Essay: Gain Competitive Advantage Via E-Commerce & Customer Retention With Social Media.

Executive Summary

1. Gain of competitive advantage by the use of e-commerce?

2. Customer retention through social media?

3. Strategies utilised by the company?

The advancement in the information and communication technology has brought about a wide range of electronic business models and applications in the market. . The e-commerce should be integrated into the key business resources of the organisation in order to make it efficient. The decreasing cost of technology has also been very beneficial in the incorporation of newer technologies in the business of the organisation to improve their strategies and business processes.

An E-commerce system allows the customer to communicate with an individual customer as a sole company voice. It stores the data about an individual customer in their databases about their likes and dislikes and conveys it to all the divisions of the company.

The key challenges for the e-commerce companies had been the process that they can employ to channel their business through these websites and how much should their investment be in the social media.

This strategy tries to create a profitable relation between both the company and the customer rather than moulding the customer into the policies of the company. It is a process of analysing the current demand statistics of the customer and also in the future.

The advancement in the information and communication technology has brought about a wide range of electronic business models and applications in the market. The applications have been proved to provide a competitive edge to the organisations by the help of creation of better efficiencies and reduction in costs of the organisations. The e-commerce should be integrated into the key business resources of the organisation in order to make it efficient (Anon, 2015). The decreasing cost of technology has also been very beneficial in the incorporation of newer technologies in the business of the organisation to improve their strategies and business processes. The integration of the information technology into the business processes has provided the companies to sustain a competitive strategy in the market by decreasing the agency and the transactions cost of the organisations (Adweek.com, 2014). One of the most enticing opportunities that has been presented by the information technology is the process of e-business for the companies to conduct the transactions in the business electronically, which will promote flexibility and efficiency in the business. Though there are multitude of advantages in the e-business technology, there are certain disadvantages too in this sector and one of the most important are security and customer relations. Some of the other disadvantages also include the training costs, implementation costs. Low barriers for the entry of competitors (Acar and Polonsky, 2007).

1. Gain Of Competitive Advantage By The Use Of E-Commerce

Electronic Customer Relationship Management (ECRM) is the latest ideal model of Customer Relationship Management in the world. The established web-based companies are no longer able to develop their systems in the ancient form of customer relations, changing times need E-commerce as most of the business is becoming web based (Xia, 2013). The older companies have started accepting the form of e-commerce and hence it also has to convert its CRM to ECRM. The use of customer relationship management in the field of e-commerce has been of great help for the e-commerce companies to retain their customers (Sood, 2012). It is evident from a study that 10% gain in repeat customers can cause a 10% rise in the profits of the customers. There is a difference of 60% in sales between a high performing and an average company due to the presence of ECRM. A well planned E-commerce creates opportunity for both the customers and companies. Proper implementation of E-commerce creates loads of opportunities for organisations.

An E-commerce system allows the customer to communicate with an individual customer as a sole company voice. It stores the data about an individual customer in their databases about their likes and dislikes and conveys it to all the divisions of the company. The company knows the individual choices of the customer and can be able to implement ideas in order to retain the customer (Samiee, 2008). The company shows loyalty towards the customer by personalizing the profile and connecting it to its transaction details, personal database of the customer and hence the company is aware of the type of products the customer is interested in. personalization of customer is of two types and each of them have their own issues like rule based personalization where the customer is shown only specific set of pages by the company but this personalization requires manual updating which is very difficult for a large enterprise (Mitchell and Strauss, 2001). The other form of personalization is collaborative filtering which shows the customer the same types of item that they have browsed or shopped earlier but the problem with this is that customers get irritated due to same form of advertisement and often regard it as a spam.

By implementing E-commerce one can effectively understand the current market of any product by the likeness and predictability of the customer to buy it. It focuses the sale of certain products at certain targeted customers who are in general interested in that product (Karavdic, 2005). Even the data gained from such an operations shows the marketing technique which was effective in attracting the customers and improve the marketing efforts of a company. The data collected by the companies through the social media apps have started to engage with the customers rapidly since the start of the year 2012. In the meantime Facebook had passed its 1 billion mark and had more than 500 million active users in twitter as well as vast developments in Pinterest after it had revolutionised from its beta phase (Ison, 2015). The key challenges for the e-commerce companies had been the process that they can employ to channel their business through these websites and how much should their investment be in the social media. The main investment was the new form of data that had been introduced by the companies and how can they utilise in their e-commerce websites. These data were resources for the segmentation of the customers for the company as it represented the current trends and the individual customer likes or doesn’t likes (Bigcommerce, 2014).   

2. Customer Retention Through Social Media

An E-commerce technology greatly improves customer support and service of a company. The use of technologies like search, email management, live help, multiple language support and news feed which helps the company to receive and update their data, create log for time of orders and accurate time of delivery, and it also helps the customer to view the company agreement against buying a product. It helps to search for the specific product required by the customer. By implementing E-commerce one can effectively understand the current market of any product by the likeness and predictability of the customer to buy it. It focuses the sale of certain products at certain targeted customers who are in general interested in that product (Baer, 2015). Even the data gained from such an operations shows the marketing technique which was effective in attracting the customers and improve the marketing efforts of a company. The company knows the individual choices of the customer and can be able to implement ideas in order to retain the customer. The company shows loyalty towards the customer by personalizing the profile and connecting it to its transaction details, personal database of the customer and hence the company is aware of the type of products the customer is interested in. personalization of customer is of two types and each of them have their own issues like rule based personalization where the customer is shown only specific set of pages by the company but this personalization requires manual updating which is very difficult for a large enterprise (Anon, 2015). The other form of personalization is collaborative filtering which shows the customer the same types of item that they have browsed or shopped earlier but the problem with this is that customers get irritated due to same form of advertisement and often regard it as a spam.

This strategy tries to create a profitable relation between both the company and the customer rather than moulding the customer into the policies of the company (Anon, 2015). It is a process of analysing the current demand statistics of the customer and also in the future and hence communicate their choices through email, or telecalling by the companies to the customers and hence empowering the e-commerce agents to communicate the latest deals and information about the product.

For the proper operation of the business after incorporation of the e-commerce the company will be able to assess the departments which are really important to company and the one which will only increase the overhead charges of the company and try to trim them to save the company losses (Adweek.com, 2014). But on trimming the employees will also have to be explained the proper reason for trimming and to make them understand the importance of rest of the employees in the company. This retooling of business is important as well an issue for the proper functioning of the company. This difficulty will also be overcome by the help of the e-commerce technology, as it will help the company to take essential administrative decisions which will provide it with the support and trust of the customers as well as employees. The improvement in the sector of online securities will also be very beneficial in the earning of trust of the clients as well as the customers (Acar and Polonsky, 2007). Like introduction of proper channels of transactions which are safe and secure and will prevent the theft of personal data and identity.

Conclusion

Social media as well as other factors like the security measures taken by the company are very important factors in the maintenance of any organisation involved in e-commerce. But the most important parts of any company that is the customer and the employees are to be given the most importance, as they are the ones who are responsible for not only the development but for the mere existence of the company. Therefore e-commerce has been a boon to the companies as it has been able to revive the relationship not the organisations with the customers and employees.

References

Acar, A. and Polonsky, M. (2007). Online Social Networks and Insights into Marketing Communications. Journal of Internet Commerce, 6(4), pp.55-72.

Adweek.com, (2014). The Rise Of Social Media In E-Commerce [INFOGRAPHIC]. [online] Available at: https://www.adweek.com/socialtimes/social-e-commerce/496484 [Accessed 7 Aug. 2015].

Anon, (2015). [online] Available at: https://www.thedrum.com/news/2014/02/16/infographic-importance-social-media-e-commerce [Accessed 7 Aug. 2015].

Anon, (2015). [online] Available at: https://www.k-ecommerce.com/medias/Social%20Media%20and%20eCommerce%20Article.pdf [Accessed 7 Aug. 2015].

Baer, J. (2015). Social Media is a Terrible Ecommerce Tactic - or is it? | Convince and Convert: Social Media Strategy and Content Marketing Strategy. [online] Convinceandconvert.com. Available at: https://www.convinceandconvert.com/social-media-strategy/social-media-is-a-terrible-ecommerce-tactic-or-is-it/ [Accessed 7 Aug. 2015].

Bigcommerce, (2014). [online] Available at: https://www.bigcommerce.com/ecommerce-answers/effective-social-media-use-ecommerce-marketing/ [Accessed 7 Aug. 2015].

Ison, J. (2015). TRADEGLOBAL. [online] TradeGlobal®. Available at: https://www.tradeglobal.com/bridging-gap-social-media-ecommerce/ [Accessed 7 Aug. 2015].

Karavdic, M. (2005). Integrating e-commerce into existing export marketing theories: A contingency model. Marketing Theory, 5(1), pp.75-104.

Mitchell, T. and Strauss, J. (2001). Practitioner and Academic Recommendations for Internet Marketing and E-Commerce Curricula. Journal of Marketing Education, 23(2), pp.91-102.

Samiee, S. (2008). Global marketing effectiveness via alliances and electronic commerce in business-to-business markets. Industrial Marketing Management, 37(1), pp.3-8.

Sood, S. (2012). The Death of Social Media in Start-Up Companies and the Rise of S-Commerce.Journal of Electronic Commerce in Organizations, 10(2), pp.1-15.

Xia, L. (2013). Effects of Companies' Responses to Consumer Criticism in Social Media. International Journal of Electronic Commerce, 17(4), pp.73-100.