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From the 1940 's invention of the ENIAC to the high powered computers of today, end users are constantly bombarded with a litany of options. Enter the Internet. A virtual world that has broken down communication barriers and raised our notion of globalization to epic proportions. One can chat with friends in the far east while downloading articles for a report and simultaneously finding a recipe for french onion soup.
As the million new users join the internet every day , we must look at where this has lead to and what it means to us as investors. The media gives us more internet information than most can handle. Think of Nortel's advertisments which read, "Where do you want to go today?" . As I sat and watched this years Superbowl, I came to a realization.
Last years much hyped "dot. com" after "dot. com" advertisments seemed to be sparse. Is this representative of some kind of decline in the popularity of the Internet? Its not; internet sales is not only hear to stay, it's completely going to change the way business is handled. Dealing with business investment on the internet is a daunting task.
Internet sales are succeeding and this is very positive. Many companies are using the internet to make direct first time connections. Others, using secure Internet connections are intensifying relations with some of their trading partners, and using its reach to request quotes or sell off stocks of goods or services by auction. Various companies have emerged in many industries bringing together buyers and sellers in this rapidly growing electronic marketplace . As investors, there are many pieces to the proverbial e-commerce pie. The two most important slices deal with the type of end consumer.
Businesses either try to sell to other business, called, Business - to - Business or B 2 B and business sell to consumers called, Business - to - Consumer or B 2 C. Both are similar in purpose, but are very different in practice. Business - to - Business sales are the outright winner in terms of dollar sales per year. Presently, B 2 B sales made up 80 % of total e-sales in 1999 for an estimated total of over $ 150 billion.
It is predicted that by the year 2003, this number may reach upwards of $ 3 trillion. Companies are utilizing B 2 B to maximize their output while minimizing their costs. Kubota, a tractor manufacturer has used their site to coordinate their orders with suppliers, exchange information about short and long term plans and keep track of inventory and investments. By doing so, they have managed to communicate more freely with their partners and lower costs. This type of change is common with these sites and has therefore created a logical decision for companies. B 2 B is having a great impact on how large corporations function.
Business will use their sites to maximize their output in a number of respects. By hosting a site, suppliers that are associated with the product will be able to synchronize their shipments of product to reduce their overhead of inventory and therefore reduce costs. Current requirements of product can be updated digitally and automatically shipped out saving labour costs which in turn create larger margins of profit. Through low transaction costs, this will also allow for profitability in smaller orders.
Business - to - Consumer Internet shopping will be the future of e-commerce. But not now. B 2 C has all of the potential to move forward and create many financial opportunities for the investor but many problems need to be addressed before this happens. At present, only a small percentage of e-commerce is made up of B 2 C. This may be for a number of reasons. Firstly, businesses simply buy more at a time than home shoppers do.
The average consumer spent $ 308 per transaction in the United States this year . The purchasers have two payment options, either pay directly by credit card or offline. The former necessitates greater human capital to maintain the integrity of the purchases and to keep secure the financial transactions. The latter is a safer process, but is far for time consuming and therefore loses the likelihood of impulse purchases and overall sales. Secondly, B 2 C e-commerce sites are still difficult to use. Most users at home are still using basic 56 k modems that make navigating complex sites extremely time consuming and downright boring.
The time spent waiting for pictures to download creates frustration and pushes away users instead of bringing them back. As equipment quality increases to meet up with the complexity of sites, traffic will increase and so will sales. B 2 C e-commerce sites are not yet organized properly. When the whole concept of business began, it was individual vendors in seperate locations trying to sell their product. When these vendors decided to get together in one area such as a market their volume of sales increased. It is going to take a movement of companies to put their products together in a e-mall.
This e-mall will allow consumers to go to one familiar place such as web and move around to their favourite stores just as they would normally shop. Whether they wanted to visit Banana Republic or The Body Shop, it would be set up in a fashion that they recognize and prices they have seen. The goal in the medium term should not be to eliminate stores but to just minimize their overhead and phase out pushy sales people and high inventories. These sites need significant site traffic to garner high gains. Just as with normal "window shopping", this occurs online as well and without many hits, these sites cannot succeed. Bibliography:
Free research essays on topics related to: e commerce, b 2 c, business to business, internet sales, b 2 b
Research essay sample on B 2 C B 2 B
