What is B2C E-commerce

When you are shopping for your favorite gadget online, the ecommerce business model you are encountering is B2C e-commerce. With a surge in companies that sell directly to consumers driven by a revolution in digital platforms, B2C e-commerce has become a major business toolkit in the strategy box of consumer-focused organizations. Consumers today value the flexibility, convenience, and variety offered by ecommerce businesses as opposed to physical storefronts that have space limitations. Let us understand B2C E-commerce businesses with respect to their types, advantages, challenges, and future trends.

Introduction

An ecommerce business model that permits sellers to sell products and services directly to individual consumers through an online platform removing the requirement for intermediaries. An important point to note here is that the individual consumer is the end user of the products and services bought online and this is what differentiates B2C e-commerce from B2B e-commerce that involves business relationships between two businesses.

B2C e-commerce became widespread after the dotcom boom in the 1990s and the term used to be associated with online retailers who transacted online with consumers through a digital platform. B2C e-commerce has fundamentally reshaped consumption habits of consumers and has given rise to more impulsive purchases driven by the availability of an unparalleled variety of products and services. B2C e-commerce can deal with several product categories such as electronics, clothing and accessories, self-grooming, ready-to-eat food, FMCG products, white goods, books, and financial services.

Understanding B2C E-commerce

The term “B2C” refers to any transaction that is conducted online between a seller and an individual consumer. The transaction usually happens on a platform known as e-commerce portal that involves multiple aspects such as browsing the online catalog or collection, addition to the cart, paying for the order using one of the payment methods through a secure payment gateway, and finally, receiving the delivery at your address. Individual consumers can pay through credit card, debit card, internet banking, and UPI. They can also opt for cash on delivery (COD). The e-commerce portal could be owned by a third-party aggregator such as Amazon on which several sellers list their products. Or, a seller can also use his own portal. A good example would be Sugar Cosmetics that manufactures the entire range of products as well as sells them on its own platform.

A brief historical perspective on B2C e-commerce will help you appreciate how the idea disrupted the traditional way of conducting business. Michael Aldrich may be regarded as a pioneer of B2C e-commerce as he first utilized the idea in 1979 through a concept known as “teleshopping.” Teleshopping involves paid programs on TV with a salesperson pitching products or services to consumers urging TV viewers to make phone calls and buy the required items. It was a precursor to what we know today as B2C e-commerce because it retained the core elements of a B2C business – real-time transaction and shipping of goods to desired addresses. 

Aldrich came up with the idea of connecting a TV to a computer that could handle multiple transactions along with requests from phone numbers. While doing this, people would not need to switch off the TV. Though the idea was one of a kind, Aldrich wanted customer validation before deciding to actively market this business model. When his team displayed the networked system of commerce at the Data Entry Management Association Conference in September 1979, visitors were amazed at the systems’ ingenuity. The key takeaway for Aldrich was that people loved the idea of shopping from home. And, they officially launched the teleshopping business model in early April 1980.

Then, in 1982, Minitel was launched in France which was a previous avatar of the world wide web. Minitel incorporated Videotex terminals and telephone lines that laid the foundation for online shopping. The World Wide Web became available to the public in 1991 which created the first global infrastructure for the eventual B2C ecommerce business model. NetMarket sold a Sting CD in August 1994 through credit card and this is the first recorded secure e-commerce transaction conducted on the World Wide Web. Thereafter, Amazon and eBay launched their websites in 1995. Multiple ecommerce businesses were launched in the 1990s of which most shut down due to the dotcom crash. Only Amazon and eBay survived. Taobao and Tmall, both ecommerce businesses by Alibaba, were respectively started in 2003 and 2008. As you can see, B2C e-commerce has come a long way since the 1980s. 

Types of B2C E-commerce Models

• Direct Sellers:

Direct sellers are typically manufacturers of small businesses that sell their products on their own b2c store. Some online business examples that are under the bucket of direct sellers are Bombay Shirt Company, Mamaearth, Boat and Sugar Cosmetics among others. Direct sellers have more control over their customer experience, logistics, and brand image. Amazon also sells its own private label products under the brand name “AmazonBasics.”

• Online Intermediaries

Online intermediaries are the middlemen who connect sellers and buyers by providing an e-commerce transaction portal. They do not own any product or service but instead use recommendation engines to match products with individuals who are most likely to buy. Booking.com and Expedia can be thought of as pure-play online intermediaries because they are simply aggregators creating a well-coordinated marketplace for sellers and buyers in exchange for a fee.

• Advertising-Based Models

Several ecommerce models can also take an advertisement-based approach where they typically show free content or offer free features while simultaneously displaying static advertisements or video advertisements. The free content and features brings in visitors to the website while clicking an advertisement results in monetization for the e-commerce company. For instance, Facebook and Instagram are social networking platforms but they thrive on advertisement revenues. Since these sites have data points on user behavior, they represent a robust digital asset for companies looking forward to targeted advertising for their products.

• Community-Based Models

A community-based e-commerce model effectively builds a community that shares a similar interest in terms of lifestyle or demographics. User lifestyles and demographics can predict consumption patterns and could be used for marketing products. The shared interests could be a cyclist’s group or a group of amateur photographers. Once a business creates a community, it can keep the community engaged by organizing events and subtly marketing its products and services. Community-based models are suitable for services that are experiential in nature.

• Fee-Based Models

B2C business models also involve a category that requires customers to pay subscription fees on a regular basis to continue enjoying the services. OTTs such as Netflix, Hotstar and others regularly employ fee-based models where subscribers can get access to the documentaries, movies, and series for a monthly fee. Traditional B2C e-commerce retailers such as Amazon also have subscription-based services such as Amazon Prime that offer numerous advantages to members such as discounted shipping fees, cashbacks on purchase, and a bundled access to Amazon Music, Amazon Prime Video, and Prime Gaming among others. 

Advantages of B2C E-commerce

There are several benefits of adopting a B2C ecommerce models as mentioned below – 

• Convenience

Nothing screams of more convenience when you can order anything sitting at your home with just a few clicks of a mobile app 24 x 7. Not only can you browse through a vast collection of products, but also you can take the help of several features such as creating a list of products in which you are interested, scheduling your delivery, and much more. You do not have to worry about payments since there are multiple payment modes and you can decide one based on your preference. 

• Wider Reach

Any business can carry out its operations on a limited scale if it is constrained by geography. B2C e-commerce enables businesses to reach a wide customer base because of no limitations on business reach. Businesses may consider going the B2C e-commerce route if they are looking for an increase in revenue.

• Cost Reduction

Since a B2C e-commerce business does not require a physical presence such as a shop in a prime location, this results in a major cost reduction in terms of reduced rent, taxes, salary, maintenance, utilities and other overheads. A dark store, warehouse, or even one’s own property is sufficient to start an e-commerce business.

• Personalization

A B2C business has access to data on consumer behavior trends such as frequency of shopping, browsing time, preferred payment mode, and several other metrics. These help them offer tailored recommendations such as suggesting an accessory or a better product that creates a personalized shopping experience.

Challenges in B2C E-commerce

In your quest of setting up a B2C e-commerce business, you may several challenges such as – 

• Competition

With access to an increased customer base comes increased competition as e-commerce businesses vie for the same pie. Consumers have several e-commerce apps on their mobile phone and they may simultaneously browse the same product in all apps and choose the one that offers the lowest price. Differentiating one’s business is  a challenge in this extremely competitive space.

• Customer Trust

Financial transactions done online always pose a security threat. Cyberattackers and hackers can steal consumer information from payment gateways that are not compliant and updated with the latest security protocols. If the e-commerce business compromises on the quality of products, then customers may receive a different product or a defective product that may erode trust in the B2C e-commerce business.

• Logistics

Delivery and shipping could be challenging especially if logistics is handled by third-party delivery partners. Setting up one’s own logistics is capital-intensive and e-commerce businesses outsource logistics to third-party providers. This brings in quality-control issues such as non-fulfilment of delivery, mismanagement of inventory levels, or product damage during transit.

Future Trends in B2C E-commerce

• Mobile Commerce

Mobiles have become more than personal devices, today, they have become an extension of our lives. B2C e-commerce companies will adopt a mobile-first strategy that makes the application and UI/UX mobile-friendly. Applications, websites, landing pages, and the user interface needs to be compatible with a smartphone so that a consumer can make an online purchase seamlessly. Another trend is an increase in mobile wallets as they can be easily integrated into the payment mechanism of e-commerce applications without having the need to enter credit card or debit card information.

• Social Commerce

B2C e-commerce businesses will increasingly leverage social media platforms for sales. As a consumer scrolls through content on social media, ecommerce businesses can advertise a product that aligns with the user’s lifestyle preferences in the social media feed. Businesses may choose to do live events and talk to social media users directly about products and services. Those live events would be a great way to receive direct feedback. Businesses will also engage influencers, social media profiles with a lot of followers, for influencer marketing of their products and services. An influencer already has a niche group of followers and targeting such influencers represents a more targeted way of marketing products.

• Artificial Intelligence

Artificial intelligence will be used in the areas of customer service, personalized recommendation engines, and targeted marketing campaigns. Some of the most common customer service issues are repetitive and may not need human interaction. So, AI chatbots can handle complaints regarding defective products and subsequent verification through images, replacement requests, refunds processing, and recording feedback. Artificial intelligence can also play a role in recommending products and accessories. Also, it may provide insights about consumer behavior to brands based on which brands can personalize their advertising efforts.

Conclusion

B2C e-commerce has become the mainstay of online retailing powered by a robust internet infrastructure, increased smartphone penetration, increased usage of online payment options, and preference of convenience and flexibility. For a business, B2C e-commerce represents a more powerful way of increasing brand awareness, customer base, and revenues all of which contribute to personalized marketing, customer loyalty, and higher profitability. While it has its own set of challenges, B2C e-commerce could be for you if you are looking to start your own business without investing much capital or you are looking to expand your business and brand name.