B2C Failures: Toward an Innovation Theory Framework

Abstract

This article uses concepts derived from the investigation of product and services innovation failures to develop a strategic market framework to help understand why so many Internet-based business-to-consumer (B2C) companies failed to fulfill their initial promise. B2C crashes, viewed collectively, may be seen as representing 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. Research shows B2C firms failed because they did not follow timetested business precepts, but does not tell us why. In addressing this question, this article argues that unsuccessful B2C firms failed to realize they were marketing innovative services. It focuses on the difficulty of marketing innovative services by developing an integrated framework using the continuum of need-solution context, in conjunction with the notion that seller/buyer perceptions about the scope of innovations are not necessarily concordant. Matched perceptions lead to success, but not always because sellers and buyers can both misjudge the nature and scope of an innovation. Using secondary sources, the article illustrates the explanatory power of the framework and contributes to e-commerce management issues by clarifying why, despite resource availability, most B2C firms failed in the initial round.