E-Commerce

            Electronic commerce has redefined sales across the board; business-to-consumer sales are personalized to a level never before imagined. The significance of e-commerce resonates through all industries some more than others. The earliest instance of e-commerce is in 1979 of Michael Aldrich who invented online shopping; essentially his method included a real time transaction-processing computer connected to a domestic telephone line in the UK. At its most primitive form this was a simple exchange of data over a landline, however, the greatest change occurs closer towards present time.

            E-commerce activity picks up in the mid-1990’s, during this time big companies make an entrance to e-commerce. Several companies were launched during this time, these include ebay- an online auction site, amazon- now the largest online store, and Dell’s website for sales online direct to consumers. Companies like these had a slow start introducing a new concept for shopping; consumer trust could not be established for credit card transactions especially with an auction site like ebay where transactions are between users. Traction was not solid until the early 2000’s when Amazon.com had their first profitable year and ebay acquires PayPal for $1.5 billion, by the mid-2000’s reputable companies set a standard for secure online payments and e-commerce accounted for 2.5% of total retail sales in the US. Throughout the past ten years e-commerce has experienced steady growth as a percent of total retail sales in spite of a drop in total retail sales through the recession. This signals a shift towards online shopping as opposed to retail store shopping. Companies incapable of adapting to the changing landscape suffer the consequences. One obvious example is Best Buy, this big box retailer did not shift to online sales fast enough and resulted in being a showroom for online retailers like Amazon.com. Mostly because it is easier to compare prices online and big box retailers incur higher costs with actual storefronts. Adding to this, actual stores have limited space, what does this mean? Retailers can only hold inventory that will sell most and fastest, holding popular products can only capture a fraction of consumers. Online retailers have a significant advantage here by serving the long tail. The common example is Netflix, this streaming company virtually has unlimited space for products available at any point in time, by offering a larger selection of movies more consumers are satisfied without worrying of using valuable shelf space.

            E-commerce has greatly improved as more information is collected on the consumer. By following consumer habits online, internet companies can predict consumer preferences, examples include Netflix with movie recommendations, and Amazon with product recommendations. Data on consumer allows for effective targeted promotions with higher sales than traditional retail stores. Looking onward, technology continues to improve and an increasing number of consumers adopt internet shopping, soon product management will entail lower level design intended to target more specific consumers by further segmented consumers. Anticipated technology includes software that tracks eye movement in order to optimize page layout designs and marketing. Furthermore, merging with social networks, online retailers will have abundant information on the average consumer, including food preferences with yelp, travel habits through travel sites linked through major social networks. Soon the marketing executive position will become too simple to stand alone.