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Archive for July 2008

Consumer-to-business and the value of social media

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Harry van Vliet, Erik Hekman and I have started a summer writing project with the work title ‘The value of social media’. Eventually, this writing will become a cahier, say, a booklet. We work in a wiki. We write in Dutch. The text will be translated in English once we are done.

One of the topics I discuss is business models. In core of business is trade: You have something to sell, I want it, we trade it (when for money, we call this transaction, when for something, barter). You may also refer to this system as needs relationship. Today we also observe a new form of needs relationship, that of Consumer-to-business (C2B). One of the most common definitions of C2B is that this is an e-commerce business model in which consumers offer products and/or services to companies that pay for it. CB is therefore a 180˚ shift of the traditional (B2C) business models. We also call this the inverted business model. Inverted business models emerge under the influence of two main developments:
1- The rise of the current web (web2.0) with keywords such as interaction, participation, transparency and community building has an impact on two-way communication and value web creation (in contrast to the traditional value chain),
2- The downfall of costs of technology. Individuals now have access to technology and applications that used to be restricted to companies due to the costs.
Due to these developments, people are empowered to create their own digital environment. Consequently, (some) people will use that empowerment to also create a certain commercial environment.

Another way to look at C2B can be found in research, conducted by Chen, Leen and Chuang*: “Compared to the three frequently mentioned models: B2B, B2C, and C2C, which are now very popular, the progress of the other one (i.e., C2B) is far left behind; it is seldom seen on the Internet. A possible reason for this situation is the high transaction cost. It takes effort to unify a group of buyers’ common needs and preferences and to interact between the buyer’s party and the potential venders in order to complete a transaction. Moreover, it is not clear how to do it; there is little research into this problem”.
The authors further state that C2B is mainly a matter of collective buying processes, e.g. participating in organized leisure travel; in this case, the consumer will modify his personal whishes because of the lower price that has been negotiated collectively with the offerer.

In his thesis, Alexander Osterwalder states**: “A business model is a conceptual tool that contains a set of elements and their relationships and allows expressing a company’s logic of earning money. It is a description of the value a company offers to one or several segments of customers and the architecture of the firm and its network of partners for creating, marketing and delivering this value and relationship capital, in order to generate profitable and sustainable revenue streams”.
Strangely enough, it is hard to find definition of C2B that are not company-centered but more consumer-centered. Currently I am conducting a literature study of, what I would like to call, ‘real’ C2B: consumers proposing to businesses, specifically in social media. We’ll see what the values are

* An agent-based model for consumer-to-business electronic commerce, National Sun Yat-Sen University, Taiwan, October 2006.

** The business model ontology, a proposistion in a design science approach, University of Lausanne, 2004.

Written by Kees Winkel

July 19, 2008 at 08:20

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