E Commerce Case Study Questions And Answers


Marketing and Growth ChannelsAccording to the National Retail Federation, the e-commerce sector is set to grow another 8-12% this year. That means there’s plenty of opportunity to grow – but there’s also more competition than ever, too.

Launching a successful e-commerce venture takes more than connecting a valuable product or service with the right audience. Scale too quickly, and you could be one of the 93% of start-ups that flame out before you get a chance to start making $100k per month.

Even if you have a great product, you need expert strategy and incredible customer service to grow sustainably. And – as your customers will no doubt tell you – there’s always room for improvement.

Whether you’re in start-up mode or you’re ready to scale, there’s no need to reinvent the wheel. All e-commerce companies have to figure out how to retain customers, drive traffic, and make more sales in a competitive environment. Why not learn from companies that have mastered their corner of the online marketplace?

From driving traffic with killer content to identifying the right platform for growth, these 15 e-commerce case studies will help you transform how you do business.

1. Marketing and Growth Channels


Content Marketing/SEO

Mobile Accessories Retailer Zagg Develops Content with 172% ROI

Zagg, an online retailer that sells mobile device accessories, is a picture-perfect example of how good content can drive traffic to your site – and help you convert. An aggressive publishing schedule (they post up to 35 times per week) and expert SEO means customers find Zagg content easily.

By promoting products through copy, giveaways, and other promotions, Zagg’s content also drives sales and engagement. In 2012 alone, the company reported a 172% ROI on their blog – all of which came from direct sales.

But that doesn’t mean they rely on their blog to do all the heavy lifting on its own, says Zagg’s social media marketing expert Drew Conrad.

“The #1 referrer to the blog is our email channel,” Conrad wrote at the MarketingLand blog. “About twice each month, we compile the best posts in an email and send it to our list. Generally speaking, these content emails get a significantly higher CTR than our traditional emails.”

User-Generated Content

How Modcloth Grew to $100 Million Through Retro-Inspired Women’s Clothing

Since 2002, Modcloth has sold retro-inspired women’s clothing. They also launched an audience engagement strategy that helped them scale quickly – catching the eye of buyer Wal-Mart earlier this year.

According to Community Specialist Marketing Manager Mary Packett, Modcloth’s user-generated content platform, “Style Gallery,” helped spur massive engagement and growth on all of the company’s social platforms over the past five years.

“Since Style Gallery launched in November 2012, users have shared over 6,000 photos, and they’ve been ‘loved’ (Modcloth’s version of ‘like’) over 350,000 times,” marketing blog Contently reports. The “Style Gallery” has also translated into 2.75 million Pinterest followers and almost a million Facebook fans.

Modcloth’s innovative engagement strategy has helped the company grow 40% year over year – and earn more than $100 million in revenue.

Email Marketing

Segmented Content Helped Dormify Increase Their Revenue by 92%

Lifestyle brand Dormify has tweaked its email marketing campaigns since launching in 2009. But, in 2016, they adopted an automated strategy that changed their bottom line.

Dormify now sends each new subscriber a welcome message followed by a three-email series with segmented content. This small but savvy change resulted in a 92% increase in email revenue.

“[The series] kind of serves as an easy intro and overview of all of the different experiences that Dormify has to offer,” Nicole Gardner, the COO of Dormify told DMN, “but [it also gives them] a little nudge via an exclusive offer to actually shop with us, too.”

Google AdWords

Trivago Uses Google AdWords for a 140% Higher Click-Through Rate

In order to compete against major hotel search engines like Priceline and Orbitz, trivago wanted to increase their claim on search traffic.

In 2015, the company used Google’s Dynamic Search Ads to help automate complicated search queries, like “What are the nicest hotels in San Francisco?” According to Google, their DSA feature also “automatically generated longer, more relevant ad headlines for the company’s ads based on a person’s specific search.”

The result? A 140% higher click-through rate, better conversions in new markets, and better ad ROI in the markets trivago had already conquered.

Facebook Ads

How JackThreads Scored 1 Million New Email Opt-Ins Through Their Facebook Page

JackThreads, an online men’s retailer and flash-sale site, used Facebook’s custom audience insights to reach 1 million new email opt-ins, driving sales and a 6x ROI on ad spend.

According to Facebook’s case study, the company used demographic targeting – including “likes and interest targeting” – to encourage new email sign-ups. At the same time, JackThreads re-targeted their existing ads to ensure their existing Facebook followers were encouraged to become email subscribers, too.

The campaign lowered JackThreads’ customer acquisition costs, delivered a 72% match rate with their intended audience, and improved more than three-fold on their traditional ad buy.

Referral Marketing

How Harry’s Leveraged the Power of Referral Marketing – Before the Company Launched

Shaving e-commerce site Harry’s generated 100,000 leads in a week by using a gamified referral campaign prior to the company’s launch.

According to company founder Jeff Raider – who also happens to be the brain behind Warby Parker – they wanted to launch their business using “the most powerful and effective” marketing tool they could think of: a credible referral from a trusted friend.

Here’s what they did:

“First, users entered their email addresses on a splash page,” Raider told marketer Tim Ferriss. “This first step was essential since we wanted to capture emails both for our list and so that we could use it as an identifier for tracking referrals.”

“The second page was where the referral mechanisms lived,” Raider added. “By sharing the link with friends, users had the opportunity to earn free product. The more friends who signed up using your unique referral link, the bigger the prize you earned.”

Voilà! A list of 100,000 email addresses in a week.

Customer Retention / Upsells

At Finch Goods, Customers Keep Coming Back to Earn Points – and Be Delighted

Finch Goods, an online retailer that specializes in upscale men’s lifestyle products, uses a point system to keep their customers buying – and referring new business.

According to founder Richard Lazazzera, he’s still in testing mode with the customer loyalty program Loyalty Lion.

“This program rewards visitors and customers for completing actions like creating an account, making purchases, and referring friends,” Lazazzera wrote at A Better Lemonade Stand.

But he doesn’t stop there, either. Lazazzera also adds a personal touch to delight his customers.

His team often sends “handwritten cards with an order, a small additional gift with larger orders,” he added. “[Sometimes], I just send our best customers a gift at random just as a thank you.”

Lazazzera’s hit on a winning combination of creating customer delight – and adding value for loyal customers.

2. Product and Fulfillment


Crowdsourced

Minted’s Customer Favorites Become the Site’s Best-Selling Products

Minted, an online art marketplace similar to Etsy, depends on crowdsourcing to generate all of their products. Unlike Etsy, though, the retailer built its brand through gamification and online engagement – putting product curation directly in the hands of the consumer.

This is part of the brand’s success, says analyst Yoram Wurmser.

“The future of e-commerce is curation, broadly defined, whether it’s by machine, expert or crowd,” Wurmser told Wired.

“You can only show so many images before people move on, far fewer than they’ll review on a desktop. So it’s important to show the right products in that more limited attention span.”

At Minted, that translates into popular products crushing the site’s customer polls. 80% of their best-selling items were ranked in the top 5% of the product challenge by customers.

Dropshipping

How to Take Your Dropshipping Business to $3 Million – All While Keeping Your Customers Happy

Want to scale your business without sinking resources into producing a product yourself? Dropshipping might be the answer.

Online clothing retailer Leo Gary uses Oberlo to fulfill and ship orders directly to their customers. According to the Oberlo blog, this allows Leo Gary to remain more responsive to customers’ needs.

“Dropshipping allows me to have a lot of products, and this allows me to be flexible,” founder Allen explained to the company. “If my niche product doesn’t attract any visitors, I just pick another product for my store.”

In just a few years, Allen hit $3 million in sales and sold his business.

Custom Products

How Custom Cycling Gear Helped ELEVEN vélo Dominate the Market

ELEVEN vélo, a retailer that specializes in customizable cycling wear, was never going to be an easy store to launch online.

“We realized if we could make kit on demand, we would be doing something different,” founder Gerard Thomas told WooCommerce.

“We would let people create what they want within a set of constraints, and that way we would develop a business that was very difficult to touch in terms of a competition (without replicating the same pipeline).”

Thomas and his team leveraged the WooCommerce platform to make product customization easy for their customers – a feat after the company hired a developer to build a similar, but clunkier, custom site.

Order Fulfillment

Even Small Businesses Should be Able to Scale Inventory and Ordering Processes Like the Big Guys

When Al’s Sporting Goods, a small business in Logan, Utah, needed an e-commerce solution that would help them expand their inventory and upgrade their systems, they knew the process wouldn’t be a simple one.

By adopting multiple dropshipping vendors, the retailer was able to expand its online inventory from 8,000 products to 38,000 – but that made fulfillment a nightmare.

“The system we were using before required every order to be touched and required multiple key-strokes,” explains e-commerce manager Riley Reeder at the UniteU blog. “With thousands of orders, it took two people hours to accomplish.”

Automating inventory processes – and tracking inventory in real time – allowed Reeder and his team to become more efficient, even as they grew.

3. Platforms for Growth


Shopify

How a Clean Shopify Template Helped a Lifestyle Brand Hit $120,000 Per Month in Sales

If you’re going to market upscale beard oils and other hair care products to men, you better have flawless design, a killer brand identity, and loyal customers to boot.

Since Beardbrand founder Eric Bandholz planned to market his upscale lifestyle products to a design-savvy crowd, he used the clean design of Shopify’s templates to create product vision boards that encouraged customers to explore the brand’s story.

With customer review and newsletter integrations in place, Beardbrand encouraged customers to engage with their product and their community. The strategy helped them grow to $120,000 per month in sales in under a year – with a higher repeat customer rate than other competitors in their industry.

BigCommerce

From Side Hustle to $1M Per Month: Pink Lily Boutique Hits it Big with BigCommerce

Since launching on BigCommerce in 2014, Tori and Chris Gerbig, the husband and wife team behind online fashion retailer Pink Lily Boutique, used the e-commerce platform to grow a $1M per month empire.

By using multiple integrations, including automated, batched shipping and fulfillment, the Gerbigs were able to manage a deluge of daily orders. According to the BigCommerce blog, the business fulfills about 600 orders per day.

“BigCommerce’s integrations with ShipStation and InStockNotify have made it possible for our team to perform functions that would have previously taken days or even weeks in a matter of minutes,” Chris Gerbig told the blog.

In their first month after switching to BigCommerce, PinkLily’s revenue shot up 40%. Now the couple can truly keep pace with their customers’ needs.

Amazon

Handle Front- and Back-End Traffic to Build an Online Empire

The speed and reliability of Amazon’s e-commerce platform, AWS, helped ShopDirect, the U.K.’s 4th largest online retailer, scale their business to more than 880,000 unique visitors per day.

According to Andy Wolfe, the CIO of ShopDirect, the company’s previous e-commerce platform couldn’t necessarily handle both their front-end and back-end traffic at once.

“One of the things we needed to be able to do was scale, and scale quickly,” Wolfe told Amazon.

With better hosting capabilities, the retailer’s user experience and website availability improved so dramatically, they received and fulfilled 10,000 orders per hour during Black Friday 2013.

Cratejoy

How Subscription Service Nomadik Used Cratejoy to Launch Their Business Out of the Wilderness and Into the Limelight

Nomadik, a subscription box service tailored to outdoor adventurers, used Cratejoy’s platform and integration to increase their number of subscribers from 15-20% per month to 150% – that’s a 12x increase in just 6 months.

According to founder Patrick Hines, this is due, in part, to becoming part of Cratejoy’s online marketplace.

“The Cratejoy Marketplace helped get a lot of traffic and orders that are low-hanging fruit – ones that we wouldn’t normally have gotten,” Hines told the Cratejoy blog.

“This is super important because when you’re in that initial 50, 100, 200 subscriber count, you want to get as many orders and as many subscribers as you can,” he added. “For Nomadik, that helped us get some working capital and cashflow coming in.”

Related posts

End-of-Chapter Questions

  1. What do social networks, auctions, and portals have in common?

Social networks, auctions, and portals are all based on feelings of shared interest and self-identification—in short, a sense of community. Social networks and online communities explicitly attract people with shared affinities, such as ethnicity, gender, religion, and political views, or shared interests, such as hobbies, sports, and vacations. The auction site eBay started as a community of people interested in trading unwanted but functional items for which there was no ready commercial market. That community turned out to be huge—much larger than anyone expected. Portals also contain strong elements of community by providing access to community-fostering technologies such as e-mail, chat groups, bulletin boards, and discussion forums.

  1. What are the four defining elements of a social network—online or offline?

Social networks involve (a) a group of people, (b) shared social interaction, (c) common ties among members, and (d) people who share an area for some period of time.

  1. Why is Pinterest considered a social network, and how does it differ from Facebook?

Pinterest is a visually oriented site that allows users to curate their tastes and preferences, expressed in visual arts. Pinterest is similar to a visual blog. Facebook, on the other hand, focuses on sharing of news and comments among “friends.”

  1. What are three mobile social networks?

Several of the largest newer social networks like Instagram, Snapchat, and WhatsApp are almost entirely mobile.

  1. Why are mobile social networks growing so fast?

Mobile social networks are growing so fast due to the rapid adoption and intense use of mobile devices.

  1. What are two measures that can be used to understand the importance of social networks and to compare them to other Internet experiences?

Two measures that can be used to understand the importance of social networks and to compare them to other Internet experiences are monthly unique visitors and time on site (engagement).

  1. What is an affinity community and what is its business model?

An affinity community is one in which members can participate in focused discussions with others who share the same affinity, or group identification, such as religion, ethnicity, gender, sexual orientation, or political beliefs. The business model is a mixture of subscription revenue from premium content and services, advertising, tenancy/sponsorships, and distribution agreements.

  1. List and describe four different types of auctions.

The English auction is the easiest to understand and the most common form of auction on eBay. Typically, there is a single item up for sale from a single seller. There is a time limit when the auction ends, a reserve price below which the seller will not sell (usually secret), and a minimum incremental bid set. Multiple buyers bid against one another until the auction time limit is reached. The highest bidder wins the item (if the reserve price of the seller has been met or exceeded). English auctions are considered to be seller-biased because multiple buyers compete against one another— usually anonymously.

The Dutch Internet auction format is perfect for sellers that have many identical items to sell. Sellers start by listing a minimum price, or a starting bid for one item, and the number of items for sale. Bidders specify both a bid price and the quantity they want to buy. The uniform price reigns. Winning bidders pay the same price per item, which is the lowest successful bid. This market clearing price can be less than some bids. If there are more buyers than items, the earliest successful bids get the goods. In general, high bidders get the quantity they want at the lowest successful price, whereas low successful bidders might not get the quantity they want (but they will get something).

The Name Your Own Price auction was pioneered by Priceline, and is the second most-popular auction format on the Web. In Name Your Own Price auctions, users specify what they are willing to pay for goods or services, and multiple providers bid for their business. Prices do not descend and are fixed: the initial consumer offer is a commitment to purchase at that price.

To participate in a penny auction (also known as a bidding fee auction), you typically must pay the penny auction site for bids ahead of time, typically 50 cents to $1 dollar, usually in packs costing $25-$50. Once you have purchased the bids, you can use them to bid on items listed by the penny auction site (unlike traditional auctions, items are owned by the site, not third parties). Items typically start at or near $0 and each bid raises the price by a fixed amount, usually just a penny. Auctions are timed, and when the time runs out, the last and highest bidder wins the item. Although the price of the item itself may not be that high, the successful bidder will typically have spent much more than that. Unlike a traditional auction, it costs money to bid and that money is gone even if the bidder does not win the auction. The bidder’s cumulative cost of bidding must be added to the final price of a successful bid to determine the true cost of the item.

  1. What is the difference between a C2C and a B2C auction?

The most widely known auctions are consumer-to-consumer (C2C) auctions, in which the auction house is simply an intermediary market maker, providing a forum where consumers—buyers and sellers—can discover prices and trade. Less well known are business-to-consumer (B2C) auctions, where a business owns or controls assets and uses dynamic pricing to establish the price.

  1. How does a Name Your Own Price auction, such as Priceline’s, work?

In a Name Your Own Price auction, users specify what they are willing to pay for goods or services, and multiple providers bid for their business. Prices do not descend and are fixed: the initial consumer offer is a commitment to purchase at that price.

  1. List and briefly explain three of the benefits of auction markets.

The benefits of auction markets are:

  • Liquidity: Sellers and buyers are connected in a global marketplace.
  • Price discovery: Even difficult to price items can be competitively priced based on supply and demand.
  • Price transparency: Everyone in the world can see the asking and bidding prices for items, although prices can vary from auction site to auction site.
  • Market efficiency: Consumers are offered access to a selection of goods that would be impossible to access physically, and consumer welfare is often increased due to reduced prices.
  • Lower transaction costs: Merchants and consumers alike are benefited by the reduced costs of selling and purchasing goods compared to the physical marketplace.
  • Consumer aggregation: A large number of consumers who are motivated to buy are amassed in one marketplace—a great convenience to the seller.
  • Network effects: The larger an auction site becomes, in both the numbers of users and products, the greater all of the above benefits become and therefore the more valuable a marketplace it becomes.
  • Market maker benefits: Auction sites have no inventory carrying costs or shipping costs, making them perhaps the ideal online business in that their main function is the transfer of information.
  1. What are the four major costs to consumers of participating in an auction?

The major costs to consumers of participating in an auction are:

  • Delayed consumption: Auctions can go on for days and the product must then be shipped to the buyer. Buyers will typically want to pay less for an item they cannot immediately obtain.
  • Monitoring costs: Buyers must spend time monitoring the bidding.
  • Equipment costs: Buyers must purchase, or have already purchased, computer systems and Internet service, and learned how to operate these systems.
  • Trust risks: Consumers face an increased risk of experiencing a loss as online auctions are the largest source of Internet fraud.
  • Fulfillment costs: Buyers must pay for packing, shipping, and insurance, and will factor this cost into their bid price.
  1. Why has the FTC warned consumers about penny (bidding fee) auctions?

To participate in a penny auction (also known as a bidding fee auction), you typically must pay the penny auction site for bids ahead of time. Once you have purchased the bids, you can use them to bid on items listed by the penny auction site. Items typically start at or near $0 and each bid raises the price by a fixed amount, usually just a penny. Auctions are timed, and when the time runs out, the last and highest bidder wins the item. Although the price of the item itself may not be that high, the successful bidder will typically have spent much more than that. Unlike a traditional auction, it costs money to bid and that money is gone even if the bidder does not win the auction. The bidder’s cumulative cost of bidding must be added to the final price of a successful bid to determine the true cost of the item. For this reason, the Federal Trade Commission has warned that bidders may find that they spend far more than they intended.

  1. What is herd behavior and how does it impact auctions?

Herd behavior is the tendency to gravitate toward, and bid for, auction listings with one or more existing bids, by making multiple bids on some auctions (coveted comparables), and making no bids at auctions for comparable items (overlooked comparables). Herd behavior results in consumers paying higher prices than necessary for reasons having no foundation in economic reality.

  1. Name and describe five types of possible abuses and frauds that may occur with auctions.

Some of the possible abuses and frauds include:

  • Bid rigging: Agreeing offline to limit bids or using shills to submit false bids that drive prices up.
  • Price matching: Agreeing informally or formally to set floor prices on auction items below which sellers will not sell in open markets.
  • Shill feedback, defensive: Using secondary IDs or other auction members to inflate seller ratings.
  • Shill feedback, offensive: Using secondary IDs or other auction members to deflate ratings for another user (feedback bombs).
  • Feedback extortion: Threatening negative feedback in return for a benefit.
  • Transaction interference: E-mailing buyers to warn them away from a seller.
  • Bid manipulation: Using the retraction option to make high bids, discovering the maximum bid of the current high bidder, and then retracting the bid.
  • Non-payment after winning: Blocking legitimate buyers by bidding high, then not paying.
  • Shill bidding: Using secondary user IDs or other auction members to artificially raise the price of an item.
  • Transaction non-performance: Accepting payment and failing to deliver.
  • Non-selling seller: Refusing payment or failing to deliver after a successful auction.
  • Bid siphoning: E-mailing another seller’s bidders and offering the same product for less.
  1. What types of products are well-suited for an auction market? At what points in the product life cycle can auction markets prove beneficial for marketers?

The types of products that are well-suited for an auction market include rare and unique products where prices are difficult to discover and where there may have been no market for the goods. These include perishable items such as airline tickets, hotel rooms, car rentals, or tickets to plays, concerts, and sporting events. Traditionally, auctions have been used by businesses to generate a higher profit on items at the end of their life cycle than they would receive from product liquidation sales. However, they are now more frequently being used at the beginning of a product’s life cycle to generate premium prices from highly motivated early adopters, for example: early releases of music, books, DVDs, video games, and digital appliances.

  1. What three characteristics define a portal site today?

The three characteristics that define a portal site today are navigation of the Web, providing content, and serving as the starting point for pursuing commerce. Web portals are gateways to billions of web pages available on the Internet. Originally, their primary purpose was to help users find information on the Web, but they have evolved into destination sites that provide a myriad of content from news to entertainment.

  1. What are the two main types of vertical market portals and how are they distinguished from one another?

The two main types of vertical market portals are affinity group portals and focused content portals. Affinity group portals seek to attract statistical aggregates of people who identify themselves by their attitudes, values, beliefs, and behavior. They exist to serve such broad constituencies as women, African Americans, and gays, as well as much more focused constituencies like union members, religious groups, and even home schooling families. Focused content portals contain in-depth information on a particular topic in which all members are interested. They can provide content on such broad topics as sports, news, weather, entertainment, finance, and business. Or they can appeal to a much more focused interest group such as boat, horse, or video game enthusiasts.

  1. List and briefly explain the main revenue sources for the portal business model.

The main revenue sources for the portal business model are:

  • Providing ISP services such as online access and e-mail services for a monthly fee.
  • General advertising such as charging for the number of banner ad impressions delivered.
  • Tenancy deals whereby companies that value having access to their audience will lock in long-term multiple-year deals in which they are guaranteed a certain number of impressions with premium placement on home pages and through exclusive marketing deals, for example, subscription fees.
  • Charging for premium content.
  • Garnering commissions on sales that are generated from consumers originating from the portal site.
  1. Why has Yahoo struggled in the last three years?

Yahoo has struggled in the last three years to grow revenues and earnings despite the fact that its unique visitor count has held steady with Google’s. One part of the problem is the falling price of display ads, which are the mainstay of Yahoo’s ad platform. Another key issue is declining user engagement with materials on the site and the amount of time spent on the site. To address these issues, Yahoo has made a number of acquisitions including Aviate, Tumblr, and Flickr, and launched digital magazines like Yahoo Food and Yahoo Tech that curate content from around the Web. The key to display ad revenue is content and engagement: the more you can show users, the longer they stay on your site, the more ad revenue can be generated. So far, Yahoo and the other general portal sites have not been able to compete with social network sites on these dimensions of engagement and time on site. After several years of pursuing unsuccessful new strategies, Yahoo agreed to sell itself to Verizon in 2016.

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E-Commerce 2017: Business, Technology, Society, 13rd Edition, Kenneth C. Laudon, Carol Traver

PART 1 Introduction to E-Commerce
1 THE REVOLUTION IS JUST BEGINNING
2 E-COMMERCE BUSINESS MODELS AND CONCEPTS
PART 2 Technology Infrastructure for E-commerce
3 E-COMMERCE INFRASTRUCTURE: THE INTERNET, WEB, AND MOBILE PLATFORM
4 BUILDING AN E-COMMERCE PRESENCE: WEBSITES, MOBILE SITES, AND APPS
5 E-COMMERCE SECURITY AND PAYMENT SYSTEMS
PART 3 Business Concepts and Social Issues
6 E-COMMERCE MARKETING AND ADVERTISING CONCEPTS
7 SOCIAL, MOBILE, AND LOCAL MARKETING
8 ETHICAL, SOCIAL, AND POLITICAL ISSUES IN E-COMMERCE
PART 4 E-commerce in Action
9 ONLINE RETAIL AND SERVICES
10 ONLINE CONTENT AND MEDIA
11 SOCIAL NETWORKS, AUCTIONS, AND PORTALS
12 B2B E-COMMERCE: SUPPLY CHAIN MANAGEMENT AND COLLABORATIVE COMMERCE
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