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E-Commerce E-Commerce: Business to Consumer, Perspectives of Growth More and more businessmen start to explore internet market as a potential market for further growth and development. Many offline companies undertake efforts to earn money in internet. More and more internet-projects appear. These projects include services of e-trade platforms, internet-auctions, various internet-portals, and internet-shops, to mention a few. Internet-shop or B 2 C model (Business-to-consumer) became one of the most popular businesses in internet.
According to various researchers, Amazon. com became the first successful project that made great impact on development of Business-to-consumer internet shops. Besides, such business model is intuitively and most easily understood to the majority of American businessmen. Amazon. com is, actually, the realization of the scheme of average business with implementation of new technologies. It obeys the principle that indefinite quantity of potential consumers can simultaneously enter one place (the companys website).
For example, thousands of visitors attend internet shops owned by Amazon. com and eToys. com on a daily basis. Moreover, a potential possibility to reduce the expenses for rent, quantity of employees, possibility to serve a large quantity of products can be related to additional pluses.
Lets examine the general scheme of Business-to-consumer model used by the overwhelming majority of internet-based companies. General Scheme of E-commerce Model The consumer uses internet browser to enter the website of an internet shop. Website contains e-storefront, where a catalog of products is presented. Usually there is a search button that allows the consumer searching for definite product. Necessary elements of interface are used to facilitate the consumer process of entering necessary registration data, forming the order, processing the payment with the help of various e-bank gateways or other payment systems, asking for delivery, getting information about the seller-company and online help (Focazio 120). The consumer executes process of registration either when he forms the order, or when he enters the e-shop.
After the consumer chooses the product, he has to fill the form in, where he chooses the way payment and delivery will be done. After the order is completed and the registration is over, all collected information is transmitted from e-storefront to trade system of the internet-shop. Trade system checks whether the necessary product is available for sale and initiates query to payment gateway. In case the product is not available, trade system sends the order to the supplies, and reports the customer about the possible delay. In case payment is collected when the consumer gets the product (for example, by courier or by payment forward), the customer has to confirm his order. Usually the customer has to confirm the fact of order by phone or by e-mail confirmation.
In case there is a possibility to proceed with payment via internet, the payment gateway is used. Finally, the order for service of delivery is formed when confirmation of online-payment is received. Nowadays there are thousands of internet-shops in the United States. The majority of them were created during the last several years. Book, video, CD, DVD, computers, foodstuffs, and domestic appliances are the most popular goods sold in internet (Cunningham 28). As the practice shows, the majority of internet shops cannot boast with considerable public stock-jobbing despite widely advertised advantages of e-commerce.
There are many reasons to explain numerous failures. Insufficient percentage of potential customers, low income, and insufficient development of payment systems are considered the main reasons of e-commerce low popularity. However, we should objectively examine the actual state of affairs in e-commerce sector. Considerable part of internet-sellers do not develop effective e-commerce model. Instead, they wait for speculative expectations in the internet market. Such companies issue share holdings and wait until their stock will be rising rapidly.
According to the research conducted by Pegasus Research International, more than one third of the companies can become bankrupts if they will continue using such strategy. This research was based on 335 internet-companies with shares quoted by NASQAD. Yet, e-commerce remains an extremely attractive business with almost no expenses for employees. Does it mean that e-commerce pronounces the time to fire the employees? Those consumers, who decided that e-commerce will allow them from the process of offline shopping and waste of time, probably were mistaken. The companies that promised to change the very concept of shopping starting with books and finishing with patrol and various stuffs, werent able to complete the turn-over in the industry of e-commerce.
For example, Urban tech. com, the company with a stainless reputation that specializes on delivery of their products exactly to the customers apartments, stopped to serve the customers in the United States and Great Britain. The company decided to continue service for several companies and private persons only and remained no more than courier (Levy 41). Another company, Webhouse Club online company specialized in patrol and groceries sales, announced its closing.
The leader in online retail trade, Amazon. com, reduced discounts for the books (Spector 73). In such a way, the possibility to purchase the book with a considerable discount and delivery included in price remained in the past. Thus, promised e-commerce turn-over failed. According to the opinion of analysts, the main reason of fiasco was that investors lost their patience in waiting for considerable successful results of e-commerce.
They seemed to expect more income brought by direct participants of e-commerce projects. In their turn, many companies that sell their products using e-commerce channels, underestimated expenses for advertising and reputation. During the boom of e-commerce the consumers believed that internet changes their concept of making a purchase. Nevertheless, the internet sellers were confronted with difficulties. It provided to be that internet shops are not able to take the place of offline traditional shops. The can serve only as a valuable supplement to traditional shops.
For their part, the consumers were not in a hurry to refuse from visiting traditional shops. The major part of them didnt refuse from the habit of buying daily products in supermarkets, shops, markets located not far from their houses. In such a way, the hopes of e-commerce shop owners were not so optimistic. So, nowadays, the internet sellers focus attention on the products that are not so easy to get in traditional shops due to various reasons such as place of origin, where the delivery is quite expensive, or due to other reasons.
Internet companies also understood that it is more convenient to buy a large-dimensioned product in internet shop with the option of delivery free of charge, than to buy the same product in a shop. Despite a visible popularity of e-commerce, it remains not very popular. The customers simply got used to make purchases in traditional shops, where they can touch the product or to compare it visually. As a result of this, many leading internet shops have to close or announce its bankruptcy. Value America, Boo. com, Living.
com are among of them (Hall 83). Lack of financing influences the ideas of new perspective projects that, probably, will never be realized. Lets examine the case of Webhouse, a department of Priceline company. Its manager and founder Jay Walker undertook decision to invest approximately 125 million dollars in Web House. He sold a part of Priceline shares because he didnt have money enough to develop the project. Walker wanted to implement the idea of Priceline into Web House model.
According to it, the customer has an option to bargain for prices for airway tickets and hotel rooms, etc. The idea was good for the airline tickets, but wasnt successful for groceries. Another problem of e-commerce is that it is impossible to embrace a large quantity of consumers. From the very beginning businessmen considered that e-commerce projects will become huge trade centers and quantity of the customers will be also considerable. However, people usually purchase economically profitable goods and services only. Delivery is one of the main advantages of making purchases in internet; however, its prime cost is still high, especially when the customer orders only a tin of coffee or one video-CD.
In such a way, delivery can cost more than the product itself. Such situation is not profitable either for customer, or for the seller. E-commerce projects also have to spend a lot of money for marketing and advertising. However, from the very beginning they considered that advertising expenses will be miserable compared with expenses for advertising for offline shops. They considered that the customer has only to know the internet address of their shop and the purchase will be completed of its own record. The theory collapsed.
Real shops are located just on the way home. Colorful signboards invite people to make a purchase. The address of internet shop is easy to forget. Therefore, many online companies are forced to construct their trade offline centers parallel with virtual reality. Finally, it turned out to be that the future of e-commerce is to propose the products and services that are difficult to get in a real shop. What kind of products and services can be popular?
Actually, there are two kinds of e-commerce: sale of products and information. The difference is quite considerable and can be examined at all levels starting with determination of the target consumers and finishing with the payment for service rendered. Electronic sales of products have right to exist. They are interpreted as the way to widen usual non-virtual business. They are quite perspective. What concerns information and services, the subject is difficult to understand.
Ideology of e-commerce supposes access to free and easily accessible resources. What is the sense to sell information in the structure, where information can be obtained for free? Yet, data is subject to sell. There are numerous information agencies that propose news content in operative regime to its subscribers and customers. Printed mass media sources (predominantly newspapers and magazines) are the main customers of those information agencies. Quite often the activity of information agency is unprofitable and the company has to look for new segments of readership (Fingar 60).
Is it possible to get internet-visitors as potential buyers of internet-based content? What is the kind of data the consumers will be ready to pay for? As far as we know, information in internet is free. However, the information agencies can publish information that is not the same. The materials published in the website can be more generalized. Besides, the website can be used only to publish the announcement of material proposed for sale.
Highly tailored and narrow focused information can be proposed for sale. For example, information on finance, economics, and marketing can be sold due to its limited usage. Normative, legislative acts that can be useful for a limited circle of consumers also can be proposed for sale. News hardly can be sold as there are many free news agencies in the internet. What concerns the sale of products, modern e-commerce proposes a number of methods aimed to optimize the work of enterprises with help of business-to-business solutions. Lets examine some of them.
The majority of small-scale and middle-scale business companies dont consider the necessity to examine optimization of their e-commerce projects seriously. Such situation is easy to explain. In case when the company gets additional discounts from suppliers, the amount saved is a tangible benefit. The same situation is valid for sale of the product at higher price.
Additional profit is a tangible benefit. It is more difficult to evaluate the results of implementation of B 2 B solutions as the companies need more time to see the tangible benefit. Moreover, the result from implementation of business-to-business solutions doesnt have short-range effect. However that may be the company doesnt need to be a multi-billion corporation to successfully use the system of management of business processes. Any seller, distributor, supplier, manufacturer, importer, exporter, trade house, dealer and even the retailer can maximize its profit by method decrease of explicit costs and growth of sales with the help of e-commerce solutions. Such solutions are multiform and are able to satisfy the demands of any business involved.
Lets examine business solutions by the following examples: Example 1 A Noname Finance Corporation decided to optimize the process of purchase of computers with help of e-commerce system of purchase. The company already used the services of other suppliers. The computer technique was registered in electronic database. Now the company decided to use the principle of reverse auction to complete the purchase. Before the purchase was completed, the company has chosen the suppliers. The suppliers took part in the auction, made stakes, and corrected them in the future considering the proposals of other suppliers.
In such a way the suppliers were competing to win the auction and to get the right to sell the hardware at the most reasonable price. The company was able to save a considerable amount of money in comparison with traditional method of purchase. Example 2 The supplier of stationery usually received the order by fax and e-mail. Although the quantity of orders was high, the average amount was low. He supplier also had to fill in the order by hand and the customer had to wait until the supplier finishes filling in all necessary documentation. No wonder that the customers were not satisfied with service rendered.
In order to find solution, the company decided to implement e-commerce based mechanism of sales and to combine it using XML interface. Implementation of e-commerce technologies helped to increase productiveness. Example 3 The company decided to sell its wines via internet. There were approximately 30 competitors in the niche. The company decided to create business-to-customer portal.
The solution embraced internal business processes supported storage, distribution, delivery, and support services. In result of these novelties the company became one of the leading e-sellers in the e-market. Such solutions like e-purchase and e-sale can have great impact of the business of company irrespectively of its size. The direct advantages of e-commerce: reduction of costs; increase of profit margin; increase of productivity; automation of sales-purchase process; Indirect advantages: Possibility to redirect saved costs to the main tasks of the business; To improve level of service; Possibility to work with numerous suppliers; Possibility to raise competitive capacity of the goods on the markets In conclusion Id like to underline that e-commerce has its advantages and disadvantages.
Despite of problems e-commerce faces, it managed to create a new economic system with high tempo of growth. E-commerce changed the very concept of business. Small-scale and middle-scale companies have the same changes to get profit as multi-billion corporations. Internet is an ideal atmosphere for business, where all visitors are potential customers. E-commerce strengthens position of the company in the market and acts as an operative instrument for marketing and production distribution. Finally, e-commerce allows entering global market with minimum expenses involved.
Bibliography Cunningham, M. (2001). B 2 B: How To Build A Profitable e-Commerce Strategy. Cambridge, Mass. Perseus Fingar, P. (2001). The Death of "e" and the Birth of the real new economy: business models, technologies and strategies for the 21 st century. Tampa: Meghan-Killer Press Focazio, M. (2001).
The e-Factor: Building a 24 / 7 Customer-Centric, Electronic Business for the Internet Age. New York, AMACOM Hall, R. (2001). Digital dealing: How E-markets are Transforming the Economy. New York Levy, M. (2001). E-value-or-Die.
com; Thriving In the Internet Age Through E-Commerce Management. Indianapolis, New Riders Spector, R. (2000). Amazon. com: Get Big. Fast. New York, Harper Business
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Research essay sample on B 2 B Business To Business
