Internet Use for Businesses

Thesis: In the future, an active and effective use of internet by e-commerce, online advertisement
and customer relationship management will be crucial for businesses to maintain their presence
in the market.

I. E-Commerce
A. Definition and its applications
1. Definition
2. Advantages
a. Economical advantages (Global Clothing B2C E-Commerce
Report 2013, 2013, para. 10)
b. Customer satisfaction (Rosenblum, 2013, para. 7)
B. Potential problems and how to address them
1. Customer complaints (Designing a Multi-Channel Warehouse for
Stores and E-Commerce , n.d., para. 6), (Rosenblum, 2013, para. 11)
2. Producers side problems
a. Risk of failure (Rosenblum, 2013, para. 5), (Rosenblum, 2013,
para. 6)
b. Security risks (Meier& Stormer, 2009, p. 128), (Meier&
Stormer, 2009, p. 138)
II. Online Advertisement
A. Developing of online advertisement

1. Definition of online advertisement (Bakshi & Gupta, 2013, p. 29)

2. Increase of online advertisement spending (Bakshi & Gupta, 2013, p.
22; Interactive Advertising Bureau [IAB], 2012, p. 12)
3. Recovering from the recession (Interactive Advertising Bureau [IAB],
2012, p. 7)
B. Benefits of e-advertisement
1. Return of advertising investment (Bughin et al., 2011, p. 24; Baker,
2006, para. 2)

2. Advantages of online advertisement over other platforms (B.McCabe,

2001, p. 3)
3. Statistics about the people on the Internet (Paul, 2005, p. 97)
III. Customer Relationship Management
A. CRM and its applications
1. Definition (Jain, n.d.; Findlay, 2000; Ciszewski, 2001, p. 5)
2. Effective Application of CRM (Jain, n.d., p.10), (Meier & Stormer,
2009, p. 146)
B. Interactions with e-commerce business model
1. Use of CRM for a Successful E-commerce Business
a. Service Industry (Jamalzadeh, Behravan, Markhali & Jouya,
2013, Abstract)
b. Business to Business (Zeng, Wen & Yen, 2003, p.42)
2. Integration of Companys Web Site with its CRM Network
a. Direct communication and Relationship with the Customer

(Chen & Lin cited in Farooqi & Dhusia, 2012, p. 43)

b. Better Information for the Customers (Jain, n.d., p. 2)

Internet Use for Businesses

People had been trading even before the Lidians introduced money. With the
development of agriculture, communities began to produce more goods to trade different goods
with other communities. After the money, a standard measure of value, the trading process
became more convenient for both the buyer and the seller. There have not been major changes to
the way the transactions took place. For years, the buyer and seller met at a marketplace and did
their business by face-to-face interaction. With the invention of the telephone and television,
alternative channels became available. But the real change occured with the digital revolution in
the 1970s. After this revolution, the internet use became more and more extensive in every
aspect of business. Today most of the companies are using internet in one or more aspects of
their business. In the future, a more active and effective use of internet by e-commerce, online
advertisement and customer relationship management will be crucial for businesses to maintain
their presence in the market.

E-commerce is a key application of internet to the business life. Knowing what it is and
its advantages will lead companies to notice when and where to adapt their business to ecommerce. Electronic commerce is the industry of goods and services being sold and bought
online. Becoming online and using e-commerce brings the company economical advantages and
better customer satisfaction. The textile industry has really been reaping the benefits of online
shopping. An example given in the Global Clothing B2C E-Commerce Report 2013, states that
the sales of clothing has increased by half to few tens of billions of euros in 2012. In Japan,
clothing is the top selling merchandise category in business to customer e-commerce. Also in

South Korea, with a growth rate slightly less than the whole business to customer e-commerce
market clothing was one of the top categories (CNBC, 2013, para. 10). Another significant
advantage is that with e-commerce a high level of customer satisfaction becomes more
reachable. You comfort your clients by not bothering them with going to the stores or with the
possible difficulties in the store itself; for example the place of the store, a shortage of the
product or a problem with the staff there. With e-commerce, the human effect of the selling side
is minimized. Therefore clients are not much aware of the things mentioned before and, with a
higher percentage, be more happy with the transaction they made. As Rosenblum (2013) stated
becoming online is a must if the target audience is the young generation (para. 7). Because young
shoppers tend to spend more money primarily on clothing and technology, relevant companies
need to be aware of the e-commerce concept in order not to fall behind.
Apart from knowing what electronic commerce is and its advantages, being aware of its
potential problems is another step for a successful e-commerce. These potential problems can be
divided into two, as customer complaints and producers side problems. The article Designing a
Multi-Channel Warehouse for Stores and E-Commerce explained that the e-commerce orders
have to be given top priority and must be distributed error-free since most e-commerce clients
pay in advance, their tolerance is low about problems in the expected delivery hence the most
common complaints are with regards to delayed deliveries and absence of delivery info (Consafe
Logistics, n.d., para. 6). Moreover, Rosenblum (2013) points out that client expectations identify
smooth experience in any engagement with the seller (para. 11). Thus, it is obvious that customer
satisfaction through e-commerce is harder to reach, but is crucial for success. In addition to
customer complaints, there are potential problems on the producers side too. The risk of failure
has always been a major force on the companies. Nevertheless, there are companies who

successfully managed this risk. According to Rosenblum (2013), two factors can be stated on
how do companies like overstock.com or wayfair.com reach the success besides all these
complications. First, because all their businesses are constructed over world wide web, they do
not need to be concerned about capacity expansion. Second, a delivery system and shipping
productivity systems are built to decrease the costs of distribution (para. 5). The number of risk
takers grow day by day. In 2013, H&M commenced online retailing in the US. Rosenblum
(2013) believes that there are two reasons leading to that decision; first there is a full expectation
among H&Ms new generation customers and the company has flourished enough in the country
so it can manage to bring sufficient inventory to distribute to both e-commerce warehouses and
stores (para. 6). In addition to these, security risks are as much concerning as the risk of failure.
Meier and Stormer (2009) states that although credit cards are the most popular online payment
method, there are several security risks such as the possibility of the card being stolen physically
and the lack of anonymity (p. 128). In response to these possible thefts, Meier and Stormer
(2009) notes that there are some methods to address the security issues of direct credit card use,
the most popular one, PayPal, has more than 50 million users worldwide (p. 138). All things
considered, becoming online is a tough decision to make but at the same time is a milestone for
the company.

Another channel to use the Internet more efficiently is online advertising. Online
advertisement industry has shown an eye-catching success in the last decade and total spending
increased with a big growth rate. Some important differences between conventional and online
advertising have effect upon this success. Firstly, unlike conventional advertising channels, it is
more possible and convenient to interact with the potential customers. In addition, advertisers
have options to pay per click or impression. Thus, they can be sure that they only pay for real ad

viewers. However, ads on newspaper, radio and television are prepaid and advertisers can not
know how their ads will affect the audience. Another advantage of online advertisement is
possibility of showing customized ads according to interests of visitors. Advertisers can show
appropriate ads to each visitor by using their search keywords or web history. Therefore, visitors
only see ads in their area of interest and advertisers can contact their true target audience.
Consequently, search-related ads have a big place in online advertisement area. Interactive
Advertising Bureau [IAB] (2012) points out that, search is the most profitable e-advertising
method and has the 46.5% of total profits in 2011. This ratio was 44.8% in 2010. Moreover, total
income from search was $11.7 billion in 2010 and reached to $14.8 billion next year (p. 12). In
brief, developing facilities of the Internet give a wide range of opportunity to the advertisers.
According to Bakshi & Gupta (2013), the Internet is an increasingly common platform of
advertisement by more usage of its ad facilities. It has rich media tools, a world wide area of
influence and interactive services. Gaining maximum from this new standard is possible with
understanding the target customers and planning carefully (p. 29). Advertisers which see
opportunities of the Internet has been spending a lot since the beginning of online advertising
age. While the Internet is getting widely used, spending for online advertising is also increasing.
Bakshi & Gupta (2013) states that, online advertising spending in the United States has increased
so fast in the last decade while more people are connecting to the Internet and reached to $12.7
billion from $8.2 billion between the years 2000 and 2005 (p. 22). This brilliant growth had
remained until the global financial crisis. Financial crisis in 2008 affected almost every business,
including online advertising. Reduction of business activity due to recession led to decrease in
advertising spending. However, the industry recovered from hard times and started to grow in a
couple of years. Interactive Advertising Bureau [IAB] (2012) points out that online advertising

industry bounced back from the recession and regained its big growth rate. Therefore, total
income of the industry exceeded $30 billion in 2011 for the first time in history, as a result of
average yearly growth rate of 20.3% for the previous decade (p. 7). After the recession, online
advertising is growing now and advertisers have desire to spend more every year.
Online advertising is also beneficial for advertisers in terms of number of customers and trade
volume. Ads showed at web sites have very good return rates and people traffic on the web is
increasing every year. Customized ads according to search keywords led people to see ads in
their interest areas and return of investment(ROI) of these ads is higher than others. According to
Bughin et al. (2011), profit of search to advertisers is defined by evaluating the ROI derived from
search advertising, SEO and online classified advertising. Average ROI of common mix of kinds
of search-related advertising was projected as 7:1. Therefore, advertisers gained $121 billion in
the US, $13 billion in Germany, $10 billion in France, $5 billion in Brazil, and $1 billion in India
from search in 2010 (p. 24). However, another rising channel, email, is more effective and have
higher ROI than search. Baker (2006) says that, e-mail is expected to remain as dominant
advertising method in terms of ROI in 2007. Direct Marketing Association states that, return
income of e-mail is 57.25 times larger than the investment. E-mail advertising is gaining
popularity and its marketing spend is expected to reach $1.1 billion in 2010 according to
JupiterResearch (para. 2).
Another advantage of online ads is decreasing costs compared to conventional
advertising. While the number of visitors is increasing, cost per each ad diminishes and lower
costs make them more preferable. Especially banner ads are gaining popularity due to this effect.
B.McCabe (2001) states that, banner ads is being more alluring relatively to conventional
advertisements, since their costs are decreasing (p. 3). Main reason of decrease in advertising

costs is growing people traffic on the web. More people connects the Internet every year and
most of them are young, good educated and have high purchasing power. Companies which see
this potential made investments to online advertising industry and generated huge incomes. Paul
(2005) points out that, some companies, including Yahoo!, have taken advantage of people flow
on the Internet which is increasing over the years. Number of people connected to the Internet in
the United States was 35 million in 1997 and was expected to reach 140 million in 2002.
Moreover, according to Mediamark research (1998) 68% of the Internet users have yearly
household incomes bigger than $50,000, 81% had attended university and 91% were between 18
and 54 years old. These statistics were appealing for advertisers and early e-commerce
companies (p. 97). Online advertising is profitable to advertisers in a lot of ways and has several
advantages in comparison to other advertising channels. Consequently, it is getting more popular
and the whole industry gains favor from this.

In addition to e-commerce and online advertisement, Customer Relationship

Management(CRM) is a crucial strategy that must be implemented in integration with the
internet to reach a successful business. Although CRM is a concept that began in the early
1980s, before the internet became widely available to average companies, let alone users at
home; it can be argued that its true potential came to light after the internet entered everyday use.
A good definition of the concept is given by Findlay and Ciszewski as the following: CRM is a
business approach to pick and take care of clients to improve long term value. Basically, CRM
requires to be customer-centric, to target clients: compiling information from all available
communication with the client to analyze trends and patterns (cited by Jain, n.d.,). In todays
business world CRM relies heavily on information technologies. Although information
technologies provide a number of potential benefits it is important to stay focused when applying

CRM. The information technologies necessary for a CRM system should be used to pinpoint and
secure a long-term customer relationship with most valued clients, either current or potential.
The valued clients should be classified according to their profitability (Meier & Stormer, 2009, p.
146). In many sectors, after finding out the opportunities and possible improvements a CRM
system would bring to their companies, most administrators want to implement CRM rapidly.
This eager attitude combined with the lack of appropriate research and competent business
partners results in poor implementation and eventually a decrease in customer satisfaction;
exactly the opposite of the original intention. In order to reach the goal of using internet
powerfully the corporation needs to put together a core-competency team qualified with
technical and work oriented expertise which will aid in setting a high corporate standard of client
satisfaction (Jain, n.d., p. 10). Even though CRM is applicable for most sectors and companies,
research and a thorough examination of company dynamics should be made for each specific
case before implementation to successfully build a CRM system for the business.

Aside from the quality of the CRM system in itself, its interactions with the e-commerce
business model must be very well organized to use both systems in an efficient and effective
way. Although CRM is an independent concept and it has been applied to a wide variety of
sectors even before an e-commerce model was developed, opportunities and the ease of
application to e-commerce business model is indisputable primarily due to the fact that both
models are heavily founded on information technologies and ones requirements are often
already satisfied for the other. According to a study published in Journal of Applied Sciences, in
the service industry, CRM builds and designing a strong e-business approach is proved to be
strongly correlated by factual evidence (Jamalzadeh, Behravan, Markhali & Jouya, 2013,
Abstract). Even though service industry is the most apparent example, the correlation is not

limited to the service industry. Business to business model (B2B) is a business model where a
product is sold to another seller who then will sell it to end-users and is widely used in both
traditional markets and online businesses between retailers and wholesalers. In a research
conducted by Zeng, Wen & Yen (2003) on the integration of these models it is stated that, more
powerful marketing campaigns, heightened client receptivity, lower managerial costs and
elevated selling time may all be achieved by building, applying and managing a CRM approach
established on B2B models (p. 42). The integration of the companys website and its CRM
system is a key part of any CRM implementation, even more so for an e-commerce company.
This integration yields two main benefits for the company, direct communication and
relationship with the customer and better information for the customers. With a good integration,
direct communication with both current and possible clients is made possible. This
communication obviously does include simple information on products and services and answers
to any queries from the clients but also extends to more beneficial information flow such as
exchange of receipts and delivery or purchase orders in a faster and easier manner than
traditional mail or e-mail exchanges. A study by Chen & Lin (2012) states that by using E-CRM
several businesses have decreased their target time of processing receipts, payments and delivery
data to 24 hours from 48 hours since clients can go to the website at any time (cited in Farooqi &
Dhusia, p. 43). All these already online activities help to develop a relationship with both current
and potential clients more conveniently in a more extensive way which is the core of a CRM
system. The integration of companys CRM network and its website is very useful to deliver
better, more accurate and up to date information for the customers. This aspect is much more
critical in businesses that require exact stock information, precise estimated time of arrivals of a
delivery or service or instantly updated data such as stock prices or currency rates. In a study Jain

states that most institutions have put their work and services online to interact with their clients
more rapidly and with better info as they have recognized the power of e-commerce (n.d., p. 2).
In todays business world it is clear to more and more companies that the website has a very
important role. Obviously the design and management of the website is much more important for
an e-commerce company which does business online. All the evidence proves that CRM offers a
wide variety of opportunities for businesses to increase customer satisfaction and loyalty and
yields even better results when combined with an e-commerce strategy and thus crucial for a
company that hopes to stay in the market in the future.

References
Baker, D. (2006). Email focus: Method, not madness, Retrieved from
http://www.mediapost.com/publications/article/53189/email-focus-method-notmadness.html

Bakshi , G. , & Gupta, S. K. (2013). Online advertising and its impact on consumer buying
behavior. Retrieved from http://www.euroasiapub.org/IJRFM/feb2013/3.pdf

Bughin, J. , & Corb L., Manyika J., Nottebohm O., Chui M., Barbat B. M., Said R. (2011).
Impact
of internet technologies: Search. Retrieved from
http://www.mckinsey.com/~/media/mckinsey/dotcom/client_service/High
%20Tech/PDFs/Impact_of_Internet_technologies_search_final2.ashx

CNBC. (2013, October 3). Global clothing b2c e-commerce report 2013. Retrieved from
http://www.cnbc.com/id/101084213

Consafe Logistics. (n.d.) Designing a multi-channel warehouse for stores and ecommerce. Retrieved from
http://www.consafelogistics.com/knowledgecenter/articles/e_commerce

IAB (2012). Internet Advertising Revenue report. Retrieved from

http://www.iab.net/media/file/IAB_Internet_Advertising_Revenue_Report_FY_2011.pdf

Jamalzadeh, M., Behravan, N., Markhali, A.& Jouya, S., (2013). Customer relationship
management constructs initiating successful e-business strategy for service-based
companies. Journal of Applied Sciences, doi:10.3923/jas.2013.60.69

Jain, V. (n.d.).Importance of information flow, customer relationshp management &

customer satisfaction in strategc management of e-commerce. Retrieved from
http://hosteddocs.ittoolbox.com/VJ070204.pdf

McCabe, B. (2001). Online advertising: costs vs. effectiveness, Retrieved from

http://images.forbes.com/fdc/mediaresourcecenter/documents/gertner.pdf

Meier, A., & Stormer, H. (2009). eBusiness & eCommerce. Berlin: Springer-Verlag

Paul, P. (2005). Innovative marketing in the e-commerce space: A case study. Retrieved from
http://businessperspectives.org/journals_free/im/2005/IM_2005_01_Paul.pdf

Rosenblum, P., (2013). Not all retailers reaping a bounty from ecommerce efforts.
Forbes. Retrieved from http://www.forbes.com/sites/paularosenblum/2013/08/19/not-allretailersreaping-a-bounty-from-ecommerce-efforts/

Zeng, Y., Wen, J., & Yen, D. (2003). Customer relationship management (CRM) in business-tobusiness (B2B) e-commerce. Information Management & Computer Security, 11(1), 39 44. doi: 10.1108/09685220310463722