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B2C E-business
Ron CenfetelliBAIT 511, Period 7 - 2016
What Is B2C? Business-to-consumer electronic commerce.
Any business that sells its products or services to consumers (individuals) over the internet.
Some B2C Statistics
http://www.techgig.com
In 2012, ~25% of B2C e-bus sales through mobile
Alibaba brought in record sales of 120.7 billion yuan ($17.73 billion) on Friday
“More goods than the Black Friday and Cyber Monday sales days in the United States combined.”
82% of Alibaba’s Singles Day sales came from mobile devices
http://www.cbc.ca/news/business/china-alibaba-singles-day-1.3847390
http://goo.gl/iVpH5z
http://www.vancouversun.com/News/12229469/story.html
Retail disruptionAugust 2016: Macy’s closes 100 stores (15%) Nearly 44,000 US retail workers laid off in 2016Retail “Showcasing”
• Shoppers shop at a brick-and-mortar store to try out products “touch and feel”
• Shoppers then take out their smartphone, scan barcode, proceed to buy from competing online retailer at lesser price
• The online retailer can often offer a lower price as it doesn’t have to carry the overhead of the offline retailer (rent, property taxes, salespeople, etc.)
• Adding insult to injury: Shopper uses the store’s free WiFi!
More B2C statistics Online retail about 9% of all retail sales
(http://www.census.gov/retail/index.html) Effectively higher given you would likely never buy certain
items online (e.g. gasoline) Scope of products purchased online continues to expand
Refrigerators, treadmills, luxury items, lawnmowers
Beyond Buy & Sell Transactions: Majority of US offline sales are researched online prior to
purchase (Bloomberg BusinessWeek) Compared to 27% in 2003 Forrester estimates that 1/3 of all retail is influenced by Web
Canadian B2C Canadians spent about $29 billion on Internet
retail shopping in 2015 (eMarketer).
Somewhat of a lag vis-à-vis USA but catching up Online to offline sales ratio: 5.7% (USA=7 to 9%). Substantial number of of Canadian retailers do NOT sell
online (e.g., CanadianTire’s switches over the years) Not the same sales tax incentive as there is in US Shipping & Distribution challenges
About a third of B2C orders in Canada are from foreign websites (eMarketer)
Paul Briggs | April 27, 2016
“…online commerce in Canada still lags the U.S., with sales accounting for 5.7% of overall retail spending in Canada and 8.4% in the U.S. Canadians spend an average of $1,130 online per year compared with US$1,483 in the U.S.”
“68% of Canadians are still concerned about shipping costs when shopping online despite the efforts of retailers to lower costs or offer in-store pickup of goods free of charge.”
“Forrester compared the cost of shipping a six-pound box from Toronto to Vancouver, a distance of 4,370 km, using Canada Post’s Xpresspost service against shipping the same parcel from New York to Los Angeles, a distance of 4,443 km, using the U.S. Postal Service’s priority mail service. The U.S. shipment cost US$11.30; the Canadian shipment cost a whopping $40.63.”
http://natpo.st/141EiAY
“In the hot lobbying firefight going on at the moment over the government's systematic stifling of international online shopping by Canadians, one important voice is absent: consumers.
This is not terribly unusual. Farmers seldom ask the cow for permission to milk it.
But Canadian consumers seem largely unaware that a significant matter of their economic self-interest is being decided by others, quietly and behind closed doors.”
http://www.cbc.ca/1.3656603
Canadian B2C (continued) A little less than half of all Canadian companies
have a website, unchanged from 2012. 91% for large firms
About 20% of firms with a website have one tailored for the mobile platform.
Source: Statistics Canada
B2C Motivation for Buyers
ConvenienceValue-adding infoTrackingDisintermediationReintermediationPrice advantage (?)
Price transparency, yes
PersonalizationChoiceService:
Availability (24x7)Self-helpMany others…
http://www.telegraph.co.uk/
B2C Motivation for Sellers
Competitive parity, you may need B2C just to keep up with the competition
Visibility (especially for smaller firms)Expanding market reach (reaching into competitors
domain, becoming global)Reducing (some) costsMultimedia marketing opportunitiesDigitized distribution channel (ex: iTunes)Responsiveness to customersOffering new services to the customer
For example…“Carol Pride [CIO of Caesars] … is pushing the company
to ramp up the company's use of data through analysis, reporting, and improved Web-based access, which plays right into Harrah's strategy of capitalizing on customer information. “
“Pride hopes to increase revenue by providing more personalized informationwhile at the same time more automatedservices based on the value of individual customers to the organization. She plans to …let customers at kiosks print on the spot the coupons and promotions they've earned. …use customer data more effectively to set room rates [and]…further Pride's mass-customization strategy. “InformationWeek “High Rollers” Sept 2004
Web Analyticsfor Online Customer Behavior
o Massive Metricso Ease of use – monitor errors & broken links, who’s
using what browsers, screens, Flash, etc.o Sales Effectiveness
o Conversions to sales, cross-selling, trends, keyword effectiveness
o Marketing Effectivenesso Pages viewed, geographical location, paths taken through
site, where do customers leave, “real estate” valueo “A/B Testing” – experiment with design, etc.o And many many more…
Web Analytics• An example…
• BuildDirect’s use of Web Analytics• http://www.google.com/analytics/case_study_builddirect.html
(no longer being profiled there)
• Online sales increased 50% after implementing Google Web Analytics Suite
ca.linkedin.com/in/danbrodie22
Web Analytics applied to online ads“It’s reporting back to the advertiser and agency saying, ‘Guess what? The soccer mom in Indiana likes background three, which was pink, likes image four, which was the S.U.V., and likes marketing message 12, about room, safety and comfort,” said Calvin Lui, chief of Tumri.
Some advertisers are using that information just to see which version of the ad works best, but Mr. Luiemphasized that the appropriate ad is not static, and changes all the time as content on the page changes.”
Watching Your Every Move Online (a.k.a. “Behavioral Targeting”)
“Should Phorm prevail over the privacy anxieties, a more interesting question may emerge: Just how targeted can advertising get before it turns creepy? One theory about artificial intelligence, known as the "uncanny valley," asserts that humanlike forms are tolerated, even welcomed, up to a point. But once they get very realistic, any imperfections repulse.”
http://www.bloomberg.com/news/articles/2016-11-01/paranoid-android-erica-may-be-the-creepiest-robot-ever-built
JON GUTIERREZ: http://www.therobotsvoice.com/2011/03/7_films_that_got_stuck_in_the_uncanny_valley.php
Erica (Professor Hiroshi Ishiguro)
“Facebook officials are now acknowledging that the social media giant has been able to create a running log of the web pages that each of its 800 million or so members has visited during the previous 90 days. Facebook also keeps close track of where millions more non-members of the social network go on the Web, after they visit a Facebook web page for any reason.”
http://www.usatoday.com/tech/news/story/2011-11-15/facebook-privacy-tracking-data/51225112/1
http://www.usatoday.com/tech/news/story/2011-12-29/internet-privacy/52274608/1
http://www.businessweek.com/magazine/big-brother-is-watching-you-shop-12152011.html?chan=rss_topStories_ssi_5
http://www.pcmag.com/article2/0,2817,2425052,00.asp
With iBeacon, everything you do with phone in hand could have a price tag. "Thank you for your purchase" could turn into "Thank you for your Pebble Smartwatch purchase, Kara," followed by any number of notifications to upsell you. A follow-up ad may say "Would you like a backup battery for only $20 located in aisle B?"
B2C Business Models
We’ve discussed that the web potentially creates new models and/or reinvigorates old business modelsSome notes on two B2C business models:New Media (Blogs, etc) – advertisingManufacturing
B2C Business Models –New Media
An extension to the conventional media broadcast model (TV, newspapers, etc). Blogs, online news, Hulu, etc etc
All about “eyeballs” Revenue model is to provide content
(usually for free) along with expectations that advertisements are the major or only source of revenue for the broadcaster.
“That has led some of its advertisers – like eBay and Old Spice, most recently – to actually get compliments from Imgur’s users in the comments. One user even said “I’ve never loved marketing so much,” said Sarah. Another joked that “eBay will always be ‘ebae’,” she added.
Aimed at a younger generation who is often said to be advertising-adverse, this sort of social media success is still something of a feat for brands.”
“Imgur Is The Anti-Facebook” 22 Sept 14, TechCrunch, Sarah Perez
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Annual revenue peremployee
Per-worker profit
Google AdsTraditional Ads
http://www.businessweek.com/articles/2013-07-29/omnicom-publicis-still-too-many-people-not-enough-robots
http://www.pewresearch.org/fact-tank/2013/07/15/news-magazines-hit-by-big-drop-in-ad-pages/
Some offset in digital (e.g., iPad) version sales
“The Economist and The Atlantic, have begun diversifying revenue streams with such initiatives as events, conferences and creation of niche content.”
© Ronald T.
“Most people over 30 have never heard of vlogging celebrities like Zoe ‘Zoella’ Sugg or Tyler Oakley, even though more than twice as many people subscribe to their YouTube channels than tuned in to watch the series finale of ‘Mad Men.’ A Variety poll conducted last summer found that the five most influential public figures in the eyes of American teens were all YouTube stars. Many top YouTubers… also rake in millions of dollars in advertising revenue.”
Laura Miller for Salon
http://goo.gl/OEo8y9
B2C Business Models –Manufacturer
Allow a manufacturer to reach buyers directly and thereby compress the distribution channel.• Dell is the classic example but traditional mfg’s also
want to pursue the e-business channel The Problem: channel conflict
• Internal: conflict with traditional sales channels (cannibalization).
• External: conflict with channel partners • Example: Auto Mfg’s versus Auto Dealers
Manufacturing, E-business, &Channel Conflict How to take advantage of the Internet as a
channel without alienating existing offlinechannel partners?• Option 1: Abandon your channel partners• Option 2: Look for integrative solutions
• Focus on website as info/service channel, not x-tions– Recall the role of Service Functionality
• Use B2C for niche products not carried by partners• Offer same price online, perhaps higher price!• Share agreements (give partners credit for online sales)• (and many more…)
Interface Design
Interface Design Various terms Human Computer Interaction (HCI) Usability Design
The Human in Human Computer Interaction
Importance of Interface Design in B2C E-Business A company’s virtual storefront
Its ‘window to the world’ (Benbasat 2006) Possibly the only contact with the customer is via a
company’s website/app Ever “walked into” Amazon?
The digital channel may be the only means to establish a relationship with customers Trust, Rapport, Responsiveness, Overall Impression
of the firm Usability Reducing “distance”
A Nose for HCI
http://www.ted.com/talks/tan_le_a_headset_that_reads_your_brainwaves
Interface Issues A good way of understanding the
importance of HCI is through bad design.
Interface issues online https://www.reddit.com/r/badwebdesign/
http://www.webpagesthatsuck.com
Interface issues online
Interface issues online
But maybe bad design doesn’t matter
Achieving Good Interface Design Step 1: Hire a professional
Resources (lots of local talent) http://www.vanue.com (diverse group dedicated to user
experience and design, especially web design) http://www.fathomconsulting.ca (Gord Withers) http://www.zenhousemedia.com (Alyssa Burt) http://www.devlin.ca (Catharine Devlin) http://www.habaneros.com Performance by Design (http://www.pbd.ca/main.html) Wider Funnel (http://www.widerfunnel.com/ )
Step 2: Evaluate what your users want, need, and/or react to. Usability testing! Usability testing! Usability testing!
See above about hiring a professional Also http://www.usertesting.com/
Great way to do wireframes, wireframes with actual functionality
http://www.balsamiq.com/
Many companies hire their own usability experts (A posting from Vanue.com)
Many companies hire their own usability experts (A posting from Vanue.com)
Taking a human perspective CASA: Computer as a Social Actor
Extensive research supports that humans anthropormorphize computers and other media Even if they are unaware that they are doing so See Reeves & Nass book “The Media Equation”
This extends to websites (or other ebusiness interfaces) Humans perceive websites to have personality, a decision-
making style, and other human attributes Humans behave towards websites as a social actor imbuing the
website with consequential attributes such as trust and perceived similarity between themselves and the site
See work by Al-Natour, Benbasat and Cenfetelli as one example
Taking a human perspective Again, a website/app is a firm’s window
to the world What human attributes do you want your
site to convey? Do you want to adapt to your user’s attributes
(e.g. their personality)? Trust continues to be the dominant gap to be
bridged Although CASA applies, websites and other HCI’s have
not yet developed the imperceptible inter-personal cues that govern person-to-person interaction We’re working on this
Taking a human perspective Disclosure Study (Al-Natour,
Benbasat & Cenfetelli 2009)
Broad Summary of B2C HCI A website/app is an extension of the organization Align your site’s design with your business goals
(e.g. aesthetics for a design firm) Lots of resources available to design/build
websites. You wouldn’t necessarily build your own house or car, why build your own site?
The most important design criteria? WHAT YOUR USERS WANT/NEED/REACT TO
Usability testing
Always think of your organization’s online presence as a social actor and a direct representative
Next Week: the Recorded Music Industry (RMI) Topics we will discuss…
What is the role of the major labels (e.g., Sony, Warner, et al.)? What is their business model? What other type of business to they
emulate? Why is piracy an issue for RMI and other content providers? What prior technologies had an influence on this industry over the
last 100 years? How were these technologies viewed by the RMI? Given the Internet as the latest technology, is it an opportunity or threat to
this industry? What would you do if you were CEO of a major label? What have been the impacts of the Internet on other stakeholders
in this context: Artists, Consumers, Retailers?
