Business-to-consumer (B2C) markets have made a significant contribution to the com-
mercial 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 con-
sumers 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 trad-
ing 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 dot-
com 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 sup-
port 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 suc-
cesses 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-retailingactually means and how the Internet con-
tributes 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.Key themes and concepts
This chapter addresses two key themes, which are central to understanding how busi-
nesses are utilising Internet technologies to serve consumer markets:1 Online customers: this section focuses on online consumer demographics, the key
factors which determine online expectations in terms of choice and service quality
and the key drivers of online purchasing behaviour.
2 E-retailing: this section examines firstly the online B2C trading environmentfocusing
on why retail businesses are going online and ways in which companies are using the
Internet to serve consumer markets; and secondly, which retailers are trading online,
the range of activities they are offering and the type of products and services they
are selling.CHAPTER 10· BUSINESS-TO-CONSUMER INTERNET MARKETING