E-commerce Case Study

BBA 3331, Introduction to E-commerce 1

Course Learning Outcomes for Unit VII Upon completion of this unit, students should be able to:

7. Analyze the impact of e-commerce on businesses. 7.1 Compare and contrast the effectiveness of websites in terms of the dimensions of the social

marketing process.

Course/Unit Learning Outcomes

Learning Activity

7.1 Unit Lesson Chapter 7, pp. 423–457, 473–482 Unit VII Case Study

Reading Assignment Chapter 7: Social, Mobile, and Local Marketing, pp. 423–457, 473–482

Unit Lesson There are many advantages as well as disadvantages in e-commerce. From a consumer’s point of view, it is important to understand the benefits as well as the shortcomings of online shopping. Boswell (2017) described several advantages and disadvantages of e-commerce stores.

 Convenience: Online stores are open 24 hours a day, 7 days a week, while brick-and-mortar stores have fixed store hours.

 Transportation costs: Since you shop online from the comfort of where you are, there is no need to drive or go anywhere, saving on fuel and other costs.

 Price comparisons: The online shopping experience usually comes with the availability of many sites, allowing the consumer to compare pricing from different online stores. When you visit a brick-and- mortar store, you are most likely to settle for the price the store has on an item.

 Choices: As we know, physical stores do not have infinite space. Thus, the choice of merchandise is

limited, while the choices of products are plentiful in an online store.

 Privacy: Online stores offer privacy when consumers are buying personal items that they may not want to be seen purchasing in public.

 No pressure sales: Online buying is an experience with no sales pressures. Still, online shopping does come with some disadvantages (Boswell, 2017).

 No physical contact with the product: If you are purchasing clothing or furniture, the consumer cannot try items on or touch and feel the products.

 Absence of instant gratification: The consumer cannot take the item right away. In an online environment, the buyer needs to wait for the shipping process to take place.

 Refunds/returns situations: If items arrive damaged or not as expected, the consumer will have to wait to process the return and wait to be reimbursed for the expense.

 Privacy and security: Although not as prevalent any longer, there are still legitimate consumer

concerns about the privacy and security of an online transaction and making sure online users pay attention to the security and reputation of e-commerce sites and ensuring their devices are protected from spyware and other malicious programs.

UNIT VII STUDY GUIDE

The Impact of E-commerce on Businesses and Social Marketing

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Regardless of the disadvantages, many traditional retail stores have been impacted by e-commerce while others seem to be immune to e-commerce stores. There are still a lot of services, such as restaurants and fuel stations as well as specialty and big-ticket items, that require the consumer physically to go to a store. Mau (2014) noted there are many items that you just cannot buy online. Such items include fashion clothing, high-end cosmetics and fragrances, as well as select furniture (Mau, 2014). The compelling argument made is that these high-end brands sell better in an exclusive brick-and-mortar retail store. Besides, there is also the aim to keep these items exclusive. Online and traditional brick-and-mortar retailers are adapting to the new reality of marketing and the impact of e-commerce on their businesses. While many brick-and-mortar stores have opened online storefronts, many online e-commerce enterprises are also opening brick-and-mortar storefronts. In late 2015, Amazon opened its first physical store in Seattle (Walsh, 2016). Additionally, in 2017, Amazon acquired Whole Foods to enter the fresh food market and to gain a physical presence. The Amazon-Whole Foods merger is a combination of two industries and technologies combining business capabilities to offer products and services to a mobile customer base. Other online retailers have followed suit and have also launched a physical presence to better market their products and to create a closer relationship with their customers (Walsh, 2016). As a result of the Amazon-Whole Foods merger, Walmart has partnered with Google on e-commerce, and Kroger, a grocery competitor to Whole Foods and Walmart, has partnered with Uber for grocery delivery (Wilford, 2017). The shift in the brick-and-mortar space with a direct link to e-commerce is a strategic move to compete for customers at the local level. The reason is that the e-commerce environment has become saturated, and businesses are facing difficulties in maintaining an online presence. Online environments have become crowded and expensive (Walsh, 2016).

Core concepts (Walsh, 2016)

As in traditional marketing, selling items in person still has a special appeal. Online retailers’ aim in opening physical stores is to increase awareness of their brands and to draw customers to their online e-commerce sites as well. A clear example is the Apple flagship stores; these stores are high-end advertising vehicles. Apple’s flagship stores are not just Apple; each is unique in its local ties to the community, to other local businesses, and to local people working in its stores. Walsh (2016) found that flagship stores are a great marketing vehicle as they are not only successful in their own right, but they generate significant sales in the online stores. The connection to online and brick-and-mortar stores is brought together by unique digital marketing. To reach customers, online and physical businesses must merge technology with advertising. Businesses must leverage social networking, locality, and mobility (SoLoMo). SoLoMo Social media has become vital for many e-commerce and local businesses. Furthermore, social media combined with a mobile device that supports location services has enabled businesses to micro-target prospective customers. SoLoMo embodies the integration of social media channels and geographical location using a mobile device. For consumers, this represents the availability of information relevant to a physical location such as ratings, promotions, and coupons. An example is FourSquare, a geolocation-aware application that integrates with Facebook. FourSquare interacts with the consumer’s mobile device to input (e.g., ratings, status) and receive information (e.g., products and services available, coupons). For the e- commerce and local businesses, it represents the opportunity specifically to target products and services to consumers anytime and anywhere. In other words, SoLoMo is the platform businesses use to engage a customer based on proximity using a customer’s mobile device.

CORE CONCEPTS

The online space has become crowded and expensive. As of 2016, there are more than 800,000 online businesses competing to attract customers (Walsh, 2016).

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The evolution of smartphone technology has provided consumers with the capabilities and expectations of information and purchasing options on-the-go. In today’s competitive business environment, enterprises, to stay relevant, must leverage social media channels to deliver information based on the users’ expectations when and where they want it. Mobile users have become sophisticated with expectations and demands on information when they need it. This advancement of technology and user adoption has created new applications in digital marketing, forcing businesses and marketers to apply contextual relevance based on location and online profiles. Conversely, this shift in adoption has provided consumers with the power to expect and demand information wherever and whenever they need it. Devaney and Stein (2013) found that 97% of prospective consumers rely on SoLoMo to find information on local businesses with an online presence. Additionally, 78% of small businesses acquire close to a quarter of their customers using social media (Devaney & Stein, 2013). These percentages demonstrate an increased trend of mobile consumers with unique expectations, wants, and needs. The Importance of SoLoMo SoLoMo is important because of how it is used and the way marketing efforts evolved to become digital marketing. Traditional marketing previously functioned in silos, and these efforts included social media marketing, location-centric marketing, and mobile marketing. All of these marketing efforts were separate with their unique methods and results. The prevalent adoption of smartphones and other devices has changed the fundamental approach to advertising. The enhanced functionality of smart devices has combined social, geocentric, and mobile marketing efforts into one. In today’s digital economy, consumers expect businesses to inform them on the availability of products and services wherever they go. Consumers use technology to extend their social reach. Consumers share and receive information more easily and instantly than before, transforming the manner in which products and services are purchased. According to Ruiz (2012), consumers not only rely on brands, but they seek advice from other resources in their social networks, consult product reviews, and share their experiences about products and services with their social networks. Consequently, 62% of online consumers rely on comments about products and services from their friends on Facebook, and 75% of them visit the online store’s website (Ruiz, 2012). In today’s economy, there is no doubt that consumers are often defined by their mobility. This mobility has redefined the shopping experience and has shaped digital marketing efforts. Buying can now take place from home while watching TV or from the passenger seat of a vehicle. Technology has made the shopping experience almost like a second thought. Conclusion The impact of online stores on brick-and-mortar retailers cannot be ignored. Many physical retailers cannot compete with the ease of ordering and researching a product in an online store; however, many retailers, both online and brick-and-mortar, are adapting their business models to incorporate hybrid models, whereby a physical and online presence adds to the value of their brand. To do so, retailers must adapt to the new way of digital marketing. The combination of SoLoMo advertising has brought a different dimension in marketing, especially to small businesses. SoLoMo plays an important role in purchasing decisions at a local level with a global presence.

References

Boswell, W. (2017). The pros and cons of shopping online. Retrieved from https://www.lifewire.com/shopping- online-pros-and-cons-3482632

Shopping online via smartphone (Edinger, 2017)

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Devaney, T., & Stein, T. (2013, April 16). Your business needs to get social, local and mobile--fast. Forbes. Retrieved from https://www.forbes.com/sites/capitalonespark/2013/04/16/your-business-needs-to-get- social-local-and-mobile-fast/#74db77a433e4

Edinger, H. [HutchRock]. (2017). Online-shopping-clothing-mobile phone [Photograph]. Retrieved from

https://pixabay.com/en/online-shopping-clothing-2900303/ Mau, D. (2014, March 31). Why some luxury brands still don't sell online. Fashionista. Retrieved from

http://fashionista.com/2014/03/why-some-luxury-brands-still-dont-sell-online Ruiz, J. (2012, September 27). What is So(social) Lo(local) Mo(mobile) and why is it important to marketers?

[Blog post]. Retrieved from https://maximizesocialbusiness.com/what-is-solomo-and-why-is-it- important-to-marketers-7142/

Walsh, M. (2016, January 30). The future of e-commerce: Bricks and mortar. The Guardian. Retrieved from

https://www.theguardian.com/business/2016/jan/30/future-of-e-commerce-bricks-and-mortar Wilford, A. (2017, September 13). Editorial: Consumers the big winners of Amazon-Whole Foods merger. The

Hill. Retrieved from http://thehill.com/opinion/finance/350434-consumers-the-big-winners-of-amazon- whole-foods-merger