B2B vs. B2C Supply Chain

The two broad categories of business relationships for sales of goods and services are business to business, or B2B, and business to consumer, or B2C. The supply chains of these two types of business relationships differ in important respects. Differences include the negotiation between buyer and seller, the length of the supply chain, the number of customers involved and the volume of sales.

One of the important differences between a business to business and business to consumer relationship is the level of bargaining power that exists between the parties to transactions in the supply chain. In a business to consumer supply chain, the business tends to have a disproportionate level of bargaining power relative to the customer because of its size and resources. In a business to business supply chain, on the other hand, both parties to a negotiation tend to be relatively sophisticated institutions and are on a more level footing.

Another difference between business to business and business to consumer supply chains is that business to consumer supply chains are often longer than business to business supply chains. Often B2C supply chains involve one or more producers, wholesalers and retailers, whereas B2B supply chains often involve just two companies, with one selling a good or service directly to another.

The number of customers is typically much greater in a B2C relationship than in a B2B. This has important implications for managing relationships. It can be difficult to manage the numerous relationships that come with a B2C supply chain, whereas there are often few customers in B2B supply chains, meaning that relationships are much closer.

The volume of sales to each customer tends to be much higher in a B2B supply chain than in a B2C supply chain. For this reason, each relationship in a business to business supply chain is proportionately more important than relationships in a business to consumer supply chain, in which each customer may only purchase a single unit and may never be a repeat customer.