Essay: Electronic Commerce

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  • Subject area(s): Marketing essays
  • Reading time: 5 minutes
  • Price: Free download
  • Published on: July 4, 2019
  • File format: Text
  • Number of pages: 2
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Introduction:

Electronic Commerce, also known as commercial transactions conducted electronically on the internet is a new way for consumers to obtain goods without having to leave the house. Online shopping has increased throughout the years and continues to do so. Major e-commerce such as Amazon, EBay and Groupon have succeeded in the industry. Amazon has dominated as one of the best e-commerce around. Amazon started out as a bookstore but have made its way up the ladder and is now capable of selling anything and everything. Amazon’s competitive advantage starts with great customer service. Amazon’s cheap prices, convenience and acquisition of many other companies are all strategic advantages. In our research for e-commerce, we focused on Amazon as an example of the e-commerce industry. E-commerce has made business processes more reliable and efficient. Participating in e-commerce is essential for businesses to be able to market their products and services in the global marketplace. In a study conducted to survey consumers’ use of online shopping, findings conclude that e-commerce is an easier way to target your market as advertising is done much online. It has become a valuable medium for communicating with target markets. Online advertising allows the use of the Internet for the express purpose of delivering marketing messages. “Online advertising has grown steadily regardless of downturns in the economy. It is expected to grow by 16 percent in 2011, boosting its share of all advertising to slightly more than 15 percent,” (Smith, 2008). Advertising message could also effectively increase customers’ purchasing probability and enhance the image of product and services (Wei & Yue, 2015).

Rules & Regulation

Starting an e-commerce is very similar to starting any business. You start with a business name and domain for a webpage. You then select the best business structure and register your business. License, permits, employee identification number and your off to start marketing early. Stock your inventory and choose the right software for more productivity. However, it is much more complicated than this. Originally CEO/ Founder Jeff Bezos had started his online bookstore in his basement garage and had wanted to name his company, “Cadabra,” as in, “abra cadabra.” This soon was a bad idea as his lawyer mentioned the word would be mistaken for, “cadaver,” which is a synonym for dead corpse in medical terms. This just shows how a single word could ruin an image or be taken wrongfully. Language is so powerful and when translated the same word to a different language the meaning could already change. The tone and culture play a huge role in language internationally. Operating an e-commerce requires the knowledge of many rules and regulations, that may differ in different countries as well. Anti-Spam Law are used to protect consumers from receiving unsolicited marketing material since online markets are capable of collecting a lot of consumer information and easily have an abuse to power. This regulation ensures that businesses cannot legally spam people without having them consent to it first. Even when sending out commercial material, businesses must include a clear method to unsubscribe, which then must be honored. This rule also requires advertisements to be marked and headers must not be misleading to consumers. If a business wishes to use email as a channel for marketing they would need permission from customers. For example: if you violate this law in Canada, your business will be penalized up to $16,000 for every non-compliant email sent. The second regulation is Privacy Policy. Being transparent is the key in gaining loyalty. “Personalization has been shown to increase the level of loyalty a consumer holds toward a retailer,” (Srinivasan et al., 2002). Privacy Policy should contain a clear statement on what your policy is such as when you obtain personal information from consumers for easy accessibility or personalization, third party marketers may be able to get this information which should be stated if so in the privacy policy. One way to personalize the exchange experience is to recommend future purchases that are specific to the customer’s likes and needs. This can be done through the use of a recommender engine that keeps track of the customer’s purchases and then recommends products that are similar or related in some way. PCI Compliance is another credit card information standard to follow. Payment Card Industry Data Security Standard (PCI DSS), ensures that businesses are operating in a safe manner that prevents payment data from getting misused or stolen. If an online business does not compliant with PCI, they will contact the payment brands (Visa, MasterCard, etc.). If a security breach or loss of data occurred, then the business will face a much higher fine and repercussion. Thirdly, collecting taxes is very complicated when it comes to online businesses too, the proper process is different from region to region. In the United States, online stores are not required to even pay taxes if there is no physical presence. But a physical presence in each state has a different definition which results in gray area and many complications. In e-commerce the business depends on your ability to fulfill shipment. From warehouses to shipment, regulation in certain items and products must be recognized. Proper paper work or fees may apply, and countries all have different regulation, for example: alcohol. Shipping is so crucial as it can lead to more sales or ruin a shopper’s experience. Lastly, an important regulation all companies should have is the terms and conditions. Unlike a store, an online business does not have many insurance options with the right plan unless it is very costly. This is why the terms and condition are very important to e-commerce companies such as Amazon. Having a thorough terms and condition will reduce personal liability if there is an issue. In the terms and conditions, you can clearly define what your company is offering, guarantees, warranties, and etc., (Chan, 2018).

Evolution of Amazon

Before we begin going in detail of the e-commerce Amazon and its global trends, opportunities and challenges, Amazon’s evolution is like no other and as a model e-commerce this is where Amazon all began. As mentioned before, by the end of 1995, CEO Jeff Bezos had started his online bookstore which opened its first remote distribution center and added one-click ordering to speed checkout and lower the number of abandoned orders. By 1998, Jeff expanded to include sales of music and DVD/video. By 1999, he began sales of home improvement products, such as software, video games and gift items. By early 2000, he opened its marketplace to enable third-party orders. Such as an alliance with Toys ‘R’ Us and offered its first free shipping offer on orders greater than $100. The same year he also launched its first overseas operations, in Japan. By 2004, Amazon started selling everything, as Jeff Bezos had hoped for since the beginning. 2005 was the mark of the Amazon Prime, which gave consumers benefits and would eventually include free shipping and music, video, and e-book perks. In 2007, Amazon launched the Kindle e-reader and by 2008 acquired Audible.com, Fabric.com, and AbeBooks (Sherman, 2015). Zappos.com was acquired in 2009 where Amazon also announced a textbook trade-in program. By 2014, the Fire TV device was introduced to add streaming services to TVs, Prime Music, 3D printed products store and Fire Phone. Bezos then even bought the Washington Post. In 2015, Amazon hired Woody Allen to create his first TV series and began producing movies for theaters. The one-hour delivery from local stores in selected areas was introduced as well. Today, Amazon’s capability is endless, with new products coming out left and right and the quickest innovation around, Amazon has surpassed Walmart as most valuable retailer in the U.S. by market capitalization and partnerships established.

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