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Figuring Out
Kashflow

Trends in E-Commerce

E-Commerce is “the buying and selling of products or services over electronic systems such as the Internet and other computer networks”

E-Commerce involves:
  • E-tailing
  • E-marketing
  • E-business transaction

The growing importance of e-commerce for business  

  • Currently there are 1,668,870,408 internet users in the world (1.67 billion; total world population 6.9 billion) (Internet World Stats)
  • US e-commerce sales in 2008 approx $204billion (Forrester State of Retailing Online 2008)
  • UK e-commerce sales in 2008 approx £59billion  (Xorte)
  • UK B2C e-commerce growing 17% in 2009  (Global B2C Ecommerce Report)
  • Top 500 retailers posted 2008 growth of 20.7% in e-commerce
  • Web-only channels are fastest growing e-commerce channels
  • Recession not unduly affecting e-commerce growth

Why the change in customer behaviour?

  • Increasing pressure on time 
  • consumers are wanting to co-design and customise their products 
  • consumers are empowered and have high expectations
  • consumption can be accessed globally
  • consumers are driven by interests rather than necessity 

The effectiveness of websites for e-commerce

  • Valuable for conveying information in a similar fashion to direct mail activities;
  • More cost effective in terms of reaching the target market than traditional methods such as direct mail;
  • A rational rather than emotional medium
  • Effective in precipitating action;
  • Effective for both long and short term promotions;
  • Not effective in grabbing attention*; and
  • Less effective in changing attitudes*
* Social media can grab attention and change values, but these are not necessarily housed in websites

Online business models for e-commerce

  • Advertising - Primary income source, simple & easy
  • Subscriptions - Set fees for Internet access
  • Pay per use - Users pay for individual information, complex
  • Hybrids - Combination of business models

The perceived risks of e-commerce and how to manage the risks

  • Time risk - consumers can waste time searching for product - make sure navigation of your website is easy and includes a search function.
  • Vendor risk - the site may be a scam - make sure you are transparent with your customers.
  • Security risk - concerning credit card numbers - make sure your website has security verfication and is known to your customers.
  • Brand risk - the website of the brand they are buying from has problems - make sure the website is functioning properly before you launch it.
  • Privacy risk - concern of abuse of personal information - make sure you register and apply to data protection standards.

Future trends in e-commerce that you need to take into account

  • There is an increasing reliance on web-based systems
  • There is an increasing importance of social web for product evaluation e.g. Tripadvisor
  • There is greater price parity e.g. price comparison websites
  • There is increasing importance on real time web for financial markets
  • There is likely to be an increase in distribution problems for physical goods

 Issues you will need to consider in the future

  • Gaining global access to technology infrastructure
  • The reliability of technology
  • Technology literacies
  • The continuing change in consumer behaviour
  • Consumers are becoming more creative and selective
  • Consumers are also becoming sellers e.g. ebay shops
  • The specifications of the product will be more important than marketing
  • What people say about prodocuts is now becoming more important than brands

Expert advice by Joanne Jacobs, Social Media Expert Consultant

 

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