Block 3

Business strategy for

e-commerce (B2C)
 Chapter overview
 Corporate strategy in the digital age.
 Business value of B2C e-commerce.
 B2C business models.
 Imperatives of EC business models.
 Customer relationship management.
 From pure-play to click and mortar.
Corporate strategy in the digital age.
 IT & Internet technology have changed
transaction based activities such as
information gathering, shopping, trading,
brokering, banking, accounting,
manufacturing, distributing, servicing and
retailing.

 Affects all organizations.

 Both risks and rewards.

 Planned business strategy and model.

 Business value of B2C e-commerce
Add value to business by
 directly selling to customer.

 Supporting sales & transactional information.

 Providing product information through online

catalogs.

 Provide online information like News-letters,

weather forecast etc.

 Provide many other things that surround the

product & that tempt the potential buyer/ user.

 Enhancing value of product promotion.

Business value of B2C e-commerce
New sales channels
 Digitized products can be delivered
electronically.
 For physical products, advertisement
& ordering can be done
electronically.
 Value addition by providing
information surrounding the product
being sold.
Business value of B2C e-commerce
Direct saving
 Lower cost of transmitting & re-using
information.
 Service industries like bank, courier,
telecommunication etc.
Business value of B2C e-commerce
Brand and corporate image
 Many organizations build a web site
for building corporate image.
 Build up a brand name on the web
for the purpose of attracting
investment.
 Business value of B2C e-commerce
Customer relationship Management
 More personalized relationship with
the customer due to interactive
nature of the Internet.
 Easily capture customer information.
 Generate customer profile.
 Accordingly market products to the
right customer at right time.
Business value of B2C e-commerce
New product capabilities
 New products or customization of
existing products in innovative ways.
 Ability to store customer preference.
 Flexible manufacturing techniques to
adapt a product to a customer’s
particular need.
 Alliance of supplier, manufacturer,
distributor required.
 B2C business models
 A business model is defined as the
architecture for the products,
services and information flow as well
as a description of the potential
benefits and sources of revenue for
the business
B2C business model classification
Classification based on how the nature
of the model relates to real-world
business:

 Transplanted real-world business

model-storefront, e-mail, advertising
model.
 Native Internet business models-
virtual communities.
B2C business model classification
Classification based on interaction
pattern of the business activities of
the models.

 One2one-storefront
 One2many-spam email
 Many2One-email to many suppliers.
 Many2Many-multiple buyer to
multiple suppliers (infomediary).
B2C business model classification
Classification based on the way items
of trading are offered:

 Sell side model: e-tailer

 Buy side model: reverse auction
 B2C business models analysis
 Chose a model classification.
 Think up different types of business.
 Draw up a matrix as follows:
 B2C business models analysis
Type of Transplanted Native
model real-world Internet
models models
service Not required Suitable:
Physical delivery
channel.
Information intensive

goods Suitable:
Physical delivery channel
required.
Mirror customer’s shopping
habits.
 B2C business models analysis
 Try to come up with as many
different types of business
(homogeneous good vs. heterogeneous goods,
luxurious goods vs. household goods)

 Complete the analysis with the above

model classification.
 B2C business models
Storefront model
 Electronic counterpart of a physical retail
shop.
 Customers visit and make their purchase
online.
 Groceries, books, toys, audio and video
products.
 Business may run a traditional retail shop
with a web storefront.
 B2C business models
Storefront model benefits:
 Increased demand, low cost route to
global presence and cost reduction of
promotion and sales for the sellers.

 Lower price, wider choice, more

information and greater convenience,
24-hour availability for the customers.
 B2C business models
E-mall model

 Collection of e-shops hosted by well-

known brands.
 Common payment methods.
 Mall charges set-up, monthly listing,
per transaction fees.
 www.shoping.yahoo.com
 B2C business models
Image building model
 Web presence to provide
product/service/ organizational
information.
 Enhance public awareness and image
for some target groups- consumers,
investors, potential employees,
public etc.
 Site is information rich or emotional.
 B2C business models
Customer service model
 Web sites for providing post sale
support.
 Web based customer relationship
management software.
 B2C business models
Advertiser-supported model
 Extension of traditional media broadcasting
model.
 Web site acts as broadcaster.
 Web site provides content and service mixed
with advertising messages in the form of
banner ads.
 May be a content creator or distributor of
content created elsewhere.
 For large viewer traffic or highly specialized.
 B2C business models
Access charge model
 Users are willing to pay an access charge
for the goods or services.
 Hourly charge, monthly charge or per view
charge.
 Commonly combined with ad model where
basic content is free and premium content
must be paid for.
 May be combined with customer service
model when premium customer services
are offered.
 B2C business models
Brokerage model
3rd party makes money by charging a fee for
each transaction.
Buy/sell fulfillment: online financial brokerage such
as eTrade (www.etrade.com).
 Auction broker: a site that conducts auctions for
sellers such as eBay(www.ebay.com)
Reverse auction:
Search agent: searches for the best price such as
DealTime (www.dealtime.com)
 B2C business models
Free model
 Infomediaries set up web sites to collect
and sell information about consumer
buying habits.
 They may offer free content or services
requiring users to register.
 B2C business models
Virtual communities
 Members add their information to a basic
environment provided by the virtual
community company.
 Membership fees and advertising generate
revenue.
 May be used by other marketing
operations in order to build customer
loyalty and receive customer feedback.
 eGroups (www.egroups.com)
Imperatives of EC business models
As technology advances, new business
models may be invented.
Following questions to be asked before
adopting a model:

 Which models will prove most effective for which

kind of business?
 How can each be pursued most effectively?
 Which combinations of models tend to be
particularly effective and which tend to conflict?
Imperatives of EC business models
Some imperatives of EC business models:

 Build traffic.
 Plan for global reach.
 Exploit the opportunities of the
Internet.
Imperatives of EC business models
Some imperatives of EC business models:

 Respond to increased Internet-

enabled competition with the industry.
 Operations in the sell side models
category must provide better
selection, better availability, greater
ease of research and more purchase
related information, greater
convenience, more individual services,
lower prices and better quality.
 Customer Relationship Management

 CRM is an integrated sales,

marketing and service strategy that
precludes lone showmanship and
depends on coordinated actions.
 Capture all customer information
from various channels and give a
360 view when he contacts with the
organization.
 Profitably manage the relationship.
 Customer Relationship Management

 Identification of the most valuable

customer.
 Intimate knowledge of customer’s
needs through establishing learning
relationship.
 Improved value delivery , more
efficient marketing and sales actions.
 Customer Relationship Management

 Customer retention and loyalty.

 Customer cross selling/up selling
 New customer acquisition.
 Increased customer profitability.
 Competitive differentiation and
barrier to entry.
 Customer Relationship Management

 E-marketing
 Customer service and support
 Customer tracking
 One2one interactivity
 Customer Relationship Management

 Web personalization
 Visitor identification
 Visitor differentiation.
 Web community.
From pure-play to click and mortar
 Slow processing speed of purchase
orders.
 Links to out of stock product and
 High shipping cost.
 Security concerns