What Is Business to Business to Consumer (B2B2C)?

Business-to-business-to-consumer (B2B2C) models are partnerships that enable companies to reach more consumers, accelerate business growth and offer new services by working with other companies. B2B2C relationships are extremely common. Millions of manufacturers work with online marketplaces that not only sell their products but also fulfill orders. Mobile app developers almost universally sell through app stores. Retailers partner with services that offer convenient online shopping and home delivery to consumers. Here’s a deep dive into how B2B2C relationships work, their advantages and disadvantages and key examples from different industries.

What Is Business to Business to Consumer (B2B2C)?

B2B2C describes a relationship in which a company partners with another company to reach a broader audience of consumers or offer them a service that it cannot cost-effectively provide on its own. For example, supermarkets partner with online grocery shopping and delivery services. The supermarkets can sell more food by appealing to consumers who want the convenience of online shopping and delivery. The delivery services might generate revenue through one or more methods, such as sales commissions, delivery fees, subscriptions and advertising. The specific way in which the service provider makes money varies depending on the type of B2B2C arrangement.

The arrangement in this example is considered a B2B2C model because it uses a business-to-business (B2B) arrangement between the supermarket and delivery provider to provide a service to consumers (B2C). B2B2C business models have become widespread. Other B2B2C services providers include online marketplaces, app stores, reservation services, insurance brokers and installment payment services, such as buy now, pay later (BNPL) firms.

Key Takeaways

• Business to business to consumer (B2B2C) describes business relationships in which two companies partner to offer services to consumers.
• Examples include relationships between grocery stores and delivery services to offer consumers online shopping and home delivery. App stores and online marketplaces are also examples of products/services delivered to consumers via B2B2C relationships.
• Advantages of B2B2C include increased revenue and customer convenience.
• Potential disadvantages include lower profit margins and reduced control over the customer relationship and the customer experience.

Business to Business to Consumer Explained

B2B2C models have become popular because of the benefits they can provide to all the businesses involved — and to consumers. Developers can offer innovative new apps to millions of users through app stores, which take a cut of revenue. Restaurants can sell meals to customers who want restaurant-quality food at home by partnering with startups that offer online ordering and delivery. The delivery platforms generate revenue by providing those services and acquiring a substantial customer base in the process.

A B2B2C model involves a close partnership between two companies to bring products or services to people. In the example of the restaurant delivery platform, the customer orders from the delivery service; the delivery service handles payment, passes the order to the restaurant and transports the food to the customer. Each partner in the relationship can focus on its core competencies. As in most B2B2C models, the delivery provider is offering a service that is not cost-effective or practical for the restaurant to offer on its own. The delivery platform aims to build a viable delivery business through economies of scale — by providing services for many restaurants. Some service providers and cloud ERP solutions also provide retail predictive analytics services modules based on the data they gather. Over time, a customer may form a broader relationship with the delivery service because they perceive the delivery service as their go-to resource for ordering takeout food from a variety of different restaurants.

B2B2C relationships differ from traditional B2B and B2C models, and companies can use all three models. In a B2B model, a business sells its products to other businesses. Those customers could be companies that use the products internally, or they could be distributors or retailers that buy and resell the products. In a B2C model, a company sells direct to consumers. With successful B2B2C relationships, two companies typically partner to bring products or services to consumers that neither company could cost-effectively provide on its own.

Advantages and Disadvantages of B2B2C Business Model

B2B2C business models have become established in many different industries because they offer a wide range of potential advantages. But they also come with complex considerations and risks, including potential issues about which partner owns the customer relationship and/or the customer experience.

Advantages of the B2B2C model

Advantages of the B2B2C model include:

• Faster business growth. Companies can accelerate revenue growth by entering into B2B2C relationships. For example, startup manufacturers can display innovative products to millions of potential buyers by listing them on online marketplaces. Companies may encourage more customers to buy their products by partnering with services that offer a buy now, pay later option at checkout.

• Lower capital investment and operating overhead. Businesses can minimize costs by leaning on their B2B2C partners to provide services. For example, a grocery store that partners with a delivery service doesn’t need to buy delivery trucks, pay drivers or manage delivery logistics. The delivery services company doesn’t need expensive facilities to store food. The delivery service also lowers costs through economies of scale because it can use its delivery network to deliver food from many different companies.

• Brand credibility. Startups may increase their credibility with potential customers by partnering with companies that consumers already trust. For example, consumers know that an app offered through a smartphone manufacturer’s app store has been vetted by the manufacturer.

• Greater convenience for customers. B2B2C partnerships help companies make shopping more convenient for consumers by providing services such as fast delivery and online ordering.

• Focus on core expertise. Delegating functions to B2B2C partners frees companies to focus on their core expertise. For example, manufacturers can direct all their energies into creating innovative products, leaving sales and order fulfillment to partners.

• Customer acquisition. Depending on the relationship, one or both of the partners may be able to reduce customer acquisition costs and improve other key customer-related financial metrics. For example, startups offering specialized B2B2C services can build a customer base at relatively low cost. When consumers want to order online from a restaurant or grocery, they need to create a customer account on the delivery service’s website. As a result, the delivery service gets to add a new customer without incurring any marketing cost.

Disadvantages of the B2B2C model

Potential drawbacks of B2B2C partnerships include:

• Reduced control over the customer relationship. When companies use B2B2C partnerships to deliver products or services to customers, they typically let their partners form relationships with those customers, too. The partner may then sell other products to those customers, including products from the company’s competitors. For example, customers may sign up with an online grocery delivery service with the intention of ordering food from their neighborhood supermarket. But once they’ve registered with the service, they can use it to buy food from other stores, too.

• Customer-experience concerns. Companies that use intermediaries to provide services also rely on them to help ensure a good customer experience. If a consumer orders a restaurant meal through an app and the food arrives cold and late, the customer experience is tarnished, even though the restaurant isn’t necessarily to blame.

• Lower profit margins. B2B2C partners may charge fees that reduce companies’ profits. For example, app stores take a commission each time a consumer purchases an app. Companies need to weigh the disadvantage of lower margins against the increase in sales gained from the B2B2C partnership.

• Reliance on partner marketing. Companies that use B2B2C partners to sell their products rely, to some extent, on how the partners present their products to customers. For retailers that sell through online ordering and delivery platforms, traditional approaches such as in-store promotions and product displays may be ineffective because customers are simply unaware of them.

• Integration effort. B2B2C relationships usually require effort to coordinate with partner companies. Retailers partnering with online delivery platforms must periodically send them updated inventory availability and pricing from their enterprise resource planning (ERP) systems, for example.

B2B2C Industry Uses

Business-to-business-to-consumer models have spread through multiple industries, but they are particularly popular in ecommerce, retail, food and beverage, and brokerages.

Ecommerce

The B2B2C model is prevalent throughout ecommerce and omnichannel experiences. Many manufacturers and other suppliers sell through B2B2C relationships with online marketplaces that provide services ranging from listing products and processing payments to warehousing and dropshipping. These marketplaces enable manufacturers and other suppliers to reach a huge audience quickly and with minimal cost. In addition, many companies selling online take advantage of relationships with installment payment services, such as Affirm and Klarna, that allow customers to pay for purchases over time.

Retail

Established retailers with brick-and-mortar operations enter B2B2C partnerships with companies that offer services such as online ordering and shipping. This typically requires that retail systems provide up-to-date inventory information to these services, enabling the services to display accurate information about what’s available and how much it costs. The services work with retailers that sell a diverse range of goods, including food, electronics, office supplies, craft supplies and sports equipment. In addition, many brick-and-mortar retailers sell through online marketplaces.

Food and Beverage

Food and beverage is a retail subsector in which the B2B2C model has become particularly well established. Restaurants, groceries, wine and liquor stores, and providers of cook-at-home meal kits all partner with services that enable consumers to order items and have them delivered. The arrangement lets food and beverage companies offer home delivery with minimal capital and resource investment. Such investments can sometimes be onerous: Legal delivery of wine in the U.S., for example, requires compliance with a large and complex array of regulations dependent on both the destination state of the delivery and the state of its origin.

Financial Brokerages

Although stock, bond and insurance brokers predate terms like B2B2C, they nonetheless fit the model exactly. Insurance brokers, for example, partner with large insurance carriers to offer their products and then select among them for those that fit the needs of an individual customer. Often, the broker becomes the customer’s trusted provider, as opposed to the insurance carrier or, in the case of equities markets, the mutual fund or share-issuing company.

Business-to-Business-to-Consumer (B2B2C) Examples

Some of the best-known examples of B2B2C models are grocery delivery services, app stores and online marketplaces:

Grocery delivery.

Instacart is one of the best-known delivery companies, providing online ordering and delivery services for hundreds of thousands of businesses and millions of consumers across the U.S. and Canada. It’s best known for grocery deliveries, but it has expanded to work with a variety of other retailers, including pharmacies and electronics stores. It works like this: Retailers provide inventory information to Instacart, which publishes the information on its website and app. Consumers log in to Instacart and choose and purchase goods from their selected retailer, paying with a credit card or digital wallet. Orders are then picked by a personal shopper and delivered, or consumers can pick up their purchased items from the store. Customers pay for the service on a per-delivery basis, or with a monthly or annual subscription plus additional fees.

App marketplaces.

App stores are among the earliest and most prominent B2B2C examples. Apple’s app store is unique in that developers must use it if they want to sell mobile apps for iPhones or iPads, which is not the case for Google Play/Android phone apps. Both providers review all apps submitted for distribution, in part to ensure a safe experience for users. The app store generates billions of dollars in annual revenue for Apple, while enabling developers to reach millions of potential customers worldwide.

Retail marketplaces.

Online marketplaces such as Amazon, Alibaba and eBay operate using a variety of business models, including B2B2C partnerships with manufacturers and other suppliers. For example, they may list products and manage payment for suppliers that are then responsible for shipping the products to customers. Companies need to carefully consider their strategy for these marketplaces, due to their disruptive impact across multiple industries.

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Business-to-business-to-consumer (B2B2C) partnerships can help companies accelerate business growth, offer new services and increase convenience for consumers. Companies need to weigh the advantages of B2B2C against potential impacts on profit margins and customer relationships.

B2B2C FAQs

Why don’t businesses just go directly to consumers?

In many cases, B2B2C offers businesses several advantages over selling directly to consumers. By using B2B2C partners for online sales and/or delivery, companies can avoid the cost and complexity of performing those functions themselves. They may be able to offer services that they cannot offer on their own. Businesses also may be able to reach a wider set of customers by partnering with other companies.

What’s the difference between B2B2C and white labeling?

In a B2B2C model, customers are aware of the business partner they’re using, and they generally form a relationship with that company. For example, consumers using a delivery service platform to order food from a supermarket create accounts with the delivery service and become customers of that service. With white labeling, the provider of the product or service is usually invisible to the customer. For example, many companies use third-party white-label services to provide online chat sessions to customers. The customers aren’t aware that the service comes from a third party, and they don’t have to register with the service provider.

Is B2B2C the same as channel partnerships?

B2B2C is not the same as typical channel partnerships, such as selling products through distributors. A distributor buys products from a supplier and then resells them to customers. In a B2B2C model, the intermediaries generally don’t buy and resell the products. Instead, they partner with the original supplier to sell the products, deliver them or provide other services. However, value-added reselling arrangements, such as technology systems integrators that add design and installation services to a vendor’s products or insurance brokers that tailor a large carrier’s offering to the needs of an individual, can be considered B2B2C models.

How do B2B2C companies market to consumers?

Some B2B2C companies act as intermediaries between suppliers and consumers, marketing their services through advertising or other methods. The companies also offer a variety of suppliers’ products to consumers on their apps or websites; some accept paid advertising that promotes products from those suppliers.

What is meant by B2B2C?

B2B2C is a type of business relationship in which one company relies on another to provide services to its customers. For example, an app developer relies on an app store to sell and distribute its software to customers.

What is the difference between B2B, B2C and B2B2C?

B2B means businesses are selling to other businesses. B2C means businesses are selling to consumers. B2B2C combines both B2B and B2C. Here’s an example of a B2B2C arrangement: An online ordering and delivery platform offers its services to supermarkets (B2B); the supermarket can then sell produce online to consumers via the platform (B2C).

What business model is B2B2C?

B2B2C is a type of business model in which companies partner to offer products or services to consumers. For example, a restaurant may partner with an online ordering and delivery platform to enable consumers to order online and have food delivered to their home.

Is Amazon a B2B or B2C or B2B2C?

Amazon operates a variety of business models, including B2B, B2C and B2B2C. It is best known as a B2C company — it makes, buys and stocks many different goods in enormous warehouses, sells them online and ships them to customers. It also operates as a B2B company, selling supplies to businesses. Finally, Amazon offers B2B2C services such as sales, warehousing and fulfillment for many third-party sellers.