The Key Aspects Of E-Commerce For A Company

On January 1st, 1983, ARPANET adopted TCP/IP. After this, researchers developed the “network of networks” which led to what became the modern internet. In 1990, Tim Berners-Lee created the World Wide Web. In 1991, e-commerce became possible when the internet was opened for commercial use. In the beginning, e-commerce meant the process of exchanging commercial documentation electronically. Electronic Data Interchange (EDI) and Electronic Funds Transfer (EFT) helped facilitate the process. Today, e-commerce is known as the ability organizations and individuals have to conduct business online through sale transactions and information exchange. (Wienclaw, 2013) The rise in goods being sold via e-commerce has been revolutionary. Two of the major benefits of e-commerce for sellers is that it broadens a company’s marketplace and reduces operating costs. A couple of important benefits for buyers is the access to a plethora of products and the ability to make informed decisions based on the reviews of other buyers. E-commerce optimizes and complements the relationship and transmission between the organization, consumer, producer and merchandiser. Very few innovations have impacted commercial distribution for both the buyer and the seller like e-commerce. Today, most companies have an online presence. In this scenario, the home page is the storefront and the various links and tabs are the aisles. There is no room for passiveness in online retail.

In order to be successful, a company must strategically plan to reach their long term goals. Some important questions to answer are as follows: How much money will it cost to operate a sophisticated and safe platform? How many personnel will be needed in order to run the website? Who will take pictures of the products? Where will the products be stored? How many people will be needed to operate the distribution channel? What government regulations will impact the products and location of the business? E-Commerce is a giant in the retail industry and has greatly benefited many companies, but it needs to be approached by all company with diligence. Sometimes companies rush the launch of their website. It is okay to purchase the domain name and create a “coming soon” landing page, but a rushed website could result in incorrect links, poor quality pictures, insufficient information, and many other issues. Testing every part of the website is important because it will highlight areas that could be an issue for future customers. Social media is also an important tool to incorporate in online marketing. Customers may not visit a company’s website everyday to look for products, but it is likely they will scroll through their social feed at least once a day. If a company’s product or service appears on their screen, then they have just created an interaction between themselves and a potential customer.

Depending on the size of a company, a social media creator and coordinator may be an appropriate hire. Maintaining a good SEO helps a company stand out from the competition and places them higher in search engine results. Finally, it is necessary that company’s online presence continues to evolve. Technology is changing and growing rapidly, so what works today will not always work tomorrow. Due to the increase in smartphone users worldwide, online retail has begun to focus on the increasing mobile population. This is known as m-commerce. M-commerce accounted for 23 percent of digital commerce for the third quarter in 2017. All factors indicate this number will continue to rise. It is expected that m-commerce will account for 54 percent of all e-commerce sales in the United States by 2021. (Duncan, 2018) Mobile apps and digital wallets have facilitated the convenience of m-commerce. The Amazon app is the twenty-second most popular app on iTunes and is the eleventh most popular app on Google Play. Amazon’s ability to adapt to current trends has been a driving force behind their formidability in e-commerce. The success of e-commerce has been met with both inhibiting and enabling factors. Competitive pricing is necessary to survive in e-commerce. Some consumers will spend hours searching the internet to find the best deal. Comparison shopping engines, such as Google Shopping, Nextag, and PriceGrabber, make it even easier for consumers to find the best deals. If a company offers their product at a price much higher than their competitors, it is likely that customers who are sensitive to price will not give them their business. Some astute practices around competitive pricing is analyzing competitor prices and stock availability, knowing price variations, offering product bundling, lowering shipping fees, increasing product delivery time, giving price match guarantees, showing no discounts on unique products, not pricing above market rate, and maintaining dynamic pricing. (Ramesh, 2016) Quality is also a defining factor in E-commerce. The tolerance for low quality products is very low due to the ease of accessibility to other products. (Christina, 2017) If consumers perceive that any shortcuts have been taken, they will continue searching for the product elsewhere. This leads into another factor that impacts many customers decision to purchase - online reviews.

There are four main reasons customers look at online reviews - to understand what type of product or service they are purchasing, to alleviate the risk of making a bad purchase, to see the benefits and restriction of the product or service, for social proof from other customers. (Dunne, 2018) The Consumer Review Fairness Act protects shopper’s ability to honestly express their opinion of a company’s product or service. (ftc. gov) Even though customer reviews can hurt some companies, they are usually a great marketing tool for e-commerce. Sending emails, offering online surveys, live chats, social media involvement, and online feedback forms are great ways to encourage customers to leave a review. (Dunne, 2018) Shipping time and costs are also contributing factors to a company's success. Amazon is an excellent example of a company utilizing society’s fast paced environment. For 99 dollars a year, or 49 dollars a year for students, customers have access to millions of items that can be delivered within two day. In some cities, a product can be delivered on the same day it is purchased. Ease of navigation also impacts a customer’s decision to purchase products. It is important to offer a visually appealing website. If a website is hard to navigate and the design is cluttered, customer’s are less likely to use it. The product or services should be showcased well. Poor quality images and insufficient product descriptions never contribute to a company’s success. A well maintained website, with modern, in-stock products are fundamental in an online retailer’s success. Information regarding how to contact the company should also be easy to find. A safe and easy website will build a customer’s trust and increase the chances of them being a loyal customer. (,2014)

Once a customer has decided on an item and added it to their cart, there is still one very important factor that has to be considered - ease of checkout. If checkout is slow or too complex, shoppers may abandon their cart and search somewhere else. Website developers should optimize their page to reduce page load times. Another tool that could be helpful is a progress bar. This shows the customer the progress and offers transparency. The conversion rate is an important metric that helps companies analyze what percentage of website visitors actually purchase something. While there will always be online “window shoppers,” it is beneficial to maintain a high conversion rate. The median conversion rate in e-commerce is 1. 84 percent. The top 25 percent in the e-commerce industry have a conversion rate of 3. 71 percent. The top 10 percent have a conversion rate of 6. 25 percent. (Kim, 2018)The increasing expectation of customers to receive products fast and cheap is known as “The Amazon Effect. ” Shoppers are demanding delivery speeds and costs at a rate most retailers can not afford. (,2017) "The Amazon effect is growing," explains Steve Bulger, VP of Sales, Marketing & Customer Service at eFulfillment Service. "The problem is, it's not realistic for most online sellers. Amazon lost over $7 billion in shipping last year, which means it's unlikely that even Amazon can continue to meet the expectation they've created without the emergence of new technologies to lower their delivery costs. " (, 2017) Amazon is developing a delivery service called FBA Onsite. This will allow Amazon to pick up packages from a business and ship it directly to the customers. It will eliminate some congestion in Amazon’s warehouses and reduce the cost merchants have to pay in shipping. This will be direct competition for United Parcel Service Inc. and FedEx Corp.

If Amazon is able to ship packages quicker and cheaper than FedEx and UPS, the courier industry will experience a major disturbance. Barnes & Noble Inc. , Amazon’s original competition, is now dominated by the success of Amazon. In 2007, the Amazon Kindle was launched and is now the leading player in the book industry. Amazon share prices have more than doubled, while Barnes & Noble Inc. share prices have plunged. Their stock is down nearly 80% from it’s high of $28. 66 in July of 2015. (Hankin, 2018) Ironically, in 1995, representatives from Barnes & Noble Inc. told Bezos, the president of Amazon, that their soon-to-be-launched online bookstore would crush Amazon. Macy’s Inc. , Nordstrom Inc. , and Kohl’s Corp. are feeling the pressure of online boutiques and the launch of Amazon Wardrobe, which gives customers the opportunity to try the clothes before they buy them. Department stores require human interaction and are timeinnuficient. This goes directly against modern society’s need for individualism and time efficiency, enabled by technology. Today, many consumers are loyal to a brand, not a brick-and-mortar store. The “relationship” customers build through social media platforms increases their loyalty to these brands. (Cartner-Morley, 2018) On Instagram, Macy’s Inc. has 1. 3 million followers. Nordstrom Inc. has 2. 8 million followers. Kohl Corp. has 1. 1 million followers. That may sound like an impressive number, but when you search for specific brands, the retail store numbers sound less impressive.

For example, Supreme has 11. 7 million followers. Michael Kors Holdings Limited has 12. 7 million followers. Guccio Gucci S. p. A. has 28. 7 million followers. These exponentially larger fan bases, influences the allegiance to these brands. Following the links directly from the brands social accounts, eliminates the need for a middle-man, such as a retail store. Footlocker, and other sports apparel retailers, are already experiencing a decline in sales. Increased competition, the shopping trends of Millennials, and competitively priced alternatives have made it difficult for them to keep sales up. Shares of many sport industry retailers dropped when it was announced that Nike would begin selling on Amazon. The opening of over 3,000 stores in the United States were announced in the first three quarters. However, over 6,800 retail stores announced they were closing. This comes when consumer confidence is high, the U. S. economy continues to grow, and the U. S unemployment rate is low. Normally, these factors would greatly contribute to retail success, but there are more stores rated distressed and closing than in the financial crisis.

As of November, 2018, 6,752 stores announced they were closing. The following is a list of store categories closing: 2,502 apparel stores, 1,933 home entertainment stores, 735 footwear stores, 553 department stores, 415 miscellaneous retail stores, 240 bookstores, 165 jewelry stores, 155 sporting goods stores, 25 variety stores, 20 home furnishing stores, 5 drug stores, 3 wholesale clubs, and 1 home improvement store. (Townsend, 2017) While drug stores have not yet experienced the effects of e-commerce, Amazon has expressed its intention to enter the pharmaceutical world. It is likely that they will enter this market slowly and intentionally, much like their acquisition of Whole Foods which developed over several years. In this case, Amazon waited to purchase the company until it had developed a home grocery delivery strategy. There are three commonly discussed scenarios in which Amazon enters the pharmaceutical market. The first, and least likely, scenario is that Amazon will partner or acquire a Pharmacy Benefit Managers. Pharmacy Benefit Managers are known as the middleman in the healthcare industry.

The second, and more likely, scenario is that Amazon would reimagine the PBM process with a smaller PBM. The third, and most likely, scenario is that Amazon builds a brick-and-mortar pharmacy in order to become a mail-order pharmacy. (Brozak, 2017) Amazon is known for their fast and easy shipping. It makes sense that they would utilize one of their greatest strengths in this new venture. The Federal Trade Committee is the primary regulator for U. S. e-commerce. The International Organization for Economic Cooperation and Development recommends the e-commerce practices which focuses on the following: Company website site transparency, marketing practices, online disclosures, confirmation process, payment, and dispute resolution. (. gov) The European Union’s General Data Protection Regulation, enforced on May 25th, 2018, strengthens consumer’s data protection and privacy. Any violation of these laws are met with weighty consequences and should be prepared for with legal counsel. (. gov) Taxes are also important to research and understand when entering e-commerce. Taxes vary by state and country, so consulting with a tax professional may prove beneficial. Shipping restrictions can also be a barrier for e-commerce. Shipping restrictions are placed on items, such as, aerosols, air bags, alcoholic beverages, ammunition, animals, cigarettes, dry ice, explosives, fresh fruits and vegetables, hazardous materials, nail polish, perfumes, perishables and poison. (Ferenzi, 2018)

Some of these items can be shipped, but may require extra postage and paperwork. PCI DSS are data protection standards that all businesses who transact via credit card must meet. The SSC sets the standards and the credit card companies enforces the compliance to these standards. (Marsella, 2018)E-commerce has changed the retail industry. Competitive pricing and product diversity have broadened the consumer’s buying power. Consumer reviews allow shoppers to make better informed decisions based on unbiased comments. Internet access across the world has broadened a company’s geographical reach in ways that would have been unimaginable thirty years ago. Although e-commerce has placed a strain on some brick-and-mortar retail stores, it has the potential to revolutionize a company’s success if used properly. Companies must practice adaptability in order to remain successful in the competitive world of e-commerce.