What are the Contributing What are the Contributing Factors for Business Success Factors for Business Success and Failure in B2C E-and Failure in B2C E-CommerceCommerce

By By Adam MorteAdam MorteKeely Ritchie-BolandKeely Ritchie-BolandThomas RollinoThomas Rollino

E-CommerceE-Commerce The buying and selling of The buying and selling of

goods and services over public goods and services over public and/or private computer networksand/or private computer networks

Becoming a fundamental way of Becoming a fundamental way of processing transactions between processing transactions between buyers and sellersbuyers and sellers– Internet is now an important Internet is now an important

marketplace for businessesmarketplace for businesses 66% of adult Americans now use the internet 66% of adult Americans now use the internet

B2C E-CommerceB2C E-Commerce Sellers are organizations Sellers are organizations Buyers are individualsBuyers are individuals B2C e-commerce is a multi-billion B2C e-commerce is a multi-billion

dollar industrydollar industry Our research topic:Our research topic:““What are the contributing factors for What are the contributing factors for

business success and failure in B2C business success and failure in B2C e-commerce”e-commerce”

Case Studies of 6 B2C E-Case Studies of 6 B2C E-Commerce BusinessesCommerce Businesses Three successful:Three successful:

– Webvan.comWebvan.com– Pets.comPets.com– Furniture.comFurniture.com

Three unsuccessfulThree unsuccessful– Amazon.comAmazon.com– Netflix.comNetflix.com– Dell.comDell.com

Webvan.comWebvan.com Online grocery business that delivered Online grocery business that delivered

products to customer’s homes within a products to customer’s homes within a 30-minute window of their choosing30-minute window of their choosing– Launched in the San Francisco, California in Launched in the San Francisco, California in

19991999– Went public in November 1999, stock price Went public in November 1999, stock price

$30$30– By summer 2001, stock price $0.06By summer 2001, stock price $0.06– Shut down operations and filed for Chapter Shut down operations and filed for Chapter

11 bankruptcy protection 11 bankruptcy protection

Webvan.com Cont.Webvan.com Cont. Too big too fastToo big too fast

– Focused on short-term profitability over Focused on short-term profitability over long-term growthlong-term growth

Too much investment in Too much investment in infrastructureinfrastructure– Signed $1 billion contract to build a Signed $1 billion contract to build a

string of high-tech warehouses worth string of high-tech warehouses worth about $30 million eachabout $30 million each

Doing it all on their ownDoing it all on their own– Built its own infrastructure to deliver Built its own infrastructure to deliver

groceries instead of partnering with a groceries instead of partnering with a click-and-mortar click-and-mortar

Pets.comPets.com Pet supply website that sold pet Pet supply website that sold pet

accessories and supplies accessories and supplies – Considered a leading icon of dot-com Considered a leading icon of dot-com

bubblebubble– Widely popular sock puppet spokesdogWidely popular sock puppet spokesdog– Went public in February 2000Went public in February 2000– On November 6, 2000, the company On November 6, 2000, the company

closed its doors while it still had a closed its doors while it still had a positive net worthpositive net worth

Pets.com Cont.Pets.com Cont. Highly competitive arenaHighly competitive arena

– Competing with many click-and-mortar Competing with many click-and-mortar pet supply businessespet supply businesses

Financial problemsFinancial problems– Significant investments in infrastructure Significant investments in infrastructure – Operating expenses out of handOperating expenses out of hand

Consumer had no reason to shop at Consumer had no reason to shop at Pets.comPets.com

Furniture.comFurniture.com Online furniture storeOnline furniture store Launched in 1998Launched in 1998 Filed IPO in January 2000Filed IPO in January 2000

– It became know that company had lost It became know that company had lost $46.5 million in 1999$46.5 million in 1999

Withdrew IPO in June 2000Withdrew IPO in June 2000 In November the company shut In November the company shut

downdown

Furniture.comFurniture.com High shipping costsHigh shipping costs Poorly built back-end computer systemsPoorly built back-end computer systems

– Many shipments were shipped without Many shipments were shipped without charging a proper price for them, to the charging a proper price for them, to the wrong place, or not at allwrong place, or not at all

Product was not suited to e-commerceProduct was not suited to e-commerce– Too expensive, too large, and no touch and Too expensive, too large, and no touch and

feelfeel

Amazon.comAmazon.com Sells books and many other products Sells books and many other products Developed in a garage in Settle in Developed in a garage in Settle in

19941994 In 1999 sales exceeded $1 billionIn 1999 sales exceeded $1 billion Survived dot-com burstSurvived dot-com burst In 2006, company reported $10.71 In 2006, company reported $10.71

billion in revenuebillion in revenue

Amazon.com Cont.Amazon.com Cont. Growth over profitGrowth over profit

– Put money into expanding their Put money into expanding their companycompany

Online community Online community – Connects people around the world Connects people around the world

Inventive ideasInventive ideas– zShopszShops– Free shipping promotionFree shipping promotion

Netflix.comNetflix.com Internet-based DVD rental serviceInternet-based DVD rental service Invented and dominate the DVD Invented and dominate the DVD

rental marketrental market– Over 6.8 million subscribers in Over 6.8 million subscribers in

United StatesUnited States

Netflix.com Cont.Netflix.com Cont. ““Moneyball” StrategyMoneyball” Strategy

– Company uses data to make Company uses data to make decisionsdecisions

Partnerships/SubsidariesPartnerships/Subsidaries– Partnership with Best Buy to sell Partnership with Best Buy to sell

DVDsDVDs– Red Envelope Entertainment Group Red Envelope Entertainment Group

subsidarysubsidary

Dell.comDell.com Sells computer systems directly Sells computer systems directly

to customersto customers– Builds computers to meet customers Builds computers to meet customers

needs and wantsneeds and wants In 2006 revenues totaled $57.9 In 2006 revenues totaled $57.9

billionbillion

Dell.com Cont.Dell.com Cont. Automated e-commerce networkAutomated e-commerce network

– Robots are installed on assembly Robots are installed on assembly lineslines

Radio powered ID chipsRadio powered ID chips– Make tasks much easier to Make tasks much easier to

accomplishaccomplish

RecommendationsRecommendations Sell the right productSell the right product Properly manage financesProperly manage finances PartnershipsPartnerships Focus on growth over profitsFocus on growth over profits Inventive ideasInventive ideas

Scope of Further WorkScope of Further Work Focus on specific sectors within Focus on specific sectors within

the realm of B2C e-commerce the realm of B2C e-commerce businessesbusinesses

Focus on pure B2C e-commerce Focus on pure B2C e-commerce businessesbusinesses

Focus on click-and-mortar e-Focus on click-and-mortar e-commerce businessescommerce businesses