In the past, the Business-to-Business (B2B) and Business-to-Consumer (B2C) business models were the most prominent models used by companies around the world.
However, the advent of the internet and the developments in the world of eCommerce opened the doors for many more unique business models to come forward, taking an opposite approach to the classic models.
Among these, the business model that has garnered a lot of attention and praise is the Consumer-to-Business (C2B) business model, which generated from the Consumer-to-Consumer (C2C) business model.
What is the Consumer-to-Business (C2B) business model?
The C2B business model reverses some traditional business models and looks at business the other way round. In this model, companies don’t rely on reaching consumers but allow their consumers to interact or transact with them.
While on paper, it sounds counterintuitive to let consumers find and transact with a company, it has become a successful business model in recent years.
The chain for the C2B business model initiates from a consumer who looks for a company or business to sell their products or services. In the past, this business model would not have been successful.
However, due to the internet, many companies have built websites or platforms through which consumers can interact with them.
The Consumer-to-Business model, while the opposite of the Business-to-Consumer model, also has some similarities to it. The primary resemblance between both business models is the absence of intermediaries in the process.
Through the short supply chain, both these business models allow companies and consumers to interact directly, allowing for much better relationships and understanding between both parties.
How does the Consumer-to-Business (C2B) business model work?
In this business model, a company doesn’t have to do a lot. It waits for consumers to bring a product or service to them. The most common application of the C2B business model is in the reverse auction sites or demand collection business models, where buyers can name or demand their own price for a specific good or service.
Usually, the model defines the role of both the consumer and the company involved in the transaction. Similarly, for the model to be successful, companies will demand products or services of value. If the consumer cannot offer a product or service of value, then the company may not buy it or not make profits on it.
In the world of online businesses, the most prominent example of a C2B business model is affiliate marketing companies. These companies allow consumers, who may be bloggers or content creators, to bring customers to the company.
In exchange for the service of the consumer, in this case, the affiliates, the company pays them a predetermined amount of money, usually based on a percentage.
What are the advantages and disadvantages of the Consumer to Business (C2B) business model?
The C2B business model has various advantages and disadvantages. Some of the top ones are as follows.
Advantages
The most important advantage of the C2B business model is the innovation it brings to the world of business. Before this model, there were no models that provided similar functionality to companies.
Therefore, it opens a whole new source of revenue for companies and businesses and allowed more companies to adopt this model.
Secondly, due to the advent of the internet, the model allows consumers to directly reach businesses, which would not have been possible in the past. Most consumers have access to the internet through their smartphones or laptops and engage with various brands online.
Not only is this model advantageous for businesses, though, but also for consumers. Consumers can interact with various brands online and be the driving force behind a transaction.
For consumers that can offer value to companies, this business model allows for great profitability. The C2B business model, therefore, is mutually beneficial.
Disadvantages
While there are several disadvantages of the C2B business model, none of them is as crucial as the loss of privacy or information.
This mode may sometimes result in a breach of consumers’ information or privacy and can lead to compromises. Some companies use this model maliciously, which can end up harming consumers more than it benefits them.
Example
The best example of the C2B business model is affiliate marketing networks. Among these, the most prominent names are Amazon Associates, CJ Affiliates, Clickbank, Shareasale, etc.
All these platforms allow consumers to drive an audience to them and help them make sales. In exchange, they pay consumers a commission-based reward based on every transaction.
Conclusion
The Consumer-to-Business (C2B) business model is a revolutionary and innovative business model that allows consumers to initiate transactions with companies.
The business model has become more common as a result of online platforms adopting it. This model has several advantages but may come with its disadvantages.