E-Commerce Definition and Solutions

CIO — Get an overview of e-commerce from the experts

Compiled by Susannah Patton

• What is B2C e-commerce?
• What is the difference between B2C and B2B e-commerce?
• Why was there so much hype surrounding B2C e-commerce when it got its start in the late 1990s?
• How should companies organize their B2C initiative?
• What are the major challenges of B2C e-commerce?
• What is channel conflict and how can I avoid it?
• Can B2C e-commerce be profitable?
• Do I need a privacy policy for my B2C initiative?
• Do I have to worry about Internet taxation?

What is B2C e-commerce?

While the term e-commerce refers to all online transactions, B2C stands for "business-to-consumer" and applies to any business or organization that sells its products or services to consumers over the Internet for its own use. When most people think of B2C e-commerce, they think of Amazon.com, the online bookseller that launched its site in 1995 and quickly took on the nation's major retailers. In addition to online retailers, B2C has grown to include services such as online banking, travel services, online auctions, health information and real estate sites. Peer-to-peer sites such as Craigslist also fall under the B2C category.

B2C e-commerce went through some tough times, particularly after the technology-heavy Nasdaq crumbled in 2000. In the ensuing dotcom carnage, hundreds of e-commerce sites shut their virtual doors and some experts predicted years of struggle for online retail ventures. Since then, however, shoppers have continued to flock to the web in increasing numbers. In fact, North American consumers love e-commerce so much that despite growing fears about identity theft, they spent $172 billion shopping online in 2005, up from $38.8 billion in 2000. And the future looks rosy for e-commerce. By 2010, consumers are expected to spend $329 billion each year online, according to Forrester Research. What’s more, the percentage of U.S. households shopping online is expected to grow from 39 percent this year to 48 percent in 2010.

For a long time, however, companies have had a hard time making their websites dynamic and engaging enough for consumers to want to spend time on the site and actually spend their money there. That’s getting easier as more and more Americans are connecting to the Internet via broadband. With more customers using broadband, companies can take greater advantage of newer, flashier technologies that were not possible with dialup connections.

In short, although online commerce still represents less than six percent of all retail sales, its growth and future prospects show that it has finally become as established and mainstream as a trip to the local mall.

What is the difference between B2C and B2B e-commerce?

For one thing, the customers are different — B2B (business-to-business) customers are other companies while B2C customers are individuals. Overall, B2B transactions are more complex and have higher security needs. Beyond that, there are two big distinctions:

• Negotiation
  Selling to another business involves haggling over prices, delivery and product specifications. Not so with most consumer sales. That makes it easier for retailers to put a catalog online, and it's why the first B2B applications were for buying finished goods or commodities that are simple to describe and price.
  
  
• Integration
  Retailers don't have to integrate with their customers' systems. Companies selling to other businesses, however, need to make sure they can communicate without human intervention.

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