Digital - Driving Force for E-Commerce

Published by MBA Skool Team, Published on June 02, 2015

Today, we are witnessing an era which is marked by rapid adoption of digital technologies as well as evolving shopping behaviors. The digital technologies are turning out to be fundamental “force” that is sweeping the economic and business landscape globally. Exciting times have begun as the “power” of digital increases exponentially with increasing number of digital mobile devices and intelligent machines. Digital has the power to not only obtain better efficiencies in current business operations, but also to fundamentally change the way companies do business. That’s why every industry including e-commerce must leverage the opportunity of Digital to create and deliver more value.

While in countries such as the US and China, e-commerce has taken significant strides to achieve sales of over 150 billion USD in revenue, the industry in India is, still at its infancy. However over the past few years, the sector has grown by almost 35% CAGR from 3.8 billion USD in 2009 to an estimated 12.6 billion USD in 2013. Industry studies by IAMA indicate that online travel dominates the e-commerce industry with an estimated 70% of the market share. However, e-retail in both its forms; online retail and market place, has become the fastest-growing segment, increasing its share from 10% in 2009 to an estimated 18% in 2013.

Among the four major dimensions of digital: Social Media, Mobile, Analytics and Cloud Computing, Mobile seems to be the first dimension. In the most basic form, we can see the presence of major e-retail companies like Amazon & Flipkart and major online travel companies like IRCTC & Make My Trip on mobile platform in the form of Apps and mobile compatible websites, promoting m-commerce. According to a PWC report, E-commerce industry is estimated to have a consumer base of 243 million with 185 million accessing the services via a mobile phone. Also, leading mass e-retailers are already registering close to a third of their sales via mobile devices, the report added. Despite being a very less internet penetration of 20% in India as against 80% in US and 45% in China, traces of change are visible in the industry as mobiles are driving a large chunk of internet traffic for companies in the m-commerce space which is expected to surpass the traffic generated by personal computers or laptops. Thus, e-commerce companies need to adopt the transformation and introduce mobile optimized platforms to make the user mobile experience seamless and appealing. They need to modify their business models to push m-commerce by offering attractive discounts and other offers for purchases through the mobile platform. One of the major challenges in m-commerce is to ensure that the mobile experience of the customer is not lost across different devices. For this, the e-commerce companies need to pay attention to device operating systems, varying device resolutions, different browsers, wireless networks, and payment solutions. Secondly, in order to target potential customers, who are limited by mobile access, the companies need to keep in mind the specific characteristics of mobile shopping, viz. smaller screens, touch interfaces, limited data volume, check out process etc. Thirdly, the launch of a mobile website or mobile app should be viewed as not the end of a company’s mobile strategy, but just the beginning. Like ecommerce websites, companies need to maintain these websites and apps by constant updates based on analysis of user behavior to create a seamless shopping experience. Fourthly, a customer’s experience on one channel is directly impacted by his experience on another, and today’s customer wants to be able to switch between channels seamlessly. As a result, to offer a successful mobile experience, the e-commerce companies need to ensure that it is fully integrated to what they also offer online, in store or on the phone. Thus, we see that by leveraging mobile technology effectively and efficiently in a strategic manner, the companies can ride on a high growth rate wave.

There is no denying fact that social media has cemented itself in today’s society and changed the way many of us communicate. Not only has it affected the way we interact at an individual level, but it has also started to impact the way companies do business. Whether it’s Facebook, Twitter, LinkedIn, YouTube or a company blog, many of these social networking sites have played significant roles in the way companies are changing their marketing approach towards their online businesses.

According to a report, less than 2% of all online orders of during September and October 2014 were the result of shoppers using Facebook. Social media goes beyond just capturing a new sale, but to areas where social media has the greatest impact i.e. in brand building/awareness, customer loyalty, customer service, and gaining market insight of customers. By properly using social media to focus in these areas, e-commerce companies will be better equipped to interact with their customers, retain them and ultimately increase traffic to their store. Also, e-commerce companies can use social media presence to greatly enhance their visibility & engagement and reach of their special promotions. By creating a connection with the potential customers by better handling them and talking about the personal side of business can increase the customer base and brand loyalty. Also, with social media, e-commerce companies can target specific demographics to get their name in front of the exact group people that they want to see their products. For example, targeted very specific demographics by placing an ad on Facebook and selecting very specific criteria (men who are very cautious of fitness and bodybuilding and who live in Gurgaon). Thus, Social Media allows the e-commerce companies to integrate in their business models the following applications as per the requirements: Social network-driven sales (Sales take place on established social network sites), Peer-to-peer sales platforms (users can directly communicate and sell products to other users), Group buying (Users can buy products or services at a lower price when enough users agree to make this purchase), Peer recommendations (Users can see recommendations from other users), User-curated shopping (Users create and share lists of products and services for others to shop from), Participatory commerce (Users can get involved in the production process) & Social shopping (chat sessions for users so they can communicate with their friends or other users for some advice).

Analytics has nowadays become a buzz word, which when used strategically can deliver great value to all the stakeholders. Not only does it allow e-commerce to gain deeper insights into customer behavior and industry trends, but it also lets them make more accurate decisions to improve just about every aspect of the business, from marketing and advertising, to merchandising, operations, and even customer retention. Amazon has an unrivalled bank of data on online consumer purchasing behavior that it can mine from its 152 million customer accounts. Since many years, Amazon uses that data to build a recommender systems that suggest products to people who visit E-commerce companies can use analytics & the big data in following 6 ways: Personalization (To offer the shopper a personalized experience, including content and promotions, by processing data from the multiple touch points), Dynamic Pricing (To determine the right price to close the sale, taking into account competitor pricing, product sales, regional preferences, and customer actions), Customer Service (To serve a shopper using data from his past shopping experiences), Managing Fraud (To develop a safer environment to detect fraud in real time), Supply Chain Visibility (To inform the customers about the exact availability, status and location of their orders if multiple third parties are involved) & Predictive Analysis (To predict any future event like to predict the revenue from a certain product in the next quarter). The biggest challenge in efficient implementation of Analytics in E-commerce is the resources be it human, financial or IT.

Cloud Computing is another dimension that is allowing companies to lower costs, accelerate deployments and respond quickly to market opportunities and challenges. Cloud-e-Commerce includes information technology, marketing, management and other issues. It offers a synthetic platform for e-commerce transactions and e-commerce services. The enterprises do not need to worry about setting up the software and hardware environment any more with the IaaS or SaaS model of Cloud. And, they do not need to invest labor and capital to construct the system. All of the work can be passed to Cloud provider. Thus, enterprises can focus on their core business. Some major E-commerce businesses such as Amazon, Google and Alibaba have involved cloud computing in their long-term strategies. The key driver behind the migration of cloud computing into E-commerce strategies is the Demand. With the rapid development of information technology, E-commerce services are improving—the services with higher efficiency, lower cost, more flexibility and diversity are needed. For instance, Alibaba, the biggest B2B E-commerce enterprise offers the online loan services by virtue of cloud computing. Alibaba loans the small and medium businesses its own idle capital from B2B transactions. When evaluating a customer’s creditability, Alibaba implements the quick data analysis with cloud computing, which ensure the efficiency and effectiveness of creditability evaluation.

This article has been authored by Arush Singhal & Aastha Kumar from FMS Delhi





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