How do I start a B2C business

B2B vs. B2C in online retail: what you need to know about the differences

by Ross Simmonds

Cats vs. dogs? Tea vs. coffee? Superman vs. Batman?
Such rivalries have long divided society into two camps.

A new rivalry has begun in the business world, especially among the companies that are at the forefront of emerging online markets: B2B (Business to business, i.e. trade relationships between two or more companies) vs. B2C (Business to consumer or trade relations between company and consumer).

And, as always, when technology and commerce intersect, it's a multi-faceted matter:

  • What is more lucrative?
  • Can a company serve both markets?
  • What about retention value and customer lifetime value?
  • Are channels and purchase decisions fundamentally different?

Given these questions, I want to put an end to the rivalry, explain the differences between B2B and B2C in general and then prove that they are actually pretty much the same.

What is the difference between B2B and B2C in online trading?

Difference 1: scope of the target group

One of the most important differences between B2C and B2B is the size of the target groups. B2C brands often need to reach a broad group of consumers: sports fans, fitness-minded mothers, music-loving millennials, or children in general.

These are large demographic and psychographic groups, each of which needs its own customer journey plan:

Target groups in B2B online trading are much more narrowly defined.

There is usually a certain number of buyers with fairly manageable profiles. For example, a B2B brand may only target advertising agency owners or finance managers at tech startups.

You may be thinking now that this is limiting the potential of B2B, but in fact the opposite is the case. Let's take a look at the global gross volume of goods in B2B e-commerce compared to B2C e-commerce.

Difference 2: Average price point

A B2C brand may have to sell to hundreds of thousands of people to make a million dollars in sales because it is likely to sell their products at a lower price. In B2B e-commerce, brands often only have a few hundred customers, but still generate millions (sometimes even billions).

When I think about the most important differences between B2B and B2C, this diagram by Christoph Janz from Point Nine Capital comes to mind:

Here it becomes clear that if you want to turn over 100 million, you either have to “catch” or sell 10 million flies worth 10 each (see B2C) or “hunt” 1,000 elephants worth 100,000 each (see B2B) .

The average order value is one of the reasons B2B is so successful. Aaron Orendorff pointed out in a post on the benefits of B2B e-commerce that an average order on B2C is $ 147 compared to $ 491 per order on B2B. That is more than three times as high.

There are always exceptions, of course - B2B goods that are only $ 20 and B2C goods that are worth $ 15,000. But in most industries, the price of B2B goods is much higher.

Difference 3: The decision-making process

When a B2C buyer has decided to buy something, he takes a credit card.

A B2B buyer looking to buy something will consider the following:

Ok, I'll let my manager know, who can suggest this to senior management, which will then call in the finance and legal departments. Should we also take it to the marketing team?

As the book The Challenger Customer Released in 2015, an average of 5.4 decision makers were involved in the B2B buying process. That number has since risen to 6.8. In addition, the authors of this must-read for B2B professionals found that there is a clear correlation between the size of the purchasing team and the likelihood of a successful sale. The more people involved in the decision, the less likely a purchase will be:

Perhaps the most important thing we can infer from this fact is:

Your content - your “About Us” page, your product pages, PDFs, demo videos, pitch books, catalogs, etc. - will be shared with at least five people within the organization.

And what does that mean?

This means that you have to invest just as much in creating the best user experience as B2C brands do. Someone who visits your website needs to trust your brand and be convinced that you are offering the best solution to their problem. It is therefore imperative that B2B brands optimize their user experience and get their story across clearly.

To do that, here are a few solutions every B2B brand needs ...

Solution 1: Educational content

B2B buyers are no longer looking for sales professionals to hold hands with them from start to finish during the buying process. Rather, they want content that is accessible online so that they can learn. That's why it's important for B2B brands to invest in content that helps B2B buyers make their decisions.

For the author and marketing expert Jeff Bullas, it is an absolute must for B2B retailers to offer interesting content - provided it is useful:

Create content that creates added value for the target group. Content that solves problems and informs potential buyers.

Solution 2: High quality site search

According to studies, 98 percent of B2B buyers do their research online. For 62 percent, the advanced search played an “increasingly decisive” role in their shopping experience.

Your website and your products have to be easy to find, otherwise beneficial leads and income will fall by the wayside. For example, V-Belt Guys use the Shopify LiveSearch app to instantly offer your visitors results on search queries along with visual merchandising, including product names, descriptions, models, materials, technical details and even order codes.

Solution 3: Presence beyond your website

Potential customers don't just look at your website. Therefore, your online presence has to be consistent - your social media page and your online reviews should underpin the positive message of your website.

In this regard, the differences between B2B and B2C marketing aren't that big. The main difference is the time, how long it takes to build a relationship with a B2B buyer - or with an entire team of decision-makers. Which brings us to the next point.

Solution 4: email marketing to strengthen relationships

Email marketing is and will remain a powerful tool for B2B sales. B2B brands can still rely on email to make personal contact with their target audiences.

There are a number of ways B2B brands can create their mailing lists. One of the most successful ways is to familiarize visitors with your product in advance, provide interesting case studies, etc. All of this content can be picked up in emails to establish important customer contacts.

Invest in content that users can download and stay tuned to them by consistently offering added value in the form of educational content. We know that B2B buyers want to educate themselves. Take advantage of this by positioning your brand as an entity and building relationships based on trust and value.

Do B2C and B2B e-commerce have anything in common?

The differences between the two are significant, but B2B and B2C are not completely different. If you've read the concepts above, I hope you've noticed that some of them could find application in both B2B and B2C e-commerce.

While marketers and owners tend to have different attitudes, philosophies, and strategic approaches, B2B and B2C also have a few things in common.

Similarity 1: multi-channel approach

According to Forrester, 59 percent of shoppers would rather do their research online than seek advice from a sales rep, as they are often more interested in selling something than solving the problem.

Presumably, most of these shoppers start out with a Google search - just like their B2C counterparts - but multi-channel browsing and shopping habits are prevalent.

The majority of B2C and B2B buyers surf on similar channels. For instructions and learning content, most trust YouTube. For social engagement, go to Twitter, LinkedIn and Facebook. Just as a student might go to Facebook to find out about their fellow students, a CEO might use Facebook to share pictures of their child.

You use the platform for different purposes, but you can still be found on both.

In other words, just because your target audience is B2B, you shouldn't ignore Facebook or even Instagram. The B2B brands that use these channels while others ignore them are likely to capitalize on cheaper reach and less competition.

Similarity 2: people remain people

One of the biggest myths surrounding B2B versus B2C audiences has to do with the person on the other end of the business process. For far too long, companies have believed that a B2B buyer is a completely different kind of person than a B2C buyer.

Today we know that this is not true.

Because regardless of whether we are a student or a Fortune 500 manager, first and foremost we are all human and consist of the same neurons and chemicals that trigger feelings and move us to certain behavioral patterns.

This is why B2B marketers can make wonderful use of psychology to connect with their target audience. Learn the importance of highlighting benefits rather than features. Learn more about how Maslow's hierarchy of needs can affect your copywriting. Find out the role fear can play when a buyer decides between two similar solutions.

Conclusion: B2B vs. B2C in e-commerce

We have now broken down the differences and similarities between B2B and B2C in e-commerce. While I'm not entirely sure that this discussion will ever end, I hope this article has shed some light on the beauty of B2B e-commerce.

I would be happy if you would leave me a comment with your opinion on this topic. And if there is a B2B brand that you particularly like, I would love if you tell me about it. It is incredibly motivating to learn about successful brands.

Posted by Hendrik Breuer:Hendrik is the editor of the German Shopify blog. Do you want to publish a guest post? Then please read this guide first.

This article by Ross Simmonds originally appeared as a guest post in English on the Shopify Plus blog and was translated by Freddie Debachy.

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