Table of Contents
B2C Startup: The Overview
The term business-to-consumer (B2C) refers to the process of selling a product or a service directly from a business and consumers who are the end-users of its products or services. Most companies that sell directly to consumers can be referred to as B2C companies.
Example of “B2C”: Selling customized and designer t-shirts based on the personal choice of the customer or providing online dating services.
The term B2C is applicable to any business transaction where the consumer directly receives goods or services such as retail stores, restaurants, and doctor’s offices. Most often it refers to e-commerce businesses, which use online platforms to connect their products with consumers. While there are many examples of B2C companies in India, the best one to look at would be e-commerce portals such as Amazon, Flipkart, and Snapdeal.
All three of the above-mentioned companies serve directly to individual customers and cater to the public and stand out with a brand image and voice.
B2C Startup: Specifics
B2C start-ups enjoy adaptability and flexibility in the manner they can put up their product for sale to the public in the market, as shopper’s socioeconomics and demographics are accessed through an expansive range of marketing guarantee and stages.
However, there are various variables that ought to be considered by imminent B2C startup entrepreneurs. B2C startups that offer or sell products and services to customers incur startup costs that incorporate warehousing, planning and designing, inventory network activities, supply chain operations, and marketing costs.
Elaborating on the Startup ecosystem, the Economic Survey showed that India is ranked third in the world in the start-up ecosystem, and has many enterprises developing solutions aimed at managing and solving urban challenges. A majority of these are tech- start-ups concerned with e-commerce and consumer products and services. It also states that B2C(business to consumer) start-ups concerned with easing public service delivery and driving efficiencies, whether in waste, water, or energy, are slowly emerging. The survey also states that private investment in B2C startups is much higher than investment in B2B startups.
While launching a B2C startup, entrepreneurs get full power over each component of their business structure from manufacturing to the consumer, the sheer measure of a decision in marketing roads accessible implies that a startup should perform extensive research in order to know and distinguish the correct channel for reaching its target customers.
Effective new companies expect to distinguish and rule a specialty where there is a little rivalry as could be expected. The B2C market is, in most cases, completely globalized when entering the B2C marketplace, a startup should battle with global competition.
Data provided by YourStory Annual Funding Report reports on Leading B2C Startups Across India From 2015 To 2020, By Funding(in million U.S. dollars) on May 25, 2021, shows that between 2015 and 2020, Indian ride-sharing company Ola Cabs received total funding of over 3.7 Billion U.S. dollars. Thereby, the Bengaluru-based unicorn leads the list of leading B2C startups during that time period, followed by fintech company, PayTm, and hospitality startup OYO Rooms. The first six companies each received more than one billion dollars in funding.
B2C Startup: Features
Idea- In B2C tackling a typical issue or a common problem isn’t really the way to progress or it won’t be counted as a key to success. It’s mostly in light of the fact that the to-be-users are unlikely to have an exact meaning of the issues that trouble them enough to really pay for an answer or any solution to their problem. And to add more, B2C customers frequently snatch their credit cards to gain entertainment or something in trend, taking care of an issue probably won’t be the fundamental inspiration or won’t motivate them to buy.
A B2C startup is more helpless before trends. Understanding and derivation can provide you guidance and direction, however, chances will, in any case, assume a significant part in the expected accomplishment of your product or service. Gamble does not stop at the start line, regardless of whether you have adequate early adopters, an unavoidable trend or change can undoubtedly blow your clients away.
Growth or Staying Alive- In B2C, every new function, additional service is as much of a gamble as the first idea was. Your users might react in both ways about your new chat function, menu items, or layout. With a seemingly dashing yet unsolicited change, you may chase your customers to the competition with your own hands. Snapchat is a prime example. A new design brought the loss of millions of active users, which was reflected in the clearly visible decline in Snapchat’s stock market price.
Gaining Users and Revenue- B2C customers are less inclined to spend a large amount of cash on a product or a service. As an outcome, your estimating will probably be lower in B2C, so you will require more customers to arrive at similar revenue as start-ups who can work with greater cost and benefit per buy. In the case of the most widely recognized B2C applications, you need a group of free clients to arrive at a small paying elite.
That is the reason both your product or service and your marketing should be viral to pack basically hasty buys from your B2C customers. This cycle, if fruitful, can be striking: everyone will know your image and your brand. Consequently, it will be less in your control, even with the most capable and experienced group a significant segment will be attempting until “lucking” out.
Decision-Making Process- For large purchases, customers in B2C sometimes consult family, friends, and their social network, but it rarely gets more complicated than that.
Investors- The bigger risk factor of B2C doesn’t bring compensatory advantages to investors. No matter how big the audience is for a B2C startup if it doesn’t translate to potential extra profit.
B2C Startups: The Good, The Bad
- Lower Cost– As compared to any other startup business model, B2C has the lowest cost as you communicate and deal directly with the end consumer and thus eliminate the cost that many lose to brokers in between.
- 24/7 shop and searchability– With the arrival of the digital age and e-commerce sites, the B2C startup business model now has the added advantage of having a “shop” open 24/7 in the form of an online site which also easy to search on the net and app platforms.
- Sharing information directly with consumers– As compared to other business models, B2C has the added advantage of having direct contact with their end consumers. This enables them to share any information with them easily. In fact, you can also pitch your products directly to them via emails.
- Limited Interaction– While you can reach out to your consumers directly via app notification, popups, and emails. it is very limited in interaction which people have one on one and which also gives your consumer the option to physically see, smell and touch the products.
- Competition– As compared to other startup business model, B2C has to deal with a huge competition which is present both online and offline. While the online platform has made a huge dent in the Indian market, a huge chunk of the market is still controlled by physical shops. These shops act as a broker between B2C businesses and thus make a huge impact.
- Security– When you hear of sites like Flipkart and Amazon, you may have also heard of things such as online fraud and identity theft. Thus, you not only have to constantly upgrade your security system to keep at top of things, but you also have to take the backlash of even a one-off security breach that still takes place despite all the upgrades.
B2C Startup: The Dilemma of Choice
- Consumers hate getting sold to, companies love it
Many failed B2C products might have been beneficial for consumers if they had the patience to understand what the product might do for them. But consumers are impatient and if the value is not delivered immediately and continuously, they might stop engaging further and abandon the product for what could have been later valuable.
In B2B products, the customer is habitual to getting sold. In fact, they prefer a sales process where a human explains to them the benefits and costs of the product. This preference to being sold allows an entrepreneur to communicate the total benefit of his product in a way that’s impossible to do in a consumer scenario. Imagine if you go to sign up for Facebook, and they start a video telling all the small and big features of the platform.
As a consumer, you’ll immediately hit the back button. But for a B2B product, if you get their initial interest, prospects will want to watch videos, discuss and request presentations to understand what they will get for the price. This means that there are a lot more ways for a B2C product to go wrong: bland marketing messages, confusing first few seconds of onboarding, boring look, and feel, lack of habit building, etc.
- Consumers want to conform, companies want to differentiate–
This is the fundamental issue, it is where the dilemma of choosing arises in light because being social animals, we, as a rule, need to adjust to what others around us are doing. We would prefer not to be avoided with regard to social wonders of most loved films, style, fashion trends, and what’s going on. This makes it hard for another B2C startup to acquire footing since it faces a chicken and egg issue: no one uses a product because no one else is utilizing it as of now.
Organizations, then again, are usually on the lookout to differentiate. Rather than adjusting, organizations need to acquire an edge by accomplishing something no one else is doing. That is the reason they’re willing to try startups out. New products will make them quicker, less expensive, or better than the rivalry. (Obviously, there are customers who need to separate from one another. Yet, the more noteworthy inclination for people is to try not to be a sensitive thumb.)
- Entrepreneurs are not prototypical consumers–
Despite the fact that they shouldn’t, most entrepreneurs wind up planning products that they’d love to utilize themselves. This implies that they wind up mistaking their conduct as the conduct of a normal purchaser. Yet, an entrepreneur’s visionary has a totally different character than a normal human – just the exceptionally insane leave the comfort of a job and launch a startup. So entrepreneurs who plan customer products for themselves are also associated with the hazard of planning for a market that doesn’t exist.
Yet, with regards to organizations, most organizations are entrepreneurial as they need to distinguish themselves from the market and be ahead of the competitors. So an entrepreneur’s attitude in B2C works for planning and selling a product that puts an association in front of others in the market. This is the reason the odds of an entrepreneur’s business visionary of making a B2C product more effective in identifying with real necessities in the market.
The Dotted Line
A quick look around the B2C startups shows that, although viral growth is often hoped for, in reality, it is extremely rare. When it does happen, the associated businesses are usually extremely attractive, provided they have a way to monetize their customers because, in the B2C markets, consumer behavior is the primary driver.