Professional Documents
Culture Documents
BA Graduation Thesis
Graduate,
Nagy Szilard
Supervisor,
Lect.univ.dr. Liviu Daniel DECEANU
2021
BABEŞ-BOLYAI UNIVERSITY Faculty of
Economics and Business Administration International
Business and Economics
BA Graduation Thesis
Impact of ecommerce on the economy
Graduate,
Nagy Szilard
Supervisor,
Lect.univ.dr. Liviu Daniel DECEANU
2021
Table of content:
Abstract 3
1.Introduction 4
1.1Motivation 5
1.2Background 6
2.History of ecommerce 7
2.1Traditional stores 11
2.2 Social media and its effect on ecommerce in the early stages 13
2.3 Email marketing 13
2.4 Summary of 2010: 14
2.5 Summary 2015: 14
2.6 “Mobile vs. Non-mobile: Where should you focus?”- [4] 16
2.7 Reviews and their impact: 17
4. Ecommerce Adaptation: 23
4.1The Technology-Organisation-Environment Framework 23
4.2 Technological integration: 24
12. Conclusion 47
The term "e-commerce" refers to the practice of transacting business electronically. E-commerce
stands for the buying and selling of goods and services over the internet. Any online transaction,
document transfers, and inventory management systems are all examples of what is included in
this category. For e-commerce to reach its current stage, it has come a long way; the turn of the
twenty-first century is considered the beginning of the information technology revolution.
Following their discovery of the new trend of online shopping, entrepreneurs saw unimaginable
potential in this new market. Prior to the internet, entrepreneurs had to invest a significant
amount of money to get their business off the ground, which included rent, inventory,
advertising, and brand validation, among other expenses. Because of the internet, the cost of
starting a business has decreased significantly, which is a welcome development.It's important to
remember that even with this wide range of possibilities, success is not guaranteed; new
businesses are notoriously difficult to run smoothly. When starting an e-business, it is critical to
conduct extensive research, which is made easier by the availability of the internet. For
businesses, the migration process may appear to be a time-consuming and expensive endeavor.
Changes in customer behavior necessitate rapid adaptation by businesses, which is why
migration is such a critical process. In the case of a migration, costs can be difficult to predict,
and the return on investment (ROI) can be unpredictable. There are a variety of costs to consider,
including payment for the platform, parcel delivery, marketing, and website development.
Because of the high level of competition and the constant change in the environment, it is
necessary to rewrite the company's business plan. The ability to adapt is essential. Customer
retention is one of the most important aspects of ecommerce; although it may be difficult at first,
returning customers account for the majority of revenue. Businesses must provide dependable
services and, in some cases, a pleasurable online experience in order to encourage customers to
come back. Customers' level of satisfaction determines whether they will become loyal,
long-term, and profitable customers in situations where they have a choice. Customers who are
dissatisfied with their shopping experience are more likely to shop somewhere else in the future.
If retailers can improve customer satisfaction even further, the reward will be well worth the
effort. Customer loyalty will increase profitability.
Main question:
How did e-commerce impact the global economy?
Research question:
How can businesses adopt ecommerce?
How did ecommerce evolve?
What are the many methods that businesses may grow their businesses via ecommerce?
What marketing techniques are available in the world of ecommerce?
1.1Motivation
My initial motivation for writing about this subject stemmed from my prior experience in this
field. I began my career in this field by operating a dropshipping store. Dropshipping is a
relatively new concept; this business model entails creating an online store for a single product
or a collection of products without maintaining any inventory. Orders are immediately routed to
manufacturers. This model is ideal for beginners because the startup costs are minimal, as you
are not required to purchase inventory or pay rent or employees. Profit margins are flexible
because the cost of products is typically low in comparison to their true value. This business
model is centered on consumer trends as well as innovative products. Following that, I ventured
into social media marketing, where I assisted local businesses in gaining additional exposure and
clients through the power of social media. Following recent events in which the business realized
that online tools are far more powerful than they imagined, I thought it would be interesting to
conduct research on the impact of ecommerce and various migration strategies. I believe that
e-commerce is unquestionably the future and should be adopted by the majority of current
businesses. Although I believe that e-commerce is still in its infancy, it does present numerous
opportunities. The younger generation will have a significant impact on the future market, as
they will hold the lion's share of purchasing power. With the current shift to the online world, I
believe that online shopping will continue to evolve and eventually become standard.
1.2Background
During its early stages of development, the internet was intended for academic, military, and
scientific use only. People quickly realized that geographical barriers were no longer an issue
due to the internet's power. It ensures immediate access to data and resources. In today's world,
the internet has become ingrained in people's lives (socialization,shopping,studying, reading.
entertainment). Because of the commercial viability of this digital trend, it has quickly gained
traction, leading to the creation of new opportunities in this borderless environment. As a result
of the introduction of electronic commerce, many aspects of traditional commerce and social life
have been altered significantly. Businesses have always needed to adapt and improve in order to
remain relevant and competitive. The importance of e-commerce and its influence is increasing
year after year because it allows businesses to operate at a faster pace, with a greater flow of
information, and at a lower cost than they could previously. Each business has its own
e-commerce strategy and marketing structure; large businesses can be pioneers. At the early
stages of adaptation, e-commerce businesses may encounter numerous difficulties and barriers. It
is a lengthy process with no shortcuts. The critical first step is to recognize the competitive
disadvantage that failure to implement it will bring. This study will primarily focus on the impact
of e-commerce on businesses, but will also examine implementation strategies, key distinctions
between traditional and e-commerce, and methods for utilizing social media to develop strategy.
2.History of ecommerce
Ecommerce as we know it today began in 1948-1949. This was a document exchange between
suppliers and customers. This system was refined by various industries prior to its 1975
publication. Computers had to undergo significant evolution to be able to process electronic
business transactions. After 1991, when the Internet became commercially available, it was only
then that ecommerce could take on its current form, based on the concept of "buy and sell." Early
in the e-commerce growth stages, e-commerce meant only commercial operations, which were
carried out electronically. These were made possible through the use of electronic data
interchange (EDI) and electronic funds transfer (EFT) technologies (EFT). These were
introduced in 1970 and enabled businesses and companies to send commercial documentation
electronically. Around 1994, the internet gained widespread popularity among the general public,
following four years of development of security protocols such as HTTP and DSL enabled faster
and more secure internet access, as well as a more stable connection. In 2000, numerous
businesses from the United States and Eastern Europe launched websites to promote their
products and services. This was a watershed moment that altered the definition of e-commerce.
Following this, ecommerce was defined as the act of purchasing goods and services over the
internet through the use of electronic payment methods. It is critical to discuss the 2000 dot-com
collapse, which was a stock market "bubble" that burst between 2000 and 2001, creating a bear
market for the Nasdaq index. Numerous ecommerce businesses vanished as a result of this
unfortunate event. Traditional retailers called "brick and mortar" (street-side businesses that sell
products directly to customers) recognized the benefits of ecommerce and began integrating it
into their websites. To illustrate the impact of ecommerce, I would point to the case of the online
grocery store Webvan, whose success resulted in the demise of two supermarket chains. Other
retailers jumped on board, including Albertsons and Safeway. By the end of 2001, the most
popular form of ecommerce, B2b (business to business), had reached approximately $700 billion
in transactions. Ecommerce began to grow and reached 3.5 percent of total sales by the end of
2007. The primary advantage of e-commerce over traditional retailers is that consumers can
easily access products and search through massive databases. Comparing prices is as simple as a
few clicks, which results in a high level of competition. The rapid advancement of search
engines provides an almost unfair advantage to online merchants. It enables even small
businesses to access global markets and gain significant exposure through search engine
optimization. When it comes to sales, marketing is critical; web technologies enable online
vendors to collect data from customers and track their preferences in order to deliver targeted
marketing. When discussing the history of ecommerce, I believe it is necessary to mention eBay
and Amazon; without these two companies, ecommerce as we know it today would not exist.
The original founder of eBay is Pierre Omidyar's San Jose, he founded eBay in 1995. When the
first transaction was recorded, it was for a broken laser printer; Pierre Omidyar was unaware he
had just made history. At first, the printer was listed for $1, but after a few days, bidding
increased the price to $14, which was when he realized he was onto something. Following the
initial online sale, the volume increased to the point where his internet provider required him to
upgrade to a business plan, increasing his monthly internet bill from $30 to $250. As a result of
the increased costs, he decided to charge eBay users, who gratefully paid for the service. Due to
eBay's rapid growth, Omidyar hired Chris Agarpao to process checks. In early 1996, Jeffry Skoll
was brought on board to accelerate growth. By 1997, eBay had already generated two million
dollars in revenue and had begun selling plane tickets. Later that year, Benchmark Capital (a
venture capital firm) invested $6.7 million in the company. Meg Whitman, a former Harvard
student, was appointed chief executive officer (CEO) of eBay in 1998. At this point, eBay had
30 employees and a revenue of $4.7 million. Meg Whitmen led the company to public listing
with the starting price of 18-dollars per share. On this day in history, Omidyar became an instant
billionaire when the price closed at 54 dollars on the first day of trading. Omidyar attributed a
large portion of his success to the Beanie Babies trend (a collapsible toy) because at the time, a
large number of people would visit the site to purchase these toys and ended up staying and
purchasing additional items. After hiring additional managers from Disney and Pepsico, the team
began to focus on a mission: to connect people, not just sell them things. eBay quickly became a
global marketplace where people could purchase almost anything, but eBay knew when and
where to draw the line and prohibited the sale of certain items, including alcohol, drugs,
firearms, and any type of legal document. eBay inspired terms such as "Buy it Now," "Seller
Rating," and "Best Match." eBay laid the groundwork for companies like Amazon, which
followed the eBay model. Whitman stepped down as CEO in 2008, at which point eBay had
already acquired PayPal and Craigslist. Their annual revenue was $10.7 billion in 2018,
according to 2018 data.
Amazon.com was founded by Jeff Bezos, a former Wall Street hedge fund executive. Following
his research, he determined that the best way to enter the online market would be to sell books
online. Amazon was not the first company to sell books online, which is precisely why it faced
criticism. The goal of delivering any book to any customer anywhere set Amazon apart from the
competition. Jeff Bezos believed in the Internet's enormous potential for scalability. He coined
the slogan "Get Big Fast." In 1996, Amazon had 180,000 registered users; one year later, this
figure had risen to 1,000,000. In 1999, Jeff Bezos was named Time magazine's Person of the
Year, following Amazon's achievement of $610 million in revenue in 1998. The company began
diversifying its operations. Amazon began selling internationally in 1998, partnering with online
book retailers in the United Kingdom and Germany. Amazon began selling music and videos the
same year. Within a year, Amazon was selling consumer electronics, toys, video games, and
software, among other things. With this rapid growth, Amazon required more capital than it
could obtain from private investors. As a public company, Amazon raised $54 million on the
NASDAQ market, which enabled them to continue their aggressive growth and acquisition
strategy. Although it began selling a diverse range of products, its success has been attributed to
its highly personalized customer purchasing experience. Amazon gained customer loyalty
through exclusive services; with the power of ecommerce, they were able to use targeted
marketing; and with each customer's personal data and purchase history, they were able to make
excellent purchasing suggestions. Customer reviews were a significant innovation on the site and
became one of Amazon's trademarks; users could inform others about products by leaving
reviews. This also made it much easier for Amazon to rank products. As I previously stated, Jeff
Bezos considered Amazon to be more of a technology company than a retailer. Amazon
launched Amazon Web Services (AWS) in 2002 to adhere to his words. Initially, AWS provided
web data about website patterns, traffic, and much more, which was extremely beneficial for web
marketers and developers. They expanded their services to include storage rental and made it
possible to rent processing power (you can run/test programs/codes on more powerful systems
than are available to the general public). These services have grown in popularity to the point
where one of their competitors, Netflix, incorporates them into their own video streaming
platform. Initially, Bezos intended to own no inventory, but in order to maintain control over
deliveries, they needed to move products through their own warehouses. While their primary
source of revenue remains product sales, it is critical to note that their most profitable division is
AWS. Amazon's popular tablet, the Kindle, also revolutionized the e-book market. This created
conflict within the company, as they desired to sell e-books at a significantly lower price than
traditional publishers. After a period of time, Amazon permitted publishers to set their own
prices for ebooks. Dell is another company that has had a significant impact on the development
of ecommerce. After launching in 1994, they were the first company to reach one million dollars
in online sales by the end of 1997. Their success can be attributed to the uniqueness of their
customer service approach; on their website, you can piece together your computer tailored to
their needs and budget. Del was ranked 34 largest company in the Fortune 500 list in 2007.
Ecommerce is a relatively new phenomenon, and it is constantly evolving to the benefit of the
customer.
2010 marked the start of a new decade, and ecommerce had already advanced tremendously. In
2010, ecommerce accounted for 7.2 percent of retail sales in the United States.
2.1Traditional stores
Traditional retailers continue to be the industry's lions, accounting for the majority of sales.
Traditional retail outlets continue to account for up to 80% of the market. In 2010, we witnessed
a watershed moment in ecommerce; instead of competing with traditional commerce, they joined
it; as the adage goes, "if you can't beat them, join them." Amazon, one of the world's largest
ecommerce companies, opened a physical store in 2015, and in keeping with their origins, it was
a bookstore, after twenty years of operating just online. They were not the only brand to open a
physical location; numerous others followed suit (Allbirds, Casper and many more).
Mobile shopping saw a significant increase, and Black Friday and Cyber Monday (BFCM) saw
record sales. In total, mobile shopping accounted for approximately 35% of sales. BlackBerry
was the market leader at the time, accounting for more than 30% of the market. Mobile shopping
attributed for 1.3 percent of the ecommerce market ($2.2 billion). It wasn't until 2017 that mobile
shopping saw a significant increase. Around this time, websites began focusing more on
mobile-friendly design in order to make them more accessible and user-friendly. Mobile internet
began to evolve, becoming more secure and faster, and mobile wallets became popular,
becoming a must-have nowadays. By 2017, the 1.3 percent had grown to account for 34.5
percent of all ecommerce transactions.
-source: [1]
Initially, they believed that tablets would have a significant impact on ecommerce, but this
proved not to be the case. When Apple introduced the iPad in 2010, it was expected to
revolutionize the ecommerce space. Websites serve a less-than-optimal version of their website
to mobile users, with some functions being omitted entirely due to smaller screens; tablets were
created to address this issue. In 2011, tablets accounted for up to half of all mobile sales,
indicating a significant uptrend, and experts believed tablets were the answer, but this was not
the case. Tablets accounted for 11% of mobile sales in 2019 and this percentage is continuing to
decline. Though a critical piece of information I must mention is that the average order value on
tablets is more than double that on smartphones. Ecommerce has grown to be a highly
competitive market, but there is still room for new businesses. To illustrate this, consider
Shopify; they launched in 2006 and had grown to over 20,000 stores by 2010. What exactly is
shopify? Shopify is an ecommerce platform that hosts your store and enables non-technical users
to create websites without knowing how to code. Additionally, it integrates online payment
methods that are difficult to obtain without the assistance of a third-party platform such as
Shopify ( this is still in a very early stage in Romania). Woocommerce launched in 2011 as a
competitor to Shopify, but has since grown to become the most popular ecommerce platform. It
powers over a quarter of all online retailers. To remain competitive, brands needed to develop
novel revenue streams. Numerous novel methods were invented in 2010, and this research paper
will focus on the most popular ones:
● Subscription box
● Software as a service
● Direct to consumer
Despite the fact that these were all well-received innovations, none stood out or took over the
internet. However, Groupon succeeded; in 2010, they were on the verge of taking over the
internet. Groupon even turned down a $6 billion acquisition offer from Google. Groupon was a
daily deal website, which contributed to their demise. By 2013, merchants realized that the
discount they were required to offer their customers did not result in increased customer
retention. Regrettably, this is a prime example of how trends that emerge on the internet can fade
as quickly as they appear.
2.2 Social media and its effect on ecommerce in the early stages
Early predictions were far more optimistic than reality. Ecommerce and social media are a match
made in heaven, but they struggled to make it work in the early stages.
Both Facebook and Twitter experimented with a Buy button, but neither experiment lasted long.
Facebook eliminated organic reach and forced businesses to pay for advertising; at the time,
Facebook did not have access to the amount of data it does today, and thus their advertising tools
were less powerful.
This is not all bad news; social media and ecommerce are here to stay, and brands will eventually
figure out how to make them work together.
In comparison to social media, email marketing has seen significant success. Emails were
expected to vanish by 2002, but this did not happen. It continues to grow and evolve to this day.
If done correctly, it has been proven to be the most effective form of marketing, outperforming
social media marketing, search engine optimization, and affiliate marketing, among others. After
conducting my research, I was surprised to discover that email marketing outperformed all other
forms of marketing, even among younger generations. Marketers were concerned in 2010 that
email marketing would be unable to compete with social media, but they also began to explore
ways to make email marketing sustainable. With advancements in email marketing, abandoned
cart emails became popular in 2010, and marketers recognized the value of building their own
email list.
-Source: [2]
In 2010, ecommerce began to expand globally, bringing with it changes and innovation. In 2010,
the first physical manifestation of a digital business occurred with the emergence of mobile
shopping. Tablets demonstrated promise but fell short of expectations. Social media and
ecommerce have been unable to coexist harmoniously, and email marketing has been shown to
be the most effective.
2.5 Summary 2015:
In 2015 social media marketing started making a reappearance. Because Twitter and Facebook
made it significantly easier for consumers to find products, smaller businesses did not have to
focus as heavily on SEO ( search engine optimisation).
Because direct search and referral traffic continue to dominate, it is critical to maintain a strong
SEO strategy. While social traffic has a lower market size, we must also consider the quality of
the traffic; according to data, social traffic is superior to email and direct traffic.
Figure 4: The time spent on websites-Source: [3]
As mobile traffic has increased in popularity, businesses must begin optimizing their websites for
mobile use.
-Source: [3]
Figure 5: Distribution of Mobile vs Non-Mobile Page Views
-Source: [3]
I wanted to bring you this information: Reviews increase sales conversion rates. Businesses get
an edge when they go one step further and post client feedback on their top three social media
channels. When customer
reviews are posted, the
conversion rates on LinkedIn,
Twitter, and Facebook surpass
the industry standard of 2%.
Twitter had the greatest
conversion rate of all of the
websites examined, at 6%.
Figure 7: CVR of Reviews
Shared to Social
-Source: [3]
And what do star ratings have to do with future consumer behavior? According to an
examination of over a million reviews and 6.6 million product transactions on 6,623 distinct
products across a variety of industries and retail locations, more stars do indeed result in
increased sales. Additionally, study indicates that things with a higher star rating have a greater
sales volume and more reviews.
Figure 8: Average Star Rating And Number of Orders
-Source: [3]
-Source: [3]
The slump is regrettable, but expected. The number of reviews is critical since they have a
substantial influence on purchasing choices. Additionally, the study's discovery that 75% of the
65 million transactions reviewed earned 5-star ratings was noteworthy.
-Source: [3]
It's reasonable to conclude that, in light of this knowledge, businesses should stop worrying
about low ratings. It is more critical for buyers to read more reviews, regardless of their perfect
5-star rating. Additionally, we know that negative judgments may have both positive and
negative consequences. Mobile and social are indeed transforming e-commerce, and the
influence of reviews on purchasing choices cannot be denied. Our hope is that organizations will
be able to use the data found here to use best practices they have already mastered. Be aware of
what is now succeeding and what is not for over a million online companies.
3. Summary of the decade(2010-2020):
Ecommerce contributed for around 21% of overall sales, with Amazon accounting for 7% of that
figure. According to forecasts, online merchants in the United States would enable $861.12
billion in consumer transactions in 2020, a 44.0 percent increase over the previous year. Since at
least the late 1990s, annual growth in ecommerce in the United States has reached its highest
level in two decades. Additionally, it is over three times the growth of 15.1 percent in 2019.
According to research, ecommerce is expected to reach 20.3 percent in 2020, a ten percent
growth over 2019, which is regarded as one of the largest gains in history.
To be clear, Amazon remains number one, but other merchants are catching up. Amazon
accounts for 31% of overall ecommerce sales, but this figure increased to 49% in 2019. This is
due to the growth of other firms, not to Amazon's decline. A powerful tool in this regard is the
share growth in ecommerce. By examining it, one may learn which firms bear responsibility for
changes in ecommerce. People bought more on the Internet as a result of the epidemic, and they
did not purchase from Amazon. Walmart, Kroger, and Best Buy benefited from this
circumstance. The top online retailers are the following: Amazon, Walmart, Apple, Dell, Best
Buy, Home Depot, Target, Wayfair, Kroger, Staples. Walmart surpassed Apple for the first time
in 2020, and Target joined the top ten.
The TEO framework is an organizational theory comprising three components. These three
factors are believed to have an effect on technological innovation.
Technological context:
This includes not only technologies that the firm is already using, but also those that are
available but not being used. Existing technologies are critical because they constrain the types
of changes that a business can make. When we discuss innovation outside of a company, we can
divide it into three categories: incremental, synthetic, and discontinuous.
● Incremental changes: New versions or updates to already existing technologies.
● Synthetic: When pre-existing technologies are combined with more traditional ones, as
when a university begins offering online courses.
● Discontinuous: These are considered radical changes, such as when grocery stores
adopted bar codes.
Ecommerce is a sector defined by technological advancements. This allows companies to make
incremental and synthetic changes, discontinuous changes are only required in very rare
occasions.
The organisational context:
This refers to the firm's characteristics and resources. This context is dependent on a firm's
internal system and team, their operational procedures, and internal communication.
The environment context:
This includes the industry's structure; intense competition encourages the adoption of
innovations, as is evident with ecommerce. Rapidly growing industries necessitate rapidly
growing businesses, and ecommerce is evolving daily as a result of new technological
advancements. Government regulations play a significant role in this; new constraints or
regulations in the industry can have an effect on businesses; for example, Romania has fewer
e-commerce regulations than the US.
In conclusion, the three elements all contribute to, but also occasionally oppose, the process of
technological innovation adaptation.
Firms used many technologies before the internet to assist their commercial operations, but these
were known as “islands of automation.”- [7] The internet makes outdated problems disappear.
Technological integration may be defined as the percentage of web-based technologies in a given
project. “Web functionalities help firms provide real-time information to customers, update
product offerings and make price change, facilitate self-service via online account management
and research tools, and conduct online transactions with suppliers”- [8] So, those who are able to
provide more web-based functions will have an advantage in adopting e-commerce since clients
and trade partners will be more eager to do transactions online with them.
The worldwide reach of the internet empowers companies to access customers throughout the
globe. Firms are increasingly turning to internet-based e-commerce as a way to advance their
value chain and business strategy, which has created a need for research that explores what kind
of variables are likely to promote this kind of migration.
5. Evolution of ecommerce payment:
Cash and carry is the most frequent form of trade while shopping in a traditional manner.
E-commerce has broken many of the old norms and brought with it a significant time and
distance gap between the cash and carry, leading to a paradox where customers are obligated to
pay for something before they are able to have it. In e-commerce interactions, the contracting
parties haven't ever met or done business with each other. In a virtual network environment,
these two parties conduct the transaction as if they had never met. The vendor is concerned about
late delivery since the items have already been delivered. Furthermore, the customer is
concerned about having to pay without receiving anything. In the real world, there are always
dishonest vendors that take advantage of customers who get subpar goods and those customers
end up suffering losses because of it. Furthermore, because of the limited information available
in the e-commerce sector, buyers are unable to discover qualified suppliers. Customers may only
estimate the market condition after each buying trip and adjust their purchasing behaviors to
better the buying experience. “Under these circumstances, incomplete information may affect the
seller’s and the buyer’s choice of behavioral strategies, causing the market to ultimately evolve
and locked to bad situation”- [9] With the introduction of new payment alternatives such as
third-party payment systems, mobile payments, and cash on delivery, e-commerce has expanded
its reach.
Payment at the time of sale has long been the norm for purchases. “Western Union began
electronic money transfers in 1871”- [10], when the company introduced EFTs as a means of
transferring money. Electronic Funds Transfer (EFT) methods are known as "wire." These
methods may be used to rapidly and easily transfer money without needing an actual exchange of
currency between both the transferring and receiving sides. By about “the turn of the century, the
Federal Reserve”- [10] began using telegrams to transfer money. Western Union's main business
became transmitting money. Because of the advent of charge accounts in 1914, Western Union
was able to expand the availability of payments by making them accessible at a variety of places,
while previous versions had only been accessible at the businesses that provided them. It was
necessary to link the customers' credit cards to the accounts, and the customers were required to
reimburse the credit card issuer. During the first part of the twentieth century, a "charge card"
was a kind of credit card that was widely used as a generally recognized electronic payment
mechanism.
Despite how popular charge cards and accounts were at the time, their limits spurred additional
innovation in the 1950s, which resulted in the introduction of credit cards. Diners Club launched
“the world's first "general purpose" charge card in 1950”- [10], and it was quickly followed by
cards from Carte Blanche and American Express that were similar in nature. These early
pioneers laid the groundwork for the next credit card revolution by using charge cards in a
pioneering manner. “While charge cards required balances to be fully paid off at a predetermined
interval, credit cards allowed for the extension of credit”- [10], often with additional interest
fees—allowing balances to be carried over from a previous pay period. Charge cards were first
introduced in the United States in the early 1900s. When the Bank of America in 1958 created
the first modern-day credit card, it used the revolving credit model.
The BankAmericard, a credit card co-developed by Bank of America and now known as Visa,
was introduced in 1997 and was the first of its kind. Distribution of cards to the majority of
houses in a region where the majority of the residents were Bank of America customers was a
smart strategy for quickly expanding the cardholder base, and it helped to increase the cardholder
base significantly. In spite of the broad acceptance of credit cards, certain holdouts persisted. The
system for utilizing these devices is much more difficult to use now than it was in the past. It was
not uncommon in the 1970s for customers to pay with a credit card, but instead of calling the
issuing bank, which then had to call the credit card company, where “an employee would
manually verify the customer's name and credit balance to authorize the transaction”- [10], they
would simply use the magnetic strip on the card to process the transaction. Since this
complicated procedure had been put in place, businesses that trusted their customers or whose
costs were less than a specific amount started allowing unconfirmed transactions. The heightened
danger of credit card theft prompted merchants to be more cautious, making them more
susceptible to chargebacks and other penalties. However, for the benefit of speedier, easier
transactions, many businesses choose to accept the risk.
Electronic payment methods have evolved with the advent of the internet. In this period,
ecommerce first emerged as a quicker, more efficient method of transaction for purchases that
included card-not-present (CNP) methods, such as over the phone, in person, or via mail order.
This happened shortly after the introduction of verification and authorization systems for digital
payments via different channels, which were also introduced on the heels of electronic payment
verification. Soon after that, consumers began paying using mobile devices, using mobile
wallets(Google and Apple pay).
Bitcoin was the very first cryptocurrency to be widely presented to the globe in 2009. While
digital currencies started gaining traction after taking years to become popular, they've quickly
grown in popularity. The first creator of cryptocurrencies was Satoshi Nakamoto. After the crisis
that happened in 2008 in 2009 Satoshi Nakamoto created Bitcoin, but he was not the first to
come up with the idea. The main goal of Bitcoin was to create a decentralized way of payment
with no institution behind it.
How does cryptocurrency maintain and obtain value? Similar to other currencies,
cryptocurrencies get their worth from the size of the community's participation (such as the user
demand, limited supply, or the usefulness of the coin). Despite that, there are certain contributing
variables to the price of cryptocurrencies. Namely, most digital coins out now are issued by
private blockchain-related businesses, and their worth stems in part from how well-received their
projects are as well as their brand image and efficiency. We should go through everything that
adds value to cryptocurrency. To create a profitable cryptocurrency, one must make it useful. The
use of a decentralized digital record, or blockchain, is what gives cryptocurrencies their inherent
value. To ensure your cryptocurrency is useful, it is critical that you find a use for it inside a
certain blockchain ecosystem. Digital coins have a limited quantity. In the ideal situation, the rate
of demand would outstrip the rate of supply, thereby making it more valuable. This serves as an
illustration of Bitcoin's limited supply. There will only ever be 21 million coins in existence.
Because it is now the most popular cryptocurrency, Bitcoin is in high demand and therefore
enjoys rising value. Some currencies use a "burning" process, destroying a portion of the coin
supply in order to boost the value. Projects have a significant role in determining the value of
cryptocurrencies; if a project is more feasible and the creators take excellent care of it, the value
of the currency increases. What is market cap and why is it more important the individual price
of the coin? Market cap represents the price of a coin on the market. If a coin has Y amount
circulating and each coin is worth T then the market cap would be YxT=YT.
6.3 Cryptocurrencies as payment methods:
“Cryptocurrencies are already infiltrating the ecommerce industry, creating quite the buzz
amongst retailers and consumers.”- [11] Paypal has announced that they would now accept
cryptocurrency throughout the checkout process (Bitcoin, Etherium, Litecoin). This enables
cryptocurrency checkout simple to use and integrate for merchants. eBay, one of the largest
online marketplaces, has shown an interest in integrating cryptocurrency checkout on their
website. “expand global ecommerce and make it more frictionless and affordable for
consumers”- [12] Facebook, one of the most powerful companies in the world of social media
and ecommerce, has recently announced plans to create a cryptocurrency called Dien.
Blockchain transactions may be faster and more direct, allowing you to speed up your company's
financial cash flow. As well as serving as a new form of money, cryptocurrency enables orders to
be fulfilled in near-instantaneous time – making it great for fulfilling customers' increased need
for rapid delivery. International transfers may be made quicker and cheaper with the assistance of
cryptocurrencies, which may help businesses reach new customers and expand the market. Due
to their encryption, they are extremely difficult to steal but still easy to track, making them
secure. By increasing the number of checkout options available to customers, the experience
becomes more flexible, allowing them to pay as they want. This may result in an increase in
conversion rate.
Cryptocurrency values are very volatile and difficult to forecast, which may result in an
unpleasant scenario. With new currencies appearing daily, it may be difficult to select one that is
compatible with your website's payment system (It is advised to stick to the more popular ones).
This table will include Strengths, Weaknesses, Opportunities, and Analysis in order to help you
better grasp both the good aspects of ecommerce and the possible dangers.
Table 1: SWOT Analysis
Simple and easier Long Delivery timing Wide business growth: Privacy concerns:
exchange of There are no limitations Information can be
information: Makes it misused.
possible for merchants
and consumers to
quickly exchange
information, as well as
helps ensure fast and
on-time just-in-time
delivery.
Improved customer Less information on Cut down on local Fraud: The internet
interaction: Input and physical aspects of competitors can be a dangerous
comment boxes provide products: Material, and place and it can
immediate feedback, condition of products
damage the trust of
and that results in can be misleading
customers.
interactions that are
quicker.
No physical company
set up costs.
As a result of this table, the following conclusion can be drawn: ecommerce may help businesses
reduce their overhead and administration costs. With the potential to assist poor nations, its
global reach will alter its production and competitive advantage. When it comes to ecommerce
development, information technology (IT) plays a critical role since it simplifies market entry
and product evaluation. On the other hand, it has drawbacks; regrettably, security will always be
a major concern in ecommerce. However, in the long run, the benefits exceed the dangers.
In today's interconnected marketing world, it may be difficult to identify the different digital
marketing methods that are in use. One key factor is that all types of marketing must be
consistent. In this study, we'll look at the use of social media, email marketing, and search engine
optimization (SEO) in e-commerce marketing.
8.1 Ecommerce advertising
Advertising comes under the marketing umbrella when utilized effectively. When utilized
correctly, it is known to enhance brand recognition and lead to a higher conversion rate.
Advertising comes under the marketing umbrella when utilized effectively. When utilized
correctly, it is known to enhance brand recognition and lead to a higher conversion rate. The
primary goal of E-commerce marketing is to attract more customers to your product, service, or
brand. The very important takeaway from this is that e-commerce advertising is very successful,
and it should be included in the e-commerce advertising strategy.
Brands and businesses realize the wide impact that social media platforms have now. Brands
may interact with their audience and further expand them via social media. A lot of campaigns
are distinct, and it is essential that companies investigate the various channels to determine
which platform works best for them. The main benefit social media has to give is the ability to
show off goods in a visual manner, so there is less attention span. Making use of visual social
media platforms and putting creatives and goods in front of customers is simpler than ever
before. Instagram is an excellent illustration of this; it permits the uploading of high-quality
images and even allows businesses to identify goods with their price tag and name. This
establishes a very straightforward relationship with customers, who may simply engage in the
comments section. Instagram's latest feature is shoppable content, which allows users to
purchase items with a simple click of a button on the image. This is an excellent strategy for
increasing conversion rates, since companies capture customers at the moment. This approach
may be ideal for businesses seeking impulsive customers. Facebook Business is another social
media marketing powerhouse. When it comes to social media marketing, Facebook Business is
the most effective tool available. Facebook Business is another social media marketing
powerhouse. When it comes to social media marketing, Facebook Business is the most effective
tool available. With Facebook controlling the bulk of social media channels, Facebook Business
enables businesses to access all platforms with a single tool and highly targeted audiences.
8.3 Content Marketing
Content marketing is an effective strategy for increasing a company's website ranking via the
use of video, blog articles, and more. The optimization of a product page is critical; with short
product-related keywords, it is more likely that it will appear above the competitors in a Google
search. Writing blog articles may help a business's website reach a wider audience, it's free to
do, and it generates natural traffic. Guest articles on other websites may assist in establishing
domain authority, which can result in an increase in SEO ranking. This is often free and may aid
in audience diversity. When it comes to scaling a company, video postings are critical. With one
billion active users, Youtube is the second largest search engine behind Google. This type of
advertising similarly relies on keywords and SEO ranking, but in addition to being a free method
of reaching an audience, YouTube also offers paid advertising. Apart from advertising, you may
use video blogs to display your product in a lesson, demonstrating the advantages and proper
usage of a product to customers. If you run a site that deals with frequently-searched keywords,
create a FAQ page with answers to those long-tail keyword searches on your website to get
traffic to your site. The two essential components of a successful ecommerce business are
authority and traffic.
As previously mentioned, email marketing is one of the oldest forms of ecommerce marketing.
Automation is a critical component of ecommerce; email marketing is automated. Let your email
campaign work its magic with subscribers categorized by interest or stage in the buyer's
journey. It reduces the number of marketing tactics you have to deal with on your lengthy to-do
list. Furthermore, maintaining trust on your email list is critical to your lead generation. When
people have a heightened concern for their data privacy in this day and age, marketing emails
are unwelcome in their inbox. In order to be effective, e-commerce marketers must be vigilant
when and how they collect customers' email addresses.
Influencer marketing is about engaging individuals or companies that have a profound impact on
your target market. People may also use the phrase 'following a lot of people' to describe
someone like a celebrity or a community where your target audience is already located. A
well-known expert is like a magnet for followers who have an affinity with the person in
question. With this in mind, it is no surprise that they have little trouble getting people to notice
your online goods through a recommendation, or "paid post."
Local marketing enables you to concentrate your promotional efforts on the regions where your
most likely customers reside (assuming you have a big population of them in one area) and may
encourage new customers to become your regular customers. Consider the following: Discover
wherever your customers are situated with tracking cookies. When all of this is done, you should
offer reduced shipping to prospective clients who do have storage or shipping facilities nearby. A
new client may be exactly what you'd like to benefit from an offer.
When it comes to driving traffic to your online shop beyond the conventional techniques we
covered above, there are a myriad of other marketing strategies you may use. Trust is the
deciding element in whether a customer completes a transaction or not, which is why the
checkout page must be optimized. A business must offer consumers every reason to do business
with them, and in order to earn the greatest degree of trust, the following must not be overlooked.
Money-back guarantee: The customer must feel in control; they must know that if they are
dissatisfied with the goods, they can return it for a refund. The return policy should be
unambiguous and simple to comprehend; a customer should be aware of the return terms prior to
making a purchase. Multiple delivery choices and tracking, businesses must offer customers with
a variety of shipping alternatives and also monitor the goods. This simplifies the waiting process
for customers and also allows for greater control, leaving less opportunity for mistakes.
Customer assistance must be readily accessible and as quick as feasible. To operate a successful
company, you must have a responsive web page; sluggish page loading rates and mistakes on
web sites may quickly erode customer confidence.
Customizing your outputs to suit the specific requirements of your customer is known as
personalization. Content may be included into the headline of an email, suggestions based on
behavior, or can be applied to website pages if the user returns and has continued on their
buyer's journey. Personalization enables customers to go through the buying process more
quickly. It allows them to find exactly what they are looking for and provide them with the
information they need in order to complete their intended action, after all, make a purchase.
To demonstrate this kind of advertising, the greatest example is Coca Cola. From a marketing
standpoint, the "Share a Coke" campaign was fantastic. Coca Cola produced bottles with
customers' names on them in the hopes that customers would go out of their way to locate bottles
with their names on them and share them on social media. This resulted in massive free publicity
for Coca Cola.
Loyal customers are the best customers; they are not only repeat consumers, but they may also
bring in new customers. With a discount offer for returning customers, a company may
encourage customers to return. When developing a loyalty program, several factors must be
considered. The company must determine how they want customers to demonstrate their loyalty;
this can be accomplished in a variety of ways, including sharing their content, tagging them on
social media, referring new clients, or making repeat purchases. Additionally, incentives may be
differentiated, ranging from numerous discounts to exclusive privileges.
9.4 Reviews
With the exponential development of the ecommerce industry, competition has increased
significantly. Customers want the greatest value for money, but occasionally their expectations
may not match reality. Because reviews originate from real individuals and are based on actual
experiences, they instill a sense of confidence and security in customers, which is why they are
critical for companies. Businesses should encourage customers to write evaluations after their
experience.
When consumers are browsing your store and throughout the checkout process, utilizing live
chat may be very beneficial in assisting them with any issues they may have.
10.1 Introduction
In this case study, many marketing techniques that were utilized to grow an online shop will be
discussed, as well as other large firms that employed the same strategies. I'll talk about my
personal experience running two internet shops and the main lessons I gained via trial and error
in this instance, but also look at bigger industries that had to adopt during the pandemic.
Among the many marketing methods discussed before, I concentrated on social media marketing
and email marketing for post-purchase follow-ups or abandoned carts. While social media
marketing may seem complex at first, once you understand the fundamentals, it all boils down to
testing various audiences and gathering enough data for Facebook Business to create lookalike
audiences. Look alike audiences are an incredible feature of Facebook Business; by gathering
data from your customers, it can create similar audiences that match your customers' data,
increasing the likelihood that they will become future customers as well. With the initial shop, I
wanted to increase brand recognition, so the advertisement mostly consisted of high-quality
pictures and videos, but without a call to action, it was not enticing customers to purchase. On
the other side, with the second shop, the primary objective was to generate a wow factor and an
immediate call to action, while also generating urgency via the concept of goods being available
for a limited time. Both shops launched when Q4 began in America (the last quarter of the fiscal
year), which meant that advertising efforts revolved on the holidays, with special discounts and
bundles. The budget for advertisements was set at $50 per website, for a total of $100. This
expenditure was necessary so that Facebook could gather data for future advertising efforts.
Marketing sales funnels were utilized to boost sales and assist the sales generating process. The
famous AARRR (Acquisition-Activation-Retention-Referral-Revenue) model was utilized for
the initial shop.
Figure 14: AARRR Framework -Source: [14]
This includes not just the number of site visits but also the rate by which these potential
customers convert to consumers. You want to monitor each stage of the consumer journey
through the funnel, not simply the ultimate conversion to a paying client. Each micro-conversion
along the route is significant.
In the activation stage, the primary objective is to provide website visitors with a superior
shopping experience. The moment a user has registered as a qualified lead, activation has
occurred. To determine whether these particular conditions are present and that individual is
ready to become a client, now is the time to conduct an evaluation. It is critical to understand the
unique needs of your market in order to convert customers from qualified leads to customers.
Example: For instance, B2C versus B2B, services vs. tangible goods, and so on. Once a visitor is
at the online shop, they are already "activated."
The retention stage is all about enticing customers to return; in our instance, I want customers
who purchased jewelry to return for further purchases. For this purpose, follow-up emails with
special discounts and offers were utilized.
Referrals are critical when scaling a start-up company; it's critical to get existing customers to
speak about the website; this generates excellent exposure. Additionally, clients who have been
referred are more likely to make a purchase.
The last step is "Revenue," which is all about converting prospective clients into paying clients.
This may be quantified in two ways: average order value per usage or customer lifetime value.
To evaluate the success of your marketing activities, you must monitor your results. You will
have no comparison data, and you won't know whether your activities were successful or not
until you do anything. In other words, the only way to determine if something causes something
else is to first implement it and then measure. AARRR-based projects are never completed. To
be effective, it is critical to maintain a sales mindset, which requires a high level of commitment,
considerable effort, and strategic planning. We must not overlook the fact that people are also
constrained by a lack of funds, insufficient ideas, and insufficient data. However, the preceding is
not the whole of the labor involved; significant creative effort is required. Without a question,
this is the most critical component of the equation. To accomplish all of the above, keep in mind
the overall communication burden required to maintain coordination. This strategy may quickly
become the business's or department's most resource-intensive endeavor.
The AIDA (Attention, Interest, Desire, and Action) model was utilized for the second shop. This
model depicts the phases a person experiences while making a purchase of a goods or service.
It was very difficult to locate payment providers in Romania that would handle online purchases
on my website. Initially, I contacted "Authorize.net," "2Checkout," and "Ayden," but their rates
were too expensive for a start-up. Thus, initially, the only payment method available was PayPal,
which I saw as a significant drawback for the company. Many customers lacked PayPal or were
unwilling to use it due to its higher costs. Thus, after doing study, I determined that at the very
least, I should incorporate a payment mechanism that enables customers to pay using
cryptocurrencies. At first, I dismissed this, but this was a watershed moment for the websites.
60% of individuals utilized cryptocurrency instead of PayPal as a payment method. At first, I
was able to take just Bitcoin.
Figure 16: Paypal vs Bitcoin Revenue
Accepting cryptocurrencies as payment opened my eyes to new benefits; over time, the value of
cryptocurrencies has increased significantly, which means my earnings have increased as well.
As previously mentioned in the study report, companies may significantly benefit from taking
cryptocurrency as payment. “Stripe is a technology company that builds economic infrastructure
for the internet. Businesses of every size—from new startups to public companies—use our
software to accept payments and manage their businesses online.”-Source: [16]
Their business mainly serves the needs of e-commerce websites and mobile apps, including
payment processing software and application programming interfaces. Stripe's costs were
ridiculously cheap, given it was a necessary implementation. 1.4 percent plus one RON for
European Cards and 2.9 percent plus one RON for non-European Cards.
Figure 17: Paypal, Bitcoin and Stripe revenue
Regrettably, of the 1500$ I received through Stripe, I lost 45$ in fees alone. I never encountered
any security issues but definitely had bad experiences with PayPal when dealing with refunds.
I'd want to focus on this kind of marketing in particular since I believe it is the most neglected.
This type of marketing was mainly used with the jewelry store. Social media has increased in
popularity over the years, and it's easy to ignore the marketing opportunities it presents. Almost
everyone has a social media profile via which they follow an "influencer." Though influencer
marketing first raised some concerns due to COVID-19, this practice has actually grown. In
certain sectors, such as travel, the marketing model had to be reconsidered since it didn't account
for COVID-19; however in other industries, their marketing models were able to adjust to
account for COVID-19. Influencer is expected to grow to $13.8billion in 2021. The majority of
companies dedicate a budget to content marketing, with 75% of that budget going to influencer
marketing. The first step is to choose an influencer who is a good match for the desired audience.
I had to get follower insights from a number of influencers in order to determine their followers'
age range, region, and other demographics. Following the identification of an influencer with a
sizable following, the engagement rate must be determined. This may be determined by
combining the likes and comments together and then dividing by the number of followers. This
must be monitored since Instagram has become very competitive, and many influencers are able
to purchase followers or just have followers that are not engaged with their content. I was hoping
for a rate of engagement of more than 8%. After identifying three influencers that fit the
requirements, I sent them an email inquiring about their rates and also making an offer. After
settling on a price per post, I determined that I wanted three posts each week. As a result, I gave
them the jewelry pieces I wanted to market. The three posts cost $150 a week per influencer, for
a total of 450 $. Along with this, I was running a Facebook Ads campaign for $50 per day (as
stated before), which amounted to 350$ each week. At first, I wasn't making huge sales; some
days, I broke even, while others, I didn't. However, I had to remind myself that this was not a
race, but a marathon, and that I was gathering data. In another light, I was required to purchase
the data. After accumulating a sufficient number of website visits, add-to-carts, and conversions,
I was prepared to begin building lookalike audiences. All prior advertising initiatives have been
discontinued. The budget stayed constant at $50 each day, ultimately increasing to $100 per day.
I felt confidence in the data gathered and the algorithm used by Facebook. I was barely breaking
even on the toughest days.
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