The growing ecommerce sector has opened up new frontiers for many industries, including manufacturing. However, B2B2C ecommerce for manufacturing is a particularly interesting use case. The modern era of ecommerce-enabled companies generally directs one's thoughts to B2C customers and business models. Inspired readers may think of B2B ecommerce as business-to-business (B2B) companies. But the B2B2C scenario is seldom top of mind, despite being an important manufacturing use case.
A Forrester Consulting report from 2019 estimated that only 21% of companies employ a B2B2C supply chain and practice. Interestingly, Mark Benioff, CEO of Salesforce, stated in 2018 that "We see every B2B company and every B2C company becoming a B2B2C company. I see that over and over again." So this isn't a trivial use case, limited to niche markets.
B2B2C Examples
B2B2C refers to a business model that involves a manufacturer or an organization that produces goods and sells them to consumers, but does so through channel partnerships. With the growth of ecommerce websites and the importance of digital transformation, manufacturers need to reconsider their existing customer base, changing needs, and customer experiences.
Consider a large, global, non-niche company like Hewlett-Packard (HP). HP has long marketed its products or services directly to end-user consumers. Early on, HP realized the importance of establishing a direct relationship with its consumers, and the importance of establishing its brand—both through channel partners and in a direct play. In that regard, the company set up its ecommerce site to directly sell to consumers when the customers wanted to buy directly from the brand. But it also had its B2B businesses and channel partnership running. Selling through channels and distribution made sense for them to deliver customer services with economies of scale.
For many of its businesses, HP marketed and sold directly to consumers, but fulfilled through its channel partnership. This is a clear case of running both a B2B (business to business) and a B2C (business to consumer) operation. Beyond these models, HP also sold directly to consumers, fulfilling orders through its channels, selling inventory in a B2B manner.
By no means is this unique. Many manufacturers can leverage this model in which the brand or manufacturer sells direct to consumers, even though it supports and fulfills through its channel partners.
Challenges
The challenges in pushing towards B2B2C ecommerce for manufacturing include:
- Lack of Customer Insights: When starting this selling and fulfillment model, manufacturers quickly realize that they have limited or no first-party customer data. This is because many have traditionally sold to consumers through retailers, distributors, wholesalers, value-added resellers, marketplaces, and other third parties. Privacy regulations, like GDPR, CCPA, CASL, and a move toward a no-cookie digital world emphasize the importance of getting into this business model early and quickly.
- Competitive Pressures: Competitors are continually trying to outmaneuver your brand at retail and in channel. Manufacturers can put more emphasis on direct marketing, and managing their own marketing toward consumers. Systems like Salesforce Marketing Cloud are key to help manage this challenge.
- Margin Pressures: If the channel is the only source of getting to the end-user customer, then channel partners have the upper hand. If the distributor or retailer is your only option, then manufacturers are under increasing pressure to give in to channel demands for less and less costly products or provide them with greater margins to maintain shelf space, prime locations in-store or on the website, or other such maneuvers.
Benefits of B2B2C
- Cost Savings: B2B2C ecommerce for manufacturing means that your brand creates its own demand. Your brand receives orders for products that you provide to your channel partners. In effect, they now need to compete to receive your attention and interest in providing orders for their fulfillment. This eases margin pressures on the manufacturer's side.
- Geographic Expansion: Similar to the D2C model discussed in a previous post, selling direct to consumers lets manufacturers expand geographically beyond their traditional channel partners. Doing so digitally often gets the attention of local partners in new territories—extending your reach—and potential sales opportunities. This includes reaching global audiences.
- Personalized Experiences: By establishing a direct consumer to manufacturer experience, the brand gains the ability to cater to specific needs, quickly pivot when needed, and adapt to the needs of the digital-first customers.
- Endless Inventory: With direct market signals, and better visibility of customer desires and interests, manufacturers can better manage their production capacity. Add to this that a centralized order system gives control to the manufacturer to decide from which channel partner to fulfill orders. This means never being out-of-stock.
Conclusion
B2B2C ecommerce for manufacturing is a paradigm and use case that can drastically change the course of a business. As a manufacturing use case, the B2B2C market is growing, and it offers a wide range of opportunities. It is important for manufacturers to understand the buying process of their consumers, and reach out to a large enough market to make it worthwhile. Manufacturers need to work with technology partners like OSF Digital, which can set up both enterprise-grade B2B ecommerce systems, as well as consumer-oriented direct marketing automation systems.
Adjusting your model to a B2B2C-centric, ecommerce platform is an important step towards truly taking ownership of your manufacturing future, brand, and brand identity.
Truly the new frontier for brands is the B2B2C ecommerce for the manufacturing use case.
