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B2B2C: Key Players on The Rise

The explosion of digital platforms and e-commerce in particular has led to the advent new, innovative business strategies that have made their way into the real world. B2B2C is one of those, with some companies basing their entire business model on it, while others are capitalising on their territorial network to find prospective growth markets. B2B2C is about positioning oneself as an intermediary, working the logistical link in the value chain between producer and consumer. Major operators are driving the trend, especially since the move back to ‘local’ since the pandemic, in sectors as diverse as telecommunications, retail and energy.  

B2B2C is an acronym for business-to-business-to-customer that underlines clearly the three-tiered structure of the business strategy: the company that designs and produces the service or products, the company that resells or deploys said product or service, and the end consumer, you and I, whether company or individual. It is a strategy that by nature or design has come to underscore business models in the digital age, with traditional verticals in sectors like finance, industry, healthcare, logistics or education embracing the inevitable digitalization and the blurring of barriers between the online and the offline that is driving market growth today.  

Of course, B2B2C presents a unique challenge to businesses, not least because the two businesses along the value chain (the producer and the provider) now have two distinct target groups to satisfy (the other business and the consumer). Understanding the expectations of these two targets is key to a successful B2B2C strategy. But although the model nonetheless “presents new challenges, it also presents an opportunity to get creative,” according to Forbes’ Kate Farmer Rojas. The approach requires analytical finesse and a strong capacity for innovation, as well as an organisation capable of adaptation.  

B2B2C: the go-to business model for startups and FinTechs  

Although the model has been around for a while, it has really exploded since the 2010s particularly among startups and fintechs whose objectives generally centre around driving value creation through the development of innovative digital solutions. One example is the French-based fintech Sopra Banking Software, whose agency banking solution is designed to “facilitate easy onboarding and expand with a new distribution model. Take your branch directly to customers and provide services at their doorsteps.”  

This is a classic example of a “middle man” service provider offering services that are founded on specific business partnerships. The aim is to facilitate the service for end-users and financial institutions alike, whether that be by providing convenient digital platforms on which consumers can go about their daily financial activity without having to visit financial premises, or by providing tailored digital solutions that help banks create value in the digital world and gain local visibility. Sopra’s Agency Banking solution is an example of such a B2B2C solution. It acts as a third party that distributes “banking services on behalf of the bank, with their proximity and local visibility the key to acquiring new clients.”  

The pandemic has meant digital banking business perspectives are on the rise. According to Pentti Hakkarainen, Member of the Supervisory Board of the ECB, speaking at the 28th RegTech Convention, “the European banking sector has seen the number of digital users increase by 23% since the start of the pandemic. This reinforces the banking sector’s position as the industry where customers are most willing to connect with their service providers via online channels.”  

For the former CEO of Bank Leumi, Rakefet Russak-Aminoach, who recently joined the Israeli fintech Team8, “the question of whether to adopt a B2C model, meaning selling direct to the end user, or a B2B model, selling to another company, isn’t relevant because the model is B2B2C. Fintechs need to connect with large traditional institutions and reach end users through them. This is how the world will look in the future, a completely new order.” Indeed, the strategy has many suitors across many different sectors, but there are actors in some sectors who have based their business models on B2B2C for some time. So the order is perhaps not so new…  

B2B2C: in the DNA of some telecoms service providers  

In many industries related to the provision of goods and services, the B2B2C model has proven popular, and effective. Consider, for example, the rollout of fibre optic internet (FttH) access across Europe. The large telecoms operators across the continents have developed a robust B2B2C network for fibre installation and local services by leveraging the know-how of certain deployment operators and service providers, who act as an interface between major telephone operators and their customers, both businesses and individuals.  

These companies have certainly had a positive effect on the daily lives of consumers across Europe. Without them, millions would still be unconnected to the fibre network, especially in so-called “dead zones”, the targeting of which has been outlined in the European digital targets for 2030 in the framework of its “DigitalDecade” plan. However, not all companies have the characteristics to develop such a model successfully: most of the market is made up of SMEs acting as local subcontractors of a few large operators who have reached a critical size allowing them to fully profit from their B2B2C approach.  

This is notably the case of Solutions 30 (founded in 2003), which has managed, over a period of twenty years, to expand a small-scale model initially built around the installation and maintenance of ADSL, and which has since been extended to fibre, connected meters and even EV charging points, to an industrial scale. The company has been able to replicate tried and tested procedures throughout Europe with the major operators (Orange, Vodafone, TIM, Bouygues, Engie or Schneider Electric, among others), thus providing them with the reassurance of a uniformly standardised approach to their work, regardless of the location.  

The firm operates in cities and rural areas, with over 15,000 service engineers deployed across 10 European countries, including the UK, and provides a key link in the distribution chain, operating between the HSBB distributor and end users. “Since the beginning with ADSL, and today with fibre and 5G, the added value of our company is to relieve access providers of tasks that are not their core business, such as connecting to infrastructure networks and resolving day-to-day operating problems, for the direct benefit of end customers, whether private individuals or companies,” explains Gianbeppi Fortis, CEO of Solutions 30. “For the latter, we embody the materiality of the service provided, with a B2B2C model that is really proving its suitability as digital advances are made.”  

And the model is really proving its worth, with Solutions 30 seemingly expanding exponentially across Europe, notably in Poland, Italy or Belgium, where it signed a contract with Fiberklaar in late 2021, a company ambitioning to connect 1.5 million houses to ultra-high-speed Internet in the coming two years. “We are very pleased to call Solutions 30 one of our key partners in our ambitious plan to build an open fibre network in Flanders. This long-term cooperation with an experienced company is vital for us to provide the inhabitants of Flanders with super-fast and stable internet,” said Rik Missault, CEO of Fiberklaar.  

B2B2C: the health sector in on the act  

Of course, this business models is perfectly adaptable, and this has led to a certain rethinking of supply chains around the globe. One notable example is the digital health, big Pharma and biotech sector. Think of the success of Omada, Big Health or Propeller Health in the US or Oxford Nanpore Technologies in the UK, Doctolib in France or KRY in Sweden.  

The latter is the largest privately owned healthtech startup in Europe. Since its launch in 2016, the digital health provider has held 5 million digital care sessions with patients, raised an impressive €489m and launched operations in Norway, the UK, France and Germany. Developed to respond to a very specific issue, that of long waiting times for patients dependant on national health services, the innovative solution cuts waiting time down to as little as 30 minutes, with patients able to access 1 on 1 virtual consultations with doctors at the click of a button.   

The company’s growth perspectives look good. In April 2021, it closed its $312 million Series D after use of its telehealth tools grew by 100%. Investors are clearly impressed with the firm’s agility and success in responding to a critical need made all the more important following the Covid-19 outbreak.  

“You look into the maturity of the market and if there is any existing infrastructure you could use e-prescriptions for example,” said Johannes Schildt, KRY’s CEO and Founder. “In Sweden, theres a fairly well-built system that we can use nationwide to do e-prescriptions and in France there was nothing—when we initially launched we built that ourselves in two weeks and scaled it nationwide.” The company provides a very specific B2B2C service through a solution developed for a specific problem. Its success is in its scalability, accessibility and capacity to be effective at a local level. In short, it works because it really does cut waiting times in a health sector that has been ravaged by the negative consequences of the pandemic.  

All these examples prove one thing: many business sectors benefit from the presence of B2B2C intermediaries, who have become an essential link in the smooth functioning of their respective ecosystems. And this will certainly be true for the professions that will emerge in the decades to come. 

Brought to you by Edmund Davis

Editor-in-Chief since 2011.

Global Banking & Finance Review


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