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.

B2C business building is gaining traction because the traditional corporate strategy playbook is no longer enough to drive significant growth inside or outside a company’s core. Business building can create entirely new revenue streams. A McKinsey Global Survey of more than 1,100 CEOs found that companies that allocate 20 percent of their growth capital to creating new businesses achieve two percentage points higher revenue growth than companies that do not invest similarly.¹“How CEOs are turning corporate venture building into outsize growth,” McKinsey, October 22, 2024.

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. Our research shows that more than 80 percent of companies have at least one underutilized asset that could form the backbone of a new business (Exhibit 1). 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 our 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. We found three categories to be strong bets for leaders thinking about building new B2C businesses, irrespective of industry sector: advice-as-a-service, embedded services, and B2B2C businesses. Each allows companies to leverage their core underutilized assets to create entirely new revenue streams (Exhibit 2). These three categories represent more than 90 percent of B2C business builds that, in our experience, have delivered outsize results, with each type of business attaining high revenue multiples (Exhibit 3).

• Advice-as-a-service: These are businesses that build on their already established credibility to provide consumers with insights on specific topics (for example, wealth management, medical education, and automotive repair). For most companies, building a B2C advice-as-a-service business entails providing guidance about a core or adjacent product to a new consumer customer base. An example of this is Redfin, which built on its core expertise as a real estate market analytics company to expand into providing consumers with home purchasing and mortgage advice, ultimately becoming a full-service broker for homebuyers along every step in the journey.
• Embedded services: These are businesses that integrate consumer-focused products or services such as e-commerce offerings, payments, healthcare, or logistics directly into the company’s core business to gain broader market reach. An example of this is Stripe, which started as a B2B payments company but later built a full-service platform for merchants with embedded tools for invoicing, tax preparation, revenue reporting, and more—and then rolled these services out to new and existing customers.
• B2B2C: These are businesses that offer consumer-facing solutions in partnership with the core company’s B2B customers. These businesses allow an enterprise company to connect directly with consumers to create more value for everyone involved in the process, including B2B partners. An example of this is OpenTable, which provides a core B2B service of online reservations to its restaurant customers but later expanded to offer a data-driven B2C customer relationship management (CRM) platform that restaurants can use to create targeted consumer marketing campaigns and gain insights about their customers and dining trends.

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 (see sidebar “Advice-as-a-service case study”). CEOs who want to build advice-as-a-service businesses can very often find success with one of these five primary business models.

• Purchase assistants offer guidance at the moment of purchase, generating revenue via commissions paid by affiliate partners. For example, PayPal’s Honey helps users find the best deals while shopping online based on their past purchase behaviors.
• Decision guides support stand-alone purchase decisions, generating revenue through subscriptions. For example, MyFitnessPal helps users track nutrition and exercise to make better health choices.
• Concierge services simplify complex customer journeys such as booking travel or making restaurant reservations, generating revenue through either commissions or subscriptions. For example, Resy enables users to make restaurant reservations but also provides curated dining recommendations.
• Personal advisers provide ongoing advice over longer-term customer journeys such as wellness, investing, or healthcare, generating revenue through subscriptions or embedded fees. For example, Hims & Hers is a telehealth company offering personalized health and wellness products through virtual doctor consultations.
• Life domain partners provide personalized advice for consumers to achieve specified goals, such as weight loss coaching, financial planning, or retirement preparation, generating revenue through commissions. For example, Policygenius is an online insurance marketplace that helps consumers compare and purchase the right policies for their specific needs.

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. Look to existing assets such as untapped customer data and proprietary knowledge as a jumping-off point to build a first B2C business. Once that business gains traction, only then should a company consider expanding services. For example, Betterment led with automated investment advice for beginners, then expanded to include retirement planning and broader financial services for a wider range of users.
• Embrace tech but keep humans in the loop. Deploy AI where it spurs efficient growth but include human interaction where it adds value and increases customer stickiness. Chewy, the pet supply company, uses AI to manage inventory and suggest products to customers but also has staff write personal pet birthday notes to customers to build one-on-one relationships.
• Make it easy for consumers to join—and keep them engaged. Use creative onboarding strategies to make it easy for customers to get started and progressively build their profiles across different platforms such as mobile apps and websites. For example, Spotify lets users select music genres they like, tracks what they listen to, and creates personalized playlists to help them enjoy and discover music that matches their tastes.

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. For example, the “buy now, pay later” platform Affirm has established partnerships with major retailers such as Walmart, enabling both Affirm and these retailers to expand their customer reach and enhance the shopping experience. This integration solves a critical consumer pain point: the frustration of navigating among multiple websites to complete related tasks. By creating a unified experience, embedded services significantly enhance platform stickiness and user retention. This business model is particularly effective for companies with an already engaged user base or audience, especially those operating in markets characterized by fragmented offerings or complex customer journeys where simplification creates substantial value (see sidebar “Embedded services case study”).

We observed four primary types of embedded services business models in our research on successful builds.

• Single feature/single journey platforms help a user complete one task at a specific point in time, generating revenue through commissions paid by affiliate partners. For example, Grubhub allows consumers to order delivery from local restaurants.
• Multiple features/single journey platforms aid users along a longer timeline, generating revenue through commissions and advertising. For example, Kayak helps consumers research travel and find flights, hotels, and tours over multiple web sessions.
• Single feature/multiple journey platforms help customers complete a single task across many different destinations, generating revenue through transaction fees, subscription models, or revenue-sharing arrangements with merchants. For example, Shopify enables consumers to pay for e-commerce purchases on many different websites over many separate shopping sessions.
• Multiple features/multiple journey platforms are super-apps that embed multiple features along multiple customer journeys for everyday use, generating revenue through a combination of direct sales, subscription services, advertising, and marketplace fees from third-party sellers. For example, Amazon lets consumers research and purchase products from many merchants in one place, as well as stream videos and music, order groceries, and get health services and prescriptions.

CEOs contemplating embedded services business builds can consider these three strategies to drive stickiness.

• Prioritize a seamless user experience. Design embedded services that feel native to the host environment to reduce friction and cognitive load for users. For example, Stripe enables small-business merchants to process payments seamlessly through their smartphones. In other examples, tax preparation companies offer in-store services within retail locations, or financial advisers provide investment consultations within grocery store banking centers. Customers are looking for intuitive experiences that simplify complex interactions across both digital and physical touchpoints.
• Create win–win ecosystem dynamics. Build embedded services that provide clear value for both the host platform and the guest service provider. Shopify demonstrates this method by enabling small businesses to easily integrate payment solutions, such as Affirm, PayPal, and Shop Pay, which simultaneously reduces checkout complexity for the merchants’ end customers while expanding revenue streams for both Shopify and the embedded payments providers.
• Leverage network effects and data intelligence. Successful embedded services become more valuable as more participants join the ecosystem and contribute their user data to the combined platform. Uber’s embedded restaurant delivery service within Google Maps illustrates this principle, in which user engagement and behavioral data benefit both the navigation platform and the ridesharing/delivery provider.

B2B2C

The B2B2C business model involves a B2B company collaborating with its business customers to deliver a product or service to consumers. B2B2C businesses bridge the gap between original manufacturers and end users, providing consumers with another way to purchase products and services. For consumers, decision fatigue is real, so building a direct-to-consumer business makes sense for companies that want to make it easier for end consumers to buy their products or services normally sold through intermediaries or third parties. Many B2B companies are seeing a decrease in revenue from traditional distribution channels, and they would like to sell directly to consumers if they had a way to do so (see sidebar “B2B2C case study”). Within B2B2C, we see three primary archetypes for new-business builds, each of which generates value by providing a product or service directly to a new customer.

• Marketplaces put merchants directly in contact with consumers through an open marketplace, generating revenue through transaction fees. For example, Etsy is an e-commerce destination that aggregates independent sellers of handmade, vintage, and craft items connecting with buyers worldwide.
• Aggregators combine multiple B2B companies onto one platform to allow consumers access to many products and services under one roof, generating revenue through subscriptions or commissions. For example, ClassPass is a subscription service that gives members access to a network of fitness studios, gyms, and wellness centers under a single membership.
• Vertically integrated platforms create new direct-to-consumer websites that provide unique customer experiences and access to quality products, generating revenue through direct sales or subscription. For example, Warby Parker is an eyewear company that designs and sells glasses directly to consumers, bypassing traditional retail channels and optical shops.

Successful B2B2C builds can enable companies to reach entirely new customer segments and generate lasting new revenue streams. 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. Analyzing the entire customer journey across multiple, and often unrelated, touchpoints can help identify areas where a new B2C business could simplify the customer experience. This is a great first step in finding a new market. Chime, for example, cornered a market that more established banks had ignored: younger, underbanked customers. By offering this group digital banking services, Chime met their needs and showed larger banks the value in this previously overlooked market.
• Leverage partnerships for rapid scaling and flywheel creation. Using off-the-shelf technologies from third-party vendors can speed up the launch process for new B2C businesses while adding value to the partner’s offerings. For example, Instacart grew quickly by partnering with existing point-of-sale systems. However, companies often need to upskill their teams to manage these partnerships, such as educating technical staff on how to evaluate platforms and monitor their performance.
• Explore novel operating models. Make sure to evolve the operating model of the new B2C business on a regular basis. New businesses need flexible operating models that are more pliable than the “mothership” model that drives the main company. To find an effective model, a new-build team can start from scratch when developing the new operating model and adjust resources as needed at each stage of the project. Robinhood scaled its team strategically, starting with engineering requirements, adding customer service after customer growth, and building out compliance and security teams as it scaled.

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.

• Is there an opportunity to leverage core assets to fuel revenue growth in adjacent areas?
• Does the company have underutilized assets, such as proprietary data or customer relationships?
• 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. In general, advice-as-a-service businesses are a great first choice if the company has specialized knowledge that consumers value and trust to make purchase decisions. Embedded services businesses work well for companies that can integrate complementary offerings into their existing businesses or platforms. And B2B2C businesses are a strong pick for companies that can create value by connecting directly with end consumers.

The most successful B2C business builds we have seen—whether they help consumers make informed purchase decisions, streamline complex journeys, or bypass traditional intermediaries—share a common trait: They solve genuine pain points. Consumers today are overwhelmed by the myriad choices for products and services, bombarded by advertising, and fatigued from continued price inflation. Any business that makes consumers’ lives easier holds high potential to generate long-lasting revenue.