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Research Outline

Prepared for Dan E. | Delivered October 11, 2019

B2B vs B2C Success

Goals

To prove or disprove the hypothesis that "the journey towards the success of B2C companies are longer but the outcomes are bigger compared to B2B companies". The focus is on Israel-based startups, for instance, Datorama (B2B model) and Fiverr (B2C model).

Early Findings

  • According to Dan Eblagon, founder of Israel's first B2C investors' club — The B2C’s, one of the major reasons why an increasing number of entrepreneurs are building B2C businesses in Israel is because "consumer is a massive market, 3 times the size of the technology market".
  • Eblagon went further to state that the Israeli B2C ecosystem is healthy and strong. He added that this ecosystem "has its footprint in almost EVERY VERTICAL".
  • A graphic provided by Shopify reveals that the revenue generated by business-to-business eCommerce is over 200% larger than business-to-consumer eCommerce sales.
  • Targo Consulting reveals that most Israeli start-ups are primarily focused on products or services targeted at businesses (B2B). Many of these B2B startups across industries like software, cyber, and medical, have been sold to larger corporations for millions or billions of dollars.
  • However, Targo reveals that companies that provide consumer-facing products are "quite far from achieving similar success in both volume and scope, with the exception of individual cases such as WAZE and Fiverr".
  • A major reason behind the success of B2B startups is because "business consumers are more willing to pay larger sums for solutions that enable them to improve the profit line".
  • According to research conducted by Yoni Goldwasser, Israeli-based B2B startups usually perform very well because of their heavy reliance on deep tech innovation.
  • An analysis of the "top exits of Israeli startups" reveals that there are very few examples of successful B2C companies. Goldwasser mentioned that Israeli entrepreneurs have been unable to create products and services for their consumer market; this is because the consumer market is "just too small".

SUMMARY

While the consumer market is massive and 3 times the size of the technology market, research suggests that B2B startups are more successful than B2C startups in Israel. Notable reasons for this B2B advantage is the reliance on deep tech innovation, the willingness of companies to pay large sums for solutions that promote profitability, and the fact that Isreal's B2C market is quite small.