Business-to-Consumer E-commerce: The Characteristics and Trends

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Executive Summary

Negotiation and integration play an important role in many businesses today. The use of e-business has impacted virtually every aspect of business, by allowing the two aspects of a business to easily come into play. E-commerce has transformed not only the way business is done but has also created new business sectors and jobs. Many online businesses and global companies would attribute their growth and successes to e-business developments.

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In the last five years, the amount of business conducted through business-t-consumer e-commerce has doubled. The industry is expected to grow further as more people gain access to the internet. B2C is characterized by e-tailing, information sharing, and a globalized market. This important business tool has shown a positive trend since its inception and analysts predict more growth. Like every other new concept in a market, B2C e-commerce has and continues to experience several challenges. Major challenges include privacy and security for wares and finances, information availability for products, limited accessibility to the internet in different regions, and differing legal requirements for trade in different countries.

Despite the challenges, B2C e-commerce has attracted a lot of attention in the retail industry. Marketing consultants have taken advantage of this platform to help many businesses have their profits soar. Direct selling has strengthened many businesses that can save on the costs introduced by middlemen. For the new business, it will be a more affordable platform to establish a presence in the market. It will offer the business important benefits such as efficient order, customer, and inventory management systems. These important features will help it customize its applications and meet its clients’ needs in a more timely manner. The business must address the challenges using available endpoint solutions to benefit fully.

Business-to-Consumer e-commerce

Business-to-consumer (B2C) refers to business activities through which products and services are served to end customers. In electronic commerce (e-commerce), B2C is a blanket reference to digital transactions involving businesses and individuals for the same purpose. E-commerce has evolved to include sophisticated technologies, methods, and interfaces and currently exists in subsets in which B2C is part. It is a business approach that is expected to transform the way trading is done.

This paper revisits, in brief, the characteristics and trends of the B2C platform as well as its advantages and challenges. The report intends to study how business-to-consumer activities have evolved in the last five years and the contributions it has had to the business environment. The report will examine its applications in the new business and its ability to give it a competitive advantage. To understand the topic, the report will highlight several parameters of interest in the application of B2C application.

Parameters of interest in the business-to-consumer application are affordable operating systems, a solidified base for online e-commerce competition, how the idea has been embraced in different regions, and information accessibility. As more and more businesses embrace the idea, competition has ensured the improved quality of goods and services traded through e-commerce. Security concerns continue to be an important parameter anytime business-to-consumer e-commerce is discussed. Retailing has been made easier and the link between manufacturers and consumers has become less complex. By eliminating intermediaries, goods and services have reduced prices. Variety has been a major advantage for shoppers since they can browse different catalogs in the comfort of their homes.

This report hopes to give the reader a more clear perspective of business-to-consumer, a technology that has made shopping, ordering, payments, support, information access, and service easier (Bidgoli, 2002). Analyzing its application in the new business will give it a more practical application. The report will also help the reader understand the challenges facing this business invention. Finally, the report will give recommendations on whether the new business should adopt it and how it can utilize this tool profitably.

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Business-to-Consumer

In electronic commerce (e-commerce), B2C is a blanket reference to digital transactions involving businesses and individuals for the same purpose. E-commerce has evolved to include sophisticated technologies, methods, and interfaces and currently exists in subsets in which B2C is part. The technology went through some tough times in the past but has managed to fully revive itself, especially in the past five years.

B2C technology registered a major presence in the trading industry in 2005. In this year alone, over $170 billion worth of shopping was done online. By the end of last year, consumers were expected to spend over $330 billion and the trend is expected to continue in a positive direction. In 2011, online shopping is expected to grow from 48% in 2010 to 52%. Any young business, therefore, would benefit much by being part of the market that is experiencing the benefits of B2C technology at such high levels. As the world gets more and more connected through the internet, new and existing businesses can take advantage of such inventions to launch themselves to the mainstream markets. A new business such as ours can do this by putting a catalog for their products online and integrating with their clients’ systems.

Several characteristic steps have defined e-commerce since its inception in the 1960s. As a starting point, digital commerce became synonymous with advancements in Electronic Data Interchange (EDI) (Turban, King, Lee, & Viehland, 2002). The standards for EDI were developed as an avenue for exchanging business information and transacting electronically. In its infantry, the standardization was hectic and so most companies still developed their formats and platforms of EDI. Several transformations have since then occurred, such as the ASC X12 Standard eventually becoming stable as a module for large volumes of electronic transactions.

Later on, the DSL was developed, another landmark innovation for e-commerce. It boosted the pace of e-transactions because connections became persistent and reliable. By the end of the 20th century, AOL was posting over $1.2 billion in online sales over the Christmas holiday seasons (Weisman, 2008).

Recent developments leading to e-commerce stability give online users a cheaper and reliable operating system (OS) platform choice. It has also given users an alternative to Windows, which became too costly for many businesses. To divest, Microsoft concentrated on more e-commerce. Developments, such as the Napster application through which music files would be shared, were major transformations in the entertainment industry. In the last five years, the music industry has proved to be one of the biggest beneficiaries of these inventions, trading billions of dollars every year online, through different players in the mobile music industry such as Apple Inc.

In the last five years, an interesting parameter of business-to-customer technology has been how it is being embraced all over the globe. Globalization has played a major role in the growth of B2C applications. It has become one of the easiest ways for businesses to make a global presence. The US is the largest market for e-commerce products and accounts for over half of the total sales across the world, although it’s clear Europe and Canada are catching up at a fast rate (Rowland, 2009). Commodity prices have been an important consideration in this poise for online purchasing power. In addition, the quality of services, the ease of online ordering, the information available to the buyers before making decisions to buy, speed and reliability of goods delivery, and the degree of trust that a consumer may be having over a vendor, such as the security of payments and available redress mechanisms, have been major concerns in the last five years of the industry. These concerns determine the degree of propensity towards B2C e-commerce (McFadyen, 2008).

Characteristics of B2C

E-tailing has made it easier over the years for manufacturers to sell directly to willing buyers without the middlemen. The B2C makes brick and mortar offices almost invalid since the client can communicate directly to the producer at the comfort of their home, without the need to have a physical meeting. In place of retail distributors and other intermediaries, there has emerged Web or electronic store-fronts, a reference to single company websites, through which the sale of products and services take place. Shopping is now easier and more convenient through online browsing. Catalogs replicates of finished products are displayed on the sites (Turban, King, Lee, & Viehland, 2002). For example, at Amazon.com, customers can browse catalogs at their own time and convenience. They can then proceed to place orders and instruct the company on the best delivery time and methods. The product is then delivered as is convenient to both parties and directly to the customer.

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In B2C e-commerce, five major activities define the business. These include information sharing, ordering, payments, fulfillment, support, and service in that order (Dosi, 1988). Essentially, the B2C e-commerce model uses the company website, online catalogs, e-mail, online advertisements, message board systems, newsgroups, or discussion groups to communicate with their clients. Ordering takes the form of an electronic outline or e-mailing. Payments proceed through credit cards, digital cash, or electronic cheques. The fulfillment function proceeds under complex platforms but usually depends on the nature of the delivery or service. For example, software products can be directly downloaded from a site after payment. Services may be offered online and as a result, they are delivered with ease. However, tangible products may take days or even months to ship and the nature of the transaction may then involve intermediaries. Servicing and support may involve e-mail confirmations, periodic news flashes, online surveys, online help desks, and chat systems, guaranteed secure transactions, online auctions among other tailor-made services.

Trends

The B2C has proven to be a success both for the merchants and for the consumers over the past few years. As different businesses evolve, so does the future of traditional businesses looks bleak. The possibilities for e-commerce are expanding and so are those of B2C businesses emerging. B2C e-commerce has encroached into the fabric of international business wherein, it leads to defining consumer relations. According to Patton (2001), B2C business’s gains from market capitalization pose a real threat to traditional brick and mortar systems.

The cost of sustaining business without traditional stores, reduced inventories, remote concerns about actual earnings, and unlimited access to capital are factors that have made e-commerce a preference for many. As the history of e-commerce, attests, major strategic alliances have emerged and continue to emerge among e-commerce giants, all aimed at stationing formidable forces in what is continuously becoming a trade model of choice. TV and online advertisements augment these strategies. Websites are plentiful, an apparent implication that the B2C platform is acceptable and will stay for a long time to come.

It was predicted that revenue from online sales would grow to newer levels surpassing the 40-50% that it registered yearly from 2000 to 2006 (CIO, 2007). Businesses also expect higher prices and large profits with the expansion of markets for their online sales. Even with the economic slowdown in the US and other countries around the world, the growth of online trading is inevitable. The average amount spent on online purchases at every purchase is also on the rise. Long-term prospects for e-commerce are positive with predictions that stocks of leading e-retailers will completely level off after much loss in the duration that followed the recession. There are also hopes of experienced traditional companies venturing into the e-business to boost consumer variety and/or provide new merchandise to already existing ones. Whereas offline brick-and-mortar trade will remain a choice for bulky goods, it is anticipated that most stores will adopt a two-framework approach with offline and online sales to keep pace with new developments in e-commerce (Laudon, Traver, & Guercio, 2002).

Challenges

Whereas the business-to-consumer trend continues to provide incredible opportunities for reshaping the conduct of business, it poses several challenges to most platforms of e-commerce. These challenges are shared in equal magnitude and even much more by the B2E e-commerce platform, owing to an increase in the volume of transactions through the platform. Essentially, the real significance of B2C e-Commerce is not fully exploited. Its growth remains a relatively small portion of retail commerce. The mode of conducting business, which is a pure online transaction, with little deviation to distribution and chain management, is yet to emerge fully as a result of consumer concerns about privacy and security for their wares and finances. In addition, limited trust, poor websites usability, inability to assess tangible products sufficiently, and the lack of social appeal continue to torpedo B2C progress (Turban et al, 2002 P. 124).

The slow growth of B2C e-commerce is largely attributed to the late delivery of products, which affects customers’ trust. As a result, businesses have been slow to venture into potential areas of online sales for fear of reprimand should they fail to deliver goods on time. For some e-retailers, attempts to ensure customer satisfaction fulfillment and shipping costs occasionally lead to negative margins of operation. So, even as the success of B2C e-commerce remains, online stores are faced with challenges of product and service delivery, customer satisfaction and operational excellence, logistics of chain management, and even bottlenecks occasioned by outsourced services.

Another major challenge is information availability, which may vary from one company or country to the other. Placing orders online may differ and customers may face a challenge due to the differences from one side to the other. Different countries also have different regulations and rules when it comes to information available about products. As a result, B2C e-commerce remains concerted in only a few product groups such as banking and finance, tourism and travel, audio-visual products and books, and, lately, software sales and services, since these products share a more common infrastructure/logistic background.

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Concerns about privacy and security for wares and finances have been a subject of major debates concerning business-to-consumer e-commerce. Customer traffic concerns have also jeopardized the ability of internet technology to sustain B2C e-commerce. Denial-of-service attacks and outages experienced in prominent websites have more often than not coalesced customers into a cocoon of non-believers. Orchestrated by hackers, outages have left transactions incomplete with some clients unsure if their financial commitments would be fulfilled. Others have lost lumps of money in such transactions and as a result, they have been hesitant in influencing the progress of e-commerce and individualized B2C e-commerce in particular. A good example is the solitary hackers who followed Amazon.com offline for a long time only to cause a loss in sales due to the downtime (Nissanoff, 2006, P. 26-7).

Issues of limited accessibility continue to haunt B2C frameworks. Persistent limitations on internet accessibility resulting from inadequate infrastructure and underdevelopment in some regions make it a tough challenge to conquer. The growth of online stores is also occurring unevenly across the world, which means physical infrastructure to boost B2C sales are developed at different rates (Gasos & Thoben, 2003). A current survey on internet connectivity indicates that they are an uneven distribution across countries. The distribution of secure servers, for instance, shows more concentration in the US, Iceland, and Japan where most other OECD countries experience lesser server connectivity per a given number of inhabitants.

Application to the new company

The use of websites has allowed business organizations to create new and less expensive methods of reaching new markets across geographical boundaries while offering customers the opportunity of buying goods and services any time of the day or night. This has further been enhanced by the use of e-mails which help business to market their goods and services directly to potential customers and engage in integrated marketing communications with customers and suppliers. E-business has also increased the marketing campaigns of businesses by the use of technologies such as Customer Relationship Management systems, which allows them to co-ordinate, monitor, and report, and has a wider view of all aspects of marketing campaigns from initial customer contact to ongoing repeat purchases.

E-business provides easier and more efficient ways of accounts management and consolidation. Through the use of software like Sage and Excel, the new business stands to profit from better data and financial management. Embracing such technology will allow the business to look at financial information when required, monitor, respond and forecast customers purchasing patterns, thus resulting in several reductions in accountancy fees.

The need for business personnel to work remotely while keeping in touch with the central office has further been enhanced by advancements in information and communications technology. The need for staff to be away from the office attending meetings or work from another location has grown, especially with more employees demanding more flexible working patterns. Since effective communication and the ability to access information is critical for business success, calls for mobile working would have been frowned at a few years ago. However, through the use of Information technology, the new business will be able to use a range of technologies to achieve flexible working schedules, as well as save on additional space required when employees are working remotely. Some of the recent enabling tools include mobile phones, e-mail, broadband, laptops, etc. Adapting them as support measures will allow the company to be more flexible and adaptive to the ever-changing business needs.

Virtually all businesses across the world now have or have access to a computer and the internet, making it easy to utilize B2C business trends. The existence of two or more computers in an office almost always leads to the creation of a network. This makes resource sharing easier and less expensive and improves the communication capability of businesses. With networks, businesses can leverage the power of computers, gather information easily, better enhance their capabilities and sustain a competitive advantage.

B2C technology is a tool that will be very useful in our newly formed business. The purpose of e-business technology is to help a business enhance its communication, information handling, and ultimately the business’ returns. Business-to-customer technology will help the business facilitate better communication with its customers. By investing in an enhanced model of the technology, the business will have a great opportunity to reap the benefits of the latest communication technological trends.

The B2C technology will offer the business important benefits such as an efficient order management system, a customer management system, and an inventory management system. These important applications and features will allow our young business to customize its applications and meet its needs in a more timely manner. This technology will positively affect the new business environment by leveraging communication capabilities, fostering greater collaboration among employees, improving information management among business units, as well as enhancing productivity, and providing greater efficiency.

Conclusion

The use of technology has oriented much business into easy trading of goods and services through internet-based technologies. Business is thus not limited to face-to-face trading and is more global with new technological inventions every day. The entry of technology into the field of business has brought with it advantages and concurrent limitations that the business industry needs to critically explore before expressly adopting the use of technology in business. The merits largely outweigh the demerits and should therefore be encouraged.

Business-to-consumer has faced major challenges in the past but has survived them to be accountable for a considerable amount of retail transactions happening globally. Its characteristics include e-tailing, which has made it easier over the years for manufacturers to sell directly to consumers without the middlemen. It is also characterized by the ease to trade in global markets. Since more people have the internet today, businesses can easily sell their products in different parts of the world without having to be there physically. Another important characteristic of business-to-consumer is the availability of information for consumers on different products, an element that has allowed consumers to make more informed decisions before purchasing.

Business-to-consumer trends have allowed businesses to save on costs created by middlemen. Businesses are also able to save on advertisement and marketing costs by reaching more customers at the same time. Major challenges facing this brilliant way of trading include privacy and security concerns, and relatively slow growth as opposed to what would have been expected. Businesses are also not able to reach the big population which has no access to the internet. Different legal requirements for different products in different countries may also make it hard for a business to sell in certain regions.

Despite the few challenges, business-to-consumer e-commerce allows for bigger collaborations between manufacturers and consumers. It also allows for friends-based merchandising, which means that customers can be the biggest avenue for marketing a product, by recommending a product or a site to friends. Customer satisfaction and brand loyalty are therefore key in online trading to ensure more recommendations. Since customers have a wide variety of products to choose from, a business must ensure that its customers stay loyal to its brand through uncompromised quality standards. Through technology and social shopping, customers can browse independently and see what friends are viewing, show friends some items, chat with friends and save items in a favorite list. The use of social networks such as facebook has enabled friends to easily access many retail sites, which makes it easy to send links of the available and needed products or services to an e-mail address.

Recommendations

For the new business, business-to-consumer e-commerce is a good way to launch its products into the market. The immediate response the business will get from consumers will be very important in developing quality. It will help the business leverage its communication capabilities, fostering greater collaboration among its employees, improve information management among business units and enhance productivity and greater efficiency.

Business-to-consumer is one of the tools that every new business must adapt, especially if they intend to extend their presence to a global level. Even for businesses operating in local markets, many people are increasingly busy today and may not have the time to go to the stores for shopping. A majority of the consumer today are willing to pay even more for convenience. The new business must therefore adopt the technology if its presence has to be felt in the market. It will make it easier for the business to catalog online and reach a bigger audience at the same time.

To fully reap the benefits of B2C e-commerce, the business will need to address some of the challenges facing the platform. There are several endpoint devices available today to help deal with security concerns. The business will need to learn how to have more control over their servers to address breaches and other threats. The business should also make their site easy to use to attract more people who may not have so much time on the internet. By networking with other regularly visited sites, the business will benefit from more traffic. The business must also ensure that it provides consistent information for its customers on every site where its products are available. The business must identify its target market to avoid spending money in regions or markets where its products may be irrelevant.

Constant communication with consumers is imperative if any business intends to register success. It is through constant communication that a business can have updated market information. Customers feedbacks are the best way for a business to relate to a market. By adopting and investing in business-to-consumer e-commerce, the business will be constantly updated on the changing market trends and consumer preferences.

Reference List

Bidgoli, H. (2002). Electronic Commerce: Principles and Practice. New Jersey: Academic Press.

CIO. (2007). E-Commerce Definition and Solutions. Web.

Dosi, G. (1988). Sources, procedures, and microeconomic effects of innovation. Journal of Economic Literature, 26, 1120-1171.

Gasos, J. & Thoben K. (2003). E-Business Applications Technologies for Tomorrow’s Solutions. New York: Springer, Berlin.

Laudon, K., Traver C. & Guercio C. (2002). E-commerce: business, technology, society. Addison Wesley. Boston, MA.

McFadyen, T. M. (2008). eCommerce Best Practices – How to market, sell, and service customers with internet technologies. McFadyen Solutions.

Nissanoff, D. (2006). FutureShop: How the New Auction Culture Will Revolutionize the Way We Buy, Sell and Get the Things We Really Want. London: The Penguin Press

Patton, S. (2001). The ABCs of B2C. The E-Business Research Center. Web.

Rowland, R. (2009). ‘E-commerce Canada’s changing economy’. Web.

Turban, E., King D., Lee J. & Viehland D. (2002). Electronic Commerce: A Managerial Perspective. New York: Prentice Hall.

Weisman, J. (2008). ‘The Making of E-commerce: 10 Key Moments.’

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