Module I

INTRODUCTION TO ECOMMERCE AND INTERNET MARKETING

Overview
In this module we will explore the concept and principles of ecommerce and
internet marketing. Moreover, you will acquire the skill on how to perform digital
marketing.

Learning Objectives:
At the end of the module students will be able to:
1. Define electronic commerce or ecommerce;
2. Understand ecommerce;
3. Know the history of ecommerce;
4. Identify the advantages and disadvantages of ecommerce;
5. Differentiate types of ecommerce; and
6. Describe the types of ecommerce revenue models;

Content

What Is Electronic Commerce (Ecommerce)?

Electronic commerce (ecommerce) refers to companies and individuals that buy and sell
goods and services over the Internet. Ecommerce operates in different types of market segments
and can be conducted over computers, tablets, smartphones, and other smart devices. Nearly every
imaginable product and service is available through ecommerce transactions, including books,
music, plane tickets, and financial services such as stock investing and online banking. As such, it
is considered a very disruptive technology.

Disruptive technology is an innovation that significantly alters the way that consumers,
industries, or businesses operate. A disruptive technology sweeps away the systems or habits it
replaces because it has attributes that are recognizably superior.

Recent disruptive technology examples include e-commerce, online news sites, ride-
sharing apps, and GPS systems.

In their own times, the automobile, electricity service, and television were disruptive
technologies.

KEY TAKEAWAYS
 Ecommerce is the buying and selling of goods and services over the Internet.
 It is conducted over computers, tablets, smartphones, and other smart devices.
 Almost anything can be purchased through ecommerce today; for this reason, ecommerce
is often highly competitive.
 It can be a substitute for brick-and-mortar stores, though some businesses choose to
maintain both.
  Ecommerce operates in several market segments including business-to-business, business-
to-consumer, consumer-to-consumer, and consumer-to-business.

Understanding Ecommerce
As noted above, ecommerce is the process of buying and selling tangible products and
services online. It involves more than one party along with the exchange of data or currency to
process a transaction. It is part of the greater industry that is known as electronic business
(ebusiness), which involves all of the processes required to run a company online.

Ecommerce has helped businesses (especially those with a narrow reach like small
businesses) gain access to and establish a wider market presence by providing cheaper and more
efficient distribution channels for their products or services. Target (TGT) supplemented its brick-
and-mortar presence with an online store that allows customers to purchase everything from
clothes and coffeemakers to toothpaste and action figures right from their homes.

Providing goods and services isn't as easy as it may seem. It requires a lot of research about
the products and services you wish to sell, the market, audience, competition, as well as expected
business costs.

Once that's determined, you need to come up with a name and set up a legal structure, such
as a corporation. Next, set up an ecommerce site with a payment gateway. For instance, a small
business owner who runs a dress shop can set up a website promoting their clothing and other
related products online and allow customers to make payments with a credit card or through a
payment processing service, such as PayPal.

FAST FACT
Ecommerce may be thought of like a digital version of mail-order catalog shopping. Also
called online commerce, ecommerce is the transaction between a buyer and a seller that leverages
technology.

Special Considerations
Ecommerce has changed the way people shop and consume products and services. More
and more people are turning to their computers and smart devices to order goods, which can easily
be delivered to their homes. As such, it has disrupted the retail landscape. Amazon and Alibaba
have gained considerable popularity, forcing traditional retailers to make changes to the way they
do business.

But that's not all. Not to be outdone, individual sellers have increasingly engaged in
ecommerce transactions via their own personal websites. And digital marketplaces such as eBay
or Etsy serve as exchanges where multitudes of buyers and sellers come together to conduct
business.

FAST FACT
The U.S. Department of Commerce recognizes ecommerce business such as transactional
sites, static content sites, online marketplaces, and auction sites.
History of Ecommerce
Most of us have shopped online for something at some point, which means we've taken
part in ecommerce. So it goes without saying that ecommerce is everywhere. But very few people
may know that ecommerce has a history that goes back before the internet began.

Ecommerce actually goes back to the 1960s when companies used an electronic system
called the Electronic Data Interchange to facilitate the transfer of documents. It wasn't until 1994
that the very first transaction. took place. This involved the sale of a CD between friends through
an online retail website called NetMarket.

The industry has gone through so many changes since then, resulting in a great deal of
evolution. Traditional brick-and-mortar retailers were forced to embrace new technology in order
to stay afloat as companies like Alibaba, Amazon, eBay, and Etsy became household names. These
companies created a virtual marketplace for goods and services that consumers can easily access.

New technology continues to make it easier for people to do their online shopping. People
can connect with businesses through smartphones and other devices and by downloading apps to
make purchases. The introduction of free shipping, which reduces costs for consumers, has also
helped increase the popularity of the ecommerce industry.

Advantages and Disadvantages of Ecommerce

Ecommerce offers consumers the following advantages:

 Convenience: Ecommerce can occur 24 hours a day, seven days a week. Although
ecommerce may take a lot of work, it is still possible to generate sales as you sleep or earn
revenue while you are away from your store.
 Increased selection: Many stores offer a wider array of products online than they carry in
their brick-and-mortar counterparts. And many stores that solely exist online may offer
consumers exclusive inventory that is unavailable elsewhere.
 Potentially lower start-up cost: Ecommerce companies may require a warehouse or
manufacturing site, but they usually don't need a physical storefront. The cost to operate
digitally is often less expensive than needing to pay rent, insurance, building maintenance,
and property taxes.
 International sales: As long as an ecommerce store can ship to the customer, an
ecommerce company can sell to anyone in the world and isn't limited by physical
geography.
 Easier to retarget customers: as customers browse a digital storefront, it is easier to entice
their attention towards placed advertisements, directed marketing campaigns, or pop-ups
specifically aimed at a purpose.

But there are certain drawbacks that come with ecommerce sites, too. The disadvantages
include:

 Limited customer service: If you shop online for a computer, you cannot simply ask an
employee to demonstrate a particular model's features in person. And although some
websites let you chat online with a staff member, this is not a typical practice.
  Lack of instant gratification: When you buy an item online, you must wait for it to be
shipped to your home or office. However, e-tailers like Amazon make the waiting game a
little bit less painful by offering same-day delivery as a premium option for select products.
 Inability to touch products: Online images do not necessarily convey the whole story
about an item, and so ecommerce purchases can be unsatisfying when the products received
do not match consumer expectations. Case in point: an item of clothing may be made from
shoddier fabric than its online image indicates.
 Reliance on technology: If your website crashes, garners an overwhelming amount of
traffic, or must be temporarily taken down for any reason, your business is effectively
closed until the ecommerce storefront is back.
 Higher competition: Although the low barrier to entry regarding low cost is an advantage,
this means other competitors can easily enter the market. Ecommerce companies must have
mindful marketing strategies and remain diligent on SEO optimization to ensure they
maintain a digital presence.

Ecommerce Businesses

Pros:
 Convenient for owners as revenue may be generated semi-passively
 Convenient for consumers looking to easily browse for specific products
 Greater earning potential due to no limitations on physical location (can sell to anyone as
long you can ship there)
 Reduced costs assuming digital presence costs less than building, insurance, taxes, and
repairs.
 Greater marketing control including data extraction from customers, targeted ads, and
pop-up placement

Cons:
 Limited customer service opportunities as there is little to no face-to-face opportunities
 Lacks instant gratification as customers must believe in a product before seeing it in
person
 Products can't been seen or handled until delivered (can't try before they buy)
 Risk of a down website causing lost revenue or income.
 High reliance on shipping constraints which may be out of your control
 Higher competition due to lower barriers of entry and greater customer potential

Types of Ecommerce
Depending on the goods, services, and organization of an ecommerce company, the
business can opt to operate several different ways. Here are several of the popular business
models:

Business to Consumer (B2C)

B2C ecommerce companies sell directly to the product end-user. Instead of distributing
goods to an intermediary, a B2C company performs transactions with the consumer that will
ultimately use the good. This type of business model may be used to sell products (i.e. your local
sporting goods store's website) or services (i.e. a lawncare mobile app to reserve landscaping
services). This is the most common business model and is likely the concept most people think
about when they hear ecommerce.

Business to Business (B2B)

Similar to B2C, an ecommerce business can directly sell goods to a user. However, instead
of being a consumer, that user may be another company. B2B transactions are often entail larger
quantities, greater specifications, and longer lead times. The company placing the order may also
have a need to set recurring goods if the purchase is for recurring manufacturing processes.

Business to Government (B2G)

Some entities specialize as government contractors providing goods or services to
agencies or administrations. Similar to a B2B relationship, the business produces items of value
and remits those items to an entity. B2G ecommerce companies must often meet government
requests for proposal requirements, solicit bids for projects, and meet very specific product or
service criteria. In addition, there may be joint government endeavors to solicit a single contract
through a government-wide acquisition contract.

Consumer to Consumer (C2C)

Established companies are the only entities that can sell things. Ecommerce platforms
such as digital marketplaces connect consumers with other consumers who can list their own
products and execute their own sales. These C2C platforms may be auction-style listings (i.e.
eBay auctions) or may warrant further discussion regarding the item or service being provided
(i.e. Craigslist postings). Enabled by technology, C2C ecommerce platforms empower consumers
to both buy and sell without the need of companies.

Consumer to Business (C2B)

Modern platforms have allowed consumers to more easily engage with companies and
offer their services, especially related to short-term contracts, gigs, or freelance opportunities. For
example, consider listings on Upwork. A consumer may solicit bids or interact with companies
that need particular jobs done. In this way, the ecommerce platform connects businessess with
freelancers to enable consumers greater power to achieve pricing, scheduling, and employment
demands.

Consumer to Government (C2G)

Less of a traditional ecommerce relationship, consumers can interact with administrations,
agencies, or governments through C2G partnerships. These partnerships are often not in the
exchange of service but rather the transaction of obligation. For example, uploading your Federal
tax return to the IRS digital website is an ecommerce transaction regarding an exchange of
information. Alternatively, you may pay your tuition to your university online or remit property
tax assessments to your county assessor.
Types of Ecommerce Revenue Models
In addition to crafting what type of ecommerce company a business wants to be, the
business must decide how it wants to make money. Due to the unique nature of ecommerce, the
business has a few options on how it wants to process orders, carry inventory, and ship products:

Drop Shipping
Often considered one of the easier forms of ecommerce, drop shipping allows a company
to create a digital storefront, generate sales, then rely on a supplier to provide the good. When
generating the sale, the ecommerce company collects payment via credit card, PayPal,
cryptocurrency, or other means of digital currency. Then, the ecommerce store passes the order
to the dropship supplier. This supplier manages inventory, oversees the warehouse of goods,
packages the goods, and delivers the product to the purchaser.

White Labeling
White label ecommerce companies leverage already successful products sold by another
company. After a customer places an order, the ecommerce company receives the existing
product, repackages the product with their own package and label, and distributes the product to
the customer. Although the ecommerce company has little to no say in the product they receive,
the company usually faces little to no in-house manufacturing constraints.

Wholesaling
A more capital-intensive approach to ecommerce, wholesaling entails maintaining
quantities of inventory, keeping track of customer orders, maintaining customer shipping
information, and typically having ownership of the warehouse space to house products.
Wholesalers may charge bulk pricing to retailers or unit prices for consumers. However, the broad
approach to wholesaling is to connect to buyers of large quantities or many smaller buyers of a
similar, standardized product.

Private Labeling
Private labeling is a more appropriate ecommerce approach for companies that may not
have large upfront capital or do not have their own factory space to manufacture goods. Private
label ecommerce companies send plans to a contracted manufacturer who makes the product. The
manufacturer may also have the ability to ship directly to a customer or ship directly to the
company receiving the order. This method of ecommerce is best suited for companies that may
receive on-demand orders with short turnaround time but are unable to handle the capital
expenditure requirements.

Subscription
Ecommerce companies can also leverage repeating orders or loyal customers by
implementing subscription services. For a fixed price, the ecommerce company will assemble a
package, introduce new products, and incentivize locking to a long-term agreement at a lower
monthly price. The consumer only places an order once and receives their subscription order at a
fixed cadence. Common subscription ecommerce products include meal prep services, agriculture
boxes, fashion boxes, or health and grooming products.
Example of Ecommerce:
Amazon is a behemoth in the ecommerce space. In fact, it is the world's largest online
retailer and continues to grow. As such, it is a huge disrupter in the retail industry, forcing some
major retailers to rethink their strategies and shift their focus.

The company launched its business with an ecommerce-based model of online sales and
product delivery. It was founded by Jeff Bezos in 1994 as an online bookstore but has since
expanded to include everything from clothing to housewares, power tools to food and drinks, and
electronics.
Company sales increased by 38% in 2020 from the previous year, totaling $386.1 billion
compared to $280.5 billion in 2019. Amazon's operating income also jumped to $22.9 billion for
the 2020 fiscal year from $14.5 billion in 2019. Net income rose from $11.6 billion in 2019 to
$21.3 billion by the end of 2020.

As the world adapted to the constraints of COVID-19, ecommerce capitalized on the

opportunity to further distance itself from in-store shopping. In 2021, Amazon's net income rose
to $33.4 billion, and it ended the year with over $42 billion of cash on hand.

Amazon has stated as a result of the pandemic, the company recognized three years' worth
of forecasted growth in about 15 months.

References:

Andrew Bloomenthal, July 06, 2022, Somer Anderson, Katrina Munichiello, Investopedia,
https://www.investopedia.com/terms/e/ecommerce.asp
 MODULE II
INTERNET MARKETING AND HOW TO START AN ECOMMERCE BUSINESS

Overview
In this module you will study how to put up an ecommerce business. Moreover, you
will learn the importance and effects of internet marketing in this digital world.

Learning Objectives:
At the end of the module students will be able to:
1. Define internet marketing;
2. Describe online marketing and its tools for influencing consumers;
3. Identify the advantages of internet advertising;
4. Make conclusions regarding internet advertising; and
5. Describe the process of how to start an ecommerce business;

In the current dynamic technological changes marketing has become an inseparable part of
everyone’s life. It is found in many forms: internet and online marketing, digital marketing, social
media marketing, optimization of websites for search engines, email marketing, content
marketing, etc. Reaching consumers and creating recognizable brand is an important part of
achieving success in business. Without marketing solutions, there is a high risk of failure. Online
marketing is a strategy which facilitates image making and the online presence of a company with
the help of diversification of internet tools and solutions.

Internet Marketing
Digital marketing, also called online marketing or internet marketing, is the promotion of
brands to connect with potential customers using the internet and other forms of digital
communication. This includes not only email, social media, and web-based advertising, but also
text and multimedia messages as a marketing channel.

Online marketing and its tools for influencing consumers

Online marketing is an essential part of managing a successful business in today’s digital
world. It uses various tools for influencing consumers as follow:

1) Social media (Google+, Facebook, etc.) are a powerful marketing tool. They allow the
building of a solid and professional reputation. The firm, site or services may be advertised
through social media websites. One of the main reasons for facilitating the growth of a certain
company through ads and social contact site content is the spread of information in a word-to-
mouth mode. This employs strategies for managing reputation, that engage clients to answer
questions. Engaging clients may lead to encouraging them to share their experience with contacts
from their network.

2) VibeMarket is a service that allows small merchants of food and household goods,
restaurants, shops, fitness and yoga studios, cosmetic services, and many others to manage orders
entirely in Viber communities and to receive payments by card, without the need to build an
online shop or even to install a virtual POS terminal. Thanks to the automatized chatbot developed
in partnership, buyers may discover merchants by location and consumer category, after which to
negotiate their purchase by personal message and pay easily and safely online. The interesting
point of shopping with the new function is that it does notnrequire the merchants to build their
own online shop or to install a virtual POS terminal. For these purposes Viber collaborates with
Mastercard and myPOS.

3) Online marketing strategies may include email marketing. Firms use this tool to reach
current clients through sending newsletters or information emails. Also, the attraction of new
clients may be encouraged through signing up for a newsletter, learning more about the products
or services which are provided. Email marketing is another type of interactive approach of direct
internet marketing where the information, news or promotion will reach the consumer directly.

4) The use of online display ads is realized through posting ads on Facebook or on search
engines such as Bing and Google. Multimedia ads allow potential clients to interact with the ad,
create a larger engagement with consumers, compared to certain textual ads. More can be learnt
about potential clients through multimedia ads, such as the amount of time they spend on the ad.
In an effective display commercial it is important to see an image and its balanced content

Through the internet a company may offer its services only when they are needed by the
consumer. This gives them the right of choice, of not being disturbed or annoyed, as in marketing
advertising which is supposed to make people buy things they do not need. This creates a sense
of calmness and trust in the potential client, a new and modern type of media. When you attend a
meeting or in an informal conversation one is more frequently asked “What is your web site? I
wish to look through your activities at ease.

Some advantages of online advertising are as follows:

• The information which is available for the given business on the website is much more
than that on a billboard, brochure, or a TV commercial. Faster results can be achieved compared
to SEO optimization of the website which requires a longer period to get good results.
• A possibility to direct the ad to a specific circle of people – potential clients, because
Internet technologies provide a lot of ways to reach them.
• Internet advertising is measurable. Always and at any time one can find out the number
of visitors to the website and their location.
• Internet advertising is flexible and easily editable. If the results do not meet the
expectations, one can change the strategy without considerable costs.

Some conclusions for Internet advertising and E-commerce

Internet set the beginning of a new era in advertising and marketing. The high speed, easy
navigation and editing, low cost, constant self-improvement, client feedback and many other
factors have led to the growing popularity of internet advertising.

Internet advertising is part of the successful online marketing which developed into one
of the main ways to accomplish more sales for each online shop and higher income for business.
 Internet advertising reaches more people faster, easier and at a lower cost compared to
ordinary advertising. Online commercials do not require huge amounts of money and an online
shop or a website are often enough. There is a possibility to show products, services, or a business
with the help of various advertising channels:

- Advertising on social media (Facebook, Instagram, Twitter, Pinterest, etc.)

- Advertising on the Google display network
- Advertising on search engines (Google, Bing)
- Remarketing
- Advertising on YouTube, vbox7, Vimeo, Daily Motion, etc.
- Email marketing – sending commercial (un)wanted messages
- Mobile advertising
- Shopping on Google Merchant

Internet is the new environment where the advertising market and commerce in general
are being transferred. More and more clients seek the product they need through the internet and
more and more merchants offer it exactly there.

Internet is already an essential part of the life of the modern businessman, because the
web space gives information about news, offers, promotions and saves time.

A construction company may have a website which stands as its business card to show the
shop, showroom or offices to prospective partners or clients. In order to start profiting from this
website the company needs a large number of visits per day. In reality, these are clients who have
entered through the door, reviewed the past projects, material with which the company works and
the services they offer.

One can take advantage of the latest technological developments such as VR (virtual
reality), artificial intelligence, AR (augmented reality), 3D animation, IoT (internet of things),
etc.

With a properly launched campaign for internet advertising the company may reach
almost all consumers who use a telephone, tablet, laptop, or a computer, interactive television at
a comparatively low cost.

Thanks to internet advertising, the brand can be recognized, the sales will increase, and
the advertising costs may be optimized.

E-commerce is a global phenomenon which is developing fast in almost every country.

No matter how negative it may sound, the global COVID-19 pandemic has caused serious losses
in a number of subsectors of retail, however, it is expected to lead to a growth of ecommerce by
16% in 2020 (which by itself is considered an unexpected growth).

In conclusion, we may claim that e-commerce in Bulgaria has all the necessary
preconditions to become one of the most successful economic sectors.
How Do You Start an Ecommerce Business?
Make sure you do your research before you start your business. Figure out what products
and services you're going to sell and look into the market, target audience, competition, and
expected costs.

Next, come up with a name, choose a business structure, and get the necessary
documentation (taxpayer numbers, licenses, and permits if they apply).
Before you start selling, decide on a platform and design your website (or have someone do it for
you).
Remember to keep everything simple at the beginning and make sure you use as many
channels as you can to market your business so it can grow.

What Is an Ecommerce Website?

An ecommerce website is any site that allows you to buy and sell products and services
online. Companies like Amazon and Alibaba are examples of ecommerce websites.

What Is the Difference Between Ecommerce and Ebusiness?

Ecommerce involves the purchase and sale of goods and services online and is actually
just one part of an ebusiness. An ebusiness involves the entire process of running a company
online. Put simply, it's all of the activity that takes place with an online business.

What Is an Example of Ecommerce?

Dollar Shave Club offers customers personal grooming, health, and beauty products.
Customers can opt for what product(s) they want shipped to them and can sign up for long-term
memberships to have products sent to them on a recurring basis. Dollar Shave Club procures
goods in bulk from other companies, then bundles those products, maintains membership
subscriptions, and markets the products.

What Are the Types of Ecommerce?

An ecommerce company can sell to customers (B2C), businesses (B2B), or agencies such
as the government (B2G). Ecommerce can also be performed by customers who sell to business
(C2B), other customers (C2C), or governments (C2G).

The Bottom Line

Ecommerce is just one part of running an ebusiness. While the latter involves the entire
process of running a business online, ecommerce simply refers to the sale of goods and services
via the internet. Ecommerce companies like Amazon, Alibaba, and eBay have changed the way
the retail industry works, forcing major, traditional retailers to change the way they do business.
If starting an ecommerce site is something you're considering, make sure you do your research
before you start. And make sure you start with small, narrow focus to ensure that you have room
to grow.
References:

Andrew Bloomenthal, July 06, 2022, Somer Anderson, Katrina Munichiello, Investopedia,
https://www.investopedia.com/terms/e/ecommerce.asp

V. Zwass, Int. J. Electron. Commer., 1(1,Fall), 3-23 (1996)

E. Genchev, TJS, 18(1), 354-358 (2020)

Official site of the National Statistical Institute, https://www.nsi.bg/ Official site of the
Bulgarian E-commerce Association, https://beabg.com/e-commercepassport-2020/

D. Koleva, 22 statistiki za elektronnata targoviya v Balgariya prez 2020р (2021), [Online],

https://blog.superhosting.bg/ecommerce-statistics-2020.html M. Tonchev, Kakvo e VibeMarket i
kak raboti, (2020), [Online], https://www.digital.bg/kakvo-e-vibemarket-i-kak-
rabotiarticle976567.html?fbclid=IwAR0oyY0MUguRqYRmnIRsC9jEyp7AUc9cYNYLhEI bW-
5qSGZKbpOIo_mX04

Final Output- ECC 225

Instructions:
 Think of a Product or Service you want to venture
 Allocate Cost in creating your product or in rendering such service.
 Refer to the sample format shown with your recent 2x2 Picture in Corporate Attire
 Long size Page Layout
 No font size to follow. Be creative with your Final Output.
 Indicate your Name, Year and Section in submitting
 Submit it as a PDF File converted to JPEG to the group page.