Retail / Business-to-consumer electronic commerce|
Business-to-consumer electronic commerceBusiness-to-consumer electronic commerce (B2C) is a form of electronic commerce in which products or services are sold from a firm to a consumer.
Five Classifications of B2C E-Commerce
Companies that provide products or services directly to customers are called direct sellers. These types of B2C companies are the most well-known. There are two types of direct sellers: e-tailers and manufacturers.
Upon receiving an order, the e-tailer ships products directly to the consumer or to a wholesaler or manufacturer for delivery. Example: Amazon.com
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
Online intermediaries are companies that facilitate transactions between buyers and sellers and receive a percentage of the transactionís value. These firms make up the largest group of B2C companies today. There are two types of online intermediaries: brokers and infomediaries.
A broker is a company that facilitates transactions between buyers and sellers.
Types of Brokers:Buy/Sell Fulfillment A corporation that helps consumers place buy and sell orders. Example: eTrade
A company that helps consumers buy from a variety of stores. Example: Yahoo! Stores
A firm that offers customers access to a variety of stores and provides them with transaction services, such as financial services. Example: Amazon zShops
An intermediary that offers a fee to locate a person, place, or idea. Example: BountyQuest (now defunct)
A company that helps consumers compare different stores. Example: MySimon
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.
In an advertising-based system, businessesí 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.
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
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.
Advantages of B2C E-commerce
Challenges Faced by B2C E-CommerceThe two main challenges faced by B2C e-commerce are building traffic and sustaining customer loyalty. Due to the winner-take-all nature of the B2C 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.
What Separates the Best from the Rest?
A study of top B2C companies by McKinsey found that:
Essentially, these masters of B2C e-commerce (eBay, Amazon, etc.) remain at the top because of effective communication and value to the customer..
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