C2B is a business paradigm in which consumers (individuals) generate value and enterprises consume that value. For example, if a customer writes reviews or provides a helpful suggestion for new product development, that consumer is producing value for the firm if the input is used.
What is it?
A reverse auction or demand collection mechanism under the C2B model allows purchasers to identify or demand their own price, which is typically binding, for a given item or service. Within a consumer-to-business market, the roles engaged in the transaction must be defined, and the consumer must provide something of value to the firm.
Diving in Deep
Another type of C2B business model is the electronic commerce business model, in which consumers supply products and services to businesses and the businesses pay the consumers. This business model is a full reversal of the typical business paradigm in which businesses provide goods and services to customers. The C2B model may be seen in blogs or internet forums where the author provides a link back to an online company, promoting the purchase of a product for which the author may get affiliate money if the sale is successful. Elance was the first C2B e-commerce platform.
C2B is a form of economic connection known as an inverted business type. The C2B plan came about as a result of:
- The internet is a bidirectional network that connects huge groups of people; big conventional media sources are one-way connections, but the internet is bidirectional.
- Technology prices are falling, and people now have access to technologies that were previously exclusively available to huge corporations.
There are advantages and disadvantages.
People nowadays have cellphones or access to the internet via personal tablets/computers on a regular basis, allowing customers to interact with businesses online. According to Katherine Arline, corporations used to market goods and services to customers in typical consumer-to-business formats, but a shift has happened that allows consumers to be the driving force behind a transaction. Reverse auctions occur in consumer-to-business markets, benefiting customers by allowing them to choose their own price for a product or service. A customer may also add value to a company by agreeing to advertise a company's products on their blog or social media channels.
Businesses receive value from their customers, and vice versa. Businesses benefit from customers' willingness to negotiate pricing, give data, or market to the firm through C2B transactions. Consumers benefit from direct payment of lower-priced goods and services, as well as the transaction flexibility offered by the C2B market. Consumer-to-business marketplaces are not without flaws. C2B is still a relatively new business activity that has not been well researched.
One drawback of the consumer-business paradigm is the potential compromising of customer information and privacy. Businesses, for example, may decide to surreptitiously evaluate customer spending using sensitive information.