Ecommerce Analysis: Internal, External Factors and Business Strategies

This report provides a comprehensive analysis of electronic commerce (ecommerce), defining it as the buying and selling of products and services over the internet. It highlights key features such as ubiquity, global reach, and security. The report delves into the PESTEL theory, examining the political, e...Read More

ELECTRONIC COMMERCE

DEFINITION OF ECOMMERCE
• Flanagin et al. (2014) defines electronic commerce or
ecommerce as the process of buying and selling of products
over the internet. The term products here refers to both
goods and services which are available on the digital
platforms to customers.

FEATURES OF ECOMMERCE
• Ubiquity-Ecommerce portals facilitate buying and selling of
products on real time basis. The customers can payment on
placing orders and the companies receive the revenue.
• Global reach- The ecommerce market spreads all over the
world and facilitate customers to buy products from all the
world.
• Security-The ecommerce market is subject high level of
technological security in order to prevent or at least minimise
intrusion of hackers.

FEATURES OF ECOMMERCE CONTD…
• Universally maintained standards- Companies maintaining
ecommerce to market their goods maintain a universal
standards for their websites.
• Government control-The ecommerce markets are increasingly
controlled by the governments.

THEORY-PESTEL THEORY
• Political- Ecommerce markets comes under direct control of governments and
international bodies.
• Economic-Comes under influences of economic factors like currency exchange rates
and shipment conditions.
• Social-Dependent on social preferences to purchase products online.
• Technology-Dependent heavily on technological advancements.
• Environment- The gadgets on which ecommerce portals runs like tablets and smart
phones emit radiations which are detrimental to environment.
• Legal- The ecommerce markets comes under influences of laws like cyber laws.

TOP ECOMMERCE COMPANIES
• Amazon
• Ebay
• Alibaba

ADVANTAGES OF ECOMMERCE
• Ecommerce facilitates marketing of goods to companies
round the clock to global consumer base.
• Generates immense revenue for companies.
• Consumers can gain knowledge and order about a vast range
of products.

ADVANTAGES CONTD…
• Enables companies to diversify their risks faced in one
market over other markets.
• Provides substratum to companies to manage their financial
and market risks.
• Provides launch pads to companies to launch their products.

DISADVANTAGES OF ECOMMERCE
• Lack of actual contact between marketers of products and
consumers.
• Continuous upgradation places immense financial pressures
on companies.
• System failures disrupts the total process.
• Not protected from data theft and hacking.

CURRENT EVENT: DISCUSSION OF THE
EVENT
• The Forbes Magazine points out that points out the
current event of growth of ecommerce and its growing
importance in the business generation in business
organisations in the global market.
• The article goes on to mention that companies can use
ecommerce as a formidable tool to achieve sales growth and
generate more revenue, thus achieve growth in their
business.

CURRENT EVENT: DISCUSSION OF THE
EVENT CONTD..
• The article further mentions that the ecommerce market has achieved a
high rate of growth. For example, in the United States of America has
experienced a growth 16.4 percent and generated a revenue of $ 262.3
billion revenue (forbes.com, 2018).
• Ecommerce encompasses diverse systems ranging from supply chain
management, banking portals and after sales customer care services
which companies offer to their customers. Sisodia (2016) mention in this
context that ecommerce has emerged as a driver of the global economy.

CURRENT EVENT: DISCUSSION OF THE
EVENT CONTD..
• The article mentions that companies can target appropriate
appropriate customer bases using their ecommerce portals and
personalise the attributes of the portal according to their needs.
• For example, companies selling expensive electronic gadgets can
personalise their portals which would show their technological prowess.
• Similarly, manufacturers selling premium apparel can customise their
portals to showcase their creative aspect to attract customers (Bilgihan,
A., Kandampully, J., & Zhang, T.2016).

CURRENT EVENT: DISCUSSION OF THE
EVENT CONTD..
• The third aspect of ecommerce which the article delves into is that
the business organisations selling their goods on their ecommerce
portals should ensure that their portals should attract and retain
the interests of the targeted customer segments.
• The portal should be designed in order to create and enhance
buying experience of the customers. These features would help the
business organisations attract and retain customers for longer span
of time, thus maximum customer lifecycle and revenue generation.

CURRENT EVENT: DISCUSSION OF THE
EVENT CONTD..
• The fourth aspect which the article visits is that the companies should create their
ecommerce portals keeping the browsing habits of customers in view. For example,
high-end apparel should make their ecommerce extremely sophisticated and make
their accessible on tablets and smart phones as well.
• This would enable their target customer segments, the upper class customers
browse their portals even while travelling. Thus, the ecommerce portals should be
designed to suit the browsing habits of the target customer segments.
• This enables the business companies strong impact and positive browsing
experience among the target segments. This enables the former to retain the latter
and generate more revenue.

CURRENT EVENT: DISCUSSION OF THE
EVENT CONTD..
• The fifth theme which the article discusses is that the business organisations should
integrate their ecommerce portals with their core product strategies. Their ecommerce
portals should enable the customers view a diverse range of products. This is evident
from the fact that companies make their entire product lines available to customers on
their ecommerce portals. This enables the customers to view the complete ranges of
diverse products the companies offer which create a positive impact on their purchase
decisions.
• The multinational companies owning different brands also have links which the
customers can click to obtain information on the specific brands.
• These features create stronger positive impacts on the purchase decision making of the
customers, thus encouraging the latter to order these products online. The discussion
can be summarised by mentioning that ecommerce portals enable companies to boost
their sale of goods and revenue generation.

INTERNAL AND EXTERNAL
ENVIRONMENTS OF ORGANISATIONS
• The discussion of the impact of internal and external
environmental contexts of organisation on ecommerce can
be opened by exploring into the article by Sammut-Bonnici
and Galea (2014). They mention that external and internal
factors interact to impact the sale of goods in organisations
on their respective ecommerce portals.

INTERNAL ORGANISATIONAL CONTEXTUAL
FACTORS: FINANCIAL STRENGTHS
• Bohari, Hin and Fuad (2017) point out that the ecommerce portals of
companies are heavily dependent on the financial strengths of
business organisations owning them. This is because the ecommerce
portals have to be integrated with bank portals in end and product
lines of the companies on the other. This necessitates the companies
to invest hugely on creation and maintenance of ecommerce portals.
Thus, it can be inferred that ecommerce services comes under the
influences of the financial strengths of the companies operating them.

INTERNAL ORGANISATIONAL CONTEXTUAL FACTORS CONTD…
TECHNOLOGICAL INFRASTRUCTURE OF COMPANIES:
• The technological powers of the companies owing ecommerce portals have direct
impact on them. The financially strong companies acquire immense technological
infrastructure to operate their ecommerce portals. This is evident from the ecommerce
portals of the multinational companies which are extremely sophisticated which provide
customers with complete information about the products and enable customers to place
orders. These multinational companies continuously upgrade their portals to make them
more customer friendly and technologically advanced. Chaffey (2015) points out that
medium scale companies owing to their limited acquisition of technological resources
are not able to make their portals technologically strong. This shows that ecommerce is
dependent directly on the technological power of the companies owning and operating
them.

EXTERNAL MARKET CONTEXTUAL
FACTORS: TECHNOLOGICAL FACTORS
• Kurnia et al.(2015) point out that level of technological development in particular markets
have direct impact on ecommerce markets. This is evident from the fact that economically
advanced nations like the United States are technologically advanced and are homes to
leading ecommerce companies. This countries which are technologically less advanced in
comparison to these countries have less developed ecommerce markets.
• Khanna (2018) contradicts this statement and mention that high levels of technological
advancements also give ways to hacking and data thefts. It is evident from the fact the
hacking identities have access to high level technology which enables them to intrude into
ecommerce spaces to steal confidential data like financial information. Thus, it can be
inferred that though technological advancements in particular markets drive the
ecommerce market, it also brings with it the threat of data thefts.

EXTERNAL MARKET CONTEXTUAL
FACTORS: CUSTOMER PREFERENCES:
• Napompech (2014) points that growing
preferences among the customers to use
ecommerce to purchase products is the one
of the most important external environmental
factors driving the ecommerce market. This
is evident from the fact that customers in
advanced markets like the United Kingdom
and Japan prefer ecommerce marketing.
• The ecommerce markets in these countries
are far more developed and are expanding as
shown in the graph. Thus, it can be that
customer preferences are one of the biggest
bolstering external environmental factors
influencing the ecommerce markets.

QUESTIONS
• What are the advantages and disadvantages of ecommerce?
• What are the internal and external contextual factors
affecting ecommerce?

REFERENCES
• Bilgihan, A., Kandampully, J., & Zhang, T. (2016). Towards a unified customer experience in online shopping environments:
Antecedents and outcomes. International Journal of Quality and Service Sciences, 8(1), 102-119.
• Bohari, A. M., Hin, C. W., & Fuad, N. (2017). The competitiveness of halal food industry in Malaysia: A SWOT-ICT
analysis. Geografia-Malaysian Journal of Society and Space, 9(1).
• Chaffey, D. (2015). Digital business and e-commerce management. Pearson Education Limited.
• Flanagin, A. J., Metzger, M. J., Pure, R., Markov, A., & Hartsell, E. (2014). Mitigating risk in ecommerce transactions:
perceptions of information credibility and the role of user-generated ratings in product quality and purchase
intention. Electronic Commerce Research, 14(1), 1-23.
• forbes.com. (2018). Retrieved from https://www.forbes.com/sites/allbusiness
/2014/01/16/12-e-commerce-strategies-to-grow-your-business-this-year/#45f39a866a9a
• Khanna, A. (2018). Information Technology Act, 2000: International Perspective with special reference to Bitcoin. National
Journal of Cyber Security Law, 1(1), 15-21.
• Kurnia, S., Choudrie, J., Mahbubur, R. M., & Alzougool, B. (2015). E-commerce technology adoption: A Malaysian grocery SME
retail sector study. Journal of Business Research, 68(9), 1906-1918.
• Napompech, K. (2014). Factors driving consumers to purchase clothes through e-commerce in social networks. Journal of
Applied Sciences, 14(17), 1936-1943.
• Sammut-Bonnici, T., & Galea, D. (2014). CONCEPTUAL FRAMEWORK.
• Sisodia, S. (2016). Identification of growth driving factors for ecommerce 2.0 at Tata unistore ltd. NIFT.
• statista.com. (2018). Retrieved from https://www.statista.com/statistics/274495/eshopper-penetration-leading-ecommerce-
markets/

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