Introduction

Business-to-consumer (B2C) markets have made a significant contribution to the commercial development of the Internet. The Internet provides access to a new trading environment - a virtual marketspace, which uses digital data to facilitate market exchanges. During the last decade this marketspace has become widely accessible to consumers and in doing so has presented retail businesses with many opportunities and challenges. The success levels of Internet-based retailers has been eagerly watched and tracked by analysts around the globe as an indicator of the potential of this virtual trading environment to change fundamentally the way businesses trade with their customers. Whilst some predicted a decline in significance of Internet trading as a result of the dotcom crash, the evidence suggests the opposite as companies like Amazon, eBay and Dabs, prove to be increasingly successful. However, online success in consumer markets is not guaranteed and during the last decade retail companies have achieved varying levels of success through trading online. Those without a clear vision of how the technology can deliver added value and competitive advantage, and the corporate competencies to support their online operation (e.g. Webvan, Boo, Clickmango), have failed to realise the benefit of venturing to trade online. Perhaps as a result of a high failure rate of start up dot-coms, in the early days of commercial use of the Internet, many established high-street retailers have been slow to adopt the Internet as a sales channel. However, now they are developing successful multi-channel strategies to provide customers with choices of where to purchase their goods and services including the Internet. Some notable successes are Tesco.com, Next.com, Argos.co.uk and Figleaves.com. Furthermore, in the UK, consumer spending online is predicted to continue to grow significantly; online retailer spending is set to rise from 2.4% of the total retail spend to approximately 17% within the next four years. (Figures based on Verdict E-Retail 2005 Report, January 2005.) The importance of trading online is therefore established.

This chapter explores some of the key issues having an impact on the growth and development of online B2C markets. It begins by focusing on the consumers, examining who they are, their expectations and motivations. This discussion is followed by an investigation into what the term e-retailing actually means and how the Internet contributes to retailing through the virtual retail channel. Then, the e-retailers themselves become the focus of the chapter, with a section that explores the products and services being offered online. The chapter concludes with a brief discussion of the implications for e-retail strategy.

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