consumers began to feel more comfortable transmitting data over the internet. Web browsers could identify whether a site had an authenticated SSL certificate, helping consumers determine whether a site could be trusted. SSL encryption is still a vital part of web security today.
The mid-1990s and 2000s saw the rise of e-commerce through sites like Amazon and Zappos. Now, it's rare to see a consumer-based business that does not also sell their products online. Consumers enjoy the convenience of online shopping in their own homes, while businesses thrive on the low overhead. With a virtual storefront, a business doesn't need a storefront or a large inventory stocked at all times. This is ideal for small businesses such as jewelry stores and bakeries. Drop shipping and fulfillment centers have grown during this time period, too, allowing a layered B2C approach where the seller acts as an interface between a third-party warehouser and the customer who makes the purchase.
Challenges of B2C
There are challenges for businesses in B2C, however. As websites continue to become flashier and more user-friendly, it's up to the business to keep the site intuitive and easy to navigate. The site also must be optimized to attract consumer traffic; search engine optimization (SEO) is a necessity for a business to be competitive by rising to the top of internet search rankings. Many consumers use search engines like Google, Bing and Yahoo to find the products they intend to purchase. Customers generally choose websites on the first few pages of results after they've searched for a specific keyword or phrase. Any business that does not have a site optimized for those rankings will get buried in the mix, lose site traffic and, in turn, lose potential customers.
To ensure top-quality SEO, businesses can consult with marketing managers or outside consultants who are well versed and trained in this growing field. Companies can purchase paid listings to be ranked on the first few pages, as well as employ SEO tactics. But this strategy results in another expense for the company, reducing margins in the process. This is happening across industries in the B2C sector. Internet capability, the costs of e-pay convenience and the necessity of SEO may lead to a landscape in which larger firms with deeper pockets control the vast majority of many markets.
Another game-changing challenge is payment processing. SSL encryption lets people know that the site isn't compromised, but many people are hesitant to submit their credit card information to companies. Even if the site is safe, the place where the credit card numbers are stored may not be. In 2004, the Payment Card Industry Security Standards Council was formed to create compliance standards for any company that processes credit cards. Services like PayPal and Venmo can perform the payment processing for online vendors, taking the responsibility from the individual vendor and providing a one-stop solution for the customer at all locations and online. This solution has proved to be popular with online shoppers and businesses. PayPal currently manages more than 232 million accounts.
The Future of B2C
E-commerce is here to stay. From 2000 to 2009, sales grew over 500%, and that trajectory continued throughout the 2010s. E-tailing will continue to evolve and expand, thanks to the growing use of tablets and smartphones. These mobile devices have become an integral part of the communications culture. Social media has become the primary marketing tool for businesses.
U.S. retail e-commerce sales grew from $34.1 million in 2009 to $154.5 million in 2019, fueled by new technologies and a decade of U.S. economic recovery. The next decade will no doubt provide new challenges and some corrections as we test the limits of these expanding technologies.