It is important to analyze business models and learn how transactions are taking place in the real world so that you can decide which business model best suits you. Whenever we talk about Business to Business or B2B, we refer to a business transaction or any other interaction (like exchange of information) between different types of businesses; it can involve a manufacturer and a wholesaler, or even a wholesaler and a retailer. B2B is implemented all around the world and is done to keep the supply chains interlinked with one another. The concept of Consumer to Consumer or C2C refers to a separate sort of market where all types of commerce are done between private individuals, interacting and trading with one another. C2C is rapidly emerging & advancing with technology in the current times; individuals are aware of C2C businesses mostly through the use of online environment and many known e-commerce platforms.
The rest of this article explains B2B and C2C in more details and highlights the major difference between the two commerce concepts.
Definitions and meanings
Business to business or B2B
B2B is a business model that refers to businesses engaging between themselves for commerce activities. The business involved in the manufacture or sale of a physical good have to deal with B2B transactions as they have proper supply line which starts from the manufacturer and ends with the retailer dealing with customers.
For any business activity to take place, proper communication is required from both ends; companies practicing B2B involve their employees to communicate with the engaging company for business, such as through company’s official website, emails, telephone and social media like LinkedIn, Facebook, Whatsapp and twitter etc. Communication through company’s own website and social media pages allow the interested parties to take note of the products and services the business has to offer and as a result initiate contact.
Customer to customer C2C
C2C is another type of business model where consumers trade goods or exchange data and information with each other; it consists of no involvement of enterprises in these interactions. C2C has become more common than before due to the increasing usage of the internet daily. Many online platforms such as eBay, Etsy, Amazon, OLX, Quikr have resulted in the increasing know-how of C2C transactions.
This creates ease for a lot of buyers as they can locate and purchase items online which they aren’t able to locate elsewhere. Sellers also benefit from such transactions as they do not have to use traditional pricing methods. This further leads to higher profit margins as there are no other parties or enterprises involved.
Other than a transaction, C2C can also be seen as a marketing technique where anyone can promote their goods using effective strategies. Before any of the emerging technology took place, newspaper classifieds were and continue to be a solid example of a C2C business which allows individuals to market their product and reach a wider range of potential buyers.
Difference between B2B and C2C
The main points of difference between B2B and C2C are listed below:
1. Different models of businesses
B2B involves the trade and exchange of goods, services and information between businesses. The C2C business model involves consumers trading and exchanging goods with each other mainly in an online environment.
2. Legalities required for operation
B2B involves legal entities in commerce and require legal paperwork before conducting any sort of business. C2C involves individuals who do not represent any organization; hence legal paperwork is not required.
3. How they formulate pricing
B2B involves different types of trades which have their own set of pricing. Manufacturers and wholesalers tend to use cost-plus pricing where they have a profit margin included in the price. Retailers who purchase goods from suppliers tend to use competitor-based pricing to stay intact in the market. C2C doesn’t have any traditional pricing methods although sellers use price discrimination and negotiation.
4. Scale of Operations
B2B deals with professional entities who work at a much larger scale of operations and the volume of output ordered by enterprises is relatively bulky. C2C caters a much smaller scale as individuals usually sell what they’ve already used or a new product which isn’t in bulk quantity.
5. Main cause of failed transaction
In B2B communication errors or delayed shipment of raw materials might lead to cancellation of future contracts. C2C transactions which happen to take place in an online environment demonstrate dreck quality and steep pricing because of which consumers lose their trust in e-commerce.
6. Organizational Structure
Enterprises involved in B2B tend to be comparatively large in size and consist of a large number of workers divided into teams leading their own tasks. C2C is likely to have a sole individual working towards selling his goods or services.
B2B versus C2C – tabular comparison
A comparison of B2B and C2C in tabular form is given below:
|B2B is a model which involves businesses purchasing goods and services from each other.||C2C denotes consumers engaging in commerce with each other, usually in an online environment.|
|Requires paperwork and documentation like venture contract.||Does not require any legal work because it doesn’t represent an organization.|
|Manufacturers and Wholesalers tend to use Cost-based pricing. Retailers usually implement Competitor based or Dynamic pricing.||No traditional pricing methods needed and price discrimination and bargaining is used.|
|Scale of Operations|
|Mostly, works on a large scale of output.||Relatively small in size because of the quantity of output the seller holds.|
|Causes of failure|
|B2B activity can be harmed due to late shipment, quality of supplies, high pricing which might bring lower profit margins.||C2C can be affected if buyers are not satisfied with product quality, high pricing and security concerns.|
|B2B transactions include multiple teams of employees working towards their directed tasks and responsibilities.||Characterized by one individual managing the whole transactions.|
Conclusion – B2B vs C2C
B2B and C2C are essential business models which contribute largely in the world’s main transactions and help run operations smoothly. These terms define the foundation of any commerce taking place as they explain how businesses are run in a physical as well as a virtual environment. Both business models have an economic impact as they result in greater employment, higher GDP, and faster growing markets. With current advancements, it is important to understand these business terms and imply them in the coming future.