The Amazon Way
The advent of the Internet as a medium of conducting business transformed most economic principles that guided the industrial age. In fact, the Internet has changed from a tool that appealed to technology enthusiasts to an indispensible business tool we know today. As such, the economics of the Internet age is established on a new set of codes, many of which are contrary of traditional economic doctrines. As connectivity through the Internet and technology improved, e-commerce came into being. Although there are several business models, none has captured organizations’ and peoples’ attention like the Business-to-Consumer (B2C) model.
B2C, also known as E-trailing or internet retailing is a business model that uses the exclusive qualities of the World Wide Web to buy and sell goods and services to the consumer via the internet (Kim & Mauborgne, 2000). As the name suggest, this model involves businesses and individual consumers. The B2C business model has experience immense growth since the early 90’s with the great expansion of access to the Internet. It also includes information searching and interactive games delivery through the Internet (Elliot, 2002). Popular items sold using B2C model include books, air tickets, music, computers, and jewelry, health and beauty products.
This model is characterized by marketing and direct selling between a business and a client through an e-commerce website (Elliot, 2002). It is also characterized by a lower purchase volume for products with high prices. Considering the fact that the B2C model is highly inclined on individual transaction, the wholesale purchaser is eliminated; thus higher profits are incurred. Once a product has been placed on the online company’s website, there are several steps that a consumer must complete in order to buy. First, potential client makes a basic requirement determination. Thereafter, the client searches for available products or services that can meet the requirements.
The customer then compares the candidate product or service with others with multiple perspectives. The client places an order, pays the bill and wait for delivery. After delivery, the client inspects the deliveries. It is upon the client to contact the online company to get after-service and support or return the deliveries if disappointed. Contrary to popular belief that B2C model is not successful, Amazon‘s success contradicts this belief.
For many years, this online company has used this model by providing the concerned parties an avenue of buying and selling products and services. This company began its rise as a major online marketing firm by selling books online. With a realization that there was a lack of leadership in the online industry, Amazon decided to taste the waters. After books started to sell, the company delved into to selling other products. This fete was enough evidence that consumers had accepted the fact that the Internet was the best sales channel of choice. On the other hand, analysts have affirmed that online trade can be profitable.
It is not surprising that this company registered earnings of $5 million in profits for the fourth quarter of 2001. Companies that are inclined to this model are grouped into five categories namely; direct sellers, community based model, advertising-based model, online intermediaries, and fee-based model. It is imperative to understand that each of these categories are so different and are not directly comparable. Direct sellers sell their products and services directly to the consumer via the Internet. Griffin, D. (2009) contends that online intermediaries work as brokers by allowing non-B2C firms to reap some money from online deals.
Advertising-based models offer free services to consumers by allowing popular websites to use their sites to sell products and services but use the revenues incurred to cover costs. Free-based models offer pay-as-you-buy services to consumers, while the community-based model relies on specialized groups that are created during online transactions to make sells (Griffin, 2009). B2C model is more effective for smaller companies such as Amazon because clients are no concerned with the recognition of the company. This is because they often get products and services for the best price.