How a B2B2C Model Expands Your Market Footprint

For many small-to-midsize manufacturers, the real challenge isn’t making a quality product. It’s getting that product into new markets or the hands of new customers that aren’t readily accessible. A B2B2C model might be the solution.

What is B2B2C?

A business-to-business-to-consumer (B2B2C) strategy is a business model that connects a manufacturer to consumers through an intermediate business partner. Instead of the manufacturer selling directly to consumers (D2C), it partners with a third-party vendor or retailer for various parts of the sales transaction process.

Comparison with traditional business models

To explain, let’s compare the more traditional or commonly used business models to B2B2C. We’ll contrast B2B businesses, B2C companies, and white labeling with B2B2C.

B2B vs. B2B2C 

An example of a B2B company (business-to-business) would be a manufacturer of industrial circuit breakers that sells them directly to electrical contractors. The contractors install them in commercial buildings. The contractors are target customers of the electrical manufacturer but are also businesses themselves. This is a traditional B2B model for the manufacturer.

In a B2B2C (business-to-business-to-consumer) scenario, the same manufacturer might produce wall switches that they sell to homeowners through a home improvement store or retail distributor. The consumer has little or no direct contact with the manufacturer. The retailer handles fulfillment and, in most cases, customer service.

B2C vs. B2B2C 

In this comparison, a safety gear manufacturer makes safety gloves for end consumers, a business-to-consumer model. It sells them directly to consumers through branded retail stores or its own ecommerce website. B2C sales, in this case, could be a direct-to-consumer (D2C) transaction. The manufacturer is responsible for marketing, sales, and fulfillment, as well as the entire customer experience.

It’s important to clarify that B2C and D2C are similar but have one important difference. Both types manufacture products meant for end consumers. However, in B2C, sales and fulfillment may often be handled by a third party, whereas in D2C, the entire process, from manufacturing to purchase to delivery, is carried out by the manufacturer itself.

Using a B2B2C strategy, the company would sell their products in bulk to online ecommerce platforms like Amazon, and to safety product distributors and home improvement stores. These stores, in turn, sell the product to end users like DIYers, construction workers, and other consumers.

The advantages to the manufacturer are its ability to leverage the distribution partner’s customer base and customer data, as well as their existing sales and fulfillment infrastructure. B2C also reduces the investment needed for sales and marketing since the end user goes to the distributor’s ecommerce website or retail store to find and purchase the product. These intermediate sellers usually handle the marketing and advertising chores.

White labeling vs. B2B2C 

You’ve probably been exposed to white labeling on a regular basis. It’s extremely common in food processing. For example, a food manufacturer produces pasta sauce. But instead of selling it under its own brand, it allows grocery stores and big box discount stores to put their own labels on it, marketing it as a house or store brand.

In white labeling, the manufacturer loses any brand recognition by shoppers who believe they are buying the store “brand.” In fact, you’ll need to read the fine print to see who actually produced it. And while the store gets credit for the amazing pasta sauce, the manufacturer will need to field any customer complaints.

In B2B2C marketing, the manufacturer keeps its name on the label, increasing their brand recognition and maintaining a market presence.

Common B2B2C models for SME manufacturers

In addition to its own in-house market strategies for direct-to-consumer sales, a small or medium producer might consider using a B2B2C business model for part of its products. This could bring in new customers, expand its customer base, and promote brand recognition beyond their current region. By adding new sales channels, they might actually streamline their sales and marketing strategies.

B2B2C retail partnerships

Many consumers like to touch and view products in person, so it’s important to find retailers who can fulfill that desire. In this case, the retailer handles inventory, sales, and customer service. You will likely need to ship the stock to the retailer’s location. Look for retailers like specialty shops and department stores whose customers align with your ideal customer persona.

Digital marketplaces

Online ecommerce platforms like Amazon might be a good fit for many small- to mid-sized manufacturers. These online retailers connect you with consumers and often give you a digital storefront of your own. While Amazon is more of a one-stop shop for a wide variety of products, your product might fare better in a more industry-specific marketplace.

These ecommerce solutions often handle payments, product promotion, and in some instances, the logistics and delivery services for getting the product into the hands of the buyer. Larger ecommerce companies may even have warehouse facilities, cutting back on what you need to keep on hand. These 3PL solutions are not usually suitable for engineer-to-order products.

Service integration partnerships

A service integration partnership is where you sell products to the consumer, but you’ve contracted with another business for services such as delivery or fulfillment. One of the most common scenarios is a restaurant or grocery store selling their wares to the customer via an online app.

However, the business contracts with another business, like Uber Eats, to deliver the purchased product to the customer. This is different than a company offering direct home delivery from the store. The restaurant or grocery store doesn’t have the expense of maintaining a delivery fleet, and the second business makes a commission on the sale.

This could work in a manufacturing business with some planning. For example, a custom paint manufacturer could partner with a home improvement company or contract painter. The customer orders their paint from the manufacturer using an online ecommerce website. The custom paint is then shipped to the home improvement company or contractor for delivery and application.

Financing collaborations

Having a financing company that can offer a buy now, pay later option can make your products more accessible to a broader customer base. While these business partners don’t sell your product to the end user, they could be an important part of your sales channel. Many consumers might love to buy high-ticket items but don’t have the cash on hand to do so. Just be sure to vet the company to ensure you don’t run into any financial crises. Financing and even warranty agreements are an important part of the customer journey, particularly for online marketplaces. 

B2B2C key benefits for SME manufacturers

There are many benefits to implementing a B2B2C strategy, but there are also some challenges. For one thing, you can expand your market reach with access to new geographical areas. You’re leveraging your partner’s presence in places you’re not visible or have direct access to. Here are a few more benefits.

Enhanced brand visibility

When you partner with major brands, aside from white labeling, you maintain your brand identity and can often improve it. When your products are sold by companies known for quality and integrity, their reputation is often added to yours. This can go a long way to building brand loyalty. Additionally, when your product is sold retail, you’ll avoid the brand obscurity often common in wholesale-only business models.

Access to consumer data and insights

If you structure your B2B2C agreements properly, you’ll often gain direct feedback from consumers. Not only that, but getting the data from the retailer’s customer experience data can give you insight for driving further product development.

Focus on core competencies

You build a great product, and your core competency is manufacturing and ideation. B2B2BC partnerships allow you to go all in on your core strengths. While the partner handles sales, marketing, and distribution, you can concentrate on creating a superior product.

Reduced customer acquisition costs

It’s common knowledge that it takes more money to get a customer than to keep one. When you can leverage your business partners’ existing customer base and share marketing expenses, you have a lower cost-per-acquisition than using direct channels only.

Challenges to navigate in B2B2C partnerships

There are some challenges inherent to B2B2C relationships. But with careful investigation and planning, you can avoid or overcome them.

Partner selection

The first challenge is finding the right partner and building a good working relationship with them. They should have complementary strengths. For example, your strong point is developing and manufacturing a quality product. But you may lack marketing experience or reach. A good fit would be a partner who excels in promotion and marketing, one with their finger on the pulse of the target market you’re serving. They already interact with the people you want to reach.

Brand consistency issues

You need to be cautious. Make sure the values and goals of the partner align with yours. This will be extremely important as they act as an intermediary between you and the consumer. If they don’t value the consumer the same way you do, bad encounters between the partner’s sales and service team could tarnish your image in the eyes of your ideal customer.

Having clear communication protocols between you and your partners is crucial to maintaining a consistent customer experience. While vendor management software can guide your interactions, it shouldn’t be the end of interaction. Regular personal contact via phone or other means often finds problems not noted and can be useful in solving them before they become major issues.

You’ll need some way to ensure that your buyers are getting excellent customer support from your partners. Protecting your brand reputation is important, so make sure you’re not given a bad one because of the vendor’s interactions with the end customer. 

Data ownership and privacy

When you partner with a company for a B2B2C arrangement, make sure you check off all the necessary boxes. First, establish clear data-sharing agreements. Part of the value of a B2B2C partnership is shared data so you can develop products that fit the changing needs of your customers.

You also need to make sure your partners are following all compliance protocols for consumer privacy regulations. Know what the regulations are in the area they operate and determine if they’re following them.

This can be kind of a tightrope walk. You need to balance the need for insight and information into the buyer’s mind and their right to privacy.

Implementation strategies

It’s easy to see that forming B2B2C partnerships is more complex than selling inventory to distributors and letting them sell to the consumer. For example, the partner may be marketing to the consumer, and the consumer might be buying from you through the partner or through an ecommerce platform. Here are some key implementation strategies.

Partner identification and evaluation

Not every business would make a good partner for your products. You’ll need to set some criteria for evaluating a business partner before you sign the dotted line with them. You’ll need to assess their capabilities to ensure they have what you need.

These days you may need to evaluate their business culture and values. Many consumers have stringent values and may only want to do business with like minded companies. make sure the partners you choose are a good strategic fit. They should be reaching your ideal end customers in ways and locations you can’t do yourself. If they can’t break you into new markets, or expand your existing ones, then it may not be worth the effort.

Technology integration requirements

You likely use MRP software to help control inventory, guide manufacturing processes, and maintain order management and scheduling. Your software may also handle supply chain management. Make sure there is a way to integrate this with the partner’s salesforce and marketing technology.

One of the keys to making a B2B2C partnership work seamlessly is ensuring that customer data, including buying trends, can be used in conjunction with your technologies.

Partnership agreements

B2B2C partnerships aren’t handshake agreements by any means. They’re often more complex than other business relationships you’ve entered into. That’s one reason you should create a well-defined and complete partnership agreement. Some of the things that need to be covered are:

• Defining roles and responsibilities for both parties so there’s no room for misunderstanding.
• Revenue and cost-sharing models that are designed so that everyone gets a fair share for the work performed both in production and marketing. Pricing products so that everyone benefits is crucial.
• Performance metrics and expectations ensure that everyone’s clear on what to strive for and to make adjustments if necessary.

Customer experience focus

Lastly, the customer always has the final word. In reality, they are the most important part of any business. Without them, there is no business. So, it’s important to establish how this most valuable team member is treated. Here are three areas you’ll need to agree on.

• Joint customer service protocols need to be established in the event of an unhappy customer. Determine who is responsible for taking the complaint or question, who is responsible for remedying the challenge, and how.
• Feedback collection and response are important parts of customer service. There will be good and bad feedback. Both are necessary for business improvement. Determine how feedback will be collected, and more importantly, what happens to the information.
• Continuous improvement processes require a partner who is ready, willing, and able to work with you to improve the process. Make strategic plans on how improvements will be handled and evaluated for success. Remember, a B2B2C partnership isn’t just a means to help your business grow. It should help all parties involved thrive.

Is B2B2C right for your manufacturing business?

It’s an important decision. This article merely scratches the surface of B2B2C marketing strategies. Making the right decision is important, so consider this carefully as you assess the potential for getting your product to market.

Assessment criteria:

Current distribution capabilities and limitations—What are they, and can they be enhanced with a strategic channel partnership?

Resource availability for partnership management—Do you have the resources, both in personnel and technology, to manage these relationships effectively? If not, are you willing to invest the time and money to acquire them?

Market expansion goals—What goals do you have for expanding your market? Are they for expanding regionally, nationally, or even globally?

Product suitability for various channels—What marketing channels will be the most effective for showcasing your product to an expanded audience?

Technical readiness for integration—Is the MRP software you’re using for your current manufacturing process ready to integrate with a partner’s system?

5 key takeaways for manufacturers considering B2B2C partnerships

1. Partner selection is critical: Choose businesses with complementary strengths, shared values, and established customer relationships.
2. Technology integration makes or breaks B2B2C success: Invest in compatible systems that enable seamless data sharing and operational efficiency. Real-time data collection automation can be a valuable asset.
3. Balance control with collaboration: While you may sacrifice some direct customer contact, the expanded reach often justifies the tradeoff.
4. Start with clear agreements: Define roles, responsibilities, and performance expectations before launching any partnership.
5. Maintain brand visibility: Ensure your brand remains recognizable to end consumers even when working through intermediaries.

Frequently asked questions

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