How CEOs can outcompete by building new B2C businesses

When is a medical-device manufacturer not just a medical-device manufacturer? When it’s also an online marketplace for consumers to buy wellness products and get advice from healthcare providers. Amid unrelenting pressure from digital-first competitors, McKinsey analysis finds that established companies across sectors are increasingly building new business-to-consumer (B2C) businesses to capture their share of the $25 trillion B2C market.

CEOs who want to dive into B2C business building can start by identifying existing data and assets in their companies that could underpin new consumer offerings. The authors’ research shows that more than 80 percent of companies have at least one underutilized asset that could form the backbone of a new business. This initial analysis is especially important for CEOs of business-to-business (B2B) companies, who may not be used to selling directly to consumers and will need to take measured steps to build B2C businesses that scale effectively. Based on authors’ experience helping build more than 700 new businesses, this article provides proven strategies that CEOs can use to successfully build and scale B2C businesses.

New B2C businesses can take many forms. The authors found three categories to be strong bets for leaders thinking about building new B2C businesses, irrespective of industry sector: 

1. Advice-as-a-service:  Advice-as-a-service businesses solve a growing consumer conundrum: decision overload. These businesses help consumers navigate overwhelming choices on products and services in saturated markets by providing expert recommendations and guidance. Leveraging their established brand reputations, companies can launch advice-as-a-service businesses that provide consumers with trusted, curated content. This is especially true in markets where consumers need specialized knowledge to evaluate multiple product options, such as in healthcare and financial planning.   When exploring advice-as-a-service businesses, CEOs should consider these three proven strategies that can propel consumer adoption and engagement.  Build on the company’s unique strengths before expanding.  Embrace tech but keep humans in the loop.  And make it easy for consumers to join—and keep them engaged.
2. Embedded services: Embedded services businesses integrate third-party functionalities—such as e-commerce, payments, and logistics—directly into a company’s core platform to deliver new services to existing customers or to engage new ones.  CEOs contemplating embedded services business builds can consider these three strategies to drive stickiness.  Prioritize a seamless user experience.  Create win–win ecosystem dynamics. And leverage network effects and data intelligence.
3. B2B2C: The B2B2C business model involves a B2B company collaborating with its business customers to deliver a product or service to consumers.  These businesses allow an enterprise company to connect directly with consumers to create more value for everyone involved in the process, including B2B partners.  To get this type of business build right, CEOs can keep these three strategies in mind.  Look for areas where the industry is underserving consumers.  Leverage partnerships for rapid scaling and flywheel creation.  And explore novel operating models.  

Top-performing companies recognize that building B2C businesses is a key revenue driver. To determine whether B2C business building is right for their organizations, CEOs can ask themselves three exploratory questions.

1. Is there an opportunity to leverage core assets to fuel revenue growth in adjacent areas?
2. Does the company have underutilized assets, such as proprietary data or customer relationships?
3. If so, could these capabilities transfer to consumer markets, thereby diversifying the revenue base and creating long-term customer stickiness?

If the answers to all three questions are yes, then CEOs can confidently embark on B2C business building, choosing one of three proven pathways best aligned to their companies’ strengths and core offerings.

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