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What is B2C?

B2C / Credit: Curioso | Shutterstock

B2C, or business-to-consumer, is the type of commerce transaction in which businesses sell products or services to consumers. Traditionally, this could refer to individuals shopping for clothes for themselves at the mall, diners eating in a restaurant, or subscribing to pay-per-view TV at home. More recently, 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.

It is one of four categories of e-commerce, along with B2B (business to business), C2B (customer to business) and C2C (customer to customer).

The B2C model is likely the model that most people are familiar with. 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."

As the Internet grew in the 1990s, hundreds of thousands of domain names began to register. The potential for e-tailing was seen early on in books like "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 if a site had an authenticated SSL certificate, helping consumers determine whether or not a site could be trusted. SSL encryption is still a vital part of Web security today.

The mid-1990s to the 2000s saw the rise of e-commerce through sites like Amazon, Zappos and Victoria's Secret. Now, it's rare to see a consumer-based business not 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, like a jewelry company or a bakery.

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 their site intuitive and easy to navigate. The site must also be optimized to get consumer traffic — search engine marketing (SEM) is a necessity. Most consumers use search engines like Google, Bing and Yahoo! to find the products that they are looking to purchase. Customers generally choose websites on the first few pages of results after they've searched a specific keyword or phrase. If a site does not have a site with good SEM, they could get buried in the mix, lose site traffic, and thus lose potential customers.

To ensure good SEM, 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 employing search engine optimization (SEO) tactics.

Another challenge is the payment processing. SSL encryption lets people know that the site isn't compromised, but many people are hesitant to submit their credit cards to companies. Even if the site is safe, the place where the credit card numbers are stored is not. In 2004, the Payment Card Industry Security Standards Council (PCI) formed to create compliance standards for any company processing credit cards. Services like PayPal can perform the payment processing for online vendors, and has proven to be popular with online shoppers and businesses. PayPal currently manages more than 232 million accounts.

E-commerce is here to stay. From 2000 to 2009, sales have grown over 500 percent. 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 a new marketing tool for businesses looking to drum up interest. The market for mobile payments is expected to quadruple by 2014, at $630 billion.