• Understand the central role of information systems and of the world- wide- web in organisations.
• Identify the elements of hardware and software used for the transmission, storage and retrieval of information.
• Demonstrate how the quality of management decision making is enhanced by information systems.
The introduction of online retailers disrupted the offline business model and with the ecommerce site’s always-on online presence, user-friendly UI, tight integration with social media sites and customer data collection for analytics, led birth to Digital Marketing.
This study discusses the e-commerce business model with critical analysis of the situation, problem, its solution and evaluation from the point of privacy concerns a user face when shopping online Adoption of new marketing techniques use of social media as a tool to bond customer relations and support, and lastly, the impact online retailers have over the retail market are explained in the mentioned format.
In a country like UK where 84% of the population goes online for their shopping needs, it only makes sense for ecommerce companies to convert visitors into customers. It is bolstered by the fact that internet speeds are only increasing with small caps on data limit. Brick-mortar stores are at risk if they do not adopt a policy of shifting a part of their business model online. A survey of adults spending time on different social networking is shown.
Figure 1: Percentage of adults spending time on social networks
(Source: Hajli, 2014, pp-390)
In countries like India, the ecommerce accounts for less than 1% of the total retail market, but it is a fastest growing market and is expected to rise as much as $22 billion in next five years from the existing $3.1 billion at present (Priyanka and Srinivasan, 2015). The way an ecommerce business works is different from that of an offline retail business (Figure 2).
(Source: Mohapatra, 2013, pp- 170)
According to Heuer, Brettel and Kemper (2015), browsing products in an e-commerce site is easy, but both retail and brick stores are facing increased competition. Retail stores find themselves with fewer customers as the online ecommerce sites provide features like cash on delivery, free delivery, sales and hefty deals from time to time. For online only stores, their delivery system is either handled by its partner or partnering with a third-party courier service. Often a courier service is limited to the outskirts of the city and those living in a rural area often have to travel a lot to get their package. Also, not all sellers deliver products to each and every part of the country, especially if the item is large or heavy (Izzah, Rifai and Yao, 2016).
According to Almousa (2013), to increase competition, more competitors have entered the online market at competitive rates muddying the water more. Adding to that confusion each product in a marketplace has lots of sellers. Also, return policy in case of defects varies from seller to seller. International shipping is viable albeit a costly option if the product is not available in the online store of a particular region.
Cheung et al. (2016) opined that one solution for retail business is to shift their products to an online marketplace business model. Some offline retailers also offer an alternative online store for their products, but it needs a website dedicated to it. People who cannot visit the store will shop from their online store (Sahney, 2015).
More and more online retailers are expanding their delivery service by partnering with local delivery and courier services. In many countries, rules are enforced for a product to be deliverable anywhere within a country (Mahapatra, 2013). According to Hayashi, Nemoto and Visser (2014), customers need to look for verified and trusted sellers, especially one with a good reputation and more stars which can be easily seen. For return policies, one can ask the seller directly if it is not listed alongside the seller. International shipping is costly, but it is still an alternative if the demand of the product is much to the user.
According to Landers et al. (2015), for offline retailers moving to an only marketplace makes sense as they will get more exposure, especially if they are not much popular or are trying to expand. The idea of having the alternative of having an online store to the brick and mortar store has been adopted successfully by many. Delivery of a product to anywhere in a country is something which greatly varies from country to country. It is not perfect, but it is significantly improving. The reason of not completely expanding onto rural areas has more to do with less demand for products, and geographical difficulties can shoot up delivery costs.
With the proliferation of social media in this internet age and crowdculture being a major decision factor, ecommerce websites are increasingly using social media sites to create content in the form of ads, short films, sponsoring popular events and movies, competitions among many events (Branding in the Age of Social Media, 2016). The idea is to shift the perspective from being passive and be more interactive by reaching the masses through the use of entertainment medium. Example being, in YouTube channels of a brand or a person, creates videos to attract the audience and the gauging factors for popularity are the number of views and likes which are proportional in nature. Cultural branding is to make it a popular icon among the masses. Crowd culture determines which products are desirable and are on the rise.
As per Hajli (2014), social media is also an effective medium to create a support network for addressing customer complaints, requests and taking feedbacks. It requires managing of different roles of and a different category of a support team. It helps in creating public relations. Social networking is time intensive in nature due to its very interactive nature. One has to monitor all the social network channels, learn the intricacies and its use in a business application, reply to the comments and queries made by the customer within a specified time frame in a professional way. Not everybody feels at the ease of sharing personal information through a social medium to contact a business, and it has been a prevalent topic of controversy till date. The practice of customized ads for visitors by utilizing the information from social media lowers the privacy of those using it (Madden, 2012).
According to Calefato, Lanubile and Novielli (2015), negative feedback in the form of replies, pictures or videos targeting the brand or service can have far-reaching consequences, and it can damage the reputation. It also tends to be viral as a comment made on a social network is quickly shared and seen by everyone visiting the page. It cannot be ignored but have to be handled efficiently by damage control. One downside to social network marketing is that it attracts a lot of existing loyal customers but bringing new customers takes a lot of effort change in the marketing plan.
Ecommerce businesses need to find personnel who have knowledge in digital marketing or have experience in the practical field; otherwise, they have to be trained separately (Social Media Is Too Important to Be Left to the Marketing Department, 2016). According to Rubinstein and Good (2012), a collection of user data for marketing and user-experience improvement has to be mentioned in the privacy policies of the website. For social networking sites, most sites display user confirmation or warning on which personal info will be collected in the form of a popup (d’Aquin and Thomas, 2013). Google Plus, Facebook are major examples (Wilson, Proudfoot and Valacich, 2014).
Figure 3: Collection of user data on ecommerce platform
(Source: Gao et al. 2014, pp- 104)
By the words of Srinivasan (2014), in the case of a negative feedback it has to be addressed as professionally as possible, and the user complaint has to be dealt critical and top priority to provide a solution or a workaround; in case there is none a fix or a solution has to be dispatched and confirmed before the user. A positive experience will float around the internet the same way as a negative experience. For a business to survive it has to attract new customers from time to time for expansion and increasing user base. Therefore, the business has to avoid saturation of any kind. The brand name change, or change in marketing tactics if carefully dealt works to its advantage. Training of personnel is often cost-prohibitive and recruiting someone with experience in digital marketing is a bit hard to come by for the subject being fairly nascent.
Many e-commerce websites collect personal information of the users either through forms or web-based cookies. A collection of data usage is often told in advance to the visitors visiting the site and is required to accept, which is voluntary or are just stored without informing when they browse through the website, which is involuntary (Chen, Chiang and Storey, 2012). Privacy policies are set up and are stated clearly in the data collection and auto-user confirmation upon using the site. According to a Canadian survey 23% of people are afraid of bank fraud.
Figure 4: Chart showing percentage of users concerned with privacy issues
(Source: Madden, 2012, pp-10)
A collection of user data is a gray area where the advantages and risk often go hand-to-hand. A user can always shop in an incognito mode where the session data is deleted when the user closes the browser. Law enforcement authorities that govern e-commerce sites are Federal Trade Commission, State Enforcement, and Private tort actions, which are brought under the ECPA and common-law privacy invasion (E-Commerce: An Introduction, 2016).
Privacy policies mention that data are collected and if cookies or web bugs are used, which third parties have access to the information, security measures to ensure confidentiality, if the site owners will disclose users personal info if it is required; hence, the user is not kept in dark and can take lawsuit actions if they are broken (Adelola, Dawson and Batmaz, 2015). Shopping in incognito mode is possible, but it is not entirely useful since it requires additional steps and not all users are aware of it especially those who are not much computer literate or is their first time shopping online. Also with major e-commerce sites going to app mode or forcing users to opt for it, privacy takes step backward, leaving users with almost no choice in erasing their personal info (Gao et al., 2014).
As per Bansal and Zahedi (2014), a user who is in greater need of a product, or has much spending potential is charged more; while a user who shops for bargain deals, in general, will be denied any discount in price. It is simply due to the vendor not gaining any profit by selling to that user. Targeted ads and web banners are more of an intrusion on privacy, and the user is constantly bombarded with product recommendations even when the person is not shopping or do not want to reveal his search habits to other individuals using the same computer. The purpose of data collection is to offer regular visitors with customized deals and services based on their past usage habits. Targeted ads and web banners are displayed on various sites, so the user is made aware of his possible items needed to be brought (Ramakrishnan, Jones and Sidorova, 2012).
Conclusion
Both e-commerce and offline brick and mortar stores are here to stay but in the longer run for the offline retailers to survive they have to coexist. Privacy is still a major source of a dilemma for new and existing customers and visitors alike, but with improved policies and federal laws governing them it is accessible for a customer to lodge the complaint or file a lawsuit. Online retailers have resorted to social sites to interact better with clients in the form of support services and to gauge the popularity of their products, all while maintaining the reputation and expanding their business. Online business is a booming industry and the increased competition only forces them to offer massive discounts, deals, and sales to attract customers. The authenticity of sellers and fake products remain a problem for some online marketplaces, but there are easy workarounds for verifying the seller.
One Marketplace – There are many competitors in the online ecommerce business and for a customer it is confusing. To make it simpler, those competitors can trade by allowing themselves to work under a single marketplace.
Reducing Discounts – Even though discounts and deals are great for customers but offline retailers, it means almost running in loss and losing customers. Therefore, discounts and deals must be made less attractive or less cheap.
Quality Check – Some online retailers often do not check the authenticity of the products sent by sellers, and many sellers are selling fake or duplicate products. Quality assurance must be given to customers and quality check must be done internally, and it can stop retailers from doing business which has a very low rating or those who do not pass the quality test.
User friendly Privacy Policies – Privacy policies need to be more clear, precise and if presented in a way as to not intimidate the user will attract lots of customers for being upfront about it.
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Figure 2: Overall process of working of an ecommerce business
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