Prospects of Ecommerce and Digital Marketing

Advertising is essentially about brand visibility and reaching the target audience, which boils down to numbers in terms of reach, engagement, conversion, and Return on Investment (ROI). The more people your advert reaches, the higher the number of engagements, conversions, and sales you are likely to make.

Ecommerce has provided a powerful platform for online advertising to thrive, and this is because digital marketing cost about 62% less than traditional marketing methods and it generates three times as much leads.

Definition of Ecommerce 

Ecommerce is the buying and selling of products online, and making it available involves delivery and distribution of these products and services; and payment made by using electronic funds transfer through digital communication channels such as satellites, computer systems, and mobile devices, while digital marketing is to promote and market products and services online. Digital Marketing and e-commerce are interlaced.

Ecommerce is growing at an astonishing rate, dominating retail business to the extent that industry experts and analysts have predicted that in 2020, all retail transactions will be without having any physical interaction between both buyer and seller. The benefits of e-commerce and digital marketing are invaluable to all the key players, which include the merchant, advertiser, payment processor, merchant account provider, Buyer and the Marketer.

Ecommerce has a very high growth rate of up to 200%, it has continued to change the retail business models, and the revenue derived from e-commerce in has substantially risen.

On the African continent, Nigeria is the second leading country in online shopping, next only to Egypt; and this growth is because of a large number of users of mobile devices. Nigerian Communications Commission (NCC) reported that the number of Nigerians who surfed and shopped on the internet increased to 97 million.27

In another study conducted by Ipsos Mori, the rate of acceptance of e-commerce in Nigeria is increasing, and mobile spends increased by 31% to about $3.2 billion in 2017.25

Key Industry Players 

The key players in the e-commerce industry are advertisers, merchants, payment processors and buyers, and each one complimenting the other in the online buying and selling chain.

The Advertiser:
The advertiser is the website owner who displays products ads belonging to the merchant on their sites and drives traffic to the merchant website for a commission. These advertisers are affiliate partners, and they earn commission for providing affiliate-marketing services by helping to generate leads and direct traffic to the merchant's website.

The Merchant:
Merchants are online retailers that have bank accounts that enable them to accept credit cards for the payment of products purchased on their sites.

Payment Processor:
Payment processors are financial institutions, such as banks and other specialized funds transfer agencies that are working closely with merchant account providers, including PayPal, MasterCard, Visa and others that provide back-end payment processing software and using the processor's transfer platforms. Both the payment processor and the merchant account providers earn a small percentage of commission for their services per transaction.

The volume of online transactions by the amount of commission earned gives an idea of the annual revenue the e-commerce sector can generate, and with just a 3.5% transaction commission, an acquirer bank can earn more than $112 million annually. Ecommerce earnings tripled in 2017, going by the current 300 percent growth rate of the industry.

The Buyer:
The buyer is the consumer or shopper, and anyone who makes an online purchase falls within the category of a buyer. The benefits to the buyer include convenience and accessibility to an array of websites that are selling specific items and providing related services. Buyers can also easily compare prices and determine the quality of the product or services before placing an order from a site with the lowest price.

The days when shoppers travel across borders to purchase items are over; e-commerce has made buying and selling easy. You can now make a purchase right from your mobile device wherever you are and receive delivery of the item at the doorstep of your house from any part of the world.

Benefits of Ecommerce

Ecommerce provides many benefits to the buyer and seller, and these include the following:

1. Creates New Relationship:
The setting up of an e-commerce site instantly opens the business to new relationship opportunities globally with potential customers, business associates, and new product manufacturers. Internet presence avails a large audience of online shoppers to your business and suppliers around the world, who may be looking for representatives or affiliate partner.

2. Expands your Global Reach:
Ecommerce is a global platform for businesses on the Internet. Therefore, having an online storefront extends your frontiers on the global stage, which means that you have no bounds and you can sell your products to anyone and anywhere in the world. Some countries have introduced restrictions by way of regulations, licensing requirements or currency differentials, but generally, you are able to sell to a wider audience.

3. Increases Brand Awareness:
An online presence gives your businesses an advantage over your competitors and positioning your organization as a leading brand in the marketplace, both locally and globally. Creating brand awareness through Search Engine Optimization (SEO) helps to place your company prominently at the top of Google search results, thereby help to attract more customers to your website.

4. 24/7 Business Operations:
An e-commerce site gives you the ability to have unlimited operating hours, giving your customers all over the world round the clock access to your products and services. The cost of running a store 24/7 is far less than operating an 8-hour a day physical store. Shoppers can make orders on your website while you are out of office or at home sleeping.

5. Establishes Customer Loyalty:
An e-commerce merchant storefront, which provides clear product information, both visually and through an interactive medium, allows customers to navigate and make a purchase of items easily. Because of the ease of shopping on your site, customers tend to show more loyalty and that increases the opportunity to keep first-time customers.

6. Create a Niche Market:
Merchant sites have greater control in selecting their target audience when marketing and promoting their goods and services. This ability enables them to create a niche market, by targeting a gender, age group, location or specific target audience. By using keywords common to a niche market, generated more leads, which will attract an increased number of shoppers to the website.

7. Easy Access to Information:
Ecommerce makes it possible for customers to have direct access to both products and company information, special offers, promotions etc. This saves the storeowner time and effort of providing individual customers with information each time there is a request; and to the customers, they simply visit the website each time they need information about a product.

8. Enduring Customer Relationship:
The relationship established with shoppers and customers often determines the success or failure of a business entity, whether online or offline. The web has made it easier for e-commerce merchants to establish long-lasting relationships with their customers by making use of tools that can help to manage customer service, such as live chat, contact form, helpdesk hotlines, social media channels etc. The building of a relationship such as these helps to promote trust and create an enduring customer relationship.

9. Low Startup Cost and Higher Profit:
Merchant stores are much cheaper to run, and they require less startup capital to establish, compared with a physical store. Starting an e-commerce storefront does not require the regular trade permits or licenses of a physical store; no lease payment, low utility bills, and few or no employees are required. All the benefits that e-commerce marketing provide help to increase efficiency and profitability.

10. Adaptive Marketing Strategy:
Many business owners are unaware that e-commerce marketing strategies are far cheaper models than the traditional methods. Ecommerce marketing software allows for full automation, and it is more flexible than many of the traditional marketing or advertising strategies. One of the benefits of Internet marketing is the ability of the merchant to develop several interactive campaigns, which can reach out to the specific target audience and engage shoppers by use of social media channels.

11. Generate Foreign Exchange:
Ecommerce has potential to generate foreign revenue earnings that would lead to growth in the financial sector, create new business opportunities in the online banking sub-sector and increase the foreign exchange earning capacity of the economy. The banking industry, especially those in the African continent stands to benefit more if it steps up efforts to harness the benefits of e-commerce.

The strategic role of e-commerce in the world economy has continued to attract global attention, especially in the retail business sector. Ecommerce revenue projection globally in 2020, is $4trillion, and it is one of the fastest growing business sectors; the industry's revenue earning potential will continue to increase because of the dramatic improvement of the technology supporting the industry, especially the increasing use of mobile devices.

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References:

25    Ecommerce Penetration in Nigeria, Ipsos Mori, 2017.

27    Nigeria internet users Rise TO 91.6 million – The Communicator Magazine, NCC 2018..