draft. Adapted from previous published version (Balloted and Ratified by
Membership, June 1997)
Business-to-Consumer (B2C) Models
EIDX's historical focus has been on
business-to-business (B2B) electronic
commerce. Many developments in the world of
electronic commerce trigger developments in B2B electronic commerce, and
Some basic B2C models are described here for informational
Brick and Mortar
Most of us are
and are familiar with the traditional methods for buying consumer goods.
Click and Order - Internet B2C Order Models
It's no secret by now that
the it's very lucrative for a business to put up a web site that allows them to
sell stuff and allows consumers
to buy stuff from them. There are several order models for web-based
commerce, or "click and order." But notice that at the fundamental, technology-independent
level, the transaction is going to look very much like EIDX's models for B2B. It's what happens
before the order and after the order that is different:
- The consumer logs onto the web
and accesses the seller's web site. The seller sends a
catalog to the consumer, just like in
Pre-Order Model 1. In this
case it is sent from the seller's
server to the consumer's
on-line session on his/her computer desktop.
- Some web sites now have a
feature that allows consumers to find out if the item they want is available.
This is like the inventory inquiry and inventory
advice. If inventory is not available, the consumer has
the option to look elsewhere. Most web sites do this availability step
after the consumer goes through the process of submitting an order and is
committed to the buy.
- In most B2C transactions for
non-major purchases, the consumer typically does not send a
request-for-quote and wait for a
response from the seller. However, this
is not unheard of, especially for big-ticket items, antiques, and other such
commodities, which may be sold via Auction
or an Exchange.
- If the consumer is satisfied and
decides to purchase, he/she sends a request from his/her desktop to the
seller's server indicating that he/se are ready to buy. This is
analogous to the contract award. The
seller's server responds with an order form sent to the consumer's desktop or by
starting a shopping cart in the consumer's on-line session.
- The consumer fills out the order
form by selecting items to be put into the shopping cart, and at the end,
completing the order with
ship-to address and
payment information. This is analogous to a B2B buyer creating an
order in a back-end system.
- When the consumer submits the
order, it is just like the 'send purchase order' step in
Order Model 1. In this case, the order is sent
from the consumer's computer desktop to the seller's server.
- The seller's server sends a
response to the consumer's
desktop. It may tell the consumer that the order has been
accepted and will ship immediately, or it may tell the consumer that the order
will be confirmed via e-mail.
- If the goods are not shipped
immediately, the consumer may have the opportunity to
request a change to the order, which the
seller has to respond to, or the seller may
send a re-acknowledgment of the order via
e-mail. The seller may request something from the consumer (seller-initiated
change); for example, if multiple items are on-order, and one item
is backordered, the seller may send a request to the consumer offering them a
choice to hold all items until they can ship together or to ship available
items immediately and send the backordered item in a separate shipment.
The consumer then sends back a response to the seller.
may have one warehouse from which they ship stuff, or several strategically
located warehouses. The warehouses may be those of a
third-party logistics provider
(3PL) with whom the seller has contracted. The seller or 3PL may ship to
the consumer's home, or another location such a recipient of a gift.
The models her below represent
technology options for the basic ordering process.
Seller provides a web site that serves as the internet
store front. Goods are shipped to the customer's home or other location
from a warehouse. Payment is by credit card,
which allows sellers to do quick credit checks before accepting orders or
before shipping orders.
- Go to seller's web site
- Log in if you are a returning customer
- Look at stuff in online
- Select stuff
- Register if you are a new
- Fill out order form, including
payment information, and push "Submit Order"
Receive stuff at home or other
Amazon.com, is an example of a storefront model.
Same Day/Next Day Delivery
This is where the consumer places an order in the morning for same-day
delivery, or the night before for next-day delivery. It's really the
same as the Storefront Order Model except for the turnaround time. Many
people are familiar with the internet grocery delivery services, which haven't
turned out to be profitable for all entrants in the market due to the
logistics of having well-stocked warehouses in strategic locations.
However, this is becoming an important service model for the supplying of
medicines and medical equipment to homebound patients; in this case, the
service availability tends to be localized.
Kiosk Order Model
Many stores have computers set up in their stores that allow customers
to order something that is either out-of-stock, or only available via catalog
order. Goods are
shipped from a warehouse which ships either to
the store, where the
customer can come pick up when it arrives, or have ship it to the
customer's home or other location. Since the customer is in the store at
the time of order placement, there are more payment options - payment doesn't
have to be via credit card.
- Go to retail store
- View stuff, or look up stuff
in the catalog
- Access the order form on the
- Fill out order form, including
payment information, and delivery option
- If payment is other than
credit card, pay for stuff
- Go back to store when stuff arrives, or receive stuff at
home or other location
Office Max, Office Depot, Staples, Fry's, and CompUSA are
examples of stores that offer this ordering method.
- Aggregator Order Model
There are two types of aggregator models. One is when buyers join
together and bundle their requirements in order to increase their purchasing
power. The buyers are typically businesses, so it's really a B2B model.
In the other type of aggregator model, sellers join together and bundle their
offerings to increase their selling power. Usually, a third party acts
on behalf of either buyers or sellers to execute transactions. Sellers
aggregate to reduce cost of sales, extend customer reach and improve customer
service, and it offers buyers one-stop shopping for a variety of goods,
especially if the aggregation brings together sellers of hard-to-find,
specialty products. From the consumer's perspective, the ordering
process is just like the process in the Storefront
Staples.com is an example of an aggregator model. From
the consumer's perspective, the consumer is buying everything from Staples.
- Auction and Exchange Models
Used both for big-ticket and high value consumer goods, as well as for
materials and capital assets that businesses use to build their products.
Described in more detail in Trading Communities.
The End. (For now).
06 February 2003