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The term e-commerce is used to describe businesses that are carried out over the internet. E-commerce describes how businesses are conducted using internet applications such as shopping carts, e-mails, web services, electronic data interchange (EDI), and instant messaging.
Electronic commerce can be carried out between two or more businesses; the online business involves transactions of funds, data, goods, and services (Syed and Raisinghani 11; Stahl 150).
The success and efficiency of e-commerce typically depends on digital marketing, which uses search engine optimization (SEO) as the main tool to promote the products and services in the e-market (Needle 107). The best way through which, an e-business can prosper is building a competitive advantage through relevant people.
E-commerce has brought about a new idea in the field of business and this concept is growing very fast and is almost bringing the traditional business techniques to an end. E-commerce has provided not only a quick way to exchange products and services, but also provided the most efficient and convenient way of accomplishing the transactions involved in this trade (Syed and Raisinghani 13).
E-commerce has today developed into a large industry with companies making huge sums of money. For instance, online retail in the United States, which comprises of business-to-consumer e-commerce, sports and fitness, online travel services, and media distribution, managed to generate over $201 billion in 2009.
In the United States alone, it is estimated that more than 75% of the total population uses internet every day for private and business purposes. The same trend is also evident in other countries, which implies that the growth of e-commerce is likely to continue rising and nothing can weaken it anytime soon (Stahl 152; Needle 108).
Many startup e-commerce corporations have now taken over the biggest share of the market from the traditional businesspersons. As a result, the traditional business people have been forced to alter the structure of their companies and to develop their own websites as well.
This phenomenon is evident in the sectors of consumer electronics and travel services, where more than 50 percent of the total bookings happen online (Stahl 152; Needle 110). This has in turn, led to a drastic fall in the revenues of the traditional businesses that offer booking services.
Since most e-commerce oriented companies have lower operating expenses and a highly efficient inventory management, they have created a competitive advantage to attract consumers and retailers as well (Qin 208).
This paper will address the issues surrounding the concept of e-commerce.; the paper will review a number of literatures in order to outline the aspects of e-commerce.
The e-commerce concepts to be addressed in the paper include the how the internet phenomenon has developed in the past decade, the companies that have gained from the online business concept, the losers, the opportunities and the challenges that have come with e-commerce among other issues.
These issues will be addressed by examining the experiences that the companies that trade their products and services online have had since the introduction of e-commerce. The strategies that such companies have implemented to enhance their productivity in the online business will form the platform of understanding the benefits and the disadvantages of e-commerce.
The paper will address the challenges that online companies have and will present recommendations that can be put in place to deal with the shortfalls of e-commerce.
Opportunities in E-Commerce
There are several factors that have promoted the growth of e-commerce in the globe. One of such factors is the enormous internet penetration n many parts of the world. Since e-commerce is an online issue, the increase in the global internet penetration has had a great impact on it.
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In fact, more than 40 percent of the world’s population can access the internet, which implies that this number can also access e-commerce if it chooses to (Syed and Raisinghani 11; Briggs 141; Epstein 176).
Many countries have strived to make sure the internet becomes a basic commodity to their citizens by lowering the surfing charges and increasing the reliability and the speeds of browsing.
Other strategies that have made the internet easily accessible to many people include improved internet technology that also covers expanded bandwidth. The organizations, which have been able to capture a big share in emerging markets are at a great advantage to competitors with increased sales margin and profits (Syed and Raisinghani 14; Briggs 141).
Many e-commerce players have also enhanced their businesses by lowering the prices of the products and services they provide. The players have been able to compete effectively by improving the quality of their products and services, a move that has assisted them in ensuring high customer satisfaction.
These are the tools that the largest e-retailers, such as Best Buy and Wal-Mart Target, have relied on in their quest to gain a bigger share of the online market (Syed and Raisinghani 13; Briggs 144).
Gainers and Losers of E-Commerce
There are several businesses and service providers that have gained a lot since the introduction of e-commerce. A good example of such players is the online retail merchants such as Amazon.com and Overstock.com.
These online retailers have made use of the concept of e-commerce to expand their businesses and to improve their sales. The online retail players have a better focus on consumer electronic products (Harvie and Lee 171; Meier and Stormer 189).
Online businesses that deal in financial transactions and consumer electronics have also been favored by e-commerce. Financial transaction service providers such as EBay, EBS, and Authorize.net are some of the top financial transaction processors that have heavily utilized the concept of e-commerce.
Their businesses require e-consumers to make an online transaction through their processing platform. Currently, close to 250,000 merchants rely on EBS and Authorize.net to convince their clients to accept electronic check payments and credit cards through the internet (Kamel 128; Harvie and Lee 175).
Other groups that also enjoy the benefits of e-commerce include travel and shipping industries. The manufacturers of e-commerce software have also gotten into e-commerce and are reaping the benefits of the current online way of trading.
Other companies such as hotels, airlines, and cruise ships are now selling their products and services faster than the way they used to before venturing into the internet as a method of trading. Shipping companies such as the United Parcel Services are now ferrying most of their products to the consumers who purchase them online.
The concept of –commerce has enabled the shipping companies to increase their profit margins, which depends on the volume of the products that e-consumers buy online (Kamel 130; Harvie and Lee 173; Meier, and Stormer 191).
The companies that deal in e-commerce software are thriving in their businesses as well. It is through the assistance of these companies that individuals and organizations that are interested in buying and selling products online, accomplish their goal. Examples of the e-commerce software companies include, GSI Commerce, Volusion e-Commerce, Digital River, and Web Cube.
These companies offer services that range from software to online marketing, web hosting and order fulfillment. The companies obtain their revenues from the sales of software meant for e-commerce applications.
Due to the software services offered by these companies, e-commerce has continued to gain popularity in the business sector. As a result, the e-commerce software companies will continue to make enormous profits (Harvie and Lee 174; Meier, and Stormer 191).
The companies that provide web analytics constitute another group that has been enjoying the benefits of e-commerce and that will continue making huge profits as the online business continues to prosper. The web analytics are tools that enhance the management of all e-commerce platforms and help e-companies in determining how their online businesses are performing in the e-market (Stormer 192).
These business tools enable the companies that conduct their business online to establish the expenses they incur in activities such as marketing and advertisements. They are the most effective equipments that the online companies use to optimize their expenditures and to promote sales.
Through these tools, the online companies can determine when sales increase and the factors that have effected such an increase (Harvie and Lee 175; Meier and Stormer 194).
Although many companies have been able to benefit from conducting their business online, there a few businesses that have not reaped any benefits. Some of the companies whose businesses have been impaired by the online concept include the traditional retail and direct retail marketing.
The traditional retailers such as Best Buy and Circuit City Stores have lost the biggest share of the market they once occupied before e-commerce came into being (Kamel 128; Harvie and Lee 176).
The most common examples of the direct retail marketers that have lost a considerable proportion of their market share include Systemax and CDW. The traditional retailers and the direct retail marketers are now working on a plan to develop their own websites to assist them in preventing any further losses in their businesses (Harvie and Lee 177; Meier and Stormer 191).
Strategies of E-Commerce
Before a company decides to venture into e-commerce, it has to first determine and develop factors that will help it effectively sell its products and services through the internet. The strategies will determine the way the company would develop its structure, goals and staff in relation to the demand in the e-market.
These strategies would also assist the company to compete effectively with other firms that offer similar products and services (Plant 32; Fox 109).
The first strategy that a company that wishes to do its business online will have to address is resource expansion. Every company’s main goal of doing business online is to increase its revenues and minimize operational costs. The amount of revenue that a company wishes to generate will help the company determine the amount of resources it needs to allocate to each e-commerce activity.
Every company with a motive of making a profit not only wants to enter e-commerce to generate income to cover the expenses incurred in the production of goods and services, but also to produce revenues that it can use to support other plans; such companies will normally establish a strategy that will help it attract more clients (Plant 37; Fox 114).
The companies with so many goals to accomplish in e-commerce need to regard e-commerce as a means of expanding the resources they have. Such a strategy may involve activities that cover a full marketing plan. When developing a resource expansion strategy, a company should ensure that the activities it chooses do not impair its tax-free status.
The strategy should also be one that does not distort the company’s liability in case of a conflict or a disagreement with other companies. These are the issues that most development companies normally face when conducting their businesses through traditional ways (Plant 43; Fox 115).
Apart from the resource expansion strategy, staff and training and operational strategies also determine the way companies go about their businesses in the internet. A company’s success in e-commerce depends much on its administrative and technical personnel.
It is the workers who are responsible for proper maintenance of the company’s website. A company should ensure that its staff members are well equipped with the necessary skills and that they are willing to handle the company’s online transactions (Plant 63; Fox 109).
A company that does not have enough staff that can effectively handle e-commerce is forced to hire the services of outsiders who then sell the company’s products through the internet. However, hiring new employees is an additional cost that can be avoided by training the old workers.
A company is at a better position to develop more effective operational strategies if it has efficient employees, who possess the required skills that are necessary in conducting e-commerce (Plant 63; Fox 109).
Another strategy involves the determination of the capital costs. A company will need to decide the amount of money required in each e-consumer activity. The amount of money that a company directs to the e-consumer activities depends mostly on the level of complexity of the e-commerce platforms.
The company needs to ensure that the money it is willing to put into the e-commerce activities can match its revenues and ascertain the amount of money it can obtain from other sources such as donors (Plant 74; May 53; Fox 177).
The ability of a company to study the purchasing patterns of e-consumers may also a help a company in managing its online businesses. The companies, which sell and buy products through the internet, need to update new products on a regular basis.
This is instrumental especially when a company wishes to increase the number of goods purchased by the e-customers. It is also an effective way of attracting and retaining customers (Plant 74; May 53; Fox 181).
The ability to positively influence the e-consumers purchasing trend has a long-term effect on a company’s performance on the internet. This strategy can increase a company’s revenue by improving the sales volume of the goods that the company trades on the internet.
Therefore, it is recommended that a company adds a variety of new products to its websites as regularly as possible. Companies engaging in e-commerce should also consider placing different promotional offers regularly as a way attracting and retaining customers (May 62; Fox 181).
An effective marketing plan will positively influence the way a company trades its goods and services through the internet. It is also through a good marketing strategy given that it enables a company to establish and maintain a steady trend in the sales of its products. This marketing strategy is categorized into two subdivisions, which include offline markets and online markets (Ryan 89; Wynne 242).
The offline markets comprise of the people and companies that can access the internet for other purposes, which do not include e-commerce. Such people and organizations can easily be converted into e-customers.
An e-company can capture the offline markets through newsletters, advertisements in publications, and mailing to supporters and members. A company can also turn an offline market into an online market through advertisements of promotional offers placed on the company’s website (Ryan 91; Wynne 242).
The online market is composed of people who can access the internet and who also have the potential to purchase products and services through the internet. In the case of an online market, the internet is the main tool that is used to capture customers.
There are several ways through which a company can develop an online market. A company can decide to identify a target e-market comprising of potential customers who like the products and services it is offering online. The company may also to decide to form a partnership with other firms, which are already in the e-market and that have well developed websites (Ryan 93; Wynne 246).
Besides promoting the company’s products through the internet, digital marketing also promotes the brand image of a company. The concept of digital marketing requires that a company’s management team be well equipped with knowledge regarding the behavior of the online shoppers and the general digital market.
In addition, the management team should be comprised of business executives who have an adequate understanding of the technology that is concerned with the internet, which can enable them to develop the most effective business plans and marketing objectives (Ryan 95; Wynne 251).
The digital marketing platform has many benefits; firstly, this type of marketing is cost efficient and it assists a company in cutting down costs spent on online advertisements.
In digital marketing, there are no expenses incurred on activities such as postage, printing, and distribution as in the case of traditional marketing. Secondly, there is high precision in digital marketing as it only reaches and lays more emphasis on the targeted e-market. This in turn, assists a company reduce the time and resources it would have wasted in mass marketing (Ryan 97; Wynne 247).
Thirdly, digital marketing has an extreme leverage in advertising a company’s products. It reaches a big number of potential e-customers at the same time. It is easier for a company to determine how its prospective buyers regard it through digital marketing.
This type of e-marketing has distinct measurable results; lastly, through digital marketing, a company can easily evade cases of costly pitfalls that are so rampant in the traditional types of advertisements (Ryan 98; Wynne 252).
In addition to the benefits addressed above, digital marketing can assist in enhancing a company’s image. This it does through a number of strategies; for example, this kind of marketing technique makes it easier for potential customers and the existing ones to identify themselves with the company. This type of marketing improves the visibility of a company in e-commerce.
Secondly, the marketing style increases a company’s credibility in the online markets. When a company has a strong digital presence in a market, it automatically becomes more credible in the eyes of many e-customers. Lastly, digital marketing helps enhance a company’s image by increasing the brand awareness of that particular company (Ryan 103; Wynne 261).
The principle of digital marketing is based on the various search engines that exist. Digital marketing uses these search engines to specifically target the prospective clients that are likely to purchase the company’s products, which are offered online. The search engines also help companies identify other organizations that are willing and able to do business with them through the use of the internet.
Unlike the traditional method of marketing that suffers from social and geographical challenges, digital marketing works to ensure that such challenges are addressed and properly evaluated to prevent them from negatively impacting on the company’s operations. Most companies apply Search Engine Optimization (SEO) in identifying and retaining their e-clients (Ledford 3; Wynne 261).
Search Engine Optimization (SEO)
SEO is a technical method that is used to enhance a company’s visibility in relation to its website through various Google presentations. SEO does not have a short-term effect; the impact of its effects can only be felt after a long time of its application. SEO can take as long as six months to accomplish the task for which it is intended (Ledford 3).
However, the duration may be longer or shorter depending on the strategies, methods, and efforts applied in the engine optimizer. Even though the SEO effects are normally realized after a long time, the benefits attached to the engine optimizer are so vast and quite effective in enhancing a company’s image and productivity in the e-market (Ledford 3; Wynne 261).
SEO indexing and site maps are normally done through Google; before a company website is included in the Google index, Google has to verify and confirm the eligibility of the website. It is through the indexing of the site that Google is able to crawl and rank the site in search results.
The search result is a list that is created by Google and in which the companies’ websites are found by the potential e-customers who would wish to assess the products and services offered by the companies (Ledford 7; Wynne 271).
The Ad words make up the simplest way through which a company can index its website on Google. The company is only required to submit a manual website map, which contains other important details, to Google Webmaster Central. SEO contains other aspects such as tags, codes, keywords, and descriptions, all of which explain the situation and status of the company that is indexed on Google.
The SEO contents enhance the speed of indexing and improve the ranking of a company. Google can only list websites that are crawl-able, so it is upon a company to ensure that it submits to Google Webmaster account a site that meets this condition (Ledford 14; Wynne 273).
A company is bound to reap several benefits if it uses SEO to list its website on Google. Through SEO, a company is able to develop a proper content that will attract the potential customers to buy its products. The content can be made attractive by the use of the keyword phrases. SEO contains sites that are simple and easy to navigate through.
The simplicity of the sites helps in attracting more e-costumers, who find easy to get what they are looking for in such sites. SEO is one of the most effective ways that a company can use to beat its competitors, which offer similar products in the internet (Ledford 21; Wynne 281).
Problems with E-Commerce
Even though e-commerce has helped many businesses solve most of the shortfalls that they experienced in the traditional business methods, it has a number of problems. Some companies have websites with so much detailed information that makes the buying procedure not only long but also laborious.
When the buying process becomes too long, it confuses the e-costumers, who would wish to complete the checkout process in less than three minutes. Such long processes are likely to discourage the buyers from purchasing the products since they normally experience problems with completing this process.
If some buyers happen to go through the long procedure, there is high probability that they may not come back to purchase from the company again (Meier and Stormer 121; May 43).
Some companies also run websites with very few payment options in the shopping cart. Customers would wish to be given a variety of payment options from which they can choose their favorite one. Companies with just one method of payment are likely to lose sales if the customers find the method tiresome or consider it inconvenient. One mode of payment can also make a company’s website appear monotonous (Kamel 131).
A company may also suffer from e-commerce if most of its potential customers do not trust its website. Even though it is not a common phenomenon in e-marketing, the targeted potential buyers may fail to develop trust on a particular company whose products are intended for them. If such a case happens, then the company is likely to experience a high volume of lost sales (Meier, and Stormer 121; May 47).
There are various ways through which a company can modify it website to avoid the problems outlined above. For the case of the limitations in the mode of payments available, a company should ensure that it includes a variety of modes of payment to allow the buyers to choose the one they prefer. This is one the best ways to increase online sales since the customers will have many ways to complete their order (Fox 131).
In order to avoid long buying processes, a company should design its site in such a way that the important processes such as buying and payment remain concise. This not only gives buyers an opportunity to complete their orders in a short time, but is also a good way of attracting and retaining potential buyers (Epstein 74).
Lastly, companies need to make their websites as simple as possible. Many potential e-customers prefer simple sites to sophisticated ones. The customers tend to distrust the most complicated sites and they even shy away from them. A site that is simply designed contains sections that are clear and easily understandable, is what most prospective customers prefer (Epstein 81).
In conclusion, e-commerce and digital marketing have brought a lot of changes in business sector. Several companies have expanded their revenues and businesses by trading their products and services on the internet. The search engine optimization is the most effective equipment used in e-marketing. This tool helps companies in designing their websites in such a way that they attract a big number of customers.
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