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.
