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Business to Consumer (B2C) Commerce

B2C commerce involves transactions initiated by a consumer and conducted with an online retail establishment. Merchants can include a software company, a book or music store, a travel agency, or a bank. B2C commerce commanded tremendous media space in the last couple of years because of its high visibility and the threat that it seemingly posed to traditional brick-and-mortar businesses. It was thought that the digital nature of the products sold and the pervasive nature of the sites enabled new players to change prevailing business models. They set about deconstructing, or taking apart, the value chain that made up the traditional retail model, and then sought to rebuild it around their perceived competitive advantages.

Pure B2C is no longer a threat to offline establishments. Statistics released in late 2000 and early 2001 show online customers are making choices between merchants and not an either/or between online and offline. In fact, during the 2000 holiday season, many click-and-mortar, or hybrid stores, did better as a teamed online/offline business speaking with one voice to the customer!

B2C commerce is differentiated from offline commerce in many different ways, and the deconstructed value chain is one predominant underlying theme. The other is convenience.

By the way, the term "retail vs. e-tail," as with most things concerning the Internet, is a reflection of a compact lexicon. E-tail is the virtual online retail world, one composed of mouse clicks. It is the challenger to the brick-and-mortar retail establishment. We will use e-tail to indicate pure-play online merchants. The other classification is click-and-mortar, which refers to hybrid operations consisting of both an online and offline store.

Amidst the clutter of pure-play Web sites some retailers stand out: Amazon.com, eBay, Charles Schwab, and Edmunds, to name a few. The keys to their success in generating both "mind space" as well as loyal clientele are many and varied.

These sites offer the products and services wanted by customers, amplified by the provision of all the things made possible by the Web. These inherently positive traits for e-tailers include: 1) convenience, 2) selection, 3) quality, 4) content, and 5) service. These attributes are neither unique nor peculiar to online B2C businesses, but are seemingly defendable against brick-and-mortar competitors.

Let's look briefly at these five traits in a little closer detail.

  • Convenience: A good online store is ubiquitous and available 24x7x365. Once the novelty value of online shopping wears off, it is convenience that drives customers to the Web. Supporting features reflect the principles of good Web site design—user friendliness, availability of information, and good search capability. The quality of user experience foretells repeat visits to the site, ending possibly in a transaction and a suggested visit by a friend.

  • Selection: A good, if not exhaustive, selection is mandatory. Unlike stores in the physical world, though, selection is virtual because of the relative ease of storing information about products versus the products themselves. Intuitive navigation and a good search tool makes location of product by attribute easier, and this hastens conversion of browsers into buyers. Breadth of product is especially important for drop-ship stores.

  • Quality: On the Internet the reputation of a retailer is considerably enhanced if sites are constructed upon foundations of quality. At eBay, for instance, the auction site has a robust system of user ratings on both buyers and sellers: one point for positive comments, zero for neutral responses, and minus one for negative feedback. Anyone racking up a score of minus four forfeits the right to use the service.

    Thus, quality refers to the quality of the product or service sold and its delivery, as well as in generating customer feedback. The integrity of this gesture is measured by how well the merchant acts upon them. It has implications for the quality of relationships all along the value chain—from suppliers to end customers.

  • Content: Information content in an online market can be measured along several dimensions: information about the customers and their needs, information about the products or services, and information that users have and share.

    The Web presents many opportunities to gather and disseminate information from a variety of sources. Information about customers and their buying patterns can be monitored continuously to customize offerings that reflect understanding gained from that knowledge. Information about products being sold is dependent on availability of exhaustive catalog information and responsiveness to customer inquiries. Breadth and depth of content (catalogs of products being measured this way) are also important in rating content quality, and are intimately linked to selection.

    In fact, if it is not obvious by now, we must state here that all of these traits, qualities, and factors are interrelated. They are very difficult to remove, isolate, and examine out of their original context. This is one of the unique qualities associated with the online world: its interlocking relationships.

    The last content dimension, the willingness of users to share their knowledge, is especially pertinent to a Web presence owing to its singular ability to link a product's quality or specification to comments of other users. As noted above, quality is dependent upon customer feedback. With Amazon and eBay, integration of content and quality takes the form of reviews and feedback by customers on products they may have purchased or sold and then self-rated.

    Because content is so important, we devote an entire chapter to it, Chapter 4, "The Content Stack."

  • Service: Service, specifically customer service, is an important but largely missing ingredient on the Internet. While automation produces efficiency, it can also make the experience impersonal. In turn, this results in low customer retention.

    On the Web, good customer service can be addressed with feedback, prompt handling of questions and complaints, and in how well the merchant provides a smooth, trouble-free method to handle returns and refunds. When handled well, this often turns a negative experience into a positive one. It is ironic that on the Web the term personalization can mean customized automation within the online glossary.

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