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Roger Clarke's 'Past, Present and Future B2C'

The Past, Present and Future of B2C eCommerce

Roger Clarke **

Panel Session Notes of 15 September 2005

Prepared for a Session on 'Let's go Shopping', at Slattery's 'Rewind Fast Forward' Conference, 15 September 2005

© Xamax Consultancy Pty Ltd, 2005

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This document is at http://www.rogerclarke.com/EC/B2C-0509.html


The Panel Description - Let's go Shopping

There were great predictions for B2C Commerce. But not all turned out as thought. What are the best positioned B2C models? And what are we likely to see in the future B2C space? This panel will discuss the secrets to making money online; how you attract and retain consumers, manage payments and logistics and maintain effective partnerships and alliances.

Panellists were asked to structure their comments around a structure based on Yesterday, Today and Tomorrow.


Contents


Past

Business was very slow to grasp what the Internet and cyberspace are about.

In the early days, 1993-1998, everything was glitz, unbounded optimism, new business models based on hot air, and wonderful opportunities for people to con themselves, and others. The end of the 90s saw the dot.com implosion we had to have.

But what about the mainstream, the survivors? Unfortunately, most of them erred too far on the conservative side. Few took the trouble to participate in the already well-established e-communities. Most were unprepared to detect and confront difference and change. The dominant pattern was for the new to be viewed through old glasses (Clarke 1998).

Here's a catalogue of consumer-aggressive techniques, many of them abject failures, all of them undermining consumer loyalty and engendering consumer scepticism about e-marketers:

For the first-published history of the Internet in Australia, see Clarke (1998-2004). (To the best of my knowledge, it is still the only comprehensive document relating to the early years).


Present

There's still a predominance of projection at the consumer, as though the Internet was a broadcast medium rather than an infrastructure more attuned to pull than to push. Think over-designed sites, blinking ads, and pop-ups.

Some goods and services are naturally compelling. They were the first to move, and remain the most successful. Pornography (both legal and illegal), on-line gambling (both legal and illegal), software, games, ...

Some companies have learnt, and have structured offerings that are compelling for particular population segments. But to achieve 'compelling' you need to establish credibility and trust (Clarke 2001). You earn that through such measures as:

Some new companies have been formed by people who are familiar with Internet communities. They tend to have rather different forms, and to avoid beating the customer / member around the head. Like Google has done, they gradually drift away from their roots, and become more consumer-threatening, and more heavily dependent on 'brand' and 'market power'.

But far too many organisations are still in denial.

The music industry are astonishingly slow learners. For the first few years, they were right to hold back, to avoid cannibalising a mature and high-margin revenue-stream, and to rely on their market-power to hold out. Meanwhile, they needed to be getting new business models in place to enable adaptation to the digital era, and then to P2P. Instead, they're still locked into old-world thinking. And they're doing enormous damage to consumer loyalty in the process (Clarke 2005).

They need to re-discover their capacity to value-add, and to find the consumer resistance-point and price to it, and to re-build credibility with the public, so as to tempt them back again. The current argument between the music industry and Apple's Steve Jobs is an encouraging sign: differential pricing may not be in the interest of iTunes, but it's an important element of music industry adaptation, and Jobs won't be able to hold out for long.

The message for all of us is: small, new, nimble organisations, and consumer-providers (a variant of what Toffler described all those years ago as 'prosumers'), are eating big companies' lunch.


Future

We'll still see far too many e-marketers projecting at the consumer. But there's progress.

The winners appreciate and internalise the messages from C2C, especially eBay and its various competitors, especially those that are more successful than eBay in particular regional and functional marketspaces (e.g. Kelly 2005).

The winners recognise that loyalty is a two-way street, and they show their customers some, in the products they offer, the business processes they use, and their availability to actually interact with them.

We can even look forward to the day when events like this actually have consumer advocates, consumer representatives, and even (gasp!) consumers, involved and contributing to the event.

The winners are building on the case studies of Encyclopaedia Britannica, and are appreciating and internalising the messages from Wikipedia. Conventional consumer marketer wisdom would have us believe that there are fewer thinking consumers in the world than there are contributors of Wikipedia articles. Someone's got it wrong, and I suggest that it's conventional consumer marketers (Pink 2005).

Marketing texts are increasingly providing effective guidance to the distinctly different methods appropriate on the Internet. Shapiro & Varian (1999) established the basis by applying information economics to eCommerce strategy. Marketing texts including the Australian book Dann & Dann (2001) highlight the differences, drawing attention to the 'unique features of the Internet' (pp. 49-56) - although even they make the common mistake of referring to the Internet, and thinking of it, as just 'a media'!

The unique features they have in mind are interactivity, variety and customisation, global access, time independence and interest driven. An inspection of B2C sites shows that many have still not grasped what 'interactivity' and 'interest-driven' mean. Look for flexibility in terms and conditions, look for consumer rights processes, look for feedback and complaint mechanisms that are designed to draw the customer in rather than deflect them. You find very few of any of them.

The eShopping future is like the eShopping of the past and present - littered with the bodies of dead eMarketers who haven't learnt how much the world has changed.


References

Clarke R. (1998) 'The Willingness of Net-Consumers to Pay: A Lack-of-Progress Report' Proc. 12th Int'l Bled Electronic Commerce Conf., Bled, Slovenia, June 7 - 9, 1999, at http://www.rogerclarke.com/EC/WillPay.html

Clarke R. (1998-2004) 'Origins and Nature of the Internet in Australia' Xamax Consultancy Pty Ltd (various versions), at http://www.rogerclarke.com/II/OzI04.html

Clarke R. (2001) 'Trust in the Context of e-Business' Original of October 2001, Internet Law Bulletin 4, 5 (February 2002) 56-59, at http://www.rogerclarke.com/EC/Trust.html

Clarke R. (2005) 'P2P Technology's Strategic and Policy Implications' Invited Address to the ECom-IComp Experts Address Series at the University of Hong Kong, 8 September 2005, at http://www.rogerclarke.com/EC/P2P-StratPol-0509.html

Dann S. & Dann S. (2001) 'Strategic Internet Marketing' Wiley, 2001

Pink D.H. (2005) 'The Book Stops Here' Wired 13.03 (March 2005), at http://www.wired.com/wired/archive/13.03/wiki.htm

Kelly K. (2005) 'We Are the Web' Wired 13.08 (August 2005), at http://www.wired.com/wired/archive/13.08/tech.html

Shapiro C. & Varian H.R. (1999) 'Information Rules: A Strategic Guide to the Network Economy' Harvard Business School Press, 1999


Author Affiliations

Roger Clarke is Principal of Xamax Consultancy Pty Ltd, Canberra. He is also a Visiting Professor in the E-Commerce Programme at the University of Hong Kong, Visiting Professor in the Baker & McKenzie Cyberspace Law & Policy Centre at the University of N.S.W., and Visiting Professor in the Department of Computer Science at the Australian National University.



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