Importance of E-Commerce and Internet Marketing - Essay Example

? An Investigation of the importance of E-Commerce and Internet Marketing Introduction E-commerce is the use of electrical systems to conduct business, it is the online purchasing and selling of goods and services and it has become a vital part of our daily lives as many large transactions are conducted online. The use of E-commerce can be traced back to 1991 when the internet was commercialized and open for public use and through it, many companies started to advertise online as it was a good source of revenue and so internet marketing developed. In 1994, the first spam message was sent from Andrews University marking the beginning of online advertising, thus the two have thus grown jointly and are now a significant part of the economy. This has brought with it several positive impacts such as reduced cost of advertising and convenience in doing business; however, there have been a few negative impacts as well including easier anonymity for criminals and a faster and wider spread of false stories. This report will look at the growth of E-commerce and internet marketing and evaluate their total contribution to the economy as well as the negative impact they have had. Procedure This research employed the use of secondary research method that involves finding of relevant literature related to e-commerce and internet marketing. Therefore, this research involved finding information in scholarly databases and academic libraries, supplemented E-books and online sites that provided relevant and credible data. Secondary research has the distinct advantage of availability of pre-recorded data, which also means a lower cost of doing research. It however bears the risk of data being outdated and finding the data required unavailable without a means to conduct a study. Findings The US government began tracking internet sales in 1999 when they only accounted for 1% of all sales done within the country. Since then, internet sales have had an astronomical growth with an average rate of 92% annually. Traditional forms of doing business have been overshadowed by online commercial activities. One of the fields that has benefitted immensely from E-commerce is the travel and hotel industry where making reservations and booking travel tickets has been made more convenient. As of 2000, E-commerce was responsible for 24% of all transactions in this industry (Khattree and Rao 2005, p.525). Although used in almost all fields, some industries have experienced an exponential growth in the use of internet marketing and sales. The hotel industry is one of these industries that have experienced a significant growth in use of online marketing with a 70% increase in its application as of 2007 (Harris 2008, p. 35). Success in it heavily depends on an online presence and, E-commerce has contributed significantly to the industries growth and has aided new companies be competitive who otherwise would not have been able to afford the advertising rates of traditional modes of advertising. Internet marketing has been of great benefit to small and medium sized enterprises. As compared to the traditional methods of marketing, internet marketing allows for building of social networks. Online marketing allows for the business to have a personal touch as one can communicate directly with the manager via e-mail (Linton n.d.), this is crucial for the development of these businesses which do not have brand recognition as it wins them customer loyalty which is crucial for them since they cannot have price-wars with their larger competitors. E-commerce has changed the way different industries provide their services one of them being the medical field. The creation of websites such as WebMD has resulted in provision of highly specialized services being accessed even in remote areas as well as around the globe. This has resulted in better overall health and has been beneficial to doctors who do not have to travel to remote areas to provide medical care. The use of E-commerce has also meant that retailers get more details of their customers as they conduct their transactions. Retail stores have organized online order systems where customers can shop from their homes and have the products delivered to them. The advantage of this system to the retailer is the information gained about consumer patterns with every purchase as to conduct them one requires an online account. Tesco supermarket in UK is a prime example of this as it has used online customer relations management to see which goods have high demand and the ones with low respectively, and with this information, they communicate with their suppliers appropriately (Wright and Basu 2008). Internet marketing has led to price drops of many items due to increased competition and ease of entry. Due to the lower costs of advertising and ease of forming social relationships, it is possible for SMEs to give established companies competition and even surpass them in popularity overnight. Online magazines are popular and with low subscription fees. The increasing admiration of online news sites have occasioned in reduced sales of print media and this has enforced them to diminish considerably their marketing and sales prices in order to retain customers (Warner 2009, p.411). Although they have moved online, established news companies such as The Times or Huffington Post have found themselves facing stiff competition from newer media companies such as Gawker a situation that was not possible until the improvement of E-commerce facilities. In order to realize profit from journalism, media companies now charge a membership fee to access their items (Pauwels and Weiss 2008, p.14). Criminal activities have also shifted from using money transactions to online accounts. With E-commerce there is a guarantee of privacy and criminals can easily transfer money from one account to another and another ten steps down the trail becomes to long to follow while transaction costs will not go higher than 5$ per deposit. Online games have also proved to be an ideal place for money as they accept transactions from anonymous users and have items of extremely high value. In 2006, online game Entropa transacted more than 165 million of business mainly because in 2005 they had started to offer real world ATM cards. The introduction of the cards at once changed the business perspective of the game as players could now convert his or her game assets into cash instantly (Miller and Jentz 2007, p. 467). This meant that a person who had a considerable amount of gaming assets could anonymously withdraw their money without paying taxes or reporting their transactions to the authorities irrespective of the amount; this meant that once cash was withdrawn it was clean and untraceable. Discussion There is an emerging trend for businesses to migrate towards provision of their services online as more people join social networks on the internet as well the reduced cost of advertising. Traditional methods of advertising are declining and so are their mediums as they face stiff competition from online advertising. E-commerce has had continuous growth as goods and services that had been thought before had to be delivered physically are now available online such as books, music, movies and magazines. The digitization of these media has caused a drop in their prices but it has come with increased piracy. There is also the problem of news companies facing competition from newer un-established sites due to the low cost of marketing online. These new companies lack the work force that the other sites do and therefore will not write as professionally (Christopher, 2011), and will not bother to confirm stories and there is therefore a tendency of rumours being circulated as news especially on social media sites. Such an incident happened this year when the India rape festival that was published as a joke on a comedy site was believed to be real the story was thus spread as a sign of the hardship faced by Indian women and tarnished India’s image. Provisions of essential services such as health care have improved significantly due to their ease of access and lower operational costs. However, the internet is largely unregulated, there is a risk of untrained people posing as qualified professionals in order to make profit, and if located in a foreign country no action will be taken in case of injuries due to their recommendations (Milhorn 2004, p. 55). Consumer insight has proved invaluable to many suppliers and with online purchasing companies can predict consumers’ spending habits. This is especially important if the company delivers tangible perishable goods as overstocking will lead to losses and under stocking will lead to loss of customers. Companies must however not violate consumers’ right of privacy in acquiring this information (Warner 2011). Conclusion There is a crucial role being played by E-commerce and internet marketing in the economy. Internet marketing has reduced entry costs for new companies and reduced costs of production for clients resulting in a win-win situation for both groups. E-commerce has reduced transaction costs as well as made international business easier ad effective; however, it does require some regulation to ensure value of goods provided is equal to the cost charged as well as prevent its use for criminal transactions. In carrying out the research, the researcher faced some limitations due to the use of secondary research whose credibility is often questioned, as data acquisition from random sampling or a questionnaire would have been preferred but resources hindered this move. In addition, finding relevant and up to date data was a challenge; thus, a primary research will have to be done to ascertain the value of E-commerce and internet marketing to the economy. Evaluation This report assignment was a good reminder of the library search skills that were essential in the secondary research, though not new to me as on a daily basis I engage in searching relevant materials to complete assignments. However, the research was challenging, as finding relevant, reliable and appropriate materials was not very easy from the many resources in the library and online. Through the research, I learnt how to effectively write reports and conduct secondary research by developing library search skills and in future similar research work will not be problematic as this research was due to inadequacy of these skill. References Christopher, T. 2011 Fox and Friends Slams ‘Lousy Website’ Gawker For ‘Trying To Out’ CIA Agent. Mediaite [Online] Available at http://www.mediaite.com/tv/fox-and-friends-slams-lousy-website-gawker-for-trying-to-out-cia-agent/ [ Accessed 27 June, 2013]. Harris, J. 2008, Internet Marketing 100 Success Secrets: Online Marketing's Most Asked questions on how to manage affiliates, Techniques, advertising, programs,solutions strategies and promotions of an internet business. Raleigh, North Carolina: Lulu.com. Khattree, R. & Rao, C.R. 2003, Statistics in industry. Amsterdam: North-Holland Linton, I. n.d.‘Six Benefits of Internet Marketing.’ Chron. [Online] Available at http://smallbusiness.chron.com/six-benefits-internet-marketing-31382.html [ Accessed 27 June, 2013]. Milhorn, T. 2004. Crime: Computer viruses to twin towers. Boca Raton, Florida: Universal Publishers. Miller, L. R. & Jentz, A. G. 2007, Business law today: The essentials. Stamford, Connecticut: Cengage. Pauwels, K & Weiss, A. 2008. Moving from Free to Fee: How Online Firms Market to Change Their Business Model Successfully. Journal of Marketing: Vol. 72, No. 3, pp. 14. Warner, A 2011 ‘Smartphone Companies Accused of Violating Consumer Privacy.’ Daily News Pulse. [Online] Available at http://dailynewspulse.com/smartphone-companies-accused-of-violating-consumer-privacy/2220857/ [ Accessed 27 June, 2013]. Warner, C. 2009. Media Selling: Television, Print, Internet, Radio. New Jersey: Wiley-Blackwell. Wright, R. and Basu N. 2008, Total supply chain management. Amsterdam: Elsevier Read More