B2B & B2C - Characteristics and differences

What is B2B?

The abbreviation B2B stands for business-to-business and generally covers communication and business relationships between at least two companies. The term is used whenever two companies act with each other and when the business activity is limited to those with other companies. Business object may e. g. the exchange of tangible or intangible goods, but also the provision of services.

Examples of B2B software providers are companies that offer corporate software such as communication and project management tools, or systems for processing payment transactions for salaries or goods or for controlling and managing fulfillment processes. In addition, an example of a B2B service provider: Some logistics service providers, for example, focus exclusively on orders from companies and do not take over private deliveries.

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What is B2C?

B2C stands for business-to-consumer and describes the business and communication relationship between companies and private end consumers. A B2C company sells its products exclusively to private customers. The object of business may also be intangible or tangible goods and services. An example is a B2C software provider that distributes anti-virus programs to end customers. In the previously used example of the logisitcs industry, traditional B2C service providers would be parcel service providers.

Characteristics of B2B in comparison to B2C

Higher switching costs when changing providers

Since a change of provider e.g. of software is more expensive, more complex and complicated for a company than for end users, customer loyalty in the B2B industry is significantly higher and business relationships usually last longer. In the B2C sector, on the other hand, the exchange costs are low and customers can quickly and easily find a new provider, e.g. a power provider.

More complex products

Products in the B2B sector are often not standardized and have to be individually adapted to the customer. Marketing and sales require a great deal of explanation due to a higher complexity. Products in the B2C sector, on the other hand, are typically standardized mass-produced goods and are purchased for private use without a detailed explanation, as the use is usually intuitive and simple.

Concrete requirements for the product

B2B customers have comprehensive knowledge of the industry in which they operate. Therefore, they have a good understanding of the requirements that products they purchase from B2B providers have to meet. Even if, for example, a fashion retailer is usually unfamiliar with fulfillment software, he knows very well what requirements it has to meet in order to represent a smooth process.

Longer and more extensive buying process

Buying decisions in the B2B sector are usually made by several employees – the so-called Buying Center. For example, if a company wants to implement a new software, the purchase decision is influenced by several people from different departments with different interests and needs. The entire process is complex, multi-stage and lengthy. In the B2C sector, on the other hand, customers make their purchase decisions spontaneously, independently and emotionally driven.

Challenges in the B2B sector

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Higher competition in the market

As the B2B market is smaller compared to the B2C market, the competition between the suppliers on the market is higher.

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Complicated supply chain

Supply chain management in eCommerce can be complicated. This is particularly the case where several partners are involved in the supply chain and all need access to the same information. Miscommunication at any point in the supply chain can slow down the process.

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Tougher price negotiations

Because B2B buyers make large investments, they usually negotiate better prices, ask for discounts or demand additional services.

Challenges in the B2C sector

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Broad customer group

In the B2C sector, it is much harder to define specific customer groups than in the B2B sector. Usually these can only be described approximately, for example by personas or customer profiles. However, in order to reach the largest possible group of consumers, the company’s communication channels should be as wide as possible.

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Tougher price competition

In the B2C sector, prices and offers are usually recognizable and comparable for the customer at a glance. On the shelf of a supermarket, for example, several suppliers and products can be evaluated directly on site and an appropriate choice made. Especially for everyday products, the cheapest product usually wins here.

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Emotions play a more important role

Since purchasing decisions in the B2C sector are often primarily driven by emotions, aspects such as the design of the product or the advertising are just as decisive factors as the product itself. For B2C companies, this means that customers need to be convinced on several levels.

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