B2C Failures: Toward an Innovation Theory Framework

Abstract

Using the product and services innovation failures literature, this chapter develops a framework to help understand why so many Internet-based business-to-consumer (B2C) “dot-com” companies failed to fulfill their initial promise. Viewed collectively, B2C dot.com crashes constitute an initial wave of failure of an entirely new class of technology-driven services. Such services sought to inform, promote, sell and deliver B2C items in radically unfamiliar ways. Besides ignoring basic precepts of sound business practice, unsuccessful B2C firms failed to realize they were marketing innovative services. We place B2C dot-com ventures on a continuum of need-solution context of innovations, in conjunction with the notion that seller/buyer perceptions about the scope of innovations are not necessarily concordant. Matched perceptions between sellers and buyers lead to success. Sellers as well as buyers, however, can misjudge the nature and scope of innovations. Using case evidence, the chapter illustrates the explanatory power of the framework and contributes to e-commerce issues by clarifying why, despite resource availability, many early B2C firms failed due to misjudged perceptions of sellers and/or buyers.