ONLINE BUSINESS

AND E-COMMERCE
MODULE 1
IMPACT OF COMMUNICATION TECHNOLOGIES

• The Internet , World Wide Web and wireless communications

• Key opportunities for digital transformation - Inbound marketing and Mobile commerce
INBOUND MARKETING

• Pull – consumers searching information online

• Zero moment of truth –making decision before visiting retailer

• Good visibility in search engines

• Search marketing, content marketing and social media marketing

• Less control than traditional communication medium

SOCIAL MEDIA MARKETING

• Social media
• Social network sites (SNS) such as Facebook, LinkedIn
• B2B users – LinkedIn
• Blogs and Rich Media

• Social presence
• Social networking - Facebook
• Social knowledge - Quora
• Social sharing - Pinterest
• Social news - Twitter
• Social streaming - YouTube
• Company generated content – Blogs by different companies
MOBILE COMMERCE

• Mobile web use

• The growth in popularity of mobile apps from the iPhone store, Google Android Play,
Microsoft Windows app
• Location-based use of mobile devices is another significant trend as users may use apps
or browsers while shopping, for example.
• Related to this activity is location-based tracking of goods and inventory as they are
manufactured and transported.
E-COMMERCE

• All electronically mediated transactions between an organization and any third party it deals with.
• Customer support and requests for further information

• A communications perspective – the delivery of information, products or services or payment by electronic means.
• A business process perspective – the application of technology towards the automation of business transactions and
workflows.
• A service perspective – enabling cost cutting at the same time as increasing the speed and quality of service
delivery.
• An online perspective – the buying and selling of products and information online.
• Buy-side / sell side e-commerce
DIGITAL BUSINESS

• E‑business – the transformation of key business processes through the use of Internet
technologies (IBM)
• Three major components
• 1. Applying Technologies such as email, database, web
• 2. To achieve acquisition and retention within multi channel buying process
• 3. Through tactics like improving customer knowledge (through profiling) to deliver
targeted communication
TYPES OF SELL SIDE E-COMMERCE

• Transactional e-commerce sites - These enable purchase of products online

• Services-oriented relationship-building websites - Provide information to stimulate purchase
and build relationships, particularly where products are not suitable for sale online
• Lead generation

• Brand building sites - Provide an experience to support the brand. Products are not typically
available for online purchase.
• Publisher or media sites - Provide information, news or entertainment about a range of topics.
• Social network sites
OPTIONS TO REACH ONLINE AUDIENCE

• Paid media - Bought media where there is investment to pay for visitors, reach or conversions
through search, display advertising networks etc.

• Earned media - Publicity generated through PR invested in targeting influencers to increase

awareness about a brand.
• Also includes word-of-mouth that can be stimulated through viral and social media marketing
• Publishers, bloggers, influencers and customer advocates

• Owned media - Owned by the brand. Includes a company’s own websites, blogs, email list,
mobile apps or their social presence on Facebook, LinkedIn etc.
SIX MAJOR TYPES OF DIGITAL MEDIA
CHANNELS
• Search engine marketing - Placing messages on a search engine to encourage clickthrough to a
website when the user types a specific keyword phrase.
• Online PR - Maximizing favorable mentions and interactions with a company’s brands, products etc.
• Online partnerships. Creating and managing long-term arrangements to promote your online services
on third-party websites or through email communications' or websites using third-party sites such as
social networks or blogs
• Interactive advertising. Use of online ads such as banners and rich media ads to achieve brand
awareness and encourage clickthrough to a target site
• Opt-in email marketing
• Social media marketing
SOME MAJOR TRENDS IN E-COMMERCE

• Retail e-commerce has been growing worldwide at over 20%

• In 2020 it reached almost $4.3 trillion
• Retail m-commerce is growing at an even faster rate (over 25% a year) and increased to almost $2.8
trillion in 2020.
• Impact of Covid-19

• SMAC – Social, Mobile, Analytics and Cloud

• Allows millions of people to create and share content, establish new social bonds, and strengthen
existing ones through social network, photo- and videoposting, and blogging sites and apps,
• Significant privacy issues
• The major digital copyright owners have increased their pursuit of online piracy with mixed success
UNIQUE FEATURES OF E-COMMERCE

• Ubiquity – available everywhere and at all times

• Global reach – transactions spanning nations
• Universal standards – same standards across countries
• Information richness
• Interactivity – Two-way communication
• Information density—The technology reduces information costs and raises quality.
• Personalization/Customization of messages
• Social technology—User-generated content and social networks.
MODELS OF E-COMMERCE TRANSACTIONS

• Consumer to Consumer (C2C)

• Business to Consumer (B2C)
• Government to Consumer (G2C)
• Consumer to Business (C2B)
• Business to Business (B2B)
• Government to Business (G2B)
• Consumer to Government (C2G)
• Business to Government (B2G)
• Government to Government (G2G)
DIGITAL BUSINESS OPPORTUNITIES

• Reach
• Product assortment
• Number of consumers

• Richness
• Information
• Interactivity

• Affiliation
• Partnerships
DRIVERS OF ADOPTION OF DIGITAL
TECHNOLOGY
• Potential for increased revenue arising from increased reach to a larger customer base
• Cost reduction achieved through delivering services electronically.
RISKS

• Websites that fail because of a spike in visitor traffic aft er a peak- hour TV advertising
campaign.
• Hackers penetrating the security of the system and stealing credit card details.
• A company emails customers without receiving their permission, so annoying customers
and potentially breaking privacy and data protection laws.
• Problems with fulfilment of goods ordered online, meaning customer orders go missing
or are delayed.
• Email customer service enquiries from the website don’t reach the right person and are
ignored.
STAGE MODEL
BENEFITS OF ONLINE SERVICES

• Content – Content is king

• Customization
• Community

• Convenience
• Choice
• Cost reduction
BARRIERS TO INTERNET ADOPTION

• No perceived benefit
• Lack of trust
• Security problems
• Lack of skills
• Cost
PUMA – A CASE STUDY

• Love Football campaign

• Tagline that could be understood world over

• Puma’s ad agency, Droga5, filmed a light-hearted commercial featuring scruffy everyday

men in a Tottenham pub singing love songs to their Valentines.
• The video went viral, garnering more than 130 million impressions and spawning
hundreds of homemade response videos.
• So much of Puma’s target market lives and breathes in the digital space, it is imperative
for Puma to fuse marketing with technology to reach those consumers.
CONTINUED

• Puma maintains an extensive presence on Facebook, Twitter, Instagram, Pinterest,

Snapchat, and YouTube and closely integrates its social strategy with its other marketing
channels to deepen its engagement with consumers
• Dedicated sport, country, region, and product category pages were created for each social
network.
• Today, Puma uses a data-driven approach, geotargeting posts tailored to specific social
network audiences at the appropriate times of the day to maximize fan engagement and
generate the right mix of online content to best drive sales.
CONTINUED

• Integration of channels into a cohesive customer acquisition strategy is in fact a key

element of the emerging world of omnichannel retailing.
• The advent of the term “omni-channel” signals the evolution of multi-channel or cross-
channel retailing to encompass all digital and social technologies.
• The idea is that customers can examine, access, purchase, and return goods from any
channel, even change channels during the process, and receive timely and relevant
product information at each step along the way and in each channel.
• Restructuring of its e-commerce business.
CONTINUED

• Coordinating warehouses, PayPal, and credit card companies with all of Puma’s different
localized sites.
• To coordinate market rollouts and ensure a unified brand image, a command center took
over brand strategy and investment decisions, leaving daily operational and locality-based
decision-making to the regional teams.
• Implementing the changes
• Auto store inventory automation – Managing warehouse through robots
• Salesforce commerce cloud – E commerce platform
• Design of website – (Viget) Unify the look across numerous categories and content types
• CMS – Launch of new product etc.
CONTINUED

• Puma then turned to the mobile platform, first incorporating Storefinder into its mobile site interface.
• Using the GPS capability of the mobile device, Puma stores nearest to the user can be located along
with address and contact information.
• Puma’s mobile sites were rebuilt using responsive design features, enabling users to experience the
same content and appearance as on a desktop or laptop, managed by the same CMS.
• Puma also developed PUMATRAC, a mobile app that automatically analyzes environmental
conditions to give runners feedback on how these variables impact their performance. The app offers
multiple options to share statistics and routes with other runners.
• Mobile traffic accounts for 70% of all site traffic
• Mobile conversion rates improve from less than 1% to approximately 1.5%;
BUSINESS MODELS
BUSINESS MODEL CANVAS

• Value proposition. This is at the heart of what the business offers to its audiences and is arguably most
important to success.
• Customer segments. Different target audiences to whom the value propositions will appeal. In the
Business Model Canvas the alternatives recommended are mass market, niche market, segmented etc.
• Customer relationships. The types of relationships that will be formed, for example self-​­service,
automated services, communities or more personal assistance.
• Channels. The methods by which the organization's services will be delivered and the audiences
reached.
• Key partners. To exploit online and offline value networks, forming partnerships gives an opportunity
of expanding reach and taking advantage of existing organizations and online influencers that have
built an audience.
BUSINESS MODEL CANVAS

• Activities. The main activities that need to be performed to deliver the value proposition to develop
revenue.
• Resources. Different types of process and people to complete the activities to create and deliver the
value proposition.
• Cost structure. Different cost-​­elements; these should be checked against activities and resources.
Costs are classically broken down into fixed and variable costs and economies of scale.
• Revenue stream. This is the method by which a business derives income. Common online options
are : ad revenue, subscription fees, sales of physical or virtual goods or affiliate-​based commission
arrangements. Licensing and leasing are other alternatives.
REVENUE MODELS

• Advertising revenue

• Subscription revenue Model

• Transaction fee revenue

• Sales revenue model

• Affiliate revenue model

CONTINUED….

• CPM display advertising on‑site - CPM stands for ‘cost-​­per-​­thousand’ where M denotes ‘mille’
• CPC advertising on‑site (pay-​­per-​­click text ads) - CPC stands for ‘cost-​­per-​­click’ - Advertisers
are charged not simply for the number of times their ads are displayed, but according to the
number of times they are clicked upon
• Sponsorship of site sections or content types - HSBC sponsors the Money section on the
Orange broadband provider portal
• Affiliate revenue (CPA) – “cost-per-acquisition”- I display Amazon books on my site
SmartInsights.com and receive around 5% of the cover price as a fee from Amazon.
CONTINUED

• Transaction fee revenue - A company receives a fee for facilitating a transaction.

• Subscription access to content or services.
• Pay-​­per-​­view access to documents
• Subscriber data access for email marketing
CANVA

• Launched in 2007, in Australia

• Online design of High school yearbooks

• Initial problems for raising money

• Currently valued at $6billion
• Growth even during pandemic times
• Bill Tai and his network of venture capitalists
• Hiring assistance
CONTINUED

• Freemium product and premium product

• Making freemium consumers pay
• Competitive advantage (w.r.t. Adobe)

• Ease of use
• Lower price point than competitors
• Expanding product base
• Canva for student, video editing, integration with Dropbox etc.

• Large customer base

• Global expansion and localization

• Challenges
• Data breach
• Rewriting code
• Adobe Spark
ONLINE ENVIRONMENT
• The capacity to respond to these environmental opportunities and threats is commonly
referred to as strategic agility
• Why analyze?
• A long-​­term digital business plan or creating a shorter-​­term digital marketing campaign.

• ‘click ecosystem’ - describes the customer journeys or flow of online visitors between
search engines, media sites and other intermediaries to an organization and its
competitors
MAIN ELEMENTS OF THE MARKETPLACE

• Customer segment - identify and summarize different target segments

• Search intermediaries - The Google Trends tool (Figure 2.5) is a free tool for assessing site
popularity
• Intermediaries, influencers and media sites:
• Mainstream news media sites or portals
• Social networks
• Niche or vertical media sites
• Price comparison sites
• Superaffiliates
• Niche affiliates, influencers or bloggers

• Destination sites
LOCATION OF TRADING IN MARKETPLACE

• Electronic marketplace
THE IMPORTANCE OF MULTICHANNEL
MARKETPLACE MODELS
• The consumers select products and interact with brands, they do not use the Internet in
isolation – they consume other media such as print, TV, direct mail and outdoor ads.
• It follows that an effective approach to using the Internet is as part of a multichannel
marketing strategy.
COMMERCIAL ARANGEMENTS
TYPES OF INTERMEDIARIES
VALUING START UPS

• The cost of acquiring a customer through marketing.

• The contribution margin per customer (before acquisition cost).
• The average annual revenues per year from customers and other revenues such as banner

advertising and affiliate revenues. These are often measured as ARPU or average revenue
per user, as reported for companies like Betfair, eBay and Facebook in Chapter 1.
• The total number of customers.
• The customer churn rate.
BAIN AND CO METHOD

• Concept – business model

• Innovation
• Execution
• Traffic
• Financing
• Profile
TYPES OF PLATFORMS

• Desktop browser-based platform

• Desktop apps.
• Email platforms.
• Feed-based and API data exchange platforms
• Video-marketing platforms
DOMAINS AND URL

• .com- International firms

• .org – NGOs
• .mobi – configured for mobile
• .net – Network provider
• .in – India based companies
• In larger businesses, particularly those with many sites, it’s important to develop a URL
strategy so that there is a consistent way of labelling online services and resources.
MANAGING APPLICATIONS INFRASTUCTURE
DIFFERENT USE OF APPLICATIONS
WEB SERVICES SAAS

• Web services’ or ‘Software as a Service (SaaS)’ refers to a highly significant model for managing

software and data within the digital business age. The web services model involves managing and performing
all types of business processes and activities through accessing web-based services rather than running a
traditional executable application on the processor of your local computer.

• SaaS are usually paid for on a subscription basis, so can potentially be switched on and off

• Payments paid according to usage, hence they are also known as ‘on demand’.

• Installation and maintenance costs are effectively outsourced. Cost savings are made on both the server and
client sides, since the server software and databases are hosted externally
APIS

• Amazon Web Services (http://aws.amazon.com). One example of AWS allows affiliates,

developers and website publishers to use Amazon Product Discovery which enables other

sites to incorporate data about Amazon products and pricing.

• Facebook and Twitter use their APIs to help other sites embed social content into their sites.
• The Guardian Newspaper Open Platform (www.guardian.co.uk/open-platform) enables

sharing of content and statistics from The Guardian.

• Google APIs exist for a number of its services, most notably Google Maps
CHALLENGES

• Downtime and poor availability

• Lower performance than local database
• Reduced data security
• Data protection issues
CLOUD COMPUTING

• The cloud referred to is the combination of networking and data storage hardware and software
hosted externally to a company, typically shared between many separate or ‘distributed’ servers
accessed via the Internet.
• Google Docs will be stored somewhere ‘in the cloud’ without any knowledge of where it is or how
it is managed since Google stores data on many servers.
• ‘Is it secure, is it backed up, is it always available?’
• Examples – web mail readers, ecommerce account management, services from google, services
from CRM
VIRTUALISATION

• “The VMware approach to virtualization inserts a thin layer of software directly on the computer
hardware or on a host operating system. This software layer creates virtual machines and contains a
virtual machine monitor or ‘hypervisor’ that allocates hardware resources dynamically and transparently
so that multiple operating systems can run concurrently on a single physical computer without even
knowing it.”
• Lower hardware costs through consolidation of servers
• Lower maintenance and support costs.
• Lower energy costs.
• Scalability to add more resource more easily.
SOA

• The technical architecture used to build web services is formally known as a ‘service-

Oriented architecture’. This is an arrangement of software processes or agents which communicate

with each other to deliver the business requirements.

• An interface with the service which is platform-independent
• The service can be dynamically located and invoked
• The service is self-contained.
FACTORS AFFECTING THE ABOVE
TECHNOLOGIES
• ISPs
• Dial up and broadband
• Speed of access
• Bandwidth

• Availability
• Service level agreement
• Security
INTRANET APPLICATIONS

• Reduced product life cycles – as information on product development and marketing campaigns is rationalised we
can get products to market faster.
• Reduced costs through higher productivity, and savings on hard copy.

• Better customer service – responsive and personalised support with staff accessing customers over the web.

• Distribution of information through remote offi ces nationally or globally.

• Intranets are also used for internal marketing communications since they can include:

• Staff phone directories.

• Staff procedures or quality manuals.

• Information for agents such as product
EXTRANET
IPTV AND VOIP

• The growth in popularity of IPTV or ‘Internet TV’, where TV and video are streamed via

broadband across the Internet, is one of the most exciting developments in recent years.
• IPTV is also used to deliver standard channels available on satellite. Then there is also the

IPTV option of digital TV downloaded before playback.

• Voice over IP (VoIP) can be used for transmitting voice over a LAN or on a wider scale.
• IP stands for Internet Protocol and so VoIP enables phone calls to be made over the Internet.