Essential E-commerce Concepts, Strategies, and KPIs

Posted on Nov 3, 2025 in Business Management and Marketing

E-commerce Fundamentals and Strategy

Definition of E-commerce

E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, online transaction processing, affiliate marketing, inventory management systems, and automated data collection systems.

Reasons for E-commerce Adoption

Retail Perspective

  • Be where customers are.
  • Sales increase: due to 24/7 availability, new target markets, and internationalization.
  • Better margins: achieved through disintermediation and reduced transaction costs.
  • Better knowledge about customers and prospects.
  • Facilitates trial and error testing.

Consumer Perspective

  • Convenience.
  • Better prices.
  • Variety of products.
  • Fewer expenses (e.g., travel costs).
  • Easy comparison of prices.
  • No crowds.
  • Discreet purchases.
  • Quarantine-friendly shopping.

Convergence of Traditional and Online Commerce

Benefits of Traditional Retail

  • Better experience (sensory).
  • Tangible interaction with products.
  • Entertainment (shopping experience).
  • In-person support.

Benefits of Online Commerce

  • Easy to search.
  • Convenience.
  • Wider selection.
  • Flexible payment options.
  • Delivery options.
  • Customization.

Online commerce and traditional commerce can converge to offer a better customer experience. Offline-online integration (retail to e-commerce) turns the process around by providing access to and knowledge about the online store at a physical location. In the case of brick-and-mortar stores, qualified staff and the store interior are the keys to an effective connection between the offline and online shopping environments.

The Long Tail Strategy

The Long Tail is a business strategy that allows companies to realize significant profits by selling low volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items (the “hits”).

  • Far more niche goods than hits.
  • Costs of reaching niches are falling dramatically.
  • Filters can drive demand down the long tail.
  • The demand curve flattens.

E-commerce Strategy and Trends

Top 5 Conversion Strategies

  1. SEO Campaign Conversions: Conversions are highest when adopting a hub and spoke strategy that organizes keywords into the most commercially valuable categories and carefully considers the search intent of the keyword targeted on each page.
  2. PPC Campaign Optimization: Conversion is optimized by paying close attention to keyword selection and creating specific, highly-targeted landing pages in volume, each with a thoroughly-tested User Experience (UX).
  3. Email Conversion Rates: Rates are highest when sent at the right frequency—on average, every 2 weeks for B2C campaigns and every 4 weeks for B2B campaigns.
  4. Direct Mail Campaigns: Campaigns that incorporate useful infographics, tables, and other immediately useful information see high conversion rates resulting from recipients saving the correspondence.
  5. Organic Social Media Conversion: Conversion rates are best when posts feel original and/or rich with unique data, and feel endemic to the medium in which they are published.

The 5 Main Trends in E-commerce

  1. The Growing Popularity of Subscription and Auto-ordering Models.
  2. Mobile E-commerce Is More Important Than Ever.
  3. Omnichannel Takes the Lead.
  4. Prices: A customer will not be willing to pay differently across channels.
  5. Market Polarization: We will face a polarized market between a few very large entities that will sell much of everything (goods or services of great consumption) and, on the other hand, many small entities that will offer very niche products, with personalized, ad hoc experiences.

Phases in the E-commerce Customer Journey

  • Awareness (Vista): Marketing, partners.
  • Conversion: Search engines, product data.
  • Average Order Value (AOV): Cross-selling, up-selling.
  • Shipping: Shipping cost, timing.
  • Post-Shipping: Social media (RRSS), operations.

Customer Journey, Value, and Key Performance Indicators (KPIs)

Customer Value Definition

Customer value is the satisfaction the customer experiences (or expects to experience) by taking a given action relative to the cost of that action.

What is a Sales Funnel?

A Sales Funnel is a marketing term used to capture and describe the journey that potential customers go through, from prospecting to purchase.

Stages of the E-commerce Funnel

  1. Visitors
  2. Add to cart
  3. Delivery address
  4. Payment platform
  5. Confirm
  6. Purchase completed

Example: You run a fantastic Facebook Ad that drives traffic to a landing page. On the page, you ask your prospect to sign up for your email list in exchange for a lead magnet. Now you have leads instead of prospects.

Digital Customer Engagement

Digital customer engagement is the entire way a customer interacts with your business via technology, and how you interact with them.

Key Performance Indicators (KPIs) for E-commerce

  1. Visits: A classic analytics metric often viewed as a performance parameter for online marketing.
  2. Engagement KPI: Indicates the intensity with which users use the content of a page and whether the page is perceived as sufficiently attractive to select products for the shopping cart.
  3. Add-to-Cart Number and Quota: These indicators show how often a product is placed in the shopping cart and how often the shopping cart page is visited compared to other pages.
  4. Checkout Cancellations: This indicates what percentage of the original intended purchases will not be completed (abandonment rate).
  5. Conversions and Rate: The number of conversions is the number of purchases made in the online shop. The conversion rate indicates the percentage of users who became buyers.

Social Commerce

Social commerce is a form of online commerce that uses social networks as another sales channel, both for products and services. You can consider social media as a direct sales platform or as a place to drive traffic to your store.

E-commerce Technology and Infrastructure

E-commerce Platform Definition

An E-commerce platform is a software technology solution that allows you to build storefronts. (A storefront is any customer or business-facing proposition relating to the selling of products and services).

Platform Components

  • Website
  • In-store integration
  • Facebook store
  • Mobile app
  • Call center

Main Costs to Deliver an E-commerce Project

Main Project Costs

  • Definition of scope (strategic and functional)
  • User experience, architecture, and design
  • Development of the platform
  • Integration with third parties (3rd parties)
  • Hosting/maintenance

Usual Hidden Costs

  • Extra licenses
  • Connections with non-included services (e.g., new payment platforms)
  • Unexpected success (scaling costs)
  • Internationalization costs

Deployment Models

On-Demand (Cloud Hosting)

  • Host in the Cloud
  • Low setup costs
  • Easy to scale
  • Potential data and security issues

Outsource (System Integrator)

  • Get a System Integrator to do the build for you.
  • Less control and more fixed scope.
  • Usually better quality.
  • On-demand resource availability.

Software Models

Software as a Service (SaaS): SaaS is a cloud-based software delivery model in which the cloud provider develops and maintains cloud application software, provides automatic software updates, and makes software available to its customers via the internet on a pay-as-you-go basis.

Open Source: The term open source refers to something people can modify and share because its design is publicly accessible.

Value Chains in E-commerce

Value chains in E-commerce facilitate the analysis of all operations involved in the production of a product or service, as well as the identification of cost-cutting and differentiation opportunities.

Inventory Management

Inventory Management involves creating inventory lists, monitoring product levels, tracking orders, and supervising the status of each product cycle.

Logistics, Mobile Commerce, and User Experience (UX)

Warehouse Management

Warehouse management is the storing of products in a given location until they are ordered in the sales process and need to be shipped. This involves controlling space usage, transportation equipment, and effective labor.

Order Management

When an order is processed, a product has been sold and needs to be delivered. The efficient collection of information regarding products recently acquired by clients, as well as packaging and shipping details, falls under the Order Processing phase.

Mobile Commerce (M-commerce)

Mobile commerce is a natural progression from e-commerce. It includes any monetary transaction completed using a mobile device. It allows people to buy and sell goods or services from almost anywhere, simply by using a cell phone or tablet. Mobile commerce is more than just an evolution of e-commerce; it has also served as a trigger for new industries and services, or helped existing ones grow, including:

  • Mobile money transfers.
  • Electronic tickets.
  • Purchases and delivery of digital content.
  • Mobile banking.
  • Contactless payments, in-app payments.
  • Location-based services.
  • Mobile marketing, coupons, and loyalty cards.

Benefits of M-commerce

  • Immediate connection to the audience.
  • Enhanced customer experience.
  • It can lead 9 in 10 users to repeat business in the future.
  • Wider reach.

Optimizing User Experience (UX)

To create a good UX, focus on these key areas:

  1. Simplify Your Navigation System: Clear, easy-to-locate navigation links are central to your website’s UX.
  2. Ensure Your Website Is Responsive: Mobile web traffic has been on the rise for years now.
  3. Adhere to Accessibility Best Practices.
  4. Increase Your Site’s Speed.
  5. Incorporate Adequate White Space.
  6. Optimize Your Call to Action (CTA).
  7. Stick to Web Design Standards.