Essay Sample on E-Commerce Business Model: JIT, CTR, CRM, Website Costs

Introduction

The e-commerce business model is the theoretical organization of buyer to customer, buyer to buyer, and customer to buyer strategy. The models include the goals and purpose of a firm and how it aims to accomplish them. The paper will discuss the following topics: Just-In-Time ordering, the use of a click-through rate, the purpose of a Customer Relationship Management (CRM) system, and the four cost categories associated with website storefront creation packages.

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Just-In-Time Ordering

Just-In-Time ordering or (JIT) is an alternative to the just-in-case (JIC) system. JIC, firms keep up an inventory of products built off planning estimates, whereas JIT is on-demand. For example, with JIT, if production is going well for a new vehicle, the business can instantly request parts from a dealer on an "as wanted basis. The collapse of JIC is that if approximations are incorrect, parts can either be under-stocked or excessive. Just-In-Time (JIT) ordering is the exercise of ordering only inventory as it is required to fill near and existing term predicted orders (Miller and Reese, 2011).

There are pros and cons to using this ordering system, and it does not work for all firms. One of the main advantages of JIT is that it permits the firm to preserve their money more liquid as it requires no confinement in inventory sitting on a shelf. One of the key drawbacks to JIT is that inventory problems cause delays in production, resulting in low customer satisfaction. A business must reflect possible variables in the manufacturing process like labor strikes, inclement weather postponing inventory materials receipt of or supply scarcities before determining the right inventory method for their company (Hunt, 2018). Some of the core JIT method users are chain restaurants and auto manufacturers.

Purpose of a Click-Through

Click-through is commonly used in combination with banner ads. Also, it is a method of clicking an online advertisement leading a person to advocate's destination link (Miller and Reese, 2011). Click-through purpose is to get a visitor to a website "click" on an advertisement and land on the ad's intended destination or URL. In web analytics, click-through can be measured and is commonly referred to as Click through Rate (CTR). The key to having higher CTR's and saving money is by using relevant keywords or groups that concern to the landing page and the ad as possible. Using relevant keywords will assist produce the most profitable and stable clicks. It would be unprofitable to use keywords not related to the ad; this would only cost money unnecessarily. For example, when an ad pops up on a website and an individual clicks it, they are redirected to the URL of the company who posted the advertisement, thus click-through. Click-through is capable of generating revenue for a website by using the click-through rate (CRT) and the click-per-view.

Click-through can be very advantageous as it lets the website to track the visitor's number of who clicked on the ads. Also, they are very beneficial when used in combination with a site that needs an individual to register as the ads are personalized to the interests of customers resulting in a higher probability of clicking the ad. When determining whether the initial site receives payment, various definitions constitute a conversion. The conversion action could be a sales lead, sales transaction, a sign-up, or a visitor who directs to the main page on the site (Miller and Reese, 2011). The primary purpose of a click-through is to get visitors to the section on the ad in expectations they will turn into customers.

Purpose of a Customer Relationship Management (CRM) System

Customer Relationship Management (CRM) refers to strategies, technologies, and practices that businesses use to accomplish and analyze client relations and data during the customer growth to advance company interactions with customers, helping in driving sales growth and customer retention. The sole purpose of the company-wide deployment of CRM systems is to make sure that the organization is persistently associated with stakeholders as well as customers, which is a profitable approach for the business. The CRM systems offer firms with an effective way to remain linked with the customers' CRM systems. The gathering contact points between the company and customer and customer data across different channels, which could comprise of company's website, social media, live chat, telephone, advertising materials, and direct mail (Rouse, 2018). CRM systems are the most significant aspects of online business expansion and any online business for the company to survive.

Also, CRM is different from customer service as CRM deals with the management of its customers while customer service contracts with the customer on a more individual basis (Miller and Reese, 2011). CRM gathers and analyses data about the client's relations with the business and takes essential steps to advance the connection with the customers. Additionally, CRM conducts marketing and sale products and offers the most significant pre and after-sales facilities to the customers. For instance, if the firm is involved in building good customer relationships, then it will receive customer loyalty. Typically CRM software is purchased and installed on a business's network and is upheld by the firm. However, cloud-based CRM or SaaS (software-as-a-service) software keeps the information on an external remote system where each staff can use at any time from anywhere as long as they have an internet connection. This method is an excellent way for individuals with limited technology experience, as the CRM software company runs the installation and maintenance.

Cost Categories Associated With Site Creation Packages

The four cost categories related to site creation packages are appraisal, prevention, and external and internal failure costs. Before starting to build a website, the designer requires to discuss various options with the client, particularly in terms of price. When creating an e-commerce website, there are four cost categories to reflect.

Initial outlay- according to Millerand Reese (2011), the initial outlay includes the cost of software, hardware, and setup charges. The initial outlay is based on the choice that the firm will install software on its hardware system and maintain it. Set up fees are often charged for this, along with the price of the software and hardware.

Monthly Charges- this is a reoccurring charge for hosting costs and payment processing fees. The recurring fee is like that of Wix.com, for those that advance to their premium packages will be charged a monthly reoccurring fee in exchange for hosting several products to unlimited products on their server network. They also offer yearly packages and monthly fees for the payment processor.

Per-Product fees- this is fees charged per product entered on to the site. For example, Etsy.com charges a 20 cent listing fee when adding a product. Then when the vendors sell the product, they take a percentage of the sale, as PayPal.com does for processing the transaction.

Per transaction or percentage of transaction fee- it is based on the amount of the sale. Companies such as Etsy and eBay charge a fee for every listing and rate of the purchase amount. Often the payment processor (like PayPal.com) charges a fee as well.

Conclusion

In conclusion, firms should adopt new technologies to accommodate trends and the needs of new customers as it is crucial to the firm's survival and success. E-commerce is rapidly advancing, and companies should implement and take advantage of it.

References

Hunt, J. (2018). The "Just-In-Time Method''. Retrieved 27 February 2020 from, https://smallbusiness.chron.com/justintime-method-31185.html

Miller, F, and Reese, R. (2011). E-Commerce strategies and practices. Certification Partners, LLC, ISBN: 1-59302-627-7

Rouse, M. (2019). What is CRM (Customer Relationship Management)? Retrieved 27 February 2020 from, https://searchcustomerexperience.techtarget.com/definition/CRM-customer-relationship-management