Chapter – IV

Internet Enabled Retailing

What Is Electronic Retailing (E-tailing)?

Electronic retailing (E-tailing) is the sale of goods and services through the Internet.
E-tailing can include business-to-business (B2B) and business-to-consumer (B2C) sales of
products and services. E-tailing requires companies to tailor their business models to
capture Internet sales, which can include building out distribution channels such as
warehouses, Internet web pages, and product shipping centers.
Notably, strong distribution channels are critical to electronic retailing as these are
the avenues that move the product to the customer.
How Electronic Retailing (E-tailing) Works
Electronic retailing includes a broad range of companies and industries. However,
there are similarities between most e-tailing companies that include an engaging website,
online marketing strategy, efficient distribution of products or services, and customer data
analytics.
Successful e-tailing requires strong branding. Websites must be engaging, easily
navigable, and regularly updated to meet consumers' changing demands. Products and
services need to stand out from competitors' offerings and add value to consumers' lives.
Also, a company's offerings must be competitively priced so that consumers do not favor
one business over another on a cost basis only.
E-tailers need strong distribution networks that are prompt and efficient.
Consumers cannot wait for long periods for the delivery of products or services.
Transparency in business practices is also important, so consumers trust and stay loyal to a
company.
There are many ways companies can earn revenue online. Of course, the first income
source is through the sales of their product to consumers or businesses. However, both B2C
and B2B companies could earn revenue by selling their services through a subscription-
based model such as Netflix, which charges a monthly fee for access to media content.
Types of Electronic Retailing (E-tailing)
Business-to-Consumer (B2C) E-Tailing
Business-to-consumer retailing is the most common of all e-commerce companies
and the most familiar to most Internet users. This group of retailers includes companies
selling finished goods or products to consumers online directly through their websites. The
products could be shipped and delivered from the company's warehouse or directly from
the manufacturer. One of the primary requirements of a successful B2C retailer is
maintaining good customer relations.
Business-to-Business (B2B) E-Tailing
Business-to-business retailing involves companies that sell to other companies. Such
retailers include consultants, software developers, freelancers, and wholesalers.
Wholesalers sell their products in bulk from their manufacturing plants to businesses.
These businesses, in turn, sell those products to consumers. In other words, a B2B company
such as a wholesaler might sell products to a B2C company.
Advantages of online retail
The benefits of retailing online include:
1. Easy access to market - in many ways the access to market for entrepreneurs has
never been easier. Online marketplaces such as eBay and Amazon allow anyone to
set up a simple online shop and sell products within minutes.
2. Reduced overheads - selling online can remove the need for expensive retail
premises and customer-facing staff, allowing you to invest in better marketing and
customer experience on your e-commerce site.
3. Potential for rapid growth - selling on the internet means traditional constraints to
retail growth - eg finding and paying for larger - are not major factors. With a good
digital marketing strategy and a plan a scale up order fulfilment systems, you can
respond and boost growing sales.
4. Widen your market / export - one major advantage over premises-based retailers
is the ability expand your market beyond local customers very quickly. You may
discover a strong demand for your products in other countries which you can
 respond to by targeted marketing, offering your website in a different language, or
perhaps partnering with an overseas company.
5. Customer intelligence - ability to use online marketing tools to target new
customers and website analysis tools to gain insight into your customers’ needs. For
advice on improving your customer’s on-site experience

Disadvantages of online retail

Some negatives of online retail include:

1. Website costs - planning, designing, creating, hosting, securing and maintaining a

professional e-commerce website isn’t cheap, especially if you expect large and
growing sales volumes.
2. Infrastructure costs - even if you aren’t paying the cost of customer-facing
premises, you’ll need to think about the costs of physical space for order fulfilment,
warehousing goods, dealing with returns and staffing for these tasks.
3. Security and fraud - the growth of online retail market has attracted the attention
of sophisticated criminal elements. The reputation of your business could be fatally
damaged if you don’t invest in the latest security systems to protect your website
and transaction processes.
4. Legal issues - getting to grips with e-commerce and the law can be a challenge and
you’ll need to be aware of, and plan to cope with, the additional customer rights
which are attached to online sales.
5. Advertising costs - while online marketing can be a very efficient way of getting the
right customers to your products, it demands a generous budget. This is especially
true if you are competing in a crowded sector or for popular keywords.
6. Customer trust - it can be difficult to establish a trusted brand name, especially
without a physical business with a track record and face-to-face interaction between
customers and sales staff. You need to consider the costs or setting up a good
customer service system as part of your online offering.
 Turning Experience Goods into Search Goods

Importance of the Online Medium

The Internet is recognized currently as the “World’s largest repository of online
digital information”. New systems for searching the internet commercialize the increasingly
user-friendly nature of this information and make it more accessible and less expensive.
There is an increasing trend in the consumer market of using the e-commerce
channel to purchase their products and services. The aspect of flexibility in navigation,
convenience, and not experiencing a physical store/product has an impact on positively
evaluating the online medium. E-commerce was created through the internet and as the
Internet users were increasing, the choice of purchasing products electronically became
more and more preferable The internet is likely to replace the traditional distribution and
communication channels. This trend changes the traditional way of decision making of the
customer before purchasing a certain product and service. As such, it is important to
research on topics related to e-commerce.
Information Search

McGaughey and Mason (1998) discussed the impact the internet has to consumer
behavior through every step of the consumer decision making. This is from problem
recognition, to information search, alternative evaluation, purchase decision and post
purchase behavior. The way people interact with the internet defines the utility in of e-
commerce.

Consumer online information search behavior and the phenomenon of search versus
experience goods. They highlighted the importance of experience goods and the
informational efforts of consumers towards these goods. They showed the importance of
peer information when searching for experience attributes and the usefulness of online
information seeking, when dealing with such goods.
 They found that consumers seek a variety of information sources when seeking
experiential benefits and the extent up to which these goods can be searchable through the
Internet. Moreover, they showed the importance of word of mouth communication in
information seeking and the weight this information has on experience goods.

Tools for Information Search

The vast amount of information has no value and utility importance if it cannot be
identified, retrieved and organized by efficient mechanisms. Tools that help consumers
satisfy their informational needs and reduce their uncertainty can vary in knowledge input
and can make the overall information service more complete.

A retailer can offer descriptive information about the product, with various ways by
providing its own knowledge input to result to this information. This product attribute
information can be in forms of pictures, videos, text, sound and even olfactory. The goal for
the retailer is to describe with information the best possible way the product offered, so the
customer can have a closer to reality expectation about the product. This can be an
informational tool for illustrating the product attributes.

Also, the retailer can offer an informational tool with peer reviews in order to
incorporate word of mouth communication, often called collaborative customer content or
customer reviews, were in this case the knowledge input of this tool is coming from other
customers that share the same interest and have already experienced the product. In some
cases depending on the product, customer reviews become a more effective informational
tool (Zeithaml, 1988).

Web Quality

In order to understand how satisfaction and perception of quality works on an

online context it is necessary to examine the various measurement attempts of researchers
over the past years. There has been an extensive research on how to measure quality from
an e-commerce website. It is very difficult to come out with specific characteristics, since
the quality measured is depending on the consumer perception. Therefore there has been a
continuous effort from researchers based on empirical data to construct a framework of
measuring such a quality.

Generally, a Website facilitates efficient and effective shopping, purchasing, and

delivery of products and services”. This was the first formal definition and underlines the
main concerns of a qualitative website. Yoo and Donthu (2001) came up with four
dimensions of ease of use, aesthetic design, processing speed and security.

Szymanski and Hise (2000) created the metric of e-satisfaction that was based on
measuring product information, site design, financial security and influence of convenience.

Dabholkar (2000) investigated the expectation consumers will have on speed of

delivery, ease of use, reliability, enjoyment, and control will impact service quality
perceptions. Liljander (2002) et al. constructed four e-quality dimensions, site design and
content, trust, empathy, and security.

Performance & Information in a Website

Performance of an online retailer is the ability to deliver the product on promise.

There is product risk for consumers, since they are not able to tangibly check the product
prior to purchase. This creates important questions about how and which policies to
incorporate in order to improve performance, since it is a metric that plays important role
in the evaluation of e-service in general. It is therefore critical to assure the customer with
for example risk free return policies, in order to decrease this potential risk and encourage
the customer to purchase.

Information has been found to be an effective predictor of attitude toward the site
and e-satisfaction. Information seems to be a strong predictor of customer satisfaction and
of one’s likelihood of positive word of mouth communication. Extensive information can be
price assessment and product testimonials like peer reviews and product presentations
 The availability of information is crucial and it depends on the degree to which
information can be employed by consumers to predict their probable satisfaction with
subsequent purchases (Park & Kim, 2003).

To fulfill customers’ informational needs, the information provided should be easy to

understand, up-to-date in presenting products and services, sufficient to help a consumer
make a choice, and consistent in representing and formatting the content. It is found that
product information quality is affecting information satisfaction and that makes product
information a major performance attribute.

Satisfaction

Many business people and academics have showed a special interest in analyzing
consumers’ level of satisfaction, especially in the field of Marketing. According to Kotler
(1997), there are various purchasing steps like need, information search, evaluation of
alternatives, purchase decision and post purchase evaluation, where satisfaction can be
derived depending on customers experience on those steps. The scope of this research will
be partly focused on the information search stage and the resulting satisfaction.

There have been metrics for user satisfaction in the offline environment. Since the
internet context is different in various ways there has been an ongoing effort to construct
and measure online consumer satisfaction, in order for companies to improve according to
those metrics their performance.
Experience Versus Search Goods
The taxonomy of the products is often necessary and very important because there
is change in consumer behavior when consumers are dealing with specific types of
products. Nelson (1970), classified goods into search and experience goods according to
the benefits that consumers were seeking on those goods and developed a theory of
consumers qualitative appraisal of goods before purchasing. This classification of products
is an important dimension for researching consumer behavior. He found that seeking
information from other people was more likely when searching for experience products
than search products.
Search products are easy to predict in terms of value and quality and thus it is easier
to sell through the online medium. The internet has certain benefits and all of them can be
fully incorporated since the biggest disadvantage of physical inspection is no longer
present. This means that since those products are easy to predict, it is more convenient to
sell through the internet. For example a computer unit can be defined in terms of quality
and value by presenting information about hardware specifications, and can be easily
compared to another computer unit. That makes a computer unit a search good, since the
benefits that the consumers are seeking are in the specifications of the product itself and
not the experience of the usage of the product. The easiness to structure information and
measure its effects, when dealing with a search product makes it less importance for this
research paper to examine consumer behavior in relation to search goods

However experience products are difficult to predict in terms of value and quality
and only after ones use the prediction is easier. This is where the challenge is for academia,
to overpass barriers of pre purchase prediction to decrease the consumers risk and
uncertainty, reinforce his trust and satisfaction and make the decision process simplified
for the consumer when dealing with experience products. For example a book which is
product that someone must experience to define in terms of value and quality, is more
difficult to sell online and therefore it is a challenge for retailers to provide information
adequate enough to convince a consumer.

Further on Wright and Lynch's (1995), made a reinterpretation of the terms search
experience and credence goods according to customers inferences. They supported that
there is no good characterized initially as a search, experience and credence; it is clear that
all goods have a combination of search experience and credence attributes, according to
what benefits the consumers find important.

Word-of-Mouth Communication

Word of mouth communication is of major concern, because it is an information source that

plays a vital role in consumer decision making and consumer behavioral intentions. Katz
and Lazarsfeld (1955) found sixty years ago that word of mouth was the only most
important source of information for certain household items.
Engel et al (1969) researched on car diagnostic centers and found that word of
mouth is a strong influence on product choices, Feldman and Spencer (1965) found the
same thing for physician services and extensive research over the years highlighted the
importance of word of mouth when consumers are facing a choice of a new good
Kotler (2000) refers to a research made upon seven thousand consumers in seven
European states, where sixty percent of them declared as a major influence of buying a new
brand from family and friends. Moreover, a research made by Jupiter Communications
(1999) showed that fifty seven percent of people where highly influenced when visiting a
new website by personal recommendations.
Various online retailers provide word-of-mouth communication, as product
information to achieve informational enrichments for the product or service. For example,
book retailers, travel agencies, etc. provide word-of-mouth in the form of customer reviews
or online reviews for products or services, to enhance customer confidence and decrease
his risk.
Online reviews is a form of word-of-mouth communication, but the quantity of
information is much bigger online and contains negative and positive review
simultaneously for one specific product, whereas the offline traditional reviews are either
negative or positive and offered as one piece at a time.
Intention to Purchase
Intention to purchase is conceptualized by Blackwell et al (2001), as what
consumers are thinking to buy. From the categories of purchase intention, repurchase and
shopping intention. Shopping intentions are intentions of whether consumers are planning
to make a product or service purchase, whereas repurchase intention are intentions of
whether consumers are willing to repurchase the same product or service. Blackwell et al
(2001), found that internal and external information will influence purchase intentions.
This constract of behavioral intention will be examined since it has direct managerial
relevance for today’s e-tailers.
 Personalization through Mass Customization

Personalization

It is used to tailor information to an individual user’s (customer’s) specific needs

and preferences. By tailoring the representation of products and services, several
improvements can be achieved. These include, less interaction efforts for customers to find
the specification of services or products (configuration) they are interested in, the
recommendation of new relevant products and services a customer never thought of
(serendipity effect), and related increases of sales.

Mass customization

It is a basic production paradigm that allows the production of highly variant

products and services at costs close to those of mass production. This approach brings
flexibility to the way customers can specify their individual needs and also comes along
with new challenges for production processes that have to be made more flexible and
robust. Knowledge-based configuration is regarded as a key enabling software technology
for establishing mass customization within a company.

An often forgotten side-effect of the application of mass customization is the phenomenon

of mass confusion. The higher the number of parameters that have to be specified by users
or the higher number of products to choose from, the lower the probability that customers
will take a purchase decision. Consequently, it is important to extend existing mass
customization approaches with personalization concepts that help customers to overcome
the challenges of mass confusion. The goal of this special issue is to present advancements
 in the research areas of personalization and mass customization with a special focus on
approaches combining both fields.

Configuration technologies
A key enabling technology of mass customization is knowledge-based configuration. Early
configuration systems were implemented on the basis of rule-based technologies. Model-
based approaches predominate in existing systems, especially when the underlying
knowledge bases become large and complex. Model-based approaches allow a clear
separation between domain knowledge and corresponding problem solving knowledge.
Hence they avoid an intermingling of both knowledge types, which has significantly
increased related development and maintenance efforts. Configuration technologies are
applied in various domains such as telecommunication switches, computer hardware,
industrial machinery such as compressors and tractors, Internet of Things (IoT), and
financial services. For an overview of applications and a discussion about the history of
configuration technologies. A sketch of the major components of a configuration
environment is provided in Fig. 1.

Fig. 1
Sketch of the basic architecture of a configuration environment. User-related preferences
(requirements) are stored in the user model. The set of potential configurations is defined
implicitly by the configuration knowledge base. A configuration system (configurator)
determines a configuration that takes into account the defined set of requirements and the
constraints in the configuration knowledge base
 Many existing commercial configuration environments include constraint technologies to
support the solving of configuration tasks. In order to make configuration technologies
applicable in interactive settings such as a web-based configurator, related reasoning
engines must be able to provide response times that are below one second. Such settings
require the provision of efficient reasoning engines that often exploit compiled knowledge
representations such as binary decision diagrams (BDDs) to more efficiently determine
whether a solution exists for the given configuration task. In situations where no solution
can be identified for a given set of customer requirements, conflict detection and diagnosis
approaches are applied to assist users in finding a way out from the no solution could be
found dilemma.

Personalization technologies
The overall idea of personalization is to tailor contents to known wishes and needs of a
specific user – related information is stored in a user model that is used to extrapolate
which items such as products, services or units of information should be shown to a user.
There are various AI technologies that support the identification of items that should be
shown to a user; an example thereof are recommendation technologies.

Fig. 2
Sketch of the basic architecture of a recommendation environment. User-related
preferences are stored in the user model. Items are characterized by their ratings and
additional semantic information. A recommender system exploits the information of the
user model and the item catalog to derive a ranked list of items which is presented as the
recommendation to the user

There are a number of approaches to integrate the ideas of recommender systems into
knowledge based configuration environments. The application of recommendation
approaches is not restricted to solution search; it has also been shown how
recommendation technologies can be exploited interactively to determine personalized
diagnoses in situations where no solution meets the preferences that the user specified.

Selling Through Online Intermediaries

Online Intermediaries make transactions between third parties easier through
allowing access, host and transmit index content. They play a very important role in
business. They help maintain a connection between buyers and sellers.
For instance if someone wants to open a small business on the internet, he will not be able
to attract a lot of customers without the use of an online intermediary such as e-bay where
he can actually make an account and display his products and therefore making things
easier for him which actually affects his business since it brings him more customers.

There are a lot of types for online intermediaries such as e-commerce

intermediaries. E-commerce intermediaries have one very important characteristic. Not
only they connect Buyers and suppliers but also they allow for internet transactions to be
performed.
They do provide B2B as well as B2C proposals. Some intermediaries or Internet
service providers deliver their own Content. Some e-commerce platforms sell goods that
they take title to.
An important question that may rise is if e-commerce and e-business are the same.
Both are Different since in e-commerce ICT (Information and communication technology) is
in interactions between firms or firms and individuals while in e-business it is used to
enhance a business. -There are different types of e-commerce among them are B2B and
B2C.
B2B (Business to Business) is actually between companies B2C (Business to
Consumer) such as customer buying goods etc.. -Another important question is what is
actually fueling the e-commerce?
There are three important things:
1) Economic forces (resulting from lowering the communication costs)
2) Market forces (Corporations get more encouraged to use e-commerce to capture
international markets)
3) Technology forces (More efficient communication)

-Let us take a look on how is the internet relevant to e-commerce. We all know that the
internet allows people to connect together thus it allows people or businesses to show and
sell their products online which allows others to view them and lead them to purchase.
We now take a look at the advantages of e-commerce on businesses.
1) Reducing cost
2) Mass customization: for instance if someone wants to buy a specific computer, the
applications actually include easy to use ordering systems to fit each ones unique needs.
3) Network production: Reduction in costs and selling add-on products.

-For consumers e-commerce makes information easier and accessible which makes for a
better decision for consumers on what they really need. For example when buying a
computer, details are provided as well as the price which lets you see if its fits both your
budget and your needs.
-How does e-commerce link workers, suppliers, customers together? A supply chain
management is needed. A SCM is divided into three linked and important things.
1) Product flow: The movement of goods from the supplier to the customer
2) Information flow: status of delivery.
3) Finance flow: everything that is related to payment.
Functions of Intermediaries
Intermediaries make it possible for a company to deliver its products to the end user
without needing to own the whole supply chain.
Intermediaries
Intermediaries, also known as distribution intermediaries, marketing
intermediaries, or middlemen, are an extremely crucial element of a company’s product
distribution channel. Without intermediaries, it would be close to impossible for the
business to function at all. This is because intermediares are external groups, individuals, or
businesses that make it possible for the company to deliver their products to the end user.
For example, merchants are intermediaries that buy and resell products.
There are four generally recognized broad groups of intermediaries: agents,
wholesalers, distributors, and retailers.
Agents/Brokers
Agents or brokers are individuals or companies that act as an extension of the
manufacturing company. Their main job is to represent the producer to the final user in
selling a product. Thus, while they do not own the product directly, they take possession of
the product in the distribution process. They make their profits through fees or
commissions.
Wholesalers
Unlike agents, wholesalers take title to the goods and services that they are
intermediaries for. They are independently owned, and they own the products that they
sell. Wholesalers do not work with small numbers of product: they buy in bulk, and store
the products in their own warehouses and storage places until it is time to resell them.
Wholesalers rarely sell to the final user; rather, they sell the products to other
intermediaries such as retailers, for a higher price than they paid. Thus, they do not operate
on a commission system, as agents do.
Distributors
Distributors function similarly to wholesalers in that they take ownership of the
product, store it, and sell it off at a profit to retailers or other intermediaries. However, the
key difference is that distributors ally themselves to complementary products. For example,
distributors of Coca Cola will not distribute Pepsi products, and vice versa. In this way, they
can maintain a closer relationship with their suppliers than wholesalers do.
Retailers
Retailers come in a variety of shapes and sizes: from the corner grocery store, to
large chains like Wal-Mart and Target. Whatever their size, retailers purchase products
from market intermediaries and sell them directly to the end user for a profit.
Channel Design
A firm can have any number of intermediaries in its channels. A “level zero” channel
has no intermediaries at all, which is typical of direct marketing. A “level one” channel has a
single intermediary, usually from the manufacturer to the retailer to the consumer.
Streamlining Distribution
Streamlining distribution involves the planning and efficient use of supply chain
resources and may involve working with intermediaries.
Streamlining distribution involves the efficient use of all technologies included in the
work of logistics and distribution centers. It should be mentioned that the scope of the
planning of logistics and distribution processes is not limited only to the planning of
production, transportation, or distribution. It covers the entire logistics and distribution
process with all the elements.
No doubt the work of logistics and distribution centers greatly influences the entire logistic
chain ( supply chain ), and therefore its optimal functioning is of great significance. In order
to optimize the work of the logistics and distribution centers, one should define the criteria
according to which the optimization shall be carried out:
 Sales planning
 Stock planning
 Supply chain planning
 Production planning
 Distribution planning
 Transport planning
 Delivery schedule.
Strategic and Long-term Planning
This element provides answers to the following questions:
 Which products do we want to manipulate?
 What market are the products intended for?
 In which manner can we avoid the conflict of the given objectives?
 In what way can we best use the assets and infrastructure in order to achieve
maximal profit?
Creation of Supply Chain Network
This element optimizes the use of the necessary means in the current logistic
network that includes suppliers, production locations, locations of distribution means, and
end users.
Analyses and simulations allow testing of various combinations, i. e., the influence
that opening a facility or moving the current infrastructure facilities will have on the total
revenue and level of service. By performing various methods of logistic networks planning,
the locations of new infrastructure facilities may be determined, which would meet the
customers’ needs in an optimal way.
These methods are usually used for decision-making on whether larger quantities of
stocks will be kept at one place or whether the transport costs of more frequent deliveries
will be increased.
Demand Forecast and Planning
Demand forecast and planning with empirical knowledge (forecasts based on the
demand within the previous period) use statistical data and mathematical functions. It may
be said that demand forecast is a one-sided process, since forecasts are used as the basis for
planning only the possible customers’ demand, rather than the quantity of goods that can
be produced over the future period.
Sales planning
Sales planning can be defined as a process in which demand forecast is converted
into a feasible operative plan that can be used by producers and salespersons. This process
may include the planning of production and/or optimization of supply chains in order to
determine the possibility of meeting the demand.
Stock planning
Stock planning allows the optimal level and location of finished products that meet
the demand and the level of service of the end users. In principle, stock planning is used to
calculate the optimal level of safety stocks at every location.
Supply Chain Planning
Supply chain planning compares the demand forecast with the actual demand in
order to develop a “master plan” (schedule), based on the multi-level sources and critical
materials. The developed master plan spans the points of production and the distribution
destinations, with the goal of synchronizing and optimizing production, distribution, and
transportation.
Production Planning
The term production planning means the development of a master plan for single
factories (producers). The master plan is based on the availability of materials, factory
capacity, demand, and other operation factors.
The production planning cycle represents a complex process that is, in the majority
of considerations, represented as the start of the logistics and distribution processes. If
these processes are considered from the other side (i. e., for the production of certain
products, semi-products and raw materials are needed and are delivered to the factory),
they then represent the final products for the factory and the end of one section of the
logistics chain.
Distribution Planning
Distribution planning means the development of a feasible and viable plan of
distributing end products from the producers (via logistics and distribution centers,
warehouses, or crossdocking) to end users. Distribution planning is based on the actual
transport costs and requirements that represent single goods locations.
Transport Planning
Transport planning uses current transport prices for the minimization of dispatch
costs. In order to minimize the transport costs and maximize the usage of the fleet,
transport planning means the optimization of both the external and the internal goods flow.
One of the main transport planning functions is allowing and performing collective
(bundled) transport of goods, and the inclusion of intermodal transport systems into the
logistics and distribution processes.
Delivery Schedule
The function of delivery schedule is to create a feasible (realistic) plan that meets
the time requirements for the delivery of the product by the producer. The producer
determines the optimal methods and time of delivery, taking into consideration the
receiving of orders, the production schedule, and the availability (planning) of transport.
 Direct to Customer Interaction

The number of customers who are looking for ways to quench their shopper’s thirst
online is growing exponentially, along with the number of e-commerce businesses. In order
to attract more customers to their online shops, these businesses have developed many
strategies One of those strategies includes methods to improve customer interaction which
has been recognized crucial for e-commerce success in 2017. If you are wondering why,
here are 5 reasons to help you see the full picture and understand the importance of
interacting with online customers.
They Expect an Interaction to Happen
Did you know that 83% of online shoppers admit that they need some form of support
during their online purchasing journey.
Since we live in a customer-centric era, e-commerce business has to their best to
discover the trends in customers’ expectations, if they want to succeed in this oversaturated
and volatile market. Building a detailed buyer and negative personas for your business is
simply not enough. You have to engage in conversation with your customers and prospects,
use the latest web technologies, like advanced live chat software and analytics, to identify
trends and to custom tailor the experience for each shopper individually.
So, the first reason why you should enable communication with your online
customers is that they expect it. This is why you can see many successful e-commerce
businesses utilizing the live chat software in order to enable their customers to
communicate with support agents as soon as they arrive on the e-commerce website.
It Will Increase Customer Satisfaction
Since the customers are the ones responsible for fueling any business, they have to
be satisfied with all aspects of your online store. So, delivering a great product or service to
them is not nearly enough to cut it. Customer satisfaction has become paramount to any
online business success and one way to improve it is by keeping the lines of communication
between your business and customers open.
While building your customers persona can give you an insight into what your
customers expect and need from, you only direct interaction with them can give you the
true vision that you can act upon. In the online industry, customer happiness is crucial for
success and this is exactly why you should do everything in your power to make them as
happy as possible.
Customer Interactions Will Motivate your Employees
Doing business with no face to face experience is a daunting task. For employees
working in online establishments, it is hard to develop relationships with customers and
vice versa. We already said that interaction will make customers more happy and satisfied
but it will also motivate your employees.
The satisfaction and motivation that come on payday are not enough to keep
employees happy. This will also affect employee turnover in an e-commerce business. This
is why interaction with customers has to be established early on. Customer support agents
will be able to meet the customers and learn from their interactions.
By successfully implementing this knowledge to resolve problems more quickly,
your customer support agents will be engaged in their work and stay motivated to deliver
even better results. When the contribution is perceived as direct instead of indirect,
employees can better relate to it.
Improved Sales
Direct interaction with customers can lead to improved sales numbers. The first
documented success of such efforts dates back to 2008. When Wells Fargo tried for the
second time to increase sales by communicating with customers on their website, their
report clearly stated that their profit was increased by double-digits while the customer
satisfaction numbers spiked way above the expected amount.
This method is more than valid even in 2017. Customers are tech savvy and they
know how to use web apps. If you make yourself present and offer assistance to walk them
through a sale, you will minimize bounces and ensure that there are no shopping carts
abandoned.
Interacting with e-commerce customers in real time also enables you to upsell
products. The customers can easily relate to agents who will guide them through this
process and are open for advice and recommendations for additional purchases.
Interaction is Crucial for Ecommerce Digital Marketing Success
Since online shops operate in the digital realm, they have to rely on digital
marketing methods to establish a better position in the market. With this in mind, it is very
important to rely on Social Media Marketing to boost customer advocacy and new sales.
There are almost 2.5 billion active social media users. Tapping into social media is an
opportunity every e-commerce business should seize in order to engage the audience and
drive more traffic to its e-commerce website.
These are the top reasons why customer interaction is crucial for e-commerce in
2017. By taking a look at current digital marketing trends, it is safe to assume that
interaction with clients can only become more important. And we can already see many e-
commerce businesses starting to use chatbots in order to be available for their customers
around the clock and on any device.
 Personalized Messaging

A personalized text message is an SMS created using subscribers’ data: time,

age, country, gender etc. for the sake of providing them with more valuable offers and
news at the right time. SendPulse makes it easy to send personalized messages with its
texting functionality.

When you effectively leverage available data to make your brand experience more
appealing, relevant, and valuable to each customer as an individual, that’s personalization.
Depending on the situation and your brand’s particular needs, that can mean adding a
customer’s name to an email, automatically customizing the content they see on your app
or website, or dynamically adding relevant products or news into the push notifications
you send, and more. The key is to find the sweet spot where using data to personalize the
messaging experience helps your brand speak more thoughtfully and persuasively to
customers.

“Personalization initiatives can deliver significant value, including on average 10-

30% revenue uplift and higher customer acquisition rates and engagement.” For a lot of
brands, that means that personalization can be the difference between a successful
marketing strategy and a failed one.

Boudet cautioned of personalization efforts, “The key is that they must be done
right.” The financial impact that comes with ineffective personalization is major: Research
conducted by Accenture found that companies worldwide are losing a collective $1
trillion in annual revenue because their communications with customers aren’t
consistently relevant.

Personalization can drive real increases in engagement and revenue, and

change the game for your company, your team, and yourself. But if you’re going to do it, you
have to fully commit—there’s no partial credit.

According to a study conduct by Evergage and Researchscape, 55% of marketers

say they lack the data they need to use personalization effectively. And many of the people
who are using personalization don’t feel confident that they’re doing it well.

Consumers have been conditioned to want the interactions they have with brands to
be customized. 74% of consumers feel frustrated when they’re served up irrelevant
content or promotions on the web.
Why personalized text message is important
1. Shows significant results. SMS personalization is one of the most engaging tools in
marketing with open rates of 98%, according to Gartner.
2. Builds trustful relationships. People have a feeling of humane, non-computer
communication when they receive personalized text messages. A personalized
approach is a good foundation for trustful relationships.
3. Helps to provide more value. Personalized text messages provide subscribers with
the most relevant information. Relevance is one of the keys to a successful SMS
campaign.
4. Creates convenient communication for customers. Communication via text
message is instant, so the recipients don’t spend much time on it. Personalized text
messages make it easier to sttract attention and offer a good deal rapidly.
You may enjoy all these benefits with a marketing service at hand that offers a bunch of
useful features.
How to create personalized messages
Import your phone numbers
Import phone numbers together with relevant information about subscribers (like
country, gender, birth date etc.) Without it, personalization can’t happen. Alternatively, set
up a subscription form on your website that contains the necessary fields.
Send SMS campaign
After that, you are able to create an SMS campaign. Mention who is a sender and
write the message. There you can add variables directly into the text. A displayed example
shows how the text message looks when personalized by name.
Text message personalization tools
Subscription forms
SendPulse enables to create custom subscription forms for free, what gives an
advantage in further text message personalization. Ask yourself what sort of data your
business might require from subscribers. And then create an effective segmentation on that
basis.
Segmentation
Underneath the text field, there is a check mark for segmentation. This tool enables
you to send different messages to various segments of your audience at once.
Variable usage
For more specific segmentation you can use few variables for segmentation, for
instance, Gender and Country, at once.
Personalized text messages best practices and tips
 Think beforehand. A subscription form on your website or blog is crucial for
further SMS personalization success. Ask the subscribers’ names, location, age, etc.
and you will obtain needed data for personalization.
 Make valuable offers for each segment. Come up with special offers for each
segment, as the main idea of personalization is to provide as many customers with
the most relevant offers as possible.
  Write a smart copy. You have only a few seconds to capture recipients’ attention.
Make smart use of this time: put the offer up front, make it time-sensitive, and
ensure it is clear what to do.
 Consider when to send. Avoid sending SMS on rush-hours and at night. And, if your
audience is spread around the globe, mind different time zones.
 Segment according to the location. Proposals may vary between countries, due to
shipping time or availability of the items. Segmentation by location will help you
evade unpleasant experiences.

Choice Assistance to Choose the Right Digital Marketing Model

Look at virtually any consumer industry and you’ll see how changes in digital
technology are fundamentally altering the way that consumers engage with brands before,
during, and after a purchase. Consumers today expect to browse, research, solicit feedback,
evaluate, and push the “buy” button at their own pace, and at the time and place—and via
the platform—of their choosing. Consumers also continue to engage with brands online
after a purchase and to share experiences with one another. Much of this consumer journey
is beyond the direct control of companies, and marketing organizations are sprinting
merely to keep pace.

In addition, consumers increasingly demand marketing messages and offers that are
highly personalized, relevant, and targeted. Miss the mark, and you risk losing them forever.
In that regard, digital marketing offers both greater rewards (in terms of higher
engagement and ROI) and greater risk (due to the execution complexity and the need for
behavioral changes across the organization).
Four Digital Marketing Models

Strategy& has identified four equally successful digital marketing models: Digital Branders,
Customer Experience Designers, Demand Generators, and Product Innovators. A company’s
focus for marketing investment might have elements of each, but odds are that one of these
models represents the right marketing organization for your company.

1. Digital Branders are most often consumer products companies or other marketers
that focus on building and renewing brand equity and deeper consumer
engagement. These companies are shifting their investment from traditional linear
advertising toward more immersive digital multimedia experiences that can connect
consumers to the brand in new ways. They are reimagining how they engage
consumers, with the primary goal of recruiting new consumers to the brand and
driving loyalty through multiple experiences with the brand.
2. Customer Experience Designers use customer data and insights to create a
superior end-to-end brand experience for their customers. Typically, these
companies (such as financial-services companies, airlines, hotels, and retailers)
build their business models around customer service. By reinventing how they
interact with customers, and wowing them at multiple touch points, these
companies hope to create an ongoing dialogue and build a loyal customer base.
3. Demand Generators (typically retailers) focus on driving online traffic and
converting as many sales as possible across channels to maximize marketing
efficiency and grow their share of wallet. All elements of the digital marketing
strategy—website design, search engine optimization, mobile connected apps, and
engagement in social communities—are tailored to boost sales and increase loyalty.
Although Demand Generators also need to leverage content to drive engagement,
they’re more focused on driving volume and efficiency than on curating the deep,
emotional branded experiences that Digital Branders pursue.
4. Product Innovators use digital marketing to identify, develop, and roll out new
digital products and services. These companies employ digital interactions with
consumers primarily to rapidly gather insights that can shape the innovation
 pipeline. By helping nurture new sources of revenue, the marketing group increases
the value of the company.
The Menu of Capabilities

There are eight basic marketing capabilities, which are more or less relevant
depending on which of the four digital marketing models a company applies. (Of these
eight, the first four focus on building insights and the last four focus on activation based on
those insights.)

1. Segmentation and needs assessment, or the use of digital research tools to analyze
transactions, identify customer pain points, and interpret non-transaction data (e.g., social
media). By better understanding how specific subsets of customers assess, purchase, and
use products, the company can more directly target advertising, promotions, and content
along the path to purchase.
2. Measurement, or the development of consistent metrics across the full path to purchase
(i.e., at home, on the go, and in stores). This capability also includes metrics for consumer
engagement across paid media (e.g., advertising), owned media (such as the company
website), earned media (coverage in other publications), or shared media (e.g., Facebook or
YouTube). Implemented correctly, these metrics can help quantify ROI across the digital
marketing program.
3. Real-time decision making, fostered by regular monitoring of social sentiment and
brand health that enables adjustments during marketing campaigns—including branded
media and in-store merchandising—to make them more effective.
4. Personalization and targeting, or the creation of a singular view of the consumer
across sales channels and digital touch points through the integration of multiple data
sources—including household data, shopping behavior, mobile data, and Web analytics.
Companies can also augment customer profiles with social media data to improve target
marketing and specific offers.
5. Optimized content, or the dissemination of branded content through multiple direct-to-
consumer platforms (such as websites, mobile devices, and social media channels) that are
easy to search and navigate. Optimized content helps the company engage consumers and
drive registration and sales across a variety of formats, so that it can better provide relevant
products and services to those consumers for specific occasions or phases of life.
6. Innovation, spurred by the leveraging of social media for richer consumer insights that
fuel product development. Besides improving the product itself, these insights can enhance
the customer’s experience with the product.
7. Social influence and advocacy, or the provoking of consumer engagement to create and
share content, while also mining this social sentiment to further improve consumer
engagement. Companies with strong social influence and advocacy can encourage
consumers to create and share content about the brand within their social networks, and
then use the resulting insights to optimize their marketing communications.
8. Omni channel experience, or the implementation of marketing programs across
channels. This capability also entails investing in technology, analytics, and talent to
support seamless mobile, social, and e-commerce experiences, allowing consumers to
engage with the company wherever and whenever they want. Omnichannel experiences
also include integrated marketing programs with third parties, along with broader media
and trade-promotion strategies.

Popular Digital Marketing Channels

Before you can actually start in the selection process to identify the best digital
marketing tools, you must first learn and familiarize yourself with the various channels that
are available at our disposal – and you can start with this list below:

1. Email Marketing

When business perform lead generation and other marketing strategies, they collect
contact information like phone numbers and email addresses from potential customers,
including permissions to send them updates and other information through email. Email
marketing is one of the most effective digital marketing channels that can give businesses
and ROI of up to 4,300%.
Many businesses with in-house digital marketers use email marketing, with up to
66% rating this tool as excellent for delivering ROI. This is why up to 56% of
business highlighted that they are planning to increase email-related marketing activities
by 2014. Examples of emails sent include emails for brand building, conversion, and
newsletters.

2. Pay-Per-Click Advertising (PPC)

Paid advertising channels like Pay-Per-Click advertising deliver highly targeted

traffic of potential customers within a very short period of time. This method however is
driven by home much you are willing to invest in bidding and placing ad placements, as
well as how much you are willing to pay for acquiring one customer.

Still, your advertising budget is still within your control, enabling you to set how
much you have to spend for a day, a week or a month running your PPC ads. The
effectiveness of PPC ads rely on how well you choose your keywords for targeting potential
customers as well as optimizing the visual and contextual information in your ads.

3. Search Engine Optimization (SEO)

Almost all people using the Internet are familiar and are making use of search
engines to look for anything there is they want to know or are searching for. In fact, up
to 93% of online experiences happening to these people usually begin by using a search
engine. People use search engines to look for information about a brand, product or
services, and up to 59% of search engine users each month find a local business to satisfy a
particular need. SEO involves several activities like keyword research, making use of both
on-page and off-page optimization, linkable assets creation, organic link building and other
related activities.

4. Display Advertising

Many people visit blogs, forums, and other websites that are interesting or useful to
them. Digital marketers can reach out to these potential customers by placing relevant
display ads on these third party sites. These include banners, boxes, interactive ads, video
ads, interstitial ads, overlays and other similar ads that are linked to a landing page or
website.

Display advertising creates greater brand awareness as well as generate highly

targeted traffic that may convert into leads or sales. Payments for these display ads are
usually based on Cost-Per-Impression (CPM) which is usually more cost-effective compared
to the Cost-Per-Click (CPC) scheme typical of PPC advertising.

5. Social Media Marketing (SMM)

Social media is definitely one of the most phenomenal thing to happen in the digital
arena that business owners and digital marketers can leverage on to create brand
awareness for their products and services. Through Social Media Marketing (SMM), digital
marketers can reach out to highly targeted potential customers through direct and person-
to-person engagement.

The number of social media users continue to grow each day and is expected
to increase by up to 26% more this 2015. Businesses and digital marketers continue to ride
the bandwagon and more than 50% are planning to increase their SMM budgets this year.
Digital marketers however should select the most appropriate social network to promote
their kind of business to a particular kind of targeted audience. A simple guide is listed
below:
1. Facebook – You can reach out to almost any kind of general consumer, you just need
to learn in what groups and pages your targeted customer stay frequently go to at
Facebook.
2. Twitter – If you’re trying to develop a new business and would want to reach out to
early adopters, then Twitter may be for you, particularly in generating fast brand
awareness.
3. LinkedIn – Reaching out to professionals, business owners and other Business-to-
Business (B2B) leads and targeted customers, then LinkedIn would be the perfect
social network for you.
 4. Google+ – This is another good social network for reaching out to early adopters of
new businesses as well as reaching out to the B2B and general social media user.
Business owners should however learn how to make a good presence at Google+ as
this may be a great factor that will influence how SEO will behave in the near future.
5. Pinterest – This social network is great if you’re focusing on visuals for promoting
your brands and products. Majority of users are also women so if these are your
market, then SMM on Pinterest will be good for your business.

6. Content Marketing

Content is at the heart of every digital marketing campaign and is the one major
element that will remain constant despite the many changes that occur in the marketplace.
With good, high-quality and very relevant content, your website and other Internet
marketing real estate will generate considerable inbound traffic from highly targeted
audiences – all of which can be potential customers. Up to 73% of digital marketers in the
B2B arena are increasing content marketing activities this 2014. Content includes text,
graphics, videos, and other related materials people are looking for and are very interested
in.

7. Affiliate Marketing

If you need to reach a wider and more global audience, you need not hire someone
from other locations. All you need to work with are affiliate marketers who can do the job
for you for certain percentages in commissions when they sell your products – a perfect
example of the pay-per-performance online business model. Global e-commerce
sales exceeded 1.2 trillion dollars last 2013 according to eMarketer, with affiliate marketing
doing its share to boost this market up. Forrester on the other hand predicts affiliate
marketing to reach levels of up to $4.5 billion by the year 2016.

8. Online Public Relations

Online PR can be considered a part of Content Marketing in general for the main
principle is to create promotional content that will be used for generating branding and
 creating traffic through exposure in online PR networks. Some of these channels are free to
join while some require some joining/subscription fees before you could publish press
releases.

Primary Considerations in the Selection Process

The digital marketing channels listed above are available for business owners to use
independently or as part of an overall digital marketing campaign. The key here is to plan
your campaigns well by taking careful considerations of some vital aspects as will be
discussed below:

1. Define your primary company goals for using Digital Marketing channels.

Some of these goals that your business may be rooting for includes:

Brand Awareness – This includes greater company or product name recall as well
as familiarity with your business, brand, products and services. If this is your goal, you
should make use of digital marketing channels that provide strong brand awareness and
development like the following:
1. Social media channels particular Twitter, Facebook and Google+.
2. Engaging with targeted audience through social channels.
3. Channels that promote visual elements like Instagram and Pinterest.
4. Channels that promote video materials like YouTube and Vimeo.
5. Promotional campaigns with coupons.
6. Joint venture marketing projects with other online businesses.
7. Participating in online and offline events.
Sales Generation – Most businesses market their brands, products and services to
generate sales through online channels. More and more people are getting comfortable
with the concept of e-commerce and are now more open to the idea of purchasing products
through online means. If you have an online store, and e-commerce site, or have products
and services to sell online, the following channels can be used for digital marketing:
1. Amazon Resellers
2. Facebook Storefront
3. Google Shopping Feeds
4. Google Search Network
5. Google Display Network
6. Affiliate Marketing Networks
7. others
Lead Generation – Many businesses make use of digital marketing mainly to
generate leads and connect with potential customers. Generating leads for them is just the
first step and they will follow through by communicating directly and engaging with these
leads. Digital marketing channels that are good for lead generation includes:
1. Search Engine Optimization (SEO)
2. Pay-Per-Click Advertising
3. Display Advertising
4. Google Search Network
5. Blogging and other content marketing channels
6. Email marketing
7. others
Educate Potential Customers – Some businesses involve relatively new products
and services that are very promising in their potential but still does not have an established
market segment that are familiar or even knows that the product is already existing. Digital
marketers in this segment should go for educating their targeted customers first,
particularly in making them realize the importance of the products/services and the
problems that they can resolve. Blogging, press releases and content marketing will be ideal
for this purpose.
Generate Traffic – Many websites do not really have something to sell and may in
fact giving away information and other materials for free. Many of these sites however are
publishers of online contextual and display advertising as a way of monetizing their sites. In
order to generate revenue from these ads, websites will need a considerable amount of raw
traffic that will click on these ads. Digital marketing channels appropriate for this includes
SEO and content marketing.
 2. Define your budget allocation.

Defining what digital marketing channels to use will also help identify the budget that you
will set aside for pursuing these campaigns. Budget allocations may include the following:

 Fees for digital marketing manager and staff

 Paid advertising budgets
 Payment for content creation services
 Fees for graphic artists, photographers and videographers
 others

3. Identify Your Available talent.

Maintaining a digital marketing campaigns will require the use of personnel with a certain
level of skills and knowledge on various aspects of your channels. You need to identify these
to establish if your in-house resources would be sufficient for the job or will there be a need
for outsourcing. These skills should include:

 Development Skills – for your website design and development needs.

 Creative Skills – includes both writing and visual creation skills.
 Search Skills – talent needed for search marketing.
 Social Skills – talent needed for engaging potential customers through social media.

When establishing a Digital Marketing Campaign for your business, you cannot rely
only on a single resource to generate all the results you wanted. While each of these digital
marketing channels have their strengths, they also have their weakness such as being
inappropriate for certain audiences and business niche. The best way would be to rely on
combining these tools and channels at your disposal and making use of what they have to
offer that will help you reach your end goals.