Learning objective for Unit 5

Question 1

Describe what e-commerce is.

Answer 1

E-commerce (electronic commerce) is the activity of electronically mediated transactions between organisations and customers, and any third party.

Question 2

Explain the types of e-commerce business models and platforms.

Answer 2

E-Commerce Business Models:

• Business-to-Business (B2B):
  Both participants are businesses trading with each other selling components for finished goods and services.
• Business-to-Consumer (B2C):
  Businesses selling goods and services to the consumer. This is the most commonly used model. Small businesses usually begin with this model as it removes the need for physical stores for business-to-consumer types.
• Consumer-to-Business (C2B):
  Consumer to business is much easier today due to e-commerce. Here the consumer places their requirements and business bid for the job.
• Consumer-to-Consumer (C2C):
  This platform enables consumers to sell to other consumers.
• Business-to-Government (B2G):
  Businesses selling to governments and public administration entities. Governments now use e-commerce platforms like GeBiz for efficiencies and productivity where they are able to transact electronically.
• Government-to-Consumer (G2C):
  Although the government rarely buys products or services from individuals, people frequently use electronic means to transact with the Government for submission of documents or payment or filing of tax returns. The government will provide the platforms (portals) for this purpose.
• Consumer-to-Government (C2G):
  Consumers may also provide feedback to the government via online feedback channels.

E-commerce Platforms:

1. Desktop Browser-based Platforms:
   Desktop browser-based platforms usually referred to as online storefronts, allow shoppers to browse through the merchant’s product catalogue and purchase products online. This is the most common platform for ecommerce as it is usually always available, easiest to manage and accessible through mobile devices.

2.Email Platforms:
Email platforms offers an opportunity separate from browser and app-based options to communicate directly with the customer, whether through editorial or advertising. However, several countries have laws requiring the content provider need to seek the recipient’s permission before sending any marketing material.

3. Feed-Based and API Data Interchange Platforms:
   Many users still consume data through Really Simple Syndication feeds, as these platforms are able to push notifications and content to their users. News, Twitter and Facebook feeds and updates can be considered a form of feed stream where advertisements are inserted together with the content.

**Really Simple Syndication refers to files easily read by a computer called XML files that automatically update information. This information is fetched by a user’s RSS feed reader that converts the files into the latest updates from websites in an easy to read format.

4. Video-marketing platforms:
   Streamed videos are often delivered through such platforms as YouTube, Vimeo and other dedicated platforms. Television channels and movies that are delivered through streaming over the internet are related to this platform. Some social media platforms enable video marketing such as Facebook and Instagram Stories.
5. Mobile Platforms:
   There are mobile browsers that integrate the platforms into their mobile operating system such as Android and iPhone Operating System (IOS). A specific application provides content and improved experience through the dedicated mobile application. Current research has shown that the fastest growing consumer of digital media is through mobile devices.

Question 3

Describe the advantages and disadvantages of using e-commerce.

Answer 3

Advantages:

1. 24/7 Availability:
   Business and customers are able to transact every day of the year, 24 hours a day. Users are able to visit the website, search and track their orders beyond traditional business hours. Business may be closed for the day but potential customers in different time zones will view the web store as opened.
2. Reach:
   It is the ability to reach more customers. Traditional brick and mortar businesses are limited to the customer base that lives or works near the store, or those that pass through while travelling. With e-commerce, websites are not limited by geography. With the use of online translators, businesses are also able to reach potential customers who are not English language-based.
3. Decreased Transaction Cost:
   When consumers buy from an online store, the firm incurs little operational costs by cutting out the many unnecessary costs such as store rent and visual display. Service quality is enhanced by:
   a. delivery and returns
   b. tracking of customer’s preferences
   c. shorter processes for repeat orders.
4. Ease of Conducting Business:
   In e-commerce, a firm does not need to have a traditional physical shop. Buyers can:
   a. shop comfortably from their home or location
   b. easily choose goods from various categories without moving around physically
   c. also easily select variations
   d. sellers are able to recommend complementary products to their selected items.
5. Enables Comparison of Prices:
   Everyone can easily compare prices and options form the various websites to make better decisions.

Disadvantages:

1.Privacy and Security:
Many consumers are still wary about giving out personal information, especially credit and debit cards, to online sources. The fact is, instances of fraud has grown with the growth of the ecommerce sector, so online stores have to have secure systems, encrypted payment software, and other safeguards against online fraud Security is one of the main problem of e-commerce. Scams, fraud, hacking and many bad sites aims to steal or cheat the customer.

2.Lack of Quality Guarantee:
There is no guarantee for product quality. Orders may be damaged during delivery. Colours, size or freshness variations do happen, and the item may look different online to what one actually receives.

3. Possibility of Tried and Tested Product:
   One of the major disadvantages of e-commerce portal is that a customer is unable to try to test the product to his/her own satisfaction. Consumers are habituated to buy at physical stores after trying a product several times and suddenly it takes many guts to change this lifetime habit where they cannot touch, try and test beforehand. People miss the tangible feeling and there is always the fear that the product will not meet the standard they are expecting. This makes the consumer a bit hesitant before making a purchase. E-commerce allows users that buys and sell goods without geographic limitations, but in this method, firms have no contacts and relationships with other persons and lose their social contacts.

4.Dependency on the Website:
An e-commerce site is heavily dependent on its website. If it is not properly projected or the software is not implemented properly, the site can face technology hiccups. It then comes under consumers’ serious radar. The technical infrastructure is costly and needs huge investment. It also needs to be upgraded periodically to stay with changing times. Huge technological cost for a successful venture is a disadvantage of the e-commerce portal.

5. Severe Competition
   It is surely a disadvantage of e-commerce when that happens because the competition turns inwards and the companies try harder to attract a large chunk of the consumer base. This forces firms to drop their prices by allowing discounts, incentives and other allowances on their products. How are they going to recover their money? Obviously, the quality of the products suffers, and at the end of the day, it is the customers who are made a fool of.

Question 4

Explain considerations when selecting e-commerce platform.

Answer 4

1. Cost:
   Determine the budget of building the ecommerce website, as cost can vary depending on the type of platform used. A firm needs to make a careful evaluation of everything the platform has to offer so that it understands exactly what it is paying for, and making its selection based on that. Firms should compare services and find the most appropriate one.
2. Payment Integration:
   Selecting the precise payment gateway solution for a firm’s ecommerce is an important aspect. A secure network should be its priority when considering any payment gateway. A firm’s customer seeks trust while making the payment via any mode. PCI compliance is the necessary certificate needed to find on the payment gateway before integrating it on its ecommerce platform.
3. Technical Support:
   The same due diligence applies to firms when they are selecting a hosting company. The last thing a firm would want is to go through all the effort of selecting the right e-commerce platform, only to have problems with the servers. Poor web hosting platform can have a negative impact on a firm’s search rankings.
4. Features:
   Different platforms will have different features available. Some platforms offer in addition to the basic ecommerce functionality, built-in marketing tools like newsletters, abandoned cart emails, reward programs, daily deals, etc. An e-commerce platform should also have the capabilities to substitute any built-in features with App integrations, like Mailchimp or Shipstation. While the built-in features may be excellent, using apps that are easy to use can be essential to a growing business.
5. Security:
   E-commerce platforms are usually picked for their:
   a) storefront-building convenience
   b) range of designs
   c) functionality

However, security features need to be top of mind, too. Firms need to look for proven e-commerce solutions that provide:
a)encrypted payment gateways
b)SSL certificates
c)solid authentication protocols for sellers and buyers.

Question 5

Illustrate the basic workflow of e-commerce activities.

Answer 5

1. Product Sourcing:
    Source supplier
    Send RFQ
    Evaluate and select the vendor
    Confirm item
    Confirm shipping
    Provide buyer information
    Provide shipping information
    Make payment
    Track delivery
    Acknowledge goods receipt
    Provide review.
2. Digital Promotion
    Define the marketing objective
    Determine the budget
    Determine the digital channel
    Prepare the campaign
    Develop the campaign calendar
    Launch the campaign
    Monitor the performance
   o SEO
   o SEM
   Evaluate the performance
   o Google Analytics
   o ROI
3. Order Fulfiment:
    Select the goods to purchase
    Confirm items and amount
    Gain approval from approving authority
    Issue of order/purchase order
    Schedule delivery
    Confirm good received
4. Post-Sales Activities:
    Post-sales support
    Thank the customer for the purchase and send a feedback form
    Invite the customer to be part of the brand’s social media
    Data mine and segment the customer database
    Re-target the customer for new promotions
    Reward the customer for being an active social media advocate.
5. Manage ecommerce Business:
    Monitor the performance of the website
    Ensure systems are updated and patched
    Website availability and speed
    Monitor and identify suspicious activity
    Ensure customer data is secured
    Ensure your supply chain is optimised
    Manage and optimise your social media presence
    Reporting in a timely manner of any breach of customer data
    Expand ecommerce reach through other channels

Question 6

Describe types of online payment systems for both e-commerce and other digital marketing channels.

Answer 6

Common e-commerce Payment Providers:

• PayPal Express Checkout:
  Besides its international online payments service, PayPal also offers a hosted payment gateway called PayPal Express Checkout.
• eNETS:
  A product of NETS, an online payments service provider in Singapore; eNETS is an integrated payment gateway that accepts multiple payment options, aside from credit card payments.
• Stripe:
  Stripe is the latest integrated payment gateway in Singapore for e-commerce businesses. It was officially launched in the country in September 2016, but is fast becoming a strong competitor in the local online payment processing industry.

-AsiaPay:
Founded in 2000, AsiaPay provides payment processing solutions to banks and e-businesses covering international credit card, debit card, bank account/net banking, wallet, over-the-counters, and other prepaid card payments. AsiaPay’s services include multi-currency, multi-lingual, multi-card, and multi-channelled payment solutions.

• Mobile Payment solutions:
  Several platforms have opened up their cashless payment functionalities especially on mobile. This includes payment via connected bank accounts, linked credit or debit cards, mobile wallets or application payment services, all on consumers’ mobile devices.

The most popular cashless payment methods in Singapore include:

• Mobile Payment via Mobile Wallet:
  A mobile wallet is a type of virtual wallet where users can send, receive, and store money, and pay for purchases through their smartphone. Activating a security feature in their phone and through NFC, theytap their device to make payment. Examples of mobile wallets are AndroidPay, ApplePay, SamsungPay, GrabPay or Singtel DASH.
• Mobile Payment via Connected Bank Account:
  Using funds in one’s bank account for payment in lieu of cash. Users will be required to launch an application or software to make funds transfer from their bank account to the seller. Users could simply scan the merchant’s QR Code and execute the payment. Examples are UOB Mighty, Pay Anyone, PayLah and Flashpay.
• Mobile Payment via Linked Credit/Debit Card:
  The customer uses an application to make payment charging the payment to their credit card usually through a mobile wallet. This method may incur fees, is widely accepted when transacting in foreign denominations, and provides anextra security against theft.