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Oz – Foundations of Electronic Commerce © 2002 Prentice Hall Business-to- Consumer E- Commerce
Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Business-to-Consumer E-Commerce
2 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Learning Objectives Summarize the principles of the main
types of online business-to-consumer (B2C) activities
List the major players in the B2C arena
Explain the challenges of B2C firms Articulate the difficulties of e-retailing
in general and delivery in particular
3 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Learning Objectives Explain the concept of channel
conflict Contrast failure and success
factors in online B2C ventures List the major future developments
that are anticipated in online B2C commerce
4 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Business-to-consumer (B2C) hoopla
Why consumers shop on the Internet: Convenience Saving time Comparative shopping
Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
The business of e-retailing
Characteristics, issues, and challenges
6 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Retailing waves
IntimacySpecial services
Small varietyShopper picks, packs, delivers
Greater variety
Lower pricesNo intimacy
Shopper picks, packs, delivers
Huge varietyLower prices
Retailer picks, packs, delivers
No intimacyNo immediacy
Grocery market example
Corner grocer Supermarket Online grocer
7 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Elements of e-retailing E-tailing site must:
Promote the items offered for sale Provide a search mechanism
Comparison software Provide the means to process
purchases and payments
8 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Diminishing importance of brand names A brand name is a short cut when
there is no convenient access to information about a product
The plentiful and easily accessible information available on the Internet reduces the need to rely on brand names
9 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Repeat business challenge Attract web surfers to spend more
time at the e-tailing site Convert visitors into buyers
A major challenge
Conversion rate - the rate at which visitors are converted into buyers
10 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Delivery challenge Prompt delivery is the greatest
challenge for B2C businesses
11 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Channel conflict A direct manufacturer-to-consumer
channel may compete with the traditional distribution channels
How to circumvent channel conflicts? Sell online items that are not distributed
through retailers Use a different brand name for items
sold online
Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Challenging warehouse-to-retail transition
13 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Great difference in logistics between traditional and e-retail Labor & transportation costs shift
from the customer to the retailer
14 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
“Last mile” problemApproachApproach How it worksHow it works
Portal Aggregate demand across categories; economies of scale
Buildover Maintain your own warehouse
Caching Aggregate orders for delivery at a single destination
Speed Charge more for fast delivery or convenience store items
Niche Charge more for specialty items
15 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Portal strategy A firm offers many different, but
related services to consumers By aggregating service requests,
economies of scale are achieved
16 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Buildover strategy The firm builds its own
infrastructure by building fulfillment centers Significant investment
17 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Caching strategy Filled orders are aggregated, or
cachedcached, in one delivery location Collection centers More convenient than home delivery
for both the firm and its customers
18 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Speed strategy Quick delivery of products
Customers willing to pay more than if they purchase items the traditional way
19 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Niche strategy A niche market on which the firm
specializes Does not require a new infrastructure Relatively narrow selection of
products
20 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Successful B2C business models Reservation systems Consumer auctions Reverse auctions Stock trading Gambling Content
21 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Software sales Perishables online Bill presentment and payment “Do well by doing good” Online customer service
22 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Failures: not all that glitters is gold
Reason for failure
What happens
Poor business model
There is no demand for the products/services
Insufficient logistical means
The firm runs out of funds before it has established adequate logistics infrastructure
Competition Cannot compete against stronger players
23 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Reason for failure
What happens
Over reliance on advertising
Traffic at the site is too small to generate enough advertising revenue
Critical mass Failure to reach within a reasonable period of time a large enough audience
24 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Boo.com Foofoo.com Cookexpress.com Toysmart.com
25 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Ingredients for success Meet a consumer need
Consumers buy only what they need Total service
Offer a host of related services as one package
Aggregate online products and services offered in a traditionally fragmented industry
26 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Interaction and personalization Enable customers to conduct live
human-to-human interaction with the firm
Create customer profiles Use of technology
Use the latest technology to update your site
27 Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Trends in B2C commerce Mergers of B2C firms Clicks-and-mortar gravitation Sounder business models Mobile commerce
M-commerce
Oz – Foundations of Electronic Commerce© 2002 Prentice Hall
Business-to-Consumer E-Commerce
