4.8 E-Commerce
E-Commerce - the buying and selling of goods and services online Types of E-commerce:
• Features of an e-commerce business: • Business to consumer
• Global markets • majority of e-commerce companies operate using this model
• global reach of e-commerce business due to amount of people so there is likely to be a lot of competition which leads to
using the internet squeezed profit margins to remain competitive
• Chinese governments policies mean that brands such as • work hard to develop brand loyalty
Twitter, Facebook and Google do not operate in China • Business to business
• Unrepresentative groups • supplying other companies the goods and services they need
• not all groups of society are online yet, companies that target • suppliers have to be able to deliver an agreed quality at an
these groups such as older generations need additional selling agreed time
techniques to maximise their sales revenue • long-term relationships and customer loyalty are more
• Increasingly mobile common than in consumer markets
• having a website is not enough, companies must develop apps • keep costs low with a just in time delivery system
that work on phones, tablets and wearable technology • consumer to consumer
• use of fingerprint technology on phones has supported • allow members of the public to sell to each other, for
businesses’ online sales activity example, eBay
• The importance of peer reviews • these companies do not sell anything themselves instead
• need to be aware of the importance of customer satisfaction they provide platforms for others to trade
• increased use of technology means customers more likely to • important part of their service is payment protection for both
share bad experiences with businesses online buyer and seller
• brand image can be damaged by unhappy customers • make money by charging a commission
• Market segmentation
• social media records customer interests
• Google selects advertisements based on search terms and our
browsing history
• niche companies can target highly specific groups of Evaluation of E-commerce:
consumers with advertising and direct marketing messages
• The role of security • For Firms
• companies must regularly review and update their payment • advantages
systems to ensure customer’s card details are handled securely • global markets can lead to large sales revenue
• if customer details are stolen whilst dealing with a business • fixed costs are low
online, the individual will be less likely to use the site again • psychographics segmentation can lead to targeted
• identities and financial details can also be stolen marketing campaigns
• identity theft is a growing crime • price discrimination can lead to increasing spend per
customer
• websites and brands can be quickly and relatively
inexpensively updated
Adapting the Marketing Mix: • global usage of the internet is which represents significant
opportunities for future growth
• Product adaptions • Disadvantages
• many companies that used to sell physical products have seen • billions of consumers are not yet online so cannot be
their markets shrink because of online alternatives targeted
• for example map and satellite navigation systems have been • limited growth opportunities in countries where people do
replaced with Google Maps not have credit or debt cards
• Price adaptations • fear of online fraud prevents people from using
• Price comparison • customers cannot see or touch items which may reduce
• internet has made it easier for consumers to compare prices sales
• this has forced prices down as they must remain competitive • customer returns can be expensive to process
• increased use in price comparison websites • large and ongoing investment in technological infrastructure
• companies that are able to cut their costs have seen growth in is needed
their market share as lower prices stimulate more sales • staff with specialist computing skills must be recruited
• profit margins for retailers have been reduced as it is possible to • high levels of competition can lead to low profit margins
compare prices of physical goods • without a physical store, brand loyalty can prove difficult
• Price discrimination • there is a link between unemployment since many shops will
• cookies record all the actions a customer makes on a site close
• this includes
• what products they have looked at • For Consumers
• how long they have spent on each page • Advantages
• how often they visit the site • ubiquity of internet
• items that they place in checkout but did not purchase • shopping can be done from any location and customers do
• companies use this information to charge a higher price for not have to travel
goods they think you are likely to buy • price comparison website make it easier to find the best
• Promotion adaptions value retailer
• due to an increase in streaming services such as Netflix, television • online reviews can be used to asses quality
advertising has decrease while online advertising has increased • some products are available for immediate download or
• advertisers are also attracted to online media as it allows them to streaming
carry out psychographic segmentation to build up detailed target • Disadvantages
market profiles • the consumer has to wait for physical goods to be delivered
• Place adaptions • not all consumers have the necessary skills to use modern
• Online retailers have relatively simple decisions to make regarding technology
the distribution of their products. • some consumers are subject to financial exclusion so cannot
• Services can be downloaded or streamed while products must make online purchases
be delivered to their customer • risk of online fraud
• an efficient delivery system can be a valuable unique selling • some consumers may be put off as they do not want to
proposition for a company share their private information online
E-Commerce - the buying and selling of goods and services online Types of E-commerce:
• Features of an e-commerce business: • Business to consumer
• Global markets • majority of e-commerce companies operate using this model
• global reach of e-commerce business due to amount of people so there is likely to be a lot of competition which leads to
using the internet squeezed profit margins to remain competitive
• Chinese governments policies mean that brands such as • work hard to develop brand loyalty
Twitter, Facebook and Google do not operate in China • Business to business
• Unrepresentative groups • supplying other companies the goods and services they need
• not all groups of society are online yet, companies that target • suppliers have to be able to deliver an agreed quality at an
these groups such as older generations need additional selling agreed time
techniques to maximise their sales revenue • long-term relationships and customer loyalty are more
• Increasingly mobile common than in consumer markets
• having a website is not enough, companies must develop apps • keep costs low with a just in time delivery system
that work on phones, tablets and wearable technology • consumer to consumer
• use of fingerprint technology on phones has supported • allow members of the public to sell to each other, for
businesses’ online sales activity example, eBay
• The importance of peer reviews • these companies do not sell anything themselves instead
• need to be aware of the importance of customer satisfaction they provide platforms for others to trade
• increased use of technology means customers more likely to • important part of their service is payment protection for both
share bad experiences with businesses online buyer and seller
• brand image can be damaged by unhappy customers • make money by charging a commission
• Market segmentation
• social media records customer interests
• Google selects advertisements based on search terms and our
browsing history
• niche companies can target highly specific groups of Evaluation of E-commerce:
consumers with advertising and direct marketing messages
• The role of security • For Firms
• companies must regularly review and update their payment • advantages
systems to ensure customer’s card details are handled securely • global markets can lead to large sales revenue
• if customer details are stolen whilst dealing with a business • fixed costs are low
online, the individual will be less likely to use the site again • psychographics segmentation can lead to targeted
• identities and financial details can also be stolen marketing campaigns
• identity theft is a growing crime • price discrimination can lead to increasing spend per
customer
• websites and brands can be quickly and relatively
inexpensively updated
Adapting the Marketing Mix: • global usage of the internet is which represents significant
opportunities for future growth
• Product adaptions • Disadvantages
• many companies that used to sell physical products have seen • billions of consumers are not yet online so cannot be
their markets shrink because of online alternatives targeted
• for example map and satellite navigation systems have been • limited growth opportunities in countries where people do
replaced with Google Maps not have credit or debt cards
• Price adaptations • fear of online fraud prevents people from using
• Price comparison • customers cannot see or touch items which may reduce
• internet has made it easier for consumers to compare prices sales
• this has forced prices down as they must remain competitive • customer returns can be expensive to process
• increased use in price comparison websites • large and ongoing investment in technological infrastructure
• companies that are able to cut their costs have seen growth in is needed
their market share as lower prices stimulate more sales • staff with specialist computing skills must be recruited
• profit margins for retailers have been reduced as it is possible to • high levels of competition can lead to low profit margins
compare prices of physical goods • without a physical store, brand loyalty can prove difficult
• Price discrimination • there is a link between unemployment since many shops will
• cookies record all the actions a customer makes on a site close
• this includes
• what products they have looked at • For Consumers
• how long they have spent on each page • Advantages
• how often they visit the site • ubiquity of internet
• items that they place in checkout but did not purchase • shopping can be done from any location and customers do
• companies use this information to charge a higher price for not have to travel
goods they think you are likely to buy • price comparison website make it easier to find the best
• Promotion adaptions value retailer
• due to an increase in streaming services such as Netflix, television • online reviews can be used to asses quality
advertising has decrease while online advertising has increased • some products are available for immediate download or
• advertisers are also attracted to online media as it allows them to streaming
carry out psychographic segmentation to build up detailed target • Disadvantages
market profiles • the consumer has to wait for physical goods to be delivered
• Place adaptions • not all consumers have the necessary skills to use modern
• Online retailers have relatively simple decisions to make regarding technology
the distribution of their products. • some consumers are subject to financial exclusion so cannot
• Services can be downloaded or streamed while products must make online purchases
be delivered to their customer • risk of online fraud
• an efficient delivery system can be a valuable unique selling • some consumers may be put off as they do not want to
proposition for a company share their private information online
