Do you remember when going to a “real” store, in a physical setting like a shopping mall, was the only way to buy anything? I think most of our readers were very young, weren’t you? All of us might remember the excitement, the trip, the time and the energy spent touching and looking closely at toys, clothes and later on videogames and CDs. What is left of the full brick-and-mortar experience today now that every store is available at the click of your mouse? Not much. But the purchasing – and selling – opportunities are potentially limitless. This is why all of us, both as consumers and marketers, need to know exactly what the IT technologies and the marketing strategies behind e-commerce are, and what exactly they enable us to do. Whether you are simply a curious and attentive buyer or wish to build your business – or perhaps you want to increase the sales of the company you work in – it might be useful to learn how to best leverage this commercial practice to build a profitable and sincere relationship with as many people as possible.
Definition and origins
E-commerce is a neologism that defines the practice of online business (the prefix “e-“ standing for “electronic”) and the exchange of either information or a product, service with money. What is worth mentioning is that commercial transactions are conducted thanks to two main technologies: the Internet and the web. This might sound obvious and superficial; however, what has made online purchases in stores from all over the world possible today was the development of a sophisticated network that connects physical devices (the computers), i.e. the Internet, and the provision of a digital service that enables people to exchange and search for information, i.e. the World Wide Web. The birth of e-commerce provided the potential for a digitalization of information about businesses and the possibility of purchasing intangible goods. Born to facilitate transactions of documents and invoices, e-commerce expanded to include banking systems and online retailing of any sort of product and service, becoming in the last decades an information marketplace – or, as called by specialists, data warehouse – and fast communication network.
Types of e-commerce
If the Internet and the Web – together with security protocols for private exchange of information and money through safe gateways – paved the way for the success of e-commerce, its advent has actually changed the way in which people use these technologies. Indeed, people today do not use digital resources only to gather information; instead, they look for and create information that may promote the purchase of something. One might say that postmodern society has easily found a way to “commercialize” everything through the endless opportunities provided by the World Wide Web. But what does e-commerce enable people and businesses to do exactly, and how does it differ from the traditional brick-and-mortar retail stores? Well, it definitely depends on the type of business conducted and people involved.
Nowadays there are five main types of electronic transactions: the so called “B2B” (Business-to-Business), the “B2C” (Business-to-Consumer), the “B2G” (Business-to-Government), the “C2C” (Consumer-to-Consumer, such as eBay, based on an auction style model), the “C2B” (Consumer-to-Business) and some of their derivations, such as “M-Commerce” (Mobile Commerce) and Social Commerce. While the first type refers to the exchange of information and money transfers on private networks (also called EDI, Electronic Data Interchange), the second one is perhaps the most well-known format of selling and connects customers with online retailing. Examples of e-commerce that offer the opportunity to retail different types of products include the retailing of physical products that need to be shipped (books, clothes, technology, body care on Amazon, for example) and digital products that can be downloaded (music, eBooks). Digital products also come in the form of subscriptions that allow for the consumption of the chosen product/service on a weekly, monthly or yearly basis (think about music providers such as Spotify or movie streaming such as Netflix) and include the overall provision of any kind of service (customer care, consulting). Social Commerce, on the other hand, refers to the promotion of products through Social Media, which may have their own retail space or provide links which take the interested customer to the website of a business.
This long description of all the types of e-commerce available might have either bored you or given you a hint about the many advantages and possibilities of online transactions that both business and privates can benefit from. But are there concrete benefits behind this new commercial practice? Well, first of all, e-commerce eliminates the financial burden of a physical store: in fact, online business owners can save money which will not be invested on rent, utilities, maintenance and other operating costs associated with keeping a store up and running, including logistics, inventory and staff salaries. What is more, physical stores cannot stay open 24/7, otherwise the costs would be unbearable: online stores, on the other hand, can stay open all the time and meet the needs of customers. As a matter of fact, they allow them to freely choose when to visit the store, consider the options and place the order, without having to reach a physical destination during specific time frames and waiting in long queues. If any customer from any country or time zone can access your store at any time, with detailed information, fast purchase process and attentive customer care, then the possibility of attracting and persuading new customers is increased to become potentially infinite. Doing business by means of an online presence means also being always there for the customer and keeping in touch for the creation of a personalized shopping experience and relationship with the sellers: digital marketing tools and media such as email marketing, advertising, customer care in general are much easier to take advantage of, just simply from an office and sitting comfortably in a chair in front of a computer.
Key advantage: reaching a wider audience and gaining visibility
Reaching a wider audience is a fundamental feature and opportunity facilitated by the cooperation between e-commerce, digital marketing and computer science: as the “journey” of any online user is tracked by web browsers such as google, their preferences and interests can be identified and profiled – also through the so called “cookies” that are attached to any website visited –, and a proper targeted advertisement, i.e. a suggestion for the right product, can be offered. This is brought about through technological affordances such as data mining and cookies. Online store owners then, through web analytics tools, gain objective insights into the sales trends and the behavior of their targeted audience through quantifiable measures (movements) such as visits, clicks – on social media, websites, ads – and purchases, and are able to modify their offer or sales strategy accordingly.
Threats and challenges
If e-commerce creates more selling opportunities and the establishment of healthy and loyal customer relationships at lower costs, this does not come without its own set of challenges. Four main threats to the success of an online business need to be taken into consideration; otherwise, e-commerce may become detrimental and the reason why you lose your business revenue. The most important one – without which e-commerce cannot exist – is the security of the payment system and the protection of user information: users can be victims of credit card and identity fraud every time they log in into your website or try to purchase one of your products. A website which is not protected with safety protocols might undermine the integrity of personal and financial data and lead to a series of unwanted outcomes – such as credit card data theft, payment on fake gateways, phishing attacks to the email address of the user – which all end up causing one thing: loss of credibility. The buyer does not trust your website and will never buy anything from it.
The other three are related to the shopping experience which, as mentioned at the beginning of this article, is limited compared to brick-and-mortar retail. Many customers in fact still wish to experience the product before buying it – they want to try on clothes, feel the texture of their fabric or read an excerpt from a book – and expect to feel the luxury and comfort of asking an expert for advice on the products. Additionally, if the product promoted is a service – such as a holiday or financial consulting – and they want to buy it online, the reassurance on the quality of the service offered is necessary. This is why personal – and not impersonal – interaction through an attentive and available customer care system is not an option, but an obligation, especially in the post-purchase process, where the product must be delivered to the customer.
Finally, price comparison and customer reviews are double-edged weapons that, if not kept under control and constantly checked, can lead to the damaging of your brand and loss of revenues. Today, in fact, users can compare product prices and reviews with a single click; this is why market, competition and word-of-mouth research – on all online channels – is fundamental and must lead to the adoption of appropriate measures on the part of professionals in the field.
E-commerce planning and professional opportunities
It is obvious at this point that e-commerce works hand in hand with digital marketing strategies and tools in the conduction of an online business (for a quick overview of digital marketing, read a blogpost on the subject in our website: https://bit.ly/3zJAWCq). This implies that the competences and knowledge required might overlap and are strongly interrelated. Digital and commercial skills along with communication proficiency aimed at reaching everyone on the planet – through a common language or lingua franca, i.e. English – shape us as users but especially as professionals who want to work on an international level to conduct global affairs and online business. So how can we benefit and apply what we learn about e-commerce in our professional life, being aware of its limitations and challenges?
By having a strategy in mind of what makes an e-commerce successful and by building the right professional profile. Each e-commerce venture starts with the formulation of an e-commerce strategy and attainable objectives based on the analysis of the industry and the competition – think about the famous SWOT analysis (strengths, weaknesses, opportunities, threats). To be part of this initial step and become an e-commerce project manager, you need marketing, statistical and financial skills.
To turn your e-commerce dream into reality, you need to integrate information technologies; therefore, you have to develop and design a website with html code and create a secure login and payment gateway system. Security breaches by means of cyberattacks are frightening but real enemies, which exist for all online businesses, and if you don’t ensure confidentiality and integrity of your customers’ sensitive information – through the encryption of the data and the construction of firewalls –, you will never make profit and will ruin your brand image. Educating your customer about antiviruses and phishing attacks is also fundamental. For this step, you need to build computer science skills.
Before launching your online business, you also need to do a cost-benefit analysis, which measures all the costs related to the maintenance and promotion of your business, including logistics and delivery options. These tasks are undertaken by specialists in business or marketing analysis.
The last step, the results from which inform the other steps of the e-commerce strategy, is the promotion of the website and its products or services: this means that first marketing and then global communication skills are mandatory in a “e-job”. The brand experience of many customers starts in fact with a Google search: for this reason, it is important to be found by the potential customer by using the appropriate keywords in META tags. E-tailing works only if associated with SEO (Search Engine Optimization) and SEM (Search Engine Marketing). Once the customer has visited your website, it is possible to track his behavior (through cookies and web analytics) and tailor advertisements based on the interests detected (through clicks, time spent on visualizing specific products or researching similar products). The other major source of leads and therefore income resides in social media presence. Creating engagement and quality content that attracts the attention and shapes an interest is key to sales and brand loyalty. This may be achieved also by building a brand image and tackling issues such as sustainability, equality or taking environmental and political stances. Finally, customer-oriented quality service in each step of the marketing funnel is the means to secure not only instant customer satisfaction, but also the creation of a long-term, profitable relationship based on positive memories, attitudes and most importantly word-of-mouth publicity. After all, aren’t reviews the cheapest and more reliable organic ad? This leads to the following consideration: interpersonal and communication skills are needed to survive in a global market made up of selective, suspicious customers who speak English as a lingua franca, have no time and want to be understood.
To sum up, one may say that e-commerce is a business practice that is pervading each contemporary business to make it thrive. Compared to brick-and-mortar retailing, e-commerce manages to address the needs of a society which is increasingly based on online presence and communication and carries out most activities – of any kind – on the Internet, in a fast, simple and effective way. If we keep this in mind, it is crucial to know what skills and knowledge are required to find a job in this market. Whether you come from an “economics” background (finance, business management) or the humanities, the mastering of interdisciplinary skills such as communication, linguistic and negotiation expertise for the conduction of global affairs and international business will make you and your resumé more competitive in the pursuit of the career you desire.