B2C (Business to Consumer): Refers to a business communicating with or selling to an individual rather than a company. B2C e-commerce jumped from $11.2 billion in 1998 to $31.2 billion in 1999,
Doing business online no longer requires a huge investment by retailers, thanks to developments in template-based online stores which are based on packaged applications that are delivered over the internet.
As nearly all online stores will require the same functions: catalogues, order baskets, payment processing, content management and member management, it makes sense for those components to be created once and shared by all stores, with each store effectively ‘renting’ its own copy of the applications.
The one area where it's important for online stores to differentiate is their look and feel, and naturally retailers feel very strongly about their business branding. So the ability to create a unique ‘skin’ for each site is an important part of a template-based e-store offering.
Using the latest internet application technology, individual sites can be created within minutes of the retailer selecting a template and supplying graphics such as logos. Typically, retailers will pay only a modest monthly rental charge – and retailers require no specialist hardware or software, other than internet access.
Anyone who wants to sell products and services over the internet, or who wants customers to be able to research their purchases on the internet, should consider an online store.
These days, a web site should be a standard part of the promotional and advertising mix for every business, along with other tools such as Yellow Pages, newspaper advertising and signage.
Advantages of B2C e-commerce
B2C e-commerce has the following advantages:
- Shopping can be faster and more convenient.
- Offerings and prices can change instantaneously.
- Call centers can be integrated with the website.
- Broadband telecommunications will enhance the buying experience.
Challenges faced by B2C e-commerce
The two main challenges faced by B2C e-commerce are building traffic and sustaining customer loyalty. Due to the winner-take-all nature of the B2C structure, many smaller firms find it difficult to enter a market and remain competitive. In addition, online shoppers are very price-sensitive and are easily lured away, so acquiring and keeping new customers is difficult.
A study of top B2C companies by McKinsey[citation needed] found that:
- Top performers had over three times as many unique visitors per month than the median. In addition, the top performer had 2,500 times more visitors than the worst performer.
- Top performers had an 18% conversion rate of new visitors, twice that of the median.
- Top performers had a revenue per transaction of 2.5 times the median.
- Top performers had an average gross margin three times the median.
- There was no significant difference in the number of transactions per customer and the visitor acquisition cost.
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