The difference between B2C and B2B ecommerce

B2C is an acronym for "business to consumer" and B2B an acronym for "business to business". These terms are used to describe the seller and purchaser in an ecommerce sales transaction. B2C denotes a business selling goods or services to a consumer (that is an individual person). In B2B sales transactions, the seller is a business and the buyer is another business.

Differences in site design and operation

eCommerce websites are normally optimized for either business or consumer customers (i.e. optimized for B2B or B2C ecommerce). When initially designing an ecommerce site, you should always have in mind who your customer is. Someone buying goods or services via ecommerce as a business owner or employee will have different needs from an ecommerce site, compared to an individual buying for their own needs. 

An ecommerce website therefore will (or at least should) be designed and operated slightly differently to optimize B2B sales compared to B2C sales.

Payment

Payment in B2B websites is often very different to a B2C website.

In B2C ecommerce (at least in the US) a consumer is expected to provide a means to pay at the time they place their order, normally a credit card, debit card or electronic wallet such as PayPal. Even if the funds are not taken by the seller as soon as the order is placed, they expect to have those payment details at time of ordering and will take the money once the goods have been dispatched. It is worth noting that in some countries cash-on-delivery or payment by invoice is common. 

In B2B the seller may have pre-approved a business customer and given them a credit limit, allowing the customers' employees to place orders up to that limit. The customer then receives an invoice from the seller detailing how much is owed, with a check or funds transfer payment typically being expected within 30 days. 

Authorizing B2B customers

In B2C there is no concept of authorizing customers to use the ecommerce website. In fact in B2C ecommerce you expect a large number of customers to be first time customers, unknown to you at the time of their first order. Many sites will encourage first time customers by allowing them to complete a so-called "guest checkout" where the order is placed without the customer having to register an account.

In some B2B sites, each customer (i.e. the company that will be buying) must be approved as a customer. There may be regulatory hurdles that have to be completed before the first order, a credit check may be required, details of how goods will be delivered may be pre-agreed, the prices that will be paid could be negotiated, and so on.

Authorizing B2B users

In B2C the customer is the person who places the order. There is no distinction.

In B2B the customer is a business and there can be many employees who place orders on behalf of that customer. For example when I was an employee of a large global consultancy there were 500,000 employees worldwide and many of us were authorized to place an ecommerce transaction with Vodafone for the delivery of a mobile handset. There was a special catalogue of handsets that the employee could choose from, a list of airtime and data packages to configure, a limit to how frequently an order could be placed (once every two years) as well as an approval process that required sign-off from a manager of a certain level in the customer organization.

This is a common scenario in B2B commerce - the customer decides how its employees will purchase, get approval and pay for goods and services. The customer will configure the rules for this in conjunction with the seller to ensure that once setup ecommerce is easy and relatively inexpensive to use, monitor and control. 

B2B Pricing

In B2C ecommerce, in the overwhelming number of cases, the price paid for a product is the same no matter who is buying it. The price I am shown for a pair of shoes is the same as anyone else who is looking for those same shoes.

In the B2B world, however, it is quite common to offer or negotiate prices or discounts based on the quantity being purchased, and the relationship between the seller and the buyer. Buyers who spend millions a year or buy large quantities of a single product will gain favorable treatment compared to those who occasionally buy only small quantities of low margin products.

Tiered pricing is sometimes provided to all customers regardless of their overall annual spend. In tiered pricing the price for a product falls the more of them you buy at one time. For example place an order for one widget the price will be $100, whereas if you place an order for between 2 and 5 widgets the price per widget will be only $95, and if you place an order for 1,000 widgets they will cost just $85 each.

Price differentiation to reward and retain your largest spending customers, can be offered in a number of ways. A customer may negotiate a straight percentage discount off the list price. They may be given a volume discount or rebate once their overall annual spend reaches a certain target. They may be offered preferential terms on delivery or access to new stock ahead of other customers.

Sometimes your very largest customer, perhaps this might be the US Government, will demand the unit price for goods sold will be the lowest of any of your other customers. If you want to attract this large customer, the seller may be willing to accept this. 

Inevitably there will always be lots of exceptions and variations in pricing contracts. The process of agreeing trading terms between buyer and seller can take a long time and also then difficult to build in to the ecommerce site once done. However, once it is setup, a seller is likely to see a customer being more loyal, place larger orders and accept price rises more readily.

Example B2C and B2B ecommerce sites

The biggest B2C websites are Amazon (in US, Canada, UK, France, Germany, Italy, Australia, Japan, etc.) and Tmall.com (in China, Macau and Taiwan). While these are the biggest, there are hundreds of thousands of B2C websites in the world, selling all manner of goods and services to local and international customers.

B2B websites target business customers but often allow a consumer to purchase from them. Take the example of Nisbets in the UK. This company sells catering equipment to restaurants, hotels and catering companies, but if your kitchen at home is big enough for a $4,000 meat slicer, they won't say no if you want to buy one.

Some manufacturer B2B websites hand off sales transactions to dealers. For example Bobcat Company (construction equipment) has an ecommerce website that allows you to configure an excavator and then refers you to a dealer for final quoting and completion of the sale. Once you are a customer, though, you may receive a login to a B2B ecommerce site inaccessible to the general public for ordering spare parts. This site will be a B2B ecommerce site, but hidden behind login screens as only authorized customers can access it.

Other abbreviations

Other similar abbreviations you may find being used include B2B2C (a business selling to another business on the expectation that the products will then be sold by that customer to consumers, for example in white label websites), B2B2B (same but where the end customer is a business), C2C (an ecommerce site that facilitates consumers selling to other consumers, e.g. eBay), B2G (business selling to government) and C2B2C (consumer selling a product to a business for resale to another consumer).

 

This article was updated on January 28, 2021

M Ryan

M Ryan is an ecommerce consultant with twenty years experience working with retailers, consumer brand manufacturers and other consumer-facing businesses helping them to develop their ecommerce strategy, implement ecommerce technology and improve their ecommerce operations. He works extensively throughout US and Europe, with clients including global brands, large retailers and household names in consumer goods.