E-commerce

  E-commerce

E-commerce means the development of transactions between companies and/or

individuals on Internet, mainly for buying and selling products and services, using

applications such as e-mail, instant messages, shopping carts or Web services, to

name a few.

The progressive penetration of Internet and its possibilities have multiplied

online trade relationships. This trend started in 1970 with the transfer of funds, with

the arrival of the World Wide Web, and it became an opportunity for traditional

companies and the beginning of businesses operating only online.

The boom of mobile devices, smartphones in particular, has opened the doors to

mobile commerce (m-commerce), i.e. electronic commerce using a mobile device

.

E-commerce is an increasingly wider and more diverse phenomenon; therefore,

classifications are difficult. In any case, the most widely used classification of

e-commerce is based on the nature of its transactions looking at the relationship

between companies and/or between them and their final customers. In this line, we

can speak of:

B2B: Business to business, these are already established companies that operate

through Internet where consumers are not involved.

Car manufacturers, for example, use online purchase platforms for their suppliers

to place their orders.

B2C: Business to consumer, this is the most popular and widespread model on

Internet, where a company sells its products (e.g. Zalando, Amazon, AliExpress) or

services (Spotify) to the consumer through the Web.

B2E: Business to employee, this is a model of e-commerce that is derived from

the previous one, where only the company and its employees take part. Microsoft,

for example, uses it so that its workers can order office supplies, documents and

Table 1 Comparison between the most important e-mail marketing applications

App Business model Free subscribers Monthly mail delivery

Benchmark Freemium 2000 14,000

MailChimp Freemium 2000 12,000

MailRelay Freemium 15,000 75,000

MPZ Mail Freemium 2000 12,000

SendinBlue Freemium Unlimited 9000

TeEnvio Freemium 1000 5000

Source Prepared by the authors

Understanding Digital Marketing—Basics and Actions 59

company cards. This is a type of business that generates engagement by the staff

through, for example, attractive offers that push their performance, which is the

reason why big companies are so keen on this model.

G2C: Government to consumer, this is a variation of B2C for the public

administration. This is a model of e-commerce that is gaining progressive weight in

its implementation through the e-administration. A clear example is payment of

taxes through Internet.

C2C: Consumer to consumer is common in sectors where end consumers relate

to each other, away from companies, for their own transactions. This is a business

model that is becoming stronger with crowd sourcing economies (e.g. BlaBlaCar or

Uber) or online purchases and sales portals (eBay).

 E-commerce Techniques

 Online Shop

In order to purchase or sell on Internet, an online shop is not a must, but it becomes

a useful Web tool for efficient e-commerce [24]. Some of the most common sections in any online shops are as follows:

• Properly structured product catalogue with sections, images displaying the

product alone, as well as accurate and honest product descriptions.

• Shopping cart, always visible so that the customer can check, with just one

click, the products added, shipping costs, taxes and discounts (if applicable) and

the total purchase price.

• An internal search engine, which will be more important as the product catalogue and sections develop.

• Explanation of payment methods allowed and contact/customer support area. As

there is no physical contact, companies must offer communication pathways for

their online shops so that users can share their concerns and increase their trust

in the company.

• The availability of several payment options is recommended. Some of the most

common payment methods are credit card, which needs a safe payment gateway, bank transfer or other e-services of great penetration and reliability such as

PayPal. Payment against delivery, which was a star method for distance sales,

can also be used on some shops, although it is becoming outdated (Fig. 6).

Apart from the quality of the product that the description and the picture on the

online shop match the product, companies must be very careful with the shipping

options, especially in the case of physical products. In online sales, transportation

and the delivery of the product become the only phases where the customer has

physical contact with the company, and therefore, a bad experience with the courier

or deficient packaging can ruin the purchase experience.

60 T. Piñeiro-Otero and X. Martínez-Rolán

Companies must take care of these aspects to the last detail, as they are part of

the image the consumer will have of their brand. Guarantee and delivery dates by

the courier must be considered, as they are key e-commerce issues.

 Development of an Affiliation Programme for the Online Shop

(Affiliation Marketing)

Affiliation marketing is an online marking tool widely used for e-commerce. In

essence, it means taking the commission business model to an online environment.

Amazon was a pioneer in this type of marketing when, in 1996, it allowed other

websites to sell their books in exchange for a percentage of the unit sold.

Affiliate networks appear in order to regulate trade relations between merchants

—the real product sellers—and affiliates—those who publish the ad of a product

online. Such networks include Zanox, TradeDoubler or Commission Junction, and

they act as mediators between advertisers and affiliates, while they provide them

with tools to follow up sales and the proper development of their relationship. The

affiliate network is supported by a commission that the merchant pays the affiliate

For the merchant, the advantages are obvious—they only pay if the target is

accomplished and it can reach its potential clients through the hundreds of Webs

promoting them. However, some affiliate networks demand a monthly fee—and

 Main sections of an online shop. Source Prepared by the authors using a screenshot of

Amazon.com

Understanding Digital Marketing—Basics and Actions 61

even an entry fee—that can be up to 600 €, a threshold high enough for small- and

medium-sized merchants [26].

Retargeting or Remarketing

Retargeting is an online marketing technique to turn a user into a customer who,

despite having shown some interest on the products or services of a website, did not

manage to finish the purchase or action required.

Google labels this technique “remarketing” and uses it through their display

network.

Retargeting works as follows: The user visits a product X on an online shop.

Without finishing the purchase, they leave the website and continue browsing the

Web. When they access another site, the user will find adverts on product X, adverts

that will “follow them” during browsing and—in case they click—will bring the

user back to the initial online shop 

Retargeting is only used for consumers who have shown any interest in a product before, and therefore, it is a quality impact that often ends up in a purchase.

How an affiliate programme works. Source Prepared by the authors based on Quirk

eMarketing 

 How retargeting or remarketing works. Source Prepared by the authors based on Hussain

62 T. Piñeiro-Otero and X. Martínez-Rolán

Retargeting is part of “behavioural marketing” and is supposed to yield high

profitability for e-commerce.

 Business Models to Estimate Payment Per Page

in Advertising

Many of the online marketing strategies are based on digital advertising; therefore, it

is essential to know the different formulae to hire and estimate the cost of an online

campaign. Some of the online advertising models available include the following:

• CPM (cost per 1000). This is related to the number of times an ad is shown on

the screen, also known as impressions. The CPM indicates the cost of 1000

online impressions of the ad. This system is basically used for branding campaigns, and the process of brand equity is the most economic option of all.

• CPC (cost per click). This is related to the interactions of the user with the ad

through clicks. They are used to divert traffic to a website, paying only when the

user clicks on the ad and is redirected to a Web (therefore the name PPC, Pay

Per Click). CPC does not guarantee sales, but it ensures traffic and is less

volatile than CPM.

• CPL (cost per lead) refers to a contract based on quality contacts without

implying direct sales. In particular, CPL is the price that is paid for each user

who completes the objective or lead. Such leads vary depending on the marketing goals of the company; a lead can be to fill-in a Web form, becoming a

follower of the company on social media or to disseminate content on the site.

• CPA (cost per acquisition) is hiring ads per sales; that is, payment is done for

each action that has generated a customer. In the mobile environment, this is

also referred to as CPI (cost per install) and indicates the applications installed

after interacting with the ad. In this case, the installation of an APP, even if it is

free, becomes a purchase (Fig. 9).

Fig. 9 Models of online ad purchasing. Source Antevinio [28]

Understanding Digital Marketing—Basics and Actions 63

Of the previous models, only CPA and CPI ensure a transaction between the

customer and the company, so that they are formulae that require more economic

investment.

 E-commerce Glossary

Understanding the language of e-commerce is not simple. The use of common

words with a different meaning can sometimes be confusing.

Some of the most usual terms are as follows:

• A/B test: through this technique, organisations show two different versions of

the same content to understand which one is more widely accepted. A/B tests are

common in e-commerce and online marketing and they must be done with just

one change every time the test is performed.

• Shopping cart abandonment: this is the moment a potential customer gives up

before finalising the purchasing process on an online shop.

• API: a set of operations and instructions released by software to interact with it

and access higher quantity of data and options.

• Backoffice: administration of the backoffice of an online shop. This is mainly

geared towards catalogue and stock management to optimise the browsing

process and purchase of a product on the said shop.

• Call to action: this is an initiative to create interest among users and encourage

them to participate or react before a particular stimulus.

• CAPTCHA: Turing test inserted on a website, generally on a form, to check

whether the data are being fed by a person or a machine. It is useful to avoid

spam.

• Shopping cart: a key tool of an online shop showing the products a user has

selected for their purchase, their price and taxes, as well as the final cost for the

user.

• Cash flow: same as for traditional businesses, e-commerce needs to look at its

cash flow or the difference between receipts and payments of a company in a

particular period.

• CMS: Content management system that allows, in a simple way, to organise,

treat and publish on a website. This is also used for the online product catalogue

and, generally, for any content on the online shop.

• Cookies: website information stored in the browser enabling better understanding of the user through their browsing (habits, interests, etc.). This is key

for retargeting strategies.

• Checkout: guided process of finalising a purchase that converts the content of

the shopping cart into a real sale.

• Display network: it is Google’s affiliate network with over two million websites

available.

64 T. Piñeiro-Otero and X. Martínez-Rolán

• Dropshipping: type of retail sales in which the retailer does not have the actual

stock of the product and issues the purchase order to the supplier once the

shopping process is over. This is especially relevant for an online shop environment because it saves stocking costs.

• Eye tracking: technique and instrument to eye track the areas of the screen users

pay special attention to, as well as their reading line.

• Lead or Conversion: each of the concrete goals set by the company. Usually, a

lead is equivalent to a sale, but this is not necessarily so; they can be linked to a

database of subscribers and prescribers.

• Payment gateway: it triggers payment processing.

• Payment processing: it allows for payment management