Linking Customer Behavior to E-Commerce Strategy (page 1 of 4)

Below, the researchers look at the type of relationship between buyer and seller, the scope of goods and services linking buyer and seller, and the four competitive landscapes that result from the interplay of these forces.

Consumer behavior should be the principal determinant of corporate e-commerce strategy. While technology will improve, consumer loyalty, for example, is likely to differ significantly between, say, online booksellers and providers of financial services. Two factors seem critical in predicting behavior and determining an appropriate e-commerce strategy.

First, what is the duration of the relationship between buyer and seller? That is, does the buyer have a relationship with a favorite seller, in which they come to learn about each other, or does the buyer search for a different electronic vendor for each interaction? The former suggests an opportunity for tuning offerings; the latter precludes stable relationships.

Second, what is the scope of goods and services linking buyer and seller? Does the consumer purchase a single good or service, or a bundle of related goods and services? The former suggests the consumer searches for the provider of the best individual goods and services, while the latter suggests a search for the best provider of a collection of goods and services.
Combining these indicates that different companies, in different industries, will find themselves in one or more of four competitive landscapes.

Consumers buying products that can be described as opportunistic spot purchases exhibit no loyalty; each purchase may be from a different vendor and there is no one-stop shopping. They may buy a ticket from British Airways one day and United the next, and book their hotels separately.

Opportunistic store markets occur when consumers exhibit no loyalty or relationship continuity to brands or stores. Unlike the spot market, however, they do use intermediaries to construct bundles of goods. They may shop at Sainsbury one day and Tesco another; they may use Amazon.com one day and Buy.com another.

Consumers buying in categories that may be described as loyal links exhibit continuity when choosing vendors and service providers, but have no desire to have bundles prepared for them. They may never leave home without their American Express cards, but see no reason for their card issuer to be their insurance provider or financial planner.

Finally, consumers buying in categories that may be described as loyal chains will have preferred providers. Additionally, they will count on these providers for a range of tightly coupled offerings. They may work with a financial consultant at Merrill Lynch who helps pick stocks, reminds them to draft a will and arranges guardians for their children, helps find a lawyer and reviews their insurance. The integrated service is so effective they seldom consider switching providers or taking the time to provide these things for themselves.

Each of these environments has a different competitive feel, and requires a different strategy and use of different assets. This is as true in the physical world, where companies understand it pretty well, as it is in the dot-com world, where companies are struggling to develop profitable strategies.

Note that no e-commerce company [operates in just one environment]. There are, for instance, loyal link customers and companies may pursue them with loyal link strategies, but in reality some customers may use a web site for spot purchases and others may show great loyalty.