International Expansion

All roads lead to B2B2C

The world used to be divided into two neat segments: B2B and B2C. Now, though, the trend is for these segments to merge into one: B2B2C. How does this work in real life?

The time when B2B and B2C models functioned independently of each other is slowly fading away.  Companies are increasingly offering their wares to both businesses and individual consumers, and several business models are developing to support the B2B2C (also called B2X or B2E (Business-to-Everyone) paradigm.  We’re seeing manufacturers market to and provide content for consumers; we’re also seeing companies that not only sell products but also service them. Plus, these companies also commonly support online sales as well, which allows them to explore the potential of new markets.

What are some of these new business models, and how do they work?

Model 1: Manufacturer supports business partners’ marketing

Consumers’ opinions about a given product consist of many factors – even those outside the manufacturer’s or vendor’s control. Any weak point during the purchase process affects the producer’s reputation. Therefore, manufacturers are more actively involved in areas that were previously the domain of intermediaries: they’re taking more responsibility for educating users about their offerings.

Today's consumers begin searching for information with a visit to the producer's website. They expect that they will get valuable materials and tools. Manufacturer sites may also refer customers to business partners’ sites, where they can place an order. Furthermore, the producer's marketing department can generate and pass sales lead on to partners, helping them locate potential buyers.

The flagship example of this model at work is the "Intel Inside" campaign. Intel, which manufactures computer components, has been advertising their products for years using content adapted for their partners, who have contact with the retail customers. Intel’s advertising and informational materials are addressed directly to consumers, although in the vast majority of cases the purchase takes place through intermediaries.

 "In the western market, we observe the innovative ideas of distributors from our industry and go beyond the classic model of cooperation. Increasingly, [manufacturers] provide their business customers with useful tools or applications for the development of their companies, thus supporting them in many aspects of their operations"  says Józef Kostecki, Director of Project and Process Management at Iglotex. “Most of the existing entities [in the food market] are too small to create ready-made solutions. It is also not their main activity. Distributors with larger resources can support their clients by providing them with practical solutions, such as table booking or online ordering applications.”

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Model 2: Manufacturer provides tools for business partners

Consumers like their independence, but they also appreciate contact with other people. Consultants, salespersons, designers, and other intermediaries often have unique knowledge and experience in reaching customers. To exploit this potential, producers develop marketing solutions that help intermediaries communicate with potential buyers.

Digital tools, like configurators and product-choice wizards, are key examples of this model. So are online or mobile apps that allow users to contact an expert, set an appointment, or simply find more information. These tools help users define their needs and accomplish particular tasks. The ability to use an online or mobile tool to arrange an appointment with an expert, have a product personalized, or track the status of a shipment eases each stage of the consumer journey; such tools are also invaluable sales support for intermediaries.

Model 3: Service + product

Buyers’ expectations have an impact on how they perceive the product itself. Each transaction is made up of many elements, and each one can influence consumers’ choices. That is why some manufacturers try to provide the best customer experience possible by pairing products with complementary services.

Door-drops, installation, service training, and periodic servicing are examples of services that strengthen customer attachment to a brand. This approach also benefits business partners, providing them with an opportunity to generate additional revenue.

Howdens Joinery is an excellent example of this model in action. This company does not serve retail clients, but it still provides them with a free design service. Project tools like visualizations, 3D views, video walks, and 360° panoramic views are available on the Howdens site. As a result, Howdens connects the customer with a designer and provides ways to facilitate communication between the two parties.

“There are two strong trends in our industry. The first is close cooperation between a trading partner and a dealer. The producer proposes an idea for the local dealer's business development, like portfolio expansion or additional services that [the business partner] can offer to increase margin and the conversion. In the second model of cooperation, the producer takes on those elements that for many reasons are uncomfortable or too expensive for dealers to address them appropriately,” explains Magdalena Cedro-Czubaj, Marketing Director at Oknoplast. “For example, the producer expands their service area so that their partner can focus only on contact with customers and on sales; all the service (related to the order, communication, preparation of an individual project, etc.) is already on the producer's side. There are also call-centers or other types of quick contact tools with a potential dealer-retailer. The first model uses long-term relationships. The second relies on quick sales, where the dealer is a fast broker.”

Model 4: Online stores become less about selling, more about partnership

Some consumers, accustomed to ordering products at any place and time, expect that producers will provide them a direct purchase option. Coming up to their expectations may lead to integrating the supply chain or unifying the resources of online and physical stores, which improves efficiency.

Nevertheless, increasing revenues at the expense of partners' profits may lead to the deterioration of the manufacturer-partner relationship. The manufacturer can minimize this risk by limiting the actions that drive sales in their online store and redirecting individual customers to intermediaries.  For example, Sony provides information about its products on the Internet. People interested in purchasing a Sony product receive a list of sellers, among which Sony is only one of the possibilities. Sony Centers, in this context, become places where clients can talk to a company expert. They can also buy Sony's products, but prices are usually better at the partner facilities.

Model 5: Testing new markets via e-commerce

Sometimes the relationships developed on a given market bring the producer so many benefits they effectively stop the company from introducing any changes. In such situations, implementing a new e-commerce model in markets where the company does not yet have any business partners can be a viable way forward.

This solution eliminates some risk and allows the producer to test another way of operating. At the same time, opening online sales is an opportunity to probe the company's potential in a new location. Launching offers to the new market by direct channels not only allows the manufacturer to identify sales potential with relatively low expenditure – there is no need to open a physical branch or build a distribution network from scratch – it also significantly increases their margin.

Why now is the time for B2B2C

Customer experience has always been important, but in the modern market it is a key driver of success.  Providing a quality product or service is only part of the equation; creating an ideal experience along every stage of the journey offers companies significant advantages.  To this end, many companies are adopting various B2B2C strategies. Even those who formerly specialized in B2B are entering the consumer market. So, as the boundaries between strictly business and strictly consumer segments start to erode, forward-thinking companies are already making the transition to a more flexible business model.