2005-5-22-Business-to-consumer electronic commerce

Business-to-consumer electronic commerce

Business-to-consumer electronic commerce (B2C) is a form ofelectronic commerce in which products or services are sold from a firmto a consumer. 

Contents
1.Five Classifications of B2C E-Commerce
1.1.Direct Sellers
1.1.1.E-tailers:
1.1.2.Manufacturers:
1.2.Online Intermediaries
1.2.1.Brokers
1.2.1.1 Types of Brokers:
1.2.2.Infomediaries
1.3 Advertising-Based Models
1.4 Community-Based Models
1.5 Fee-Based Models
2.Advantages of B2C E-commerce
3.Challenges Faced by B2C E-Commerce
4.What Separates the Best from the Rest?
5.See Also
6.Sources 

1.Five Classifications of B 2C E-Commerce

1.1Direct Sellers
Companies that provide products or services directly to customersare called direct sellers. These types of B 2C companies are the mostwell-known. There are two types of direct sellers: e-tailers andmanufacturers. 

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. Thegoal is to remove intermediaries, through a process calleddisintermediation, and to establish direct customer relationships.Disintermediation is not a new idea as catalog companies have beenutilizing this method for years.
* Example: Dell.com 

1.2.Online Intermediaries
Online intermediaries are companies that facilitate transactionsbetween buyers and sellers and receive a percentage of thetransaction's value. These firms make up the largest group of B 2Ccompanies today. There are two types of online intermediaries: brokersand 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 andprovides 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 andconsumers. Individuals provide infomediaries with personal informationand in turn receive targeted ads. Companies pay these infomediaries forthe 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 guidingphilosophies for this practice: high-traffic or niche. Advertisers takea high-traffic approach when attempting to reach a larger audience.These advertisers are willing to pay a premium for a site that candeliver high numbers, for example advertisements on Yahoo! or AOL. Whenadvertisers are trying to reach a smaller group of buyers, they take aniche approach. These buyers are well-defined, clearly identified, anddesirable. The niche approach focuses on quality, not quantity. Forexample, an advertisement on WSJ.com would chiefly be viewed bybusiness people and executives. 

1.4.Community-Based Models
In a community-based system, companies allow users worldwide tointeract with each other on the basis of similar areas of interest.These firms make money by accumulating loyal users and targeting themwith advertising.
* Example: Yahoo! Groups 

1.5.Fee-Based Models
In a fee-based system, a firm charges a subscription fee to view itscontent. There are varying degrees of content restriction andsubscription 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 buildingtraffic and sustaining customer loyalty. Due to the winner-take-allnature of the B 2C structure, many smaller firms find it difficult toenter a market and remain competitive. In addition, online shoppers arevery price-sensitive and are easily lured away, so acquiring andkeeping 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 permonth than the median. In addition, the top performer had 2,500 timesmore 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 thecustomer. 

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, AlainPinsonneault, and Richard Donovan. Management Information Systerms: Forthe Information Age. 2nd Canadian ed. New York : McGraw-Hill Ryerson,2004.