B2C Crash as an Innovation Failure
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Most explanations of the massive shakeout in the business-to-consumer (B2C)
electronic commerce sector during 1999-2001 have focused on the poorly conceived
business models of the failed ventures. Surveying the 18-month period from January
1999 to June 2000, Agarwal, Arjona and Lemmer (2001) reported that most B2C failures
were caused by what they term "fatal attraction" luring visitors but failing to convert
them into customers. Failure to follow basic marketing principles is cited as a major
cause of B2C failures. According to Varianini and Vaturi (2000):
When electronic commerce was young and the outlook was rosy, it seemed that the
basic rules of marketing could be cast aside. The most important thing was thought to
be a speedy launch to grab a share of the market space. Profit wasn't a near-term, or
even a medium-term, goal. The aim was to get as many visitors as possible to your
site, on the assumption that this would, at some stage, translate into profits. Today
that strategy is in tatters.
While these explanations are valid, they examine only part of the story of B2C failures.
In this paper, we propose a framework that views B2C crash as an innovation failure...