GCSE / Level 2 Revision Notes

Marketing - E-commerce

Introduction

When you think of e-commerce (or “online business” more generally) you may initially think of Amazon, eBay, play.com and Google. These businesses have made a tremendous success of e-commerce.  But at the other end of the spectrum is the sole trading entrepreneur building a business empire from the comfort of a spare bedroom.

E-commerce plays an increasingly important role in the way in which products and services are purchased. It affects just about every market, industry and segment.

E-commerce systems hosted on a business website are now widely used to market and sell to customers and to provide after-sales support.  E-commerce is also an important part of day-to-day relationships between businesses and their suppliers.

Why e-commerce is so effective in marketing

The use of e-commerce in setting up an online business provides a wide range of marketing benefits and opportunities.
Starting an online business can be as simple as setting up a basic shop on eBay to sell a few wholesale items, to coming up with a completely new online concept with a novel way of monetising it.

The beauty of the online business is that it’s suited to just about anyone. You don’t need to be an MBA graduate based in London to succeed. You can start your operation from anywhere, as long as you’ve got access to an internet connection and a bit of business acumen. E-commerce is ideal for start-up and small businesses!

There are three basic marketing models for an online business:

E-commerce - the most closely aligned to the traditional business model of marketing. With an e-commerce site you sell a product or service. Customers buy directly from the site, and the products are then either delivered to them or downloaded.

Advertising – with this type of site, the aim is to get as many visitors as possible, increasing the amount of customers the advertisers reach. Content on this kind of site is usually completely free for the site user, providing them either with information or entertainment.

Subscription – similar to the advertising model subscription sites generally provide information or entertainment, but the difference is the user pays to access all or part of that content.
Of course, some online businesses combine two or three of the above.

The main marketing advantages of e-commerce include:

• Much cheaper and quicker to set-up
• Helps create new relationship opportunities with potential customers, suppliers & partners
• Allows for smaller market or niche segment targeting
• Allows easier delivery of information & support (e.g. descriptions, customer reviews, images, FAQs)
• Accessible wherever there is online access
• Open for business 24x7 - unlimited store hours
• Increases brand and product awareness
• Helps create customer loyalty - a well-designed site makes it easier for customers to shop
• A great way of boosting revenues from an existing business with a physical location
• Potential to lower costs - fewer sales staff, no need for a physical location etc