SIS 2047Y E-Business and Digital Marketing

CA in lieu of Exams
 Table of Contents
1. Introduction...........................................................................................................................................3
I. Concepts and Definitions................................................................................................................3
What is e-commerce?...............................................................................................................3
What are the different types of e-commerce?.........................................................................4
What are the benefits and drawbacks of e-commerce?...........................................................4
II. International E-business : Amazon................................................................................................5
Introduction of Amazon............................................................................................................5
The beginning of Amazon..........................................................................................................5
III. Local E-business : PriceGuru.........................................................................................................5
Introduction of PriceGuru.........................................................................................................5
2. Marketplace Analysis.............................................................................................................................6
What is a market analysis?................................................................................................................6
1. Industry Overview.................................................................................................................6
2. Target Market........................................................................................................................6
2.1 Market Segmentation.........................................................................................................6
2.1.1 Amazon Segmentation.....................................................................................................7
2.1.2 PriceGuru Segmentation..................................................................................................8
3. Competition...........................................................................................................................8
3.1 Amazon Competition...........................................................................................................8
3.2 PriceGuru Competition........................................................................................................9
4. Pricing and forecast...............................................................................................................9
1. Introduction
The 21 st century is shaped by the Technological Revolution, and has become the age of globalization.
The internet impacts all aspects of business. In this century, e-business is no longer an option for
businesses- it is a necessity.
In the E-Commerce Strategies book: Mapping Your Organization’s Success in Today’s Competitive
Marketplace, Charles Trepper states that :

“Today, even traditional brick-and-mortar organizations must at least establish a Web presence if
they want to remain competitive. And a string business case can be made that organizations that
don’t enter the e-commerce fray will eventually be left in the technological dust.”

As the Internet was becoming famous, online users were evolving across the world. At the beginning,
Internet users were limited to world wide web navigation and email. Then, the next stage was
introduced which consisted of using the Internet to search for information. Now, at last, web users
are engaging in e-commerce by purchasing online. There are still many barriers to overcome in order
to recruit more customers worldwide.

Internet has changed our lives in many ways such as the invention of e-mail has removed the concept
of distance from communication, the concept of electronic marketplace has removed the concept of
physical location of businesses. The biggest impact of internet technologies is felt on business
scenario. Businesses always try to leverage new technologies in order to remain competitive in the
marketplace.

On another plane, developing countries are given increased access to the global marketplace, where
they compete with and complement the more developed economies. Most, if not all, developing
countries are already participating in e-commerce, either as sellers or as buyers.

I. Concepts and Definitions

What is e-commerce?

E-commerce is usually associated with the buying and selling of goods and services over the Internet,
or conducting any transaction involving the transfer of ownership or rights to use goods or services. A
more complete definition to capture the recent developments is : E-commerce is the use of electronic
communications and digital information processing technology in business transactions to create,
transform, and redefine relationships for value creation between or among organizations, and
between organizations and individuals.
What are the different types of e-commerce?

E-commerce encompasses a broad area and is classified into different subtypes :

1. Business-to-Business (B2B)
B2B e-commerce refers to the electronic exchange of products, services or information between
businesses rather than between businesses and consumers. Examples include, online directories and
product and supply exchange websites that allow businesses to search for products and to initiate
transactions through e-procurement interfaces.

2. Business-to-Consumer (B2C)
B2C is the retail part of e-commerce on the internet. It is when businesses sell products, services or
information directly to consumers. Today, there are innumerable virtual stores and malls on the
internet selling all types of consumer goods. The most recognized example of these sites is Amazon,
which dominates the B2C market.

3. Consumer-to-Consumer (C2C)
C2C is a type of e-commerce in which consumers trade products or services with each other online.
These transactions are generally conducted through a third party that provides an online platform on
which the transactions are carried out.
Online auctions and classified advertisements are two examples of C2C platforms, with eBay and
craiglist being two of the most popular platforms.

4. Consumer-to-Business (C2B)
C2B is a type of e-commerce in which consumers make their products and services available online for
companies to bid and purchase. This is the opposite of the traditional commerce model of B2C.
A popular example is a market that sells royalty-free photographs, images, media and design
elements such as istock. Another example would be the job board.

What are the benefits and drawbacks of e-commerce?

II. International E-business : Amazon
Introduction of Amazon

Amazon is an American electronic commerce company that has become an icon of internet business.
Jeff Bezos founded the company in 1994 and launched it online in 1995 as an online bookstore.
However, the logo soon became symbolic as they started to sell everything from a to z.
Amazon is one of the largest internet retailing company in the world, that sells from books to
electronics to potential buyers from all over the country, it is well known to have cheaper prices for
their items, and having great expertise in making sure their customers’ needs are met at all times.

In 2001, amazon.com reported a fiscal loss and over a couple of years they laid off over 1000 workers.
But, this set back did not discourage Bezos instead he came up with the idea of joining forces with
other retailers to sell their products online through amazon.com. So, through hard work and
determination Bezos has been able to turn the simple online bookstore from its early beginnings into
the global phenomenon that is amazon.com.

Amazon has a type of behavior that it shows customer satisfaction as being no.1, that if a product is
defected, it would not cost anything to have it sent back to them. The product will be returned with
one that is new and will have warranty.

Amazon believes that innovation is the force to bring change in the world so it constantly innovate to
attract customers, to enhance their merchandise, to stimulate the developers following Amazon’s
infrastructure for creation of businesses and boosting the creative capability of their product creators.
Amazon made it easy for the customers to avail online shopping in an instinctively friendly
environment that leads to healthier and proficient retailing as compared to conventional shopping.

The beginning of Amazon

Amazon company went online in July 1995 and public in May 1997. The company was set-up in
Seattle as it had a large pool of technical talent. Amazon rapidly expanded into a number of products
such as Music, DVDs, Toys and electronics after the sales had grown from $147 million to $3.1 billion
in 2001.
In the year 2000,

III. Local E-business : PriceGuru

Introduction of PriceGuru

PriceGuru is a newly formed online company which is based in Mauritius. The founders of PriceGuru
are Christopher Rainer and Yannick Ayacanou. It is a one-stop shop which aims at helping Mauritian
consumers locate the best product or service at the best price at any point in time. It has a wide
selection of products ranging from clothes to home appliances and electronics. It helps customers
save time and money while offering 24/7 online access and delivery across the island.

PriceGuru also believes that the customer is king, thereby strives to offer its customers services and
products at an unbeatable price. Payments are made online through Internet Banking namely Juice or
on delivery which enables the customer to inspect the good whether it is in good condition and then
payment is made. It also provides the credit facilities where the customer select the installments, for
example 6 months and select the credit institution, it can be CIM Finance or Rogers Capital.

2. Marketplace Analysis

What is a market analysis?

A marketplace analysis is a quantitative and qualitative assessment of a market. The various customer
segments and buying patterns, the competition, the size of the market in volume and in value and
also the economic environment in terms of barriers to entry and regulation are evaluated. From the
marketplace analysis, you get to know about your customers - who they are, their characteristics and
what are their needs.

In short, a marketplace analysis is made up of 4 parts :

1. Industry Overview

In the industry overview, the current state of the industry is described and where it is headed. It helps
us to understand the landscape where we will be competing in and also if there will be demands for
the products in the future.

The industry overview for both Amazon and PriceGuru is Internet Retailing., that is the process of
selling goods and services through electronic media, particularly the internet.
One of the key trends in online retailing is accessibility to the internet, thereby allowing easy access to
the Internet through smart phones is an influential factor in increasing sales.

2. Target Market

The target market is an important section in the marketplace analysis. It helps the company
to get to know who his ideal customer is.
PriceGuru and Amazon have different types of customers, therefore market segmentation
need to be carried out.

2.1 Market Segmentation

Market Segmentation is the process of aggregating individuals or businesses with similar

characteristics that pertain to use, consumption, or benefits of a product or a service. The
segmentation process results in groups of customers called market segments.

Market segmentation allows you to:

 Focus on the right market for your business.

 Save you time and money
 Clarify how your products and services apply to these different segments of the market.
 Potentially find a segment that is willing to pay a premium for your products and services.
2.1.1 Amazon Segmentation

Amazon Segmentation, targeting and positioning involves a set of activities aimed at

determining specific groups of people as customers and developing products and services
attractive to this group.

The following table illustrates Amazon segmentation, targeting and positioning :

Type of Segmentation Segmentation Criteria Amazon target customer
segment

Geographic Region More than 100 countries

Density Urban and Rural

Demographic Age 14 and older

Gender Males and Females

Life-cycle stage Bachelor stage young, single

people not living at home

Newly married couples, no

children

Full nest I youngest child

under six

Full nest II youngest chils six

or over

Full nest III older married

couples with dependent
children

Empty Nest I older married

couples, no children living
with them

Empty Nest II older married

couples retired, no children
living at home

Solitary Survivor I in labour

force

Solitary Survivor II retired

Occupation Students, employees and
professionals
Behavioural Degree of loyalty Hard core loyal
Soft core loyal
 switchers
Benefit Sought Widest range of products
Convenience of Online
purchasing
Competitive prices
Personality Easy-going, determined and
ambitious
User status Non-users, potential users,
first-time users, regular
users, or ex-users of a
product
Psychographic Social class All social classes : lower
class, working class, middle
class and upper class

Lifestyle Resigned, Struggler,

Mainstreamer, Aspirer,
Succeeder, Explorer,
Reformer

Source : https://research-methodology.net/amazon-segmentation-targeting-
positioning-widest-range-target-customer-segment/

2.1.2 PriceGuru Segmentation

PriceGuru is an online company located in Mauritius only, therefore the main target market
will be Mauritius.

3. Competition

Every company and firm has competition. The marketplace analysis is not complete without
thinking about competition. A good competitive analysis will point out competitors
weaknesses that you can take advantage of.

3.1 Amazon Competition

Amazon competes head-to-head with other organizations for market share. It has grown
over the decades from an online retailer of books to the largest e-commerce company by
revenue in the United States. Amazon receives its revenue from 5 major categories :

1. Online Stores
The online store of Amazon offer its customers a wide range of products. In this segment,
Amazon has as competitors LightInTheBox Holding Co. , Overstock.com, Vipshop Holdings
Ltd. JD.com, Wayfair Inc. And Etsy.

2. Physical Stores
In the physical stores category, Amazon competes with Best Buy, Target, Walmart Inc. and
Big Lots.

3. Third-Party Seller Services

Third-party vendors sell their products using Amazon’s online marketplace platform. In the
third-party marketplace, Amazon’s main competitor is auction site eBay.

4. Subscription Services
Amazon sells a variety of subscription services such as Amazon Prime. And its main
competitors in the subscription services is Netflix, Apple with I tunes and Google with its
Play Store.

5. Amazon Web Services (AWS)

Amazon Web Services is a platform offering flexible, reliable, scalable, easy-to-use and cost-
effective cloud computing solutions.
Amazon’s main competitors are Alibaba Group, Oracle, Microsoft and Google.

3.2 PriceGuru Competition

PriceGuru, being a local e-commerce website, has as direct or indirect competitors

Buynow, mycart and weshare. All of these websites sells practically the same products as
PriceGuru.

4. Pricing and forecast

The final step in market analysis is to figure out the pricing. The price should be more than its costing
price in order to ensure a profit margin. Usually, customers link high prices to quality. Therefore, the
company should make sure to deliver a high-quality product or service.
But on the other hand, the business may be competing as a low-priced alternative. However that
same message of quality should be delivered to the customers.
After the pricing, we should think about how much the expected sales will be in that particular region.
The forecast should be realistic and be used as a goal for the business and also the actual sales should
be compared with it for comparison.
Several tools are available to help with the comparison of the forecast with the accounting data.

Amazon has a fee calculator whereby the person can calculate the profit for the product he wants to
sell on Amazon. The fee calculator takes into account the product category and outputs a referral fee
and a closing fee. Then the seller needs to choose the shipping methods, shipping fees and weight of
the product.

Amazon Forecast provide future points in the series. It is used to forecast metrics for inventory
management, resource planning and workforce. Amazon Forecast works with resources such as
Datasets, predictors and forecasts.
For example, if a person wants to know about the product demand on his website or physical store,
he will need to create a dataset and import training data. Then create a predictor and apply an
algorithm to the data. As an end result, a forecast will be generated.

PriceGuru analyze data or insights to determine consumer trends. Keeping track of the unsuccessful
products, PriceGuru then devise new strategies to increase sales for that particular product. It make
forecasts for product demand to ensure the sustainability of inventory.
I assume that the pricing of product are calculated by speaking to other people in the organizations
and taking a decision concerning the prices.

Revenue model

A revenue model shows how a business is making money. It includes the product and service
of value, the revenue generation techniques, the revenue sources, and the target consumer
of the product offered. A revenue model is important for the company’s long-term business
projections as it gives an overview of the company’s current and future potential to earn
profits.

1. Amazon revenue model