Magazine Article | June 1, 2000

B2C Does Not Equal B2B

Source: Innovative Retail Technologies

Modeling B2C (business-to-consumer) transactions
after B2B (business-to-business) transactions
seems logical, right? Think again.

Integrated Solutions For Retailers, June 2000
Seventy-five percent of e-commerce consists of business-to-business (B2B) transactions. Many companies have more experience dealing electronically with other companies than with their own customer base. Consequently, electronic interaction with customers is being modeled according to electronic interaction with business partners. Yet, the underlying business imperatives are completely different. Strategies developed in one area (B2B) should not be unconsciously carried over to the other (business-to-consumer, or B2C).

Distinguishing B2B From B2C
B2B transactions extend supply chain efficiencies beyond corporate boundaries. The emphasis is on wringing out the last vestiges of overhead and costs, to the betterment of the bottom line. On the other hand, downstream e-commerce activities are centered on the customer, with greater emphasis upon improving the top line by attracting and retaining clientele. Two different approaches are needed; strategies that serve B2B aspects of e-commerce cannot serve as models for interactions with the consumer.

One major retailer gained early recognition for its highly successful B2B initiative. This is an example of how initial B2B strategies can inadvertently spill over into the B2C arena. The challenges to the retailer are significant: Web shoppers are clearly looking for convenience, while also placing great demands on a retailer's fulfillment capabilities. Successful e-tailers will both transform their supply chains into value chains for the customer, and incorporate significant customer relationship management (CRM) capabilities into their processes. E-tailers can demand accountability at each link of the chain. A Web presence provides the opportunity to improve CRM by holding the entire value chain accountable for the fulfillment process.

However, B2B strategies have been competing with CRM-based, B2C fulfillment strategies. The bottom line is in open competition with the top line. The positive qualities of the retailer's personalized Web site, with its high degree of customer intimacy, are being offset by the influence of B2B thinking on customer fulfillment obligation. The overall shopping experience does not compare favorably with that of competitors.

The Influence Of B2B
Two B2B influences are apparent, and each threatens strong customer relations. First, a surcharge is added to every line item on the order for "pulling" the product. This is assessed during checkout and inflates advertised prices. This surcharge increases with the priority that the customer is asked to assign to the order. A bottom-line improvement is achieved at the risk of alienating the top line. Second, the complexity of the shipping process hinders order fulfillment. A leading transportation provider is contracted not to deliver to the customer's door, but rather to the post office in the customer's city. An individual's box may become lost somewhere in the container of boxes that the transportation provider delivers to the postal substation. Tracking and order status vanish at this point. The value chain is no longer accountable for order fulfillment.

In the emerging world of e-business, successful competitors will partition their e-commerce strategies. Upstream, the emphasis will be on improving the efficiencies of the extended supply chain and leveraging the capabilities of suppliers and trading partners. Downstream, the emphasis will be on embracing CRM by personalizing every instance of customer contact, aligning every link of the value chain, improving the fulfillment process, and demanding accountability.

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