From B2B to B2C: how Covid-19 impact is changing business models

Transitioning from B2B to B2C has become a necessity for the many companies that have seen the traditional supply chain disrupted by the COVID-19 pandemic. But what are the implications for companies seeking to have an innovative response to the challenges Covid-19 has posed?

With retail outlets, restaurants, and distribution channels shutting down due to the pandemic, many B2B companies have found themselves seeking new solutions to reach their customers directly. In many cases this has meant transforming the business structure entirely, developing e-commerce platforms to overcome the crisis.

Shifting business models is far from a smooth process, especially when years of research and development have been spent in designing services for organizations rather than consumers. Business-to-business and business-to-consumer require different communication, marketing, and distribution strategies and reaching a new audience often means making significant changes to what you are selling.

In this article, we’ll look into the challenges and opportunities of moving from B2B to B2C, addressing solutions for your company to efficiently adapt to the strange times we live in. Whether you are selling digital service or a consumable product, there is a number of essential steps to follow in order to change your business model.

Is your company ready to shift from B2B to B2C?

Clearly, making a shift from B2B to B2c is not a walk: not every enterprise will be able to transform its business model without making some structural changes. For some businesses impacted by the COVID-19 pandemic reaching the public will be easier, while for others making the switch will mean rethinking its position on the value chain. The first to ask yourself before transitioning is whether your product is suitable for the retail market. For example, a company selling SaaS products designed for large organizations will find it difficult to apply the changes necessary to sell to individuals, while a food product manufacturer may have to focus more on logistics rather than the nature of the good.

Strategies differ depending on the sector: on the one hand, a digital company switching from B2B to B2C may have to think creatively about how to change its core business, a web-based infrastructure offers the advantage of testing, global reach, and quick adjustment implementation; a wine producer, on the other hand, may still be able to deliver its bottles, but with restaurants closing, fairs delayed and distributors not investing, an e-commerce solution needs to be developed.

Many companies responding to the COVID-19 epidemic are considering shifting from B2B to B2C, and often the question is not in whether the product is right, but in how the retail market functions compared to their usual operations. B2B involves slower processes, long-lasting relationships with clients and negotiation skills that are not normally employed in B2C. Re-strategizing, therefore, is not only a matter of making a product available for those who need it but also understanding the tools to drive demand and traffic.

Skipping distributors during the crisis: becoming your own salesperson

Manufacturers looking to sell directly to final consumers will find themselves looking into solutions on how to skip the middleman. With traditional channels changing at an unprecedented speed, the ability to deliver directly to individuals can determine the success or failure of a small to medium businesses. Luckily, digital systems allow you to innovate during the COVID-19 emergency, abandon standard processes, and set up your own logistics and communication strategies.

While in B2B marketing to the consumers was usually done by the resellers, once you’ve made the switch to B2C managing orders through your e-commerce won’t be enough: becoming familiar with SEO, targeted ad campaigns, pay-per-click, and automated newsletters will be essential to make your brand known to the public.

The act of selling will become a larger part of your day-to-day operations, starting from the analysis of website data, all the way to following up on your customers’ requests and solving issues they may encounter during the purchase process. If B2B meant cultivating your leads over time and establishing a network of contacts for long-term collaboration, B2C is a much faster and dynamic process. Conversions can occur minutes after a person first comes across a brand and customers will have a much more diverse background.

Time to change your customer retention and sales cycles business models how customer retention and sales cycles change

As we’ve already mentioned, the transition from B2B to B2C is likely to translate into a larger target audience. However, while other companies tend to be recurring buyers, the behavior of individuals is less predictable. A customer retention strategy should be a key aspect of an innovation plan built in response to the COVID-19 crisis. But what does this mean?

An e-commerce website with a large user base might only see a 1% conversion rate, therefore it is important to invest in customer experience (CX), retargeting of repeat customers with higher spending rates, and develop brand awareness campaigns to build a solid online presence. There are plenty of growth strategies to invest in during as part of your COVID-19 tech retail innovation plan, from loyalty schemes to optimized checkout pages, and email marketing automations that remind users of their abandoned carts.

One important thing to keep in mind when making the switch is that B2C is more likely to suffer from seasonality than B2B. While companies and organizations are, under normal conditions, reliable customers, final consumers come in waves at different times of the year, the month, and even the week. This is where data analysis comes into play: understanding your traffic stats will allow you to make predictions and anticipate peak times.

COVID-19 impact on business: pros and cons of changing from B2B to B2C

When measuring how the COVID-19 crisis has impacted your business you will need to assess the pros and the cons of switching from a business model to the other. As we’ve seen, there are benefits in both realms, but taking the time to put things into perspective will help you decide which is the right move to make.

Pros of switching from B2B to B2C:

• Flexibility. While in B2B your distribution channels and sections of your marketing were regulated by resellers, B2C will bring much more freedom, allowing you to reach out directly to customers as you believe its best.
• Higher profit margins. True, doing your own marketing comes at a cost and will require staff training, A/B testing, and mistakes made along the way. Cutting out the middle man, however, means that you’ll be able to generate more profits thanks to higher margins.
• Full control of your brand. Branding can be tricky, but by having control of all the sales channels you’ll be able to position your name, logo, and style anywhere you see fit without having to rely on third parties to manage your image.

Cons of switching from B2B to B2C:

• Unpredictable cycles. B2B contracts usually establish the working conditions for months into the future, while single transactions with individuals can happen anywhere, at any time. Predicting user behavior requires a lot of skill, and even when a data analyst does a good job, you can’t always have the certainty of how the situation will play out.
• Dealing with customer service. Selling directly to a large audience also means helping them solve issues. Good customer service is essential to provide your clients with a pleasant buying experience, but it requires both time and resources that may not be readily available.
• Increased number of tasks to manage. Generally speaking, in a B2C company, you will be responsible not just for a higher volume of orders, but also for the micro-management of every single section of your business. Managing an e-commerce project comes down to dozens of small actions that are all fundamental for the smooth running of operations.

Are startups changing their business models during the COVID-19 crisis?

Compared to traditional and well-established companies, many startups have managed to adapt to the current COVID-19 situation by employing remote work practices and offering free services to people stuck at home. Countless digital companies have extended the free trial periods for their services, allowing users who spend a lot of time online during quarantine to get to know their brand.

Innovation during the COVID-19, however, doesn’t only have to mean brand awareness campaigns. The European Commission has recently published a call for action which allows startups developing tech solutions to combat the spread of the virus to access EU funding. The COVID-19 innovation and acceleration plan involves 164 million euros made available for startups and small businesses working on treating, testing, and monitoring the disease.

How is the COVID-19 pandemic affecting your business?

We would like to hear from you. Get in touch to let us know how your company is changing shape and how the COVID-19 has affected your business. Let’s talk together about solutions on how to overcome this difficult period. We’re here to help!