E-Commerce Definition and Solutions

E-Commerce topics covering definition, objectives, systems and solutions.

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What are the major challenges of B2C e-commerce?

What is channel conflict and how can I avoid it?

Channel conflict, or disintermediation, occurs when a manufacturer or service provider bypasses a reseller or salesperson and starts selling directly to the customer. Some sectors, including the PC and automobile industries, are particularly vulnerable, as are service industries such as insurance and travel. Levis, for example, pulled its website after its resellers protested. And in the fall of 1999, General Motors tried to buy back 700 franchises and sell cars direct -mostly to build out a possible Internet channel. But the plan backfired, upsetting dealers and prompting discussions with GM.

Now, some that struggled with channel conflict are finding ways to approach e-commerce without upsetting their salespeople. For example, big car companies and manufacturers such as Maytag are setting up websites that allow customers to decide what they want before being redirected to a local dealer. Companies that started in the brick-and-mortar world now realize that the web is a viable sales channel. They need to devote resources to it as part of their branding and commerce.

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Can B2C e-commerce be profitable?

E-commerce sites are finally generating a return. Amazon.com reported its first profit in 2002, proving to the world that online retailing could, in fact, make money. Amazon went on to post a profit for the full year in 2003. E-commerce sites are now regularly reporting profits although competition remains stiff.

Do I need a privacy policy for my B2C initiative?

Yes. According to a survey done by the Privacy Leadership Initiative, 82 percent of consumers were paying attention to online privacy statements in April 2001, and that number was rising. Customers may not read the fine print, but they are reassured by the presence of a privacy statement. If you're not sure where to begin, visit the online arm of the Better Business Bureau or the non-profit group TRUSTe. Both organizations offer privacy seal programs. Even if you choose not to join, you can learn about the kinds of precautions you should take and how to explain them to your customers. Once you establish a privacy policy, though, make sure you follow it, or you'll be putting your company at risk for lawsuits and bad press.

Do I have to worry about Internet taxation?

The Internet Tax Freedom Act of 1998 put a three-year moratorium on Internet taxation and was renewed and extended in 2004. Since its passage, Internet sales have been handled in the same way as catalog and telephone sales — if the retailer has a store in the purchaser's state, a sales tax is supposed to be added to the bill. The Supreme Court has ruled that companies cannot be required to collect taxes in states where they have no physical presence.


Senior Writer Susannah Patton can be reached at spatton@cio.com.

Copyright © 2007 IDG Communications, Inc.

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