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Understanding B2C E-Commerce

This article covers key activities and functions conducted in the context of B2C E-commerce. It explains various kinds of e-communities, how organizations reach their business and consumer value through Web initiatives, and famous B2C business model dynamics -- pure play, and brick-and-mortar.

Main Activities in B2C E-Commerce

Important aspects of B2C initiatives include promotion, ordering, product/service delivery, after-sales support. All activities are conducted in a seamless manner with the help of today's Web technologies. Let's explain them one by one:

Promotion - According to reports, advertising expenditures via Internet are expected to rise from $3.3 billion in 1999 to $33 billion by 2004. Web promotion includes banners, buttons, pop-up ads, rich-media banners, etc. There are various advantages of using corporate Websites as a promotional medium where successful initiatives provide premium content, market research, online contests, coupons, etc. and have thus successfully established their consumer loyalty. Promotion via B2C has following key benefits:

Customization - The Web experience can be tailored to users’ interests and needs – customized ads and product offers are made, and often, incentives are awarded to buyers for providing personal information covering purchasing habits and other lifestyle attributes.

Interactivity - users are provided with automated feedback which is not just a quick response, but also a highly involving characteristic of the Web platform, where users feel more “in-control.”

Participation - Web is a great participatory tool facilitating online communities such as Internet discussion groups and societies for experts and ordinary users.

Ordering– Almost all Internet sites can be classified into three Cs: (1) content-oriented sites - university sites, online newspapers and magazines (2) commerce-oriented sites – also called storefronts, these sites provide facilitate to place orders by accessing databases of products, orders, customers, payment information, and shipping alternatives (3) Community-oriented sites – e.g. ivillage.com.

Product delivery – Internet is a great medium to procure digital and intellectual products such as software, news, music, etc. These properties are ideally suited for delivery over the Internet, thus saving time and expense compared to the alternative of shipping the product through physical means.

After-sales support - The internet allows delivery of after-sales service to customers through the use of email, search-engines, and bulletin boards. Companies are developing knowledge-based systems so that they can find the answers to essential questions in a prompt and real-time manner.

Establishing an E-Community

Many companies host virtual (Web-based) communities to assist their customers e.g. GeoCities and Tripod. Some allow members to setup their own web pages and provide information publishing tools. There are broadly three types of online communities:

Communities for intimacy – These provide a platform for developing one-to-one relationships using member-generated documents and messages. Examples include email, chatting, virtual greeting cards, etc.

Communities for interests – This provides a many-to-many interaction in nature where users are driven by their shared interests. It covers moderated discussion groups with member-supplied contents along with threaded discussion and forums.

Communities for transactions – Driven by information and transaction, such communities are one-to-many, and host-driven in nature. Here host-supplied documents are available supported with multimedia facility to conduct commercial transactions.

Creating Business and Consumer Value in B2C E-Commerce

In order to achieve the ultimate shareholder value, businesses need to target intermediate goals described as business values. These are:

Reaching operational excellence -- low cost, quick response, streamlined processes

Attaining customer intimacy – life-long customer loyalty

Product and service leadership – innovation and R&D

Organizations achieve business value through the website channel in multiple stages. In order to attract customers, companies deliver premium content on the Web, free of cost to provide valuable information to customers and to promote company’s products and services -- articles, research, annual reports, product catalogs, etc. This is followed by specialized activities aimed at establishing communication linkages between company and its current and prospective customers over email, phone, fax, etc. The next step is commerce or transaction where customers interface with automated ordering system of the company. Famous examples include companies such as Dell and Cisco that reach such business values at a cost that is fraction to that of a human-based system. The last stage is using Web-enabled business processes technologies to improve or transform key internal business processes (related with customer service and supply-chain). This is how Web-based computer systems help deliver core business values: customer satisfaction, supply chain efficiencies, and developing innovative products and services.

Creating Consumer Value in B2C E-Commerce

Consumers shop on the Web since they get value in the form of (1) Lower cost -- in general, products such as books, CDs, and other intellectual material is cheaper on the Web (e-retailers, auctions) than brick-and-mortar alternatives (2) greater choice: a variety of websites available with vast product/ service offerings (3) convenience -- users can easily review product details, compare process, place order, and pay online, (4) customization -- getting the right information tailored on user needs, preferences, and interests.

Models in Business-to-Consumer E-Commerce

A Business Model describes the basic framework of a business. It tells what market segment is being served, the product/service that is being provided, and the strategy adopted to produce and deliver services. The business model provides the value proposition in terms of business value (to the organization) and customer value (to the users). In B2C E-Commerce, there are two basic groups of business models: for pure play (purely Web-based) companies, and for brick and mortar (traditional companies).

Pure play business models include:

Portal sites (Yahoo, Lycos) that depend upon Web advertising

Auction-based consumer-to-consumer sites (eBay) - these sites bring buyers, suppliers together and facilitate transactions and earn their commissions.

e-tailers and Webmalls such as Amazon.

For primarily Brick and Mortar companies, the option is either to use their own Web channel in order to strengthen existing operations to serve customers, or let competition do the same for them. Brick and Mortar business models include:

Opening Web-based channels: this move may pose a conflict with traditional sales channels (physical stores). This direct interaction with customers may leave traditional channels useless and the concept is called disintermediation (i.e. getting rid of intermediaries, i.e. middleman). Examples include gateway.com that used to sell its hardware at CompUSA (physical) stores throughout USA.

Promotion of company’s products and services (Toyota.com, BMW.com)

E-Commerce (e-retailing) transactions (bn.com, dell.com)

Customer support and running operations (e.g. Fedex.com, UPS.com)

         

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