LEARNING OUTCOME 1: UNDERSTAND THE IMPACT OF E-COMMERCE ON

BUSINESS

1. EXPECTATIONS OF INTERNET CUSTOMERS

a. THE CONTRIBUTION OF ONLINE SALES BUSINESS COMPETITIVENESS AND
SUCCESS

Online sales have revolutionized the way businesses operate, offering numerous advantages that
significantly enhance competitiveness and success. Here are five main contributions:

1. Global Reach and Market Expansion: Online sales platforms break down geographical
barriers, enabling businesses to reach a global audience. This expanded market reach allows
companies to tap into diverse customer bases beyond their local or regional markets. For
example, a small boutique in one country can now sell its products to consumers worldwide
through e-commerce platforms, effectively increasing its market size and potential revenue. This
global reach not only boosts sales but also diversifies the customer base, reducing dependency on
any single market and spreading business risk.

2. Lower Operational Costs: One of the most significant benefits of online sales is the
reduction in operational costs. Traditional brick-and-mortar stores require substantial
investments in physical space, utilities, and in-store staff. In contrast, online businesses can
operate with lower overhead costs, as they do not need physical retail space and can often
manage with a smaller team. These savings can be reinvested in other areas such as marketing,
product development, or customer service, contributing to overall business growth and
sustainability.

3. Enhanced Customer Insights and Personalization: Online sales provide businesses with
valuable data about customer behavior and preferences through analytics tools. This data allows
companies to understand their customers better, tailor their marketing strategies, and personalize
their offerings. For example, businesses can use browsing history and purchase patterns to
recommend products that align with individual customer interests, enhancing the shopping
 experience and increasing the likelihood of repeat purchases. Personalized marketing also
improves customer engagement and loyalty, driving long-term success.

4. Flexibility and Scalability: E-commerce platforms offer unparalleled flexibility and

scalability for businesses. Online stores can quickly adapt to changes in market demand, launch
new products, and scale operations up or down with relative ease. This adaptability is
particularly valuable in a dynamic market where consumer preferences and trends can shift
rapidly. For instance, a business can run targeted promotional campaigns or adjust inventory
levels without the constraints of physical space, allowing it to respond effectively to market
conditions and optimize sales performance.

5. Improved Competitive Advantage through Technology: Online sales leverage advanced

technologies such as artificial intelligence, machine learning, and automation, which enhance
competitive advantage. These technologies enable businesses to optimize pricing strategies,
manage inventory efficiently, and provide superior customer service through chatbots and
automated responses. Additionally, digital marketing tools like search engine optimization (SEO)
and pay-per-click (PPC) advertising help businesses increase their online visibility and attract
more customers. By staying at the forefront of technological advancements, businesses can
maintain a competitive edge and drive long-term success in the digital marketplace.

b. CUSTOMER EXPECTATIONS AND PURCHASE DECISIONS AND THE IMPACT OF E-

COMMERCE ON BUSINESS

Understanding customer expectations and purchase decisions is crucial for businesses, especially
in the realm of e-commerce. Here’s a breakdown of five main customer expectations and how
they impact purchase decisions and e-commerce:

1. Convenience

Expectation: Customers expect a seamless and hassle-free shopping experience. This includes
easy navigation, fast loading times, and a straightforward checkout process.
Impact on E-Commerce: E-commerce platforms that prioritize convenience often see higher
customer satisfaction and retention. Features like one-click purchasing, saved payment methods,
and mobile-friendly design enhance convenience and can lead to increased conversion rates. An
easy return policy and efficient customer service also play into this expectation.

2. Product Quality and Accuracy

Expectation: Customers expect the products they purchase to meet their quality standards and
match the descriptions provided on the site. They rely on accurate product information, images,
and reviews to make informed decisions.

Impact on E-Commerce: To meet this expectation, e-commerce businesses need to ensure

detailed and accurate product listings, high-quality images, and authentic customer reviews.
Failure to deliver on these aspects can lead to increased returns, negative reviews, and damage to
the brand's reputation.

3. Price Competitiveness

Expectation: Customers often seek the best value for their money and compare prices across
different platforms before making a purchase.

Impact on E-Commerce: E-commerce businesses must stay competitive by offering attractive

pricing, discounts, and promotions. Implementing price comparison tools, loyalty programs, and
personalized offers can help attract and retain customers. However, competing solely on price
can be challenging, so value-added services or unique selling points can differentiate a business.

4. Customer Support

Expectation: Customers expect prompt and effective support when they have questions or
encounter issues. This includes pre-sale inquiries, order tracking, and post-sale support.

Impact on E-Commerce: Providing robust customer support through various channels (live
chat, email, phone) is critical. E-commerce businesses that excel in customer service often see
higher customer loyalty and positive word-of-mouth. Automated support tools, like chatbots, can
enhance the efficiency of support services, but human interaction is still valuable for complex
issues.

5. Security and Privacy

Expectation: Customers expect their personal and payment information to be secure. They want
reassurance that their data is protected and used responsibly.

Impact on E-Commerce: Implementing strong security measures (SSL certificates, secure

payment gateways) and transparent privacy policies is essential. Businesses that prioritize
security build trust and credibility with their customers. Conversely, any security breaches or
misuse of data can severely damage a company’s reputation and lead to legal consequences.

Overall Impact of E-Commerce on Business

**1. Market Reach and Accessibility: E-commerce allows businesses to reach a global
audience, breaking geographical barriers. This increased market reach can lead to greater sales
opportunities.

**2. Cost Efficiency: Operating online can reduce costs associated with physical storefronts,
such as rent and utilities. However, businesses must invest in digital infrastructure and marketing
to compete effectively.

**3. Data-Driven Insights: E-commerce platforms provide valuable data on customer behavior,
preferences, and purchasing patterns. Businesses can use this data to make informed decisions,
personalize marketing strategies, and optimize their offerings.

**4. Competitive Pressure: The low entry barriers in e-commerce mean that competition is
fierce. Businesses need to continuously innovate and adapt to changing consumer preferences
and technological advancements to stay ahead.

**5. Customer Expectations: E-commerce raises the bar for customer expectations in terms of
convenience, speed, and service. Meeting and exceeding these expectations can differentiate a
business in a crowded market.
c. MEETING EXPECTATIONS OF INTERNET CUSTOMERS FOR QUICK AND
CONVENIENT PURCHASING PROCESS
d. SPEEDY AND EFFICIENT PURCHASING, COMPETITIVE PRICING AND BRAND
FAMILIARITY
e. OTHER KEY FACTORS INCLUDING CLEAR STATEMENT OF PRICING/SHIPPING
INFORMATION, CREDIBILITY AND TRUSTWORTHINESS, HOMEPAGE VISUAL
APPEAL, TOTAL COST CALCULATOR, SEARCH FUNCTION, PRIVACY
STATEMENT, ONSITE CUSTOMER REVIEWS AND TESTIMONIALS, ONSITE
CUSTOMER SERVICE, LINKS TO SOCIAL NETWORKS

2. Potential impact of common applications on an e-commerce business

a. Comparing common e-commerce business applications: business-to-consumer (b2c), business-
tobusiness (b2b) (e.g. buy-side and sell-side b2b, e-marketplace b2b), consumer-to-consumer (c2c)
and consumer to business (c2b)
b. Common e-commerce applications, including applications for wholesale and retail (e-tailing),
marketing, finance, manufacturing, auctions, order and delivery, payment systems, customer
support systems
c. E-commerce recommendation applications
d. Degree and nature of impact, challenges and benefits of common applications for e-businesses,
including implications for small and medium enterprises (SME)
Learning Outcome 2: Be able to plan an e-commerce strategy

1. Planning an e-commerce implementation strategy for a business

2. Identifying market for particular online products/services
3. Why an e-commerce system should be integrated with the rest of the business venture
4. E-commerce strategy covering inventory management, sales fulfilment, payment and security
5. The strategic planning process
6. Exploring the feasibility of different implementation methods, including immediate cutover,
parallel running, phased implementation, pilot system/trial implementation
7. Producing an e-commerce implementation plan for a website, taking account of site layout
and features (customer interface/ease of use, display of products, personal details entry,
payment method(s), delivery details), navigation, technology (to maximise the website value
to the target market and to ensure search engine compatibility) hosting, i.e. Internet Service
Provider (ISP), in-house or sub-contracted, cost implications such as advertising, setup,
maintenance and staff training

Learning Outcome 3: Be able to manage an e-commerce strategy

1. Risks of linking business systems to the Internet

a. Key risks: data theft and risks to the security of information through phishing, spoofing,
pharming, malware (including computer viruses, worms, Trojan horses, spyware and
adware) b. Fake traders
c. Dishonest suppliers
d. Implications for business law (e.g. laws prohibiting the sale of materials considered racist
of offensive) and domestic business law (sales taxes and business licensing implications)
e. Risks of ‘cash on delivery’ as a payment method
f. Internet selling or distance selling regulations

2. Protecting the intellectual property of an organisation

a. Defining intellectual property
b. Its importance for an organisation
c. Elements of a website that can be protected
d. Protecting software and HTML code by copyright, protecting website design and creative
content by copyright, use of trade marks to protect business names, logos and product
names, protecting computer graphics, screen displays and web pages through design law
e. The importance of protecting IP rights from an early stage
f. Controlling the access and use of website content
 g. Informing people that content is protected and what use they are able to make of any
content
h. The possible consequences of not protecting the intellectual property of an organisation

3. Security measures to protect an e-commerce solution

a. Different forms of securities including securities to control access (packet filtering, the use
of circuitlevel and application-level gateways), communications security (cryptographic
security protocols, point-to-point tunnelling protocol (PPTP) and secure sockets layer
(SSL) and firewalls
b. Payment card industry data security standard (PCI-DSS)

4. Current e-commerce developments and their incorporation into e-commerce strategy

a. Continual evolution of e-commerce
b. Type of developments incorporated into e-commerce strategy e.g. customer reviews
(including the use of review threads as online forums)
c. Links to social media for sharing products/services, good quality pictures and videos of
products, blogging, price comparisons, ‘trying on’ products online via dummy pictures,
collaboration with social shopping (e.g. eBay, Amazon and Groupon), live video
interaction
d. Mobile optimised and mobile responsive websites