E-commerce: selling online through your own site or a marketplace
Definition
E-commerce marketplace: a site such as Amazon, eBay or Etsy where many separate businesses list their products, and the site supplies the shopfront, the search and the checkout in return for a cut of each sale.
- E-commerce: selling goods and services over the internet, either through a website the business runs itself or through a marketplace.
- In practice the business lists each product with photographs, a price and a delivery option, takes the order and the money online, then packs the goods and posts them.
- Benefit: one online shop can sell to the whole country without renting a unit anywhere, which is how ASOS sells clothing to shoppers across the UK through its website and app.
- Drawback: delivery, packaging and returns all cost money, and a customer who sends half an order back still has to be refunded in full.
- Every other online seller is now a rival too, because a shopper can compare your price with theirs in seconds without leaving the sofa.
Social media: your posts and other people's recommendations
- Social media: apps and sites where a business runs a page, posts content, replies to comments and collects public reviews.
- A business posts new products and offers, answers questions sent as messages, and pays influencers to show the product to their own followers.
- Benefit: a post costs almost nothing to publish yet can reach tens of thousands of people, and every customer who shares it or tags a friend spreads the message for free.
- Drawback: complaints are public and travel fast, so one angry review sits under the post where every future customer can read it.
- Keeping the accounts going also takes time, because a page that has not posted for six months looks like a business that has closed down.
Example
- Gymshark was started in 2012 by Ben Francis, who screen-printed gym clothing in a garage in Birmingham.
- It grew by getting its clothing onto fitness influencers who wore it in their own posts and videos.
- Those posts reached followers who already trusted the influencer, so the recommendation carried more weight than an advert the business wrote about itself.
- The trade-off is control, because once the clothing is in someone else's video the business no longer decides what is said about it.
Digital communication: email, messaging, video calls and the website
- Digital communication: sending information electronically, by email, instant messaging, video call or the business's own website.
- The same tools run in three directions: to customers as order confirmations and delivery updates, to staff as rotas and team video calls, and to suppliers as orders and stock queries.
- Benefit: messages arrive instantly, cost almost nothing to send and leave a written record you can check if an order is later disputed.
- It also makes remote working possible, since a manager can approve a supplier's order from home rather than waiting until Monday.
- Drawback: staff can be overwhelmed by the sheer number of messages, and writing carries no tone of voice, so a short reply meant to be efficient can read as rude.
Payment systems: how the money actually reaches the business
Definition
Electronic payment system: any method that moves money from the customer to the business without cash, including chip and PIN, contactless cards, mobile wallets and online checkouts.
Transaction fee: the charge the card or checkout provider takes out of every sale, usually a small percentage of the amount plus a few pence.
- In person: a chip and PIN terminal, contactless for smaller amounts, mobile wallets held against the reader, or a card reader that plugs into a phone so a market stall can take cards.
- Online: a checkout page that takes card details, or payment inside an app, such as paying Deliveroo before the food is cooked or paying Tesco for a click and collect order before you drive over.
- Benefit: queues move faster, no sale is lost because a customer is carrying no cash, and the day's takings are recorded automatically instead of being counted by hand.
- Drawback: the provider takes a fee out of every single transaction, so on a £2.50 coffee the business keeps a little less than the price on the board.
- A payment system that goes down stops trading completely, because a shop that takes almost no cash has no other way of being paid.
Exam technique
- A state or identify question wants the type of technology plus one example, such as social media, for example a paid Instagram post.
- Keep the four types apart, because answers often turn every point into e-commerce when the business in the source is actually using digital communication or a payment system.
- Match the technology to the business you are given, since a market stall needs a card reader and a national clothing brand needs a marketplace listing.
- Save the effects on sales, costs and the marketing mix for the impact questions, as the marks here are for identifying the technology and saying how the firm uses it.
Self review
- Name the four types of technology in this topic.
- What is an e-commerce marketplace, and name one.
- Give one benefit and one drawback of a business using social media.
- Besides customers, who else does a business use digital communication with?
- Why does taking a card payment leave the business with less than the price charged?
