E-Commerce and Its Impact on Retail

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Since its inception, E-commerce has emerged as a formidable global industry, presenting the business world with a fundamental shift in dominance in the retail and wholesale industries in the world. Where the 20th century saw the rise of retail corporations grounded in having a physical presence in the regions in which they operate, the 21st century has enhanced the reach of a retailer far beyond the constraints of a physical business location. During their growth cycles, e-commerce platforms such as Amazon, E-bay, and Best Buy had first to ensure that their websites were optimized primarily to handle the surges in traffic resulting from of an ever-increasing number of consumers (Lieb & Lieb, 2016). Secondly, the growth cycle of an e-commerce company also includes the creation and constant improvement of its supply network. Delivering goods from the warehouse to the clients is a vital part of the e-commerce business, one which each company was sure to tackle with precision. Third, is the need for market acquisition and retention. The growth cycles of the companies include, in no small part, targeted marketing campaigns intended at reaching all types of consumers and inspiring them to purchase goods with the advertising e-commerce entity.

Q2.

In the pursuit of retail and wholesale excellence, e-commerce companies leverage several core aspects which afford them a competitive advantage over traditional retailers. Enabling consumers to purchase goods online eliminates the need for physical stores (Einav et al., 2014). Instead, goods are stored in a warehouse and dispatched whenever an order comes in. Using warehouses instead of retail stores enables e-commerce corporations to avoid the high expense of rent on their retail premises, which in turn, acts as a contributing factor to increased profits. A second core element which e-commerce companies use to their advantage is the reachability that an online presence can afford them. Online shopping has enabled entities such as E-bay and Best Buy to expand their reach to cover the entirety of North America, Europe and some parts of Asia. Furthermore, with the ever-expanding impact of the internet, e-commerce organizations will continue to leverage its power to enhance their profit-making ability.

Q3.

As e-commerce companies grow, their activities are less bound by the need to regularly advertise and gain consumers, and instead, become more and more sensitive to their corporate social responsibility. For instance, Amazon, soon after their entry into the market, began the ‘wishlist’ feature of their online presence (Lieb & Lieb, 2016). The ‘wishlist’ was undoubtedly a response to the numerous accusations of supporting wasteful consumerism brought against the company, particularly during holidays. The wishlist provides a person’s social sphere insight into the types of goods that the person wants or needs. Established e-commerce corporations also moved toward creating charities for the less fortunate, usually as a move to exhibit their keen appreciation of CSR. Amazon Smile is an excellent example of this. By encouraging consumers to spend more on what their friends and family genuinely want instead of speculative gift giving, coupled with enhanced charity features, e-commerce companies can efficiently grow their market share even further.

Q4.

Peripheral markets are critical to any business enterprise as the proper handling of such markets could spell increased profits realized by the e-commerce company in question. Since e-commerce platforms exist as an online presence, they will often try to implement strategies aimed at seizing peripheral markets whenever and wherever possible. For instance, entry into the global market, for many e-commerce entities, meant that issues like ethnicity, race, and culture had to be considered, particularly regarding marketing. By creating marketing techniques which resonate with the cultural pillars of a given region, an e-commerce platform can efficiently harness peripheral markets characterized by more pronounced racial and cultural homogeneity than American markets. An example of a periphery market would be the production and sale of ornaments and trinkets, necklaces, paintings, and apparel that profoundly allude to the cultural and ethnic elements of the people in the region. The synergy with which e-commerce companies, like Best Buy, align their practices with the ethnic values and cultural norms of a given region, often means the difference between the success or failure of the e-commerce business.

Q5.

Acquisitions and mergers are part of the business world. Acquisitions help struggling companies find their footing and simultaneously expands the size and reach of the acquiring company. Some e-commerce entities have acquired others in a bid to enhance their market share in the e-commerce industry. For instance, Amazon acquired Whole Foods in 2017 to improve its warehousing capability, as well as to add Whole Foods’ client base to its own (Kalia, Arora & Kumalo, 2016). In 2002, E-bay acquired PayPal, an online payment system. By doing this, the company optimized the checkout aspect of its website, thereby opening up the e-commerce platform to even more consumers who preferred PayPal as a payment method. Finally, Best Buy acquired Geek Squad and Magnolia Hi-Fi, a move which significantly improved the quality of products, and delivery services offered by the acquiring company.

References

Einav, L., Levin, J., Popov, I., & Sundaresan, N. (2014). Growth, Adoption, and Use of Mobile E-Commerce. The American Economic Review, 104(5), 489-494. Retrieved from http://www.jstor.org/stable/42920985

Kalia, P., Arora, R., & Kumalo, S. (2016). E-service quality, consumer satisfaction and future purchase intentions in e-retail. E-Service Journal, 10(1), 24. http://dx.doi.org/10.2979/eservicej.10.1.02

Lieb, R., & Lieb, K. (2016). 3PL CEO Perspectives on the Current Status and Future Prospects of the Third-party Logistics Industry in North America: The 2014 Survey. Transportation Journal, 55(1), 78-92. doi:10.5325/transportationj.55.1.0078

January 19, 2024
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