1.

Impact of E-Commerce on Product

Customization. E-Commerce allows for higher customization to suit individual needs and
cultural preferences of customers in the global market. Each consumer can be communicated
with individually and individual product requirements can be built into the good or service to
suit different preferences. Some examples would include airline tickets (time of the flight,
class, seat number, luggage size, cars, hotels, site-seeing, etc.) and computers assembled to
match the individual specification of each customer. When products can be tailored to the
specific needs and wants of the customer, this will result in higher sales and profits.

Wider product range. E-Commerce also allows for broader range of products to be offered.
Businesses selling over the Internet can afford to stock a much wider range of goods than
nearly all shops could financially justify. It is because businesses need sufficient demand
before they can offer a variety of products. With the introduction of E-Commerce, businesses
are able to sell more of different products to an enlarged customer base.

Less packaging. With E-Commerce, packaging will be less of an issue for E-Tailers as
packaging is not required to appeal to online customers. It is simply not needed for added
promotion. Additional detailed information about the product and any new product updates
can be placed on the company’s website. Reduced packaging helps to reduce overall costs
which can then transform into higher profit margins for the business, or offering reduced
prices for its customers. Hence, E-Commerce also means reduced waste for the benefit of the
society as there is no need for excessive packaging any longer.

Better information. Thanks to E-Commerce, additional detailed information about the

product and product updates can be placed on the firm’s website. The products being sold by
a business can be promoted online as well making it more convenient for customers to access
the information at any time. Product specifications can be very detailed and instruction
manuals can be quickly translated into many different languages. Additionally, digital
versions of products can be offer to customers.

Less storage required. E-Commerce can benefit the business as there is no need to stock the
product or display all of the products for the customers to see. Thereby, it reduces storage
costs as paying for physical retail outlets is not longer required. Trading electronically also
eliminates the problem of offering only limited stocks as space is not constrained anymore.
So, the business does not need to limit itself to offering only the best-selling products.

While, E-Commerce has had a strong impact on the product, certain products still remain
largely unaffected by the growth electronic trade, such as fresh food, specialist products such
as prescription medication or expensive luxury products.

2. Impact of E-Commerce on Price

Transparency. Price transparency refers to the openness about prices charged by businesses.
In other words, how easily customers are able to find out the prices. E-Commerce allows
higher transparency of prices as customers can make instant comparisons using the Internet
and other mobile technologies. This leads to higher market competition as now prices can not
only be compared easily and rapidly by customers, but also by competitors, in both B2C and
B2B markets. As majority of customers expect cheaper prices, they are now able to bargain
for better deals based on greater price transparency.

Birth of price aggregators. As the Internet increases price transparency, it allows customers
to access prices from all over the world and to make comparisons quite quickly easily. This
intensifies competition between companies especially when people can use price comparison
websites and smart phone apps known as price aggregators. Using price aggregators,
customers can gain a better knowledge of prices of books, clothes, CDs and DVDs, flight
tickets, children toys, insurance policies, etc. in an instant.

More competition-based pricing. Competition-based pricing is more likely to be adopted

with E-Commerce. This is more favorable for consumers along with price transparency.
Businesses need to be more competitive in terms of pricing strategies to maintain their market
share against rival businesses. Business managers can near instantaneously adjust and update
prices accordingly to better fulfill sudden changes in the level of demand.

Less premium pricing. Premium pricing is less likely to be adopted with E-Commerce. It
happens when a traditional brick-and-mortar store enjoys being the only supplier of the
product in a particular region. But when, E-Commerce becomes widespread, the regional
monopoly is more vulnerable to price competition. It now faces a new threat from online
businesses , hence is not able to set premium prices any longer.

Possible price reductions. The Internet allows businesses to cut out intermediaries –
wholesalers and retailers – from the distribution process, hence eliminate intermediation
costs. Typically, each intermediary adds a percentage mark-up in order to make its own
profit. Thanks to E-Commerce, businesses can now sell directly to the consumer. After
having lower costs, prices may then be reduced benefiting the customers.

Possible price increases. E-Commerce companies usually add shipping fees to the price of
their products. These transportation costs, which are usually paid by customers, increase the
final prices making them less competitive. In case of international trade – shipping products
abroad – E-Tailers need to be aware of international trading regulations. There will be extra
costs that will most likely apply such as customs and duties which are two common hurdles
that come with selling goods internationally.

Dynamic pricing. Businesses trading online use data about consumers to charge different
prices to different consumers depending on purchase history. Also, prices will be different
during different times of the year depending on the level of demand.

Price should not be looked at in isolation, but it should always be considered with all other
aspects of the Marketing Mix. It is because customers take holistic approach when making
their purchasing decisions and do not buy products based only on money, but tend to go for
products that offer the best overall value for money.
3. Impact of E-Commerce on Promotion

Quicker and cheaper promotion. Promotional opportunities have been greatly expanded by
the Internet and other technological developments, and at the same time the costs of reaching
huge numbers of potential customers has fallen dramatically. Without spending a huge
amount of money every year to promote their products, businesses are able to benefit from
the growing importance of globalization.

Internet technologies allowed many business organizations to cut costs by using online
marketing strategies and yet appeal to a global audience. Marketers can use text, photos,
audios and videos to promote their goods or services while customers can access more
detailed information about products via online advertisements.

Example 6: Real estate agents can use the Internet to showcase homes and apartment for sale and rent
using digital camera technology, so that clients can have virtual tours of the properties sitting in their home
or office.

Relevant markets can be targeted easier. E-Commerce provides an additional medium of

promotion to reach the exact group of customers specifically targeted. It allows marketers to
create an online sales campaign that targets the needs and wants of any community in the
world. This would not be possible with any other form of promotional media such as TV,
radio or billboards. Companies can choose to promote their corporate vision and mission,
develop their brand or promote their product range using the Internet. With more and more
people having access to the Internet, E-Commerce will continue to prosper as a promotional
tool providing businesses with further opportunities to attract specific target markets.

Allows interactive promotions. Banners, pop-ups, text messages, web pages, social
marketing, QR codes, YouTube partnerships, paid search, Pay-Per-Click (PPC) or Pay-Per-
View (PPV) – all of these terms were unheard of 20 years ago. Pay-Per-Click (PPC) schemes
mean that the advertisers pay Google and Yahoo! each time a person clicks on the advertising
banner.

Promotion can be spread very quickly and cheaply on the Internet through:

 Banner ads. The most common. The largest appear as elongated boxes at the
bottom of the screen, covering about 2/3 of the screen width, hence the name.

 Interstitial ads. The ads that flash on the screen during the time your request is
being handled.

 Pop-up ads. The ads that appear once a site has been loaded, but before you get
access. They usually contain messages from the site company, but are
 increasingly being sold to independent entrepreneurs who want to take
advantage of a popular site.

 Rich media ads. Ads that move, talk, beep, or flash.

After many people have already become used to various methods of interactive promotion,
they often tend to ignore these advertisements.

Birth of Viral Marketing. E-Commerce has enabled firms to implement Viral Marketing as
a promotional strategy which is a promotional technique that relies on the use of online social
networks such as E-Mail, Facebook, LinkedIn, Twitter or YouTube. Viral Marketing is
similar to word-of-mouth marketing but focuses on using social networks the internet. It
allows such promotions to be seen by millions of potential customers around the world, hence
can be a very cost-effective form of promotion. However, Viral Marketing has been
questioned and criticized as being an unethical and undesirable form of promotion.

E-Commerce is a new media for Above-The-Line Promotion (ATL) and a new channel for
Below-The-Line Promotion (BTL) using mainly interactive content and videos. How have
traditional promotional methods including Above-The-Line Promotion (ATL) and Below-
The-Line Promotion (BTL) evolved in response to these technological breakthroughs?

4. Impact of E-Commerce on Place (Distribution)

Global reach. The development of the Internet has fueled the potential of E-Commerce in
reaching a potentially enormous customer base around the world at any time. Especially, it
was enabling lots of businesses to reach a global audience at a fraction of the cost comparing
with traditional methods of distribution which are rather expensive. To support the sale
process, there are the specialist logistics companies ensuring that products sold online can
reach customers on time. In fact, E-Commerce provided many opportunities for courier
companies such as DHL and FedEx to grow in size.

Multilingualism. Thanks to E-Commerce, different languages can be used which offer a

further advantage as a distribution channel in different languages can be used to capture an
even larger audience. Paying for language translations of the company website, product
descriptions and brochures is a relatively low cost comparing to the potential benefits of
selling to customers from around the world. Users usually have an option to select their
preferred language from the company’s home page. Most of the people in the world speak
seven major languages such as Chinese, Hindi, English, Spanish, French, Arabic and Russian.

24/7 accessibility adds convenience. Buying through E-Commerce is often more convenient
for customers than visiting retail outlets because purchases can be done from any place.
Many shops have dedicated websites offering online purchases, in addition to their traditional
retail stores, giving convenience to customers of shopping at any time regardless whether the
actual shop is open or closed. Many schools, libraries and universities offer students remote
online access to millions of E-Books, courses and research papers.

Shorter and lessened channels of distribution. E-Commerce shortens the channel of

distribution as fewer intermediaries are used. This reduced length of supply chain reduces
operating costs bringing enormous benefits.

Destruction of traditional channels of distribution. The Internet provides a low cost

alternative to traditional retail channels. Traditional distribution channels are being destroyed
through creative innovations in the digital industry by cutting out the middleman, usually a
wholesaler. However, physical outlets may still be essential to give consumers the confidence
to buy over a businesses’ website; to provide non-internet subscribers the opportunity to buy
the product; with some products, customers may want to inspect first before buying.

Not appropriate for all products. As E-Commerce remains a relatively new channel of
distribution, it is still not appropriate for all products. It is mainly due to its impersonal nature
– online businesses offer a relatively impersonal service. Customers may not be willing to
purchase certain products online for various reasons: they cannot examine the product nor
test the product on the spot; they may feel that online product descriptions are not or that it is
too much of uncertainty to buy products online. Instead, such customers may prefer to buy
product in a physical retail outlet to have a sense of security in directly dealing with people.

No matter whether distribution of products is done in the traditional way or online,

distribution remains an integral part of any marketing strategy.

Online technologies have been be an effective element of the Marketing Mix. In this place, it
is worth to mention that while E-Commerce has tremendous impact on 4Ps of Marketing Mix
for products, on the contrary, it reduces the impact of the other three Ps in 7Ps of Marketing
Mix for services including people, processes and physical evidence.

**1. Impact of E-Commerce on Product Customization:**

- Higher customization for individual needs and cultural preferences.

 - Communication with consumers allows tailored product requirements.

- Examples include personalized airline tickets and custom-built computers.

- Wider product range due to reduced financial constraints.

- Less packaging needed, leading to cost reduction and reduced waste.

- Better product information and detailed specifications available online.

- E-Commerce reduces the need for extensive product storage.

**2. Impact of E-Commerce on Price:**

- Enhanced price transparency facilitates easy customer and competitor comparisons.

- Introduction of price aggregators intensifies competition.

- More competition-based pricing due to increased transparency.

- E-Commerce challenges premium pricing, making businesses more vulnerable to

competition.

- Potential for price reductions by eliminating intermediaries.

- Possible price increases due to added shipping fees and international trade costs.

- Dynamic pricing based on consumer data and demand fluctuations.

**3. Impact of E-Commerce on Promotion:**

- Quicker and cheaper promotions due to Internet and technological advancements.

- Online marketing strategies appeal to a global audience at a lower cost.

- Targeted promotions for specific customer groups.

 - Interactive promotions through various online mediums.

- Emergence of viral marketing as a cost-effective promotional strategy.

- Evolution of traditional promotional methods in response to technological breakthroughs.

**4. Impact of E-Commerce on Place (Distribution):**

- E-Commerce provides global reach at a fraction of traditional distribution costs.

- Multilingualism supports diverse audiences and captures a larger market.

- 24/7 accessibility adds convenience for customers.

- Shorter distribution channels reduce operating costs.

- Creative innovations in the digital industry challenge traditional distribution channels.

- Not suitable for all products due to the impersonal nature of online transactions.

- Distribution remains integral to marketing, with online technologies impacting the

Marketing Mix.