Prospects of Ecommerce and Digital Marketing
Ecommerce has provided the platform for online advertising to thrive
By March Oyinki
Advertising is about brand visibility and reaching the target audience, which all boils down to numbers. Number is important in terms of reach, engagement, conversion and ROI. The more people your advert reaches, the higher the number of engagements, conversions and sales you are likely to make. Ecommerce has provided the platform for online advertising to thrive, and the reason is because, digital marketing has over the years proven to cost about 62% less than traditional marketing methods and generates three times as much leads.
Definition of Ecommerce
Digital Media Marketing and ecommerce are inter-laced. Ecommerce is the buying and selling of products online and delivery and distribution of these products and services, and making payment using electronic funds transfer through digital communication channels such as satellites, computer systems and mobile devices, and also using digital media marketing platforms such as email, blogs, social media etc., to promote and market products and services online.
Ecommerce is growing at an astonishing rate, dominating retail business to the exent that industry experts and analysts are predicting that in 2020, which is just three years down the line, all retail transaction will be without both buyer and seller having any physical interaction. The benefits of ecommerce and digital media marketing are invaluable to all the key players, including the Merchant, Advertiser, Payment Processor, Merchant Account Provider, Buyer and the Marketer, all of which benefit enormously from ecommerce.
Ecommerce has a very high growth rate of 200%, and it has continued to change radically, retail business models across all industry segments, and according to the States Department of Commerce, the revenue derived from ecommerce in the United States alone in the first quarterly report for the year 2016, reached $1,183.9 billion, which accounted for 7.8 percent of total sales.
In the African continent, Nigeria is the second leading online shopping countries, next only to Egypt, and is attributed to the large number of users of mobile devices and the ease of shopping. Premium Times quoting Nigerian Communications Commission (NCC) reported stating that the number of Nigerians who surfed and shopped on the internet, increased to 97 million, and according to a different study conducted by Ipsos Mori, a global market research company, on behalf of PayPal, the rate of acceptance of ecommerce in Nigeria is increasing, mobile spend will increase by 39% to about $2 billion in 2016, and by 31% to about $3.2 billion by 2017.
Key Industry Players:
The Advertiser: The advertiser is the website owner who displays products ads belonging to the merchant on their sites and drive traffic to the merchant website for a commission. These advertisers are affiliate partners, and they earn commission for providing affiliate marketing services which is to help generate leads and direct traffic to the merchant’s website.
The Merchant: The processes involved in the marketing of products, conducting business on the Internet, opening a retail merchant site and increasing brand recognition among consumers, have several benefits to both merchants and shoppers. Merchants are online retailers that have bank accounts that enable the holders to accept credit cards for payment for products purchased on their sites.
Payment Processor: Payment processors are financial institutions, including banks and other specialized funds transfer agencies that are working in tandem with merchant Account Providers, such as PayPal, MasterCard, Visa and others to provide back-end payment processing software using the Processors and transfer platforms. Both the payment processor and the merchant Account Providers earn a small percentage commission for their services per transaction.
The volume of online transactions by the amount of commission earned, gives an idea of the annual revenue the ecommerce sector can generate, and with just a 3.5% transaction commission, an acquirer bank can earn more than $112 million annually. Ecommerce earnings are expected to treble yearly, considering the current 300 percent growth rate of industry.
The Buyer: The buyer constitutes the consumer, and anyone who makes an online purchase falls within the category of a buyer. The benefits to the buyer are in terms of convenience, accessibility to array of websites that are selling similar items or that are providing similar services, and they can easily compare prices and determine the quality of the product or services before placing order from a site that offers the lowest price. The days when shoppers have to travel across national boundaries just to purchase an item are over, ecommerce has made it easy. You can now make a purchase right from your bedroom and receive delivery of the item at the door step of your house from any part of the world.
Benefits of Ecommerce:
- Creates New Relationship: The setting up of an ecommerce site instantly opens the business to new relationship opportunities with potential customers, business associates and new product manufacturers. Internet presence avails your business to a large audience of online shoppers and suppliers around the world, who may request for you to be their representative or affiliate partner.
- Expands your Global Reach: Ecommerce is a global platform for businesses on the Internet. Therefore, having an online storefront extends your frontiers to the global stage, which means that you have no bounds and you can sell your products to anyone, anywhere in the world. Some countries have introduced restrictions by way of regulations, licensing requirements or currency differentials, but generally, you still will be able to sell to an wider audience.
- Increases Brand Awareness: An online presence of your business allows you reach out to millions of consumers who are constantly searching for products from the internet from all parts of the world, and therefore creating brand visibility. Ecommerce also exposes your business to a new global market, therefore positions you prominently in search results and help your company brand marketing efforts and increase awareness of your product line.
- 24/7 Business Operations: An ecommerce marketing site basically gives you the ability to have unlimited operating hours, giving your customers round the clock access to your products and services. The cost of running a store 24/7 is far less than operating a 8 hours physical store. Orders can still be taken from shoppers while you are out of office or at home sleeping.
- Establishes Customer Loyalty: An ecommerce merchant storefront that provides clear product information, both visually and interactively, allows customers to navigate and make purchase of items easily. Because of the ease of shopping on your site, customers tend to show more loyalty and that increases the opportunity to become returning customers to your site.
- Create a Niche Market: Merchant sites have greater control selecting their target audience when marketing and promoting their goods and services. This ability enables them to create a niche market, by targeting a gender, age group, a particular location or groups. By using keywords common to a niche market, they can generate more leads and attract greater number of shoppers to their sites.
- Easy Access to Information: Ecommerce makes it possible for customers to have direct access to both product and company information, special offers, promotions etc. This saves the store owner time and effort of providing individual customer with information each time a request is made, and to the customers, they simply visit the website each time they need information about a product or announcement of new products.
- Enduring Customer Relationship: The relationships you establish with shoppers and customers often determine the success or failure of a business entity, whether online or offline. The web has made it easier for ecommerce merchants to establish long lasting relationships with their customers by making use of tools that help to manage customer service, such as live chat, contact form, helpdesk hotlines, social media channels etc. All of these help to building trust and create an enduring customer relationship.
- Low Startup Cost and Higher Profit: Merchant stores are much cheaper to run and require less startup capital to establish, when compared with physical store. Starting an ecommerce storefront does not require the regular trade permits or licenses of a physical store, no lease payment, low utility bills, and few or no employees are required. All these benefits that ecommerce marketing provides, help to increase efficiency and profitability.
- Adaptive Marketing Strategy: Many business owners are unaware that ecommerce marketing strategies are far cheaper models than the traditional methods. Ecommerce marketing initiatives can be automated and they are much more flexible than many of the traditional marketing or advertising strategies. One of the benefits of Internet marketing is the ability of the merchants to develop and improve a number of interactive campaigns which are designed to reach out specific target audience and engage shoppers by use of social media channels.
- Generate Foreign Exchange: Ecommerce has potentials to generate foreign revenue earnings that would lead to growth in the financial sector, and create new business opportunities in the online banking sub-sector and increase the foreign exchange earning capacity of the economy. The banking industry, especially those in the African continent stands to benefit more if they step up efforts to harness the benefits of ecommerce.
The strategic role of ecommerce in the world economy has continue to attract global attention, especially in the retail business sector. Ecommerce revenue globally is expected to reach $ 4 trillion in 2020, one of the fastest growing business sector, and the industry’s revenue earning potentials will continue to increase because of the dramatic evolution of the technology supporting the industry, especially with the increasing use of mobile devices.
The author is CEO and Founder of Admate Communications Ltd. Digital Marketing & Communications. He writes a blog http://digitalmerchant.blogspot.in/