Business-to-consumer electronic commerce
Business-to-consumer electronic commerce (B2C) is a form of
electronic commerce in which products or services are sold from a firm
to a consumer.
Contents
1.Five Classifications of B 2C E-Commerce
1.1Direct Sellers
Companies that provide products or services directly to customers
are called direct sellers. These types of B 2C companies are the most
well-known. There are two types of direct sellers: e-tailers and
manufacturers.
1.1.1 .E-tailers:
Upon receiving an order, the e-tailer ships products directly to the consumer or to a wholesaler or manufacturer for delivery.
* Example: Amazon.com
1.1.2 .Manufacturers:
The manufacturer sells directly to consumers via the internet. The
goal is to remove intermediaries, through a process called
disintermediation, and to establish direct customer relationships.
Disintermediation is not a new idea as catalog companies have been
utilizing this method for years.
* Example: Dell.com
1.2.Online Intermediaries
Online intermediaries are companies that facilitate transactions
between buyers and sellers and receive a percentage of the
transaction's value. These firms make up the largest group of B 2C
companies today. There are two types of online intermediaries: brokers
and infomediaries.
1.2.1 .Brokers
A broker is a company that facilitates transactions between buyers and sellers.
1.2.1 .1.Types of Brokers:
(1)Buy/Sell Fulfillment
A corporation that helps consumers place buy and sell orders.
Example: eTrade
(2)Virtual Mall
A company that helps consumers buy from a variety of stores.
Example: Yahoo! Stores
(3)Metamediary
A firm that offers customers access to a variety of stores and
provides them with transaction services, such as financial services.
Example: Amazon zShops
(4)Bounty
An intermediary that offers a fee to locate a person, place, or idea.
Example: BountyQuest (now defunct)
(5)Search Agent
A company that helps consumers compare different stores.
Example: MySimon
1.2.2 .Infomediaries
An infomediary is a firm that acts as a filter between companies and
consumers. Individuals provide infomediaries with personal information
and in turn receive targeted ads. Companies pay these infomediaries for
the information that they collect.
1.3.Advertising-Based Models
In an advertising-based system, businesses' sites have ad inventory,
which they sell to interested parties. There are two guiding
philosophies for this practice: high-traffic or niche. Advertisers take
a high-traffic approach when attempting to reach a larger audience.
These advertisers are willing to pay a premium for a site that can
deliver high numbers, for example advertisements on Yahoo! or AOL. When
advertisers are trying to reach a smaller group of buyers, they take a
niche approach. These buyers are well-defined, clearly identified, and
desirable. The niche approach focuses on quality, not quantity. For
example, an advertisement on WSJ.com would chiefly be viewed by
business people and executives.
1.4.Community-Based Models
In a community-based system, companies allow users worldwide to
interact with each other on the basis of similar areas of interest.
These firms make money by accumulating loyal users and targeting them
with advertising.
* Example: Yahoo! Groups
1.5.Fee-Based Models
In a fee-based system, a firm charges a subscription fee to view its
content. There are varying degrees of content restriction and
subscription types ranging from flat-fees to pay-as-you-go.
2.Advantages of B 2C E-commerce
* Shopping can be faster and more convienient.
* Offerings and prices can change instantaneously.
* Call centers can be integrated with the website.
* Broadband telecommunications will enhance the buying experience.
3.Challenges Faced by B 2C E-Commerce
The two main challenges faced by B 2C e-commerce are building
traffic and sustaining customer loyalty. Due to the winner-take-all
nature of the B 2C structure, many smaller firms find it difficult to
enter a market and remain competitive. In addition, online shoppers are
very price-sensitive and are easily lured away, so acquiring and
keeping new customers is difficult.
4.What Separates the Best from the Rest?
A study of top B 2C companies by McKinsey found that:
* Top performers had over three times as many unique visitors per
month than the median. In addition, the top performer had 2,500 times
more visiters than the worst performer.
* Top performers had an 18% conversion rate of new visitors, twice that of the median.
* Top performers had a revenue per transaction of 2.5 times the median.
* Top performers had an average gross margin three times the median.
* There was no significant difference in the number of transactions per customer and the visitor acquisition cost.
Essentially, these masters of B 2C e-commerce (eBay, Amazon, etc.)
remain at the top because of effective communication and value to the
customer.
5.See Also
* E-commerce
* Business-to-business electronic commerce
* Bricks and clicks
* Disintermediation
6.Sources
* Krishnamurthy, Sandeep. E-Commerce Management. Mason , Ohio : Thomson/South-Western, 2003.
* Haag, Stephen, Maeve Cummings, Donald J. McCubbrey, Alain
Pinsonneault, and Richard Donovan. Management Information Systerms: For
the Information Age. 2nd Canadian ed. New York : McGraw-Hill Ryerson,
2004.