Chapter 3 B2C Business PDF

CHAPTER 3 B2C BUSINESS  Learning objectives In this chapter you will learn, that the fundamental sales process has a lot of variants due to a great variety of needs of the involved parties, that there are three challenges in realising B2C business, namely the pricin...

CHAPTER 3 B2C BUSINESS  Learning objectives In this chapter you will learn, that the fundamental sales process has a lot of variants due to a great variety of needs of the involved parties, that there are three challenges in realising B2C business, namely the pricing challenge, the fulfilment challenge and the payment challenge, that digital business creates new opportunities to learn more about your customers. 3.1. THE PROCESS MODEL AND ITS VARIANTS  3.1.1. BUYING VIA INTERNET BUT IS E-COMMERCE REALLY SO SIMPLE? A SERIES OF QUESTIONS ARISES: HOW DID THE CUSTOMER FIND THE “RIGHT” ONLINE SHOP? IS THE ORDER LEGALLY BINDING? IS THE CUSTOMER ALLOWED TO CHANGE HIS ORDER EX POST? HOW IS THE CONSIGNMENT PROCESSED THROUGH THE PROVIDER?  3.1.2. VARIANTS OF THE PROCESS INFORMATION STEP HOW DOES THE PROCESS START? THE FIRST VARIANT IS, THAT THE CUSTOMER BECOMES ACTIVE. EVEN HERE WE HAVE TO DIFFERENTIATE BECAUSE THE STARTING POINT MAY BE DIFFERENT: PRODUCT/SERVICE IS CLEAR, THE SUPPLIER HAS ALREADY BEEN SELECTED, PRODUCT/SERVICE IS CLEAR; THE SUPPLIER HAS NOT YET BEEN SELECTED, PRODUCT/SERVICE HAS TO BE DETERMINED.  3.1.2. VARIANTS OF THE PROCESS INITIATION STEP WHEN CUSTOMER AND SUPPLIER AT THE END OF THE INFORMATION STEP KNOW THAT THEY WANT TO CONDUCT A BUSINESS TRANSACTION TOGETHER, THEN THEY INITIATE IT ACCORDING TO THE SPECIFIC NATURE OF THE GOODS TO BE SOLD RESPECTIVELY BOUGHT.  3.1.2. VARIANTS OF THE PROCESS CONTRACT CONCLUSION STEP AT THE END, BOTH, THE SUPPLIER AS WELL AS THE CUSTOMER, HAVE TO “SIGN” A CONTRACT. INITIALLY ALL RELEVANT DATA HAVE TO BE PUT TOGETHER. THE CUSTOMER HAS TO BE IDENTIFIED AND HIS NAME AND CONTACT DATA HAVE TO BE DOCUMENTED.  3.1.2. VARIANTS OF THE PROCESS DELIVERY/FULFILMENT STEP IF REAL GOODS HAVE BEEN SOLD, THEN THE CONTRACT BETWEEN SUPPLIER AND CUSTOMER IS FOLLOWED BY THE COMPILATION OF THE ORDERED GOODS. IF GOODS ARE NOT IN STOCK OF THE ONLINE SHOP THEY HAVE TO BE ORDERED AT THE PRODUCER AND EITHER THEY CAN BE TAKEN FROM THE PRODUCER’S WAREHOUSE OR THEY HAVE TO BE PRODUCED. WHEN THE ORDERED GOODS ARE AVAILABLE THEY MUST BE CONSIGNED, PACKED AND FORWARDED TO TRANSPORTATION.  3.1.2. VARIANTS OF THE PROCESS BILLING/INVOICING STEP AFTER THE CONFIRMATION OF DELIVERY THE BILLING AND INVOICING STEP CAN BE STARTED. IF THE CUSTOMER HAD TO PAY BEFORE DELIVERY THEN IT MAY HAPPEN THAT THE INVOICE HAS TO BE CORRECTED AND A CREDIT NOTE (IF THE VALUE OF THE DELIVERED GOODS WAS LOWER THAN THE VALUE OF THE ORIGINALLY ORDERED GOODS) OR DEBIT NOTE (IF THE VALUE OF THE DELIVERED GOODS WAS HIGHER THAN THE VALUE OF THE ORIGINALLY ORDERED GOODS) MUST BE CREATED.  3.1.2. VARIANTS OF THE PROCESS SERVICE/SUPPORT STEP TO BE SUCCESSFUL IN E-COMMERCE DOES NOT ONLY DEPEND ON INTERESTING PRODUCTS, LOW PRICES AND FAST DELIVERY. TO GENERATE A HIGH CUSTOMER SATISFACTION PRESUMES A PROFESSIONAL SERVICE AND SUPPORT. THERE MUST BE AN EFFECTIVE COMPLAINTS MANAGEMENT. SUPPLEMENTARY AND REPLACEMENT DELIVERIES, INCLUDING RETURN CONSIGNMENTS, MUST BE IN PLACE AND RUN SMOOTHLY IF NEEDED.  3.1.2. VARIANTS OF THE PROCESS COMMUNICATION/TRACKING & TRACING STEP CUSTOMER AND SUPPLIER WANT TO MONITOR THE ORDER PROCESSING STATUS. THIS PRESUMES A SEAMLESS AND AUTOMATED DATA CAPTURE DURING THE TOTAL WORKFLOW, E.G. BY SCANNERS OR RFID TECHNOLOGY (RFID = RADIO FREQUENCY IDENTIFICATION). RFID IS THE WIRELESS USE OF ELECTROMAGNETIC FIELDS TO TRANSFER DATA, FOR THE PURPOSES OF AUTOMATICALLY IDENTIFYING AND TRACKING TAGS ATTACHED TO OBJECTS. THE TAGS CONTAIN ELECTRONICALLY STORED INFORMATION. 3.1.3 E-PROCUREMENT E-PROCUREMENT E-Procurement is a synonym for the selling process considered from the point of view of the customer. It is similar to B2C, but now the buying organization is the driver. This organization is the only customer and is looking for many suppliers. Thus a procurement platform if we talk about IT systems is somehow an inverse of an online shop. 3.2. THE PRICING CHALLENGE PRICING STRATEGY The first pricing strategy (see Chen 2014) is that the supplier sets the prices for his products. The customer makes a “take-it-or-leave-it” decision. In the E-Commerce world this leads to lower prices and price dispersion. The problem for the supplier is, that it is easy to reduce prices but it is extremely hard to increase prices. PRICING STRATEGY The second pricing strategy is the auction. Here we have a horizontal competition among customers. The customer who offers the highest amount of money gets the product. However, there is a difference to real-life auction if we are in the digital world. There are different end of auction rules, hard ending times and late minute bidding. The disadvantage for the customer is that Internet auctions run without physical inspection of goods. Thus the reputation of the supplier is a fundamental prerequisite for the trust of the customer in such transactions. PRICING STRATEGY The third pricing strategy is the individual negotiation between customer and supplier. 3.3. THE FULFILMENT CHALLENGE 3.1.1 DELIVERING REAL GOODS Real goods cannot be forwarded electronically to the customer. Forwarding agencies and trucking companies are needed. Is this an own function or should it be transferred to a third party (outsourcing)? Does it make sense to think about delivery with drones? For example in areas with very low density of population? How much is short-term delivery a competitive advantage? In international transportation trans-shipping (plane/train/ship/truck) is an issue. Also piracy and theft have to be mastered. A lot of tax and customs requirements have to be observed. And finally the export to a foreign country may raise the problem of dual use goods. Dual use goods are products and technologies normally used for civilian purposes but which may have military applications. 3.1.2 DELIVERING DIGITAL GOODS Digital goods can be copied without any damage of the original copy. Thus the “master copy” must be protected against unauthorized usage. As an example let us consider the electronic distribution of software according to the model of SIIA (Software & Information Industry Association; see Meier & Stormer 2008).  3.5. B2C-BUSINESS AND CRM CRM (Customer Relationship Management) aims at tracking and analysis of all interactions of the firm with the customers to optimize sales volume, customer effectiveness, customer satisfaction and customer loyalty. It integrates all customer-oriented processes and considers the customer as a strategic asset (A regular customer is the most profitable customer).  Typical CRM-Processes are: Process customer requests, Inform customer, Solve problems of customer, Conduct repair and service, Manage complaints: о Pre-complaint consideration set (complaint cause, dissatisfaction), о E-complaint decision (complainers versus non-complainers), о Profiling e-complaint senders (personality, demographics, culture), о E-complaint channels (channel choice, publicity), о E-complaint message (attitude orientation, language intensity), о E-complaint receivers (employees, observers), о Internal e-complaint management systems (IT, human elements), о E-complaint response message (speed, tone, content), о E-complaint feedback utility evaluations (perceptions, outcomes), PROCUREMENT PLATFORM  A procurement platform is a computerized system designed to manage the procurement process. Procurement platforms are often included in an enterprise resource planning (ERP) or accounting software product. A typical procurement platform includes purchase requisitions, purchase orders, goods receipts, and invoice processing. In addition to these core requirements, most systems include an array of reporting tools. Built-in approval processes, controls, and funds management tools are usually standard in the larger products. A procurement platform is characterized by n suppliers and one customer. Process and software are under control of the customer. OBJECTIVES OF A PROCUREMENT SYSTEM ARE: Reduction of prices through centralization (quantity rebates), Minimization of procurement costs (mainly in the area of C-products/MRO = Maintenance, Repair and Operations), Minimization of warehousing costs (just-in-time delivery). FUNCTIONS OF A PROCUREMENT PLATFORM ARE: Indent management, E-Tendering, E-Auctioning, Vendor management, Catalogue management, Purchase order integration, Order status, Ship notice, E-Invoicing, E-Payment, Contract management.  CUSTOMER RELATIONSHIP MANAGEMENT (CRM)  Customer relationship management (CRM) is an approach to manage a company’s interaction with current and future customers (Menzel & Reiners 2014). The CRM approach tries to analyse data about customers’ history with a company, in order to improve business relationships with customers, specifically focusing on retaining customers, in order to drive sales growth.  A CRM system usually provides the following functionality: External interfaces: о Web channel, о Interaction channel, о Partner channel management, Marketing: 1. Marketing resource management, 2. Segmentation & list management, 3. Campaign management, о Real time offer management, о Lead management, SALES Sales planning & forecasting, о Sales performance management, о Territory management, о Accounts & contacts, о Opportunity management, о Quotation & order management, о Pricing & contracts, о Incentive & commission management, о Time & travel, SERVICE о Service order management, о Service contract management, о Complaints & returns, о In-house repair, о Case management, о Installed base management, о Warranty management, о Resource planning,