Business or consumer models of e-commerce transactions

It is now commonplace to describe e-commerce transactions between an organization and its stakeholders according to whether they are primarily with consumers (business-to- consumer – B2C) or other businesses (business-to-business – B2B).

Figure 1.8 gives examples of different companies operating in the business-to-consumer (B2C) and business-to-business (B2B) spheres. Often companies such as BP or Dell Com­puter will have products that appeal to both consumers and businesses, so will have different parts of their site to appeal to these audiences.

Referring to the well-known online companies in Table 1.1 initially suggests these companies are mainly focused on B2C markets. However, B2B communications are still important for many of these companies since business transactions can drive revenue, as for example eBay Business (http://business.ebay.com/) or the B2C service may need to be sustained through advertising provided through B2B transactions, for example Google’s revenue is largely based on its B2B AdWords (http://adwords.google.com/) advertising service and advertising based revenue is also important to sites such as YouTube, MySpace and Facebook.

Figure 1.8 also presents two additional types of transaction, those where consumers trans­act directly with other consumers (C2C) and where they initiate trading with companies (C2B). Note that the C2C and C2B monikers are less widely used (e.g. Economist, 2000), but they do highlight significant differences between Internet-based commerce and earlier forms of commerce. Consumer-to-consumer interactions (also known as peer-to-peer or person- to-person, P2P) were relatively rare, but are now very common in the form of the social net­works. Hoffman and Novak (1996) suggested that C2C interactions are a key characteristic of the Internet that is important for companies to take into account, but it is only in recent years with the growth of always-on broadband connections and mobile access to the web that these have become so popular. P2P transactions are also the main basis for some online business models for e-businesses such as Betfair (see Mini Case Study 1.2) and eBay (www.ebay.com, see Case Study 1.2) which are still run on a business basis, and some blogs which are not run by companies, but by individuals.

Finally, the diagram also includes government and public services organizations which deliver online or e-government services. As well as the models shown in Figure 1.8, it has also been suggested that employees should be considered as a separate type of consumer through the use of intranets which are referred to as employee-to-employee or E2E.

1. E-government defined

E-government refers to the application of e-commerce technologies to government and public services. In the same way that e-business can be understood as transactions with cus­tomers (citizens), suppliers and internal communications, e-government covers a similar range of applications:

• Citizens – facilities for dissemination of information and use of online services at local and national levels. For example, at a local level you can find out when refuse is collected and at national level it is possible to fill in tax returns.
• Suppliers – government departments have a vast network of suppliers. The potential bene­fits (and pitfalls) of electronic supply chain management and e-procurement described in Chapters 6 and 7 are equally valid for government.
• Internal communications – this includes information collection and dissemination and e-mail and workflow systems for improving efficiency within government departments.

E-government is now viewed as important within government in many countries. The Euro­pean Union has set up ‘i2010’ (European Information society in 2010) whose aims include

providing an integrated approach to information society and audio-visual policies in the EU, covering regulation, research, and deployment and promoting cultural diversity. (eEurope, 2005)

E-business has introduced new opportunities for small and large organizations to compete in the global marketplace. Many commentators have noted that one of the biggest changes introduced by electronic communications is how approaches to transmitting and trans­forming information can be used for competitive advantage. A significant commentary on the disruptive, transformational nature of electronic communications is provided in Box 1.2.

The Internet also provides significant opportunities for many businesses to build closer rela­tionships with their existing customers and suppliers online to help achieve customer retention. Encouraging use of online, e-business services by customers and suppliers can sig­nificantly reduce costs while providing a new, convenient channel for purchase and customer service. Through providing high-quality online services, organizations can build lasting relationships with their stakeholders. While it is sometimes said that ‘online, your cus­tomers are only a mouse click away from your competitors’, this is a simplification, and encouraging use of online services can help achieve ‘soft lock-in’. This means that a cus­tomer or supplier continues to use a service since they find the service valuable and they have also invested a lot of time in learning the service or integrating it with their systems and there are some costs in switching. Think of different online services you use for different purposes. How often do you switch between them? Of course, the ideal is that the service meets the needs of its users so well and delivers value such that they are satisfied and do not consider switching.

Source: Dave Chaffey (2010), E-Business and E-Commerce Management: Strategy, Implementation and Practice, Prentice Hall (4th Edition).