Tool Box
Issue No. 10 - April/May 2003
To B2C or not to B2C - That is a Big Question!
by Lee Hopkins
Recently some clients of mine have had to deal with the strategic issue of B2C e-commerce-that is, whether to sell online to Joe Public or not.
In principle the idea is a good one, but as with all management decisions, there is more to the issue than meets the eye.
Firstly, there's the cost involved. The company got quotes from their bank for plugging their online sales into their bank account. Wow!! A not insubstantial up-front fee, followed by hefty monthly charges (more than they are paying for the hosting of their site!) and a 6% transaction fee.
So they were faced with the dilemma of having to make regular monthly payments to their bank whether they were making any online sales or not.
Secondly, their product range was never going to be a huge mover. They were retailing a range of sports swimwear and accessories, principally to support one of their businesses (an indoor swimming centre). They were going to be locked in to their e-commerce arrangement with their bank for a minimum 12 month period, so they had to decide whether they were likely to sell enough garments and goggles online to support the cost.
Two very big issues - cost and demand - which they had to consider.
But of course there were alternatives.
The online payment options (PayPal and the like) which they could hook into also involved upfront and transaction costs, but massively smaller than their bank's hefty charges. Balanced against this was the risk of trusting their money to an entity that was not a formally constituted financial institution, was based in the USA and had no legal and governmental structure behind it in case of difficulty.
However, I was able to hook them up with a local hosting service that offered e-commerce facilities. For a small initial fee (but a larger transaction cost), they were able to 'test the water' for a few months. No lock-in period, no monthly fixed fee, they only paid a proportion of any transaction when a s...
