Unit 5: E-commerce Marketing and Advertising

This unit explores the world of e-commerce marketing and advertising. Once an e-commerce site is built, the next challenge is to attract visitors and convert them into customers. We will look at how businesses use the unique features of the internet to reach and engage with their target audience.

We will start by examining online consumer behavior and the factors that influence purchasing decisions. We will then dive into the key digital marketing strategies and technologies, including search engine marketing, display advertising, and email marketing.

Consumers Online: The Online Audience and Consumer Behavior

The Internet has created a new and powerful channel for businesses to reach consumers. The online audience is large and growing, and it is important for businesses to understand how consumers behave online.

Learning Objectives

By the end of this chapter, you will be able to:

  • Describe the online audience and how its size and make-up are changing.
  • Explain the five-stage consumer decision process and how the internet affects each stage.
  • Identify the factors that influence online purchase decisions.
  • Explain why browsers do not always become buyers, and how firms build trust.

1. The Online Audience

The online audience is the group of people who use the Internet. The size of the online audience has been growing rapidly in recent years. In 2023, there were over 5 billion Internet users worldwide.

2. Consumer Behavior

Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. The consumer decision process is a five-stage process that consumers go through when making a purchase decision:

  1. Need recognition: The consumer recognizes that they have a need or want.
  2. Information search: The consumer searches for information about products or services that can satisfy their need or want.
  3. Evaluation of alternatives: The consumer evaluates the different products or services that they have found.
  4. Purchase decision: The consumer makes a decision to purchase a product or service.
  5. Post-purchase behavior: The consumer evaluates the purchase and may share reviews or repurchase.
flowchart LR
    A[Need Recognition] --> B[Information Search]
    B --> C[Evaluation of Alternatives]
    C --> D[Purchase Decision]
    D --> E[Post-Purchase Behavior]

Figure 1: Online Consumer Decision Journey

How the internet changes each stage

Stage Online behaviour What the marketer can do
Need recognition A post, ad, or friend’s photo triggers a want Display and social ads, influencer content
Information search Search engines, YouTube reviews, Facebook groups SEO, search ads, helpful product pages
Evaluation of alternatives Comparing prices, ratings, and delivery times Clear prices, reviews, comparison tables, fast replies
Purchase decision Checkout, payment choice, delivery promise Simple checkout, wallets and COD, visible return policy
Post-purchase behaviour Reviews, ratings, sharing, returns, repeat purchase Follow-up messages, loyalty offers, quick complaint handling

3. Factors that Influence Online Purchases

  • Demographics: age, income, education, and location shape who buys online and what they buy.
  • Culture and social influence: friends, family, reviews, and influencers strongly affect choices.
  • Trust: knowing the seller is real, that the product matches the photo, and that money is safe.
  • Convenience: saving travel time, home delivery, and shopping at any hour.
  • Price and offers: discounts, free delivery, and festival sales.
  • Website or app quality: speed, clear photos, easy navigation, and a short checkout.

4. From Browsers to Buyers

Most visitors do not buy. Of 1,000 people who visit an online shop, perhaps 300 view a product page, 60 add something to the cart, and 20 complete the purchase, a conversion rate of 2%. The gap between “added to cart” and “paid” is called cart abandonment.

Common reasons people leave without buying:

  • Unexpected delivery charges at checkout.
  • Their preferred payment method is missing.
  • Doubt that the product is genuine or will arrive.
  • A slow or confusing checkout.

Firms raise conversion by showing delivery charges early, offering the payment methods customers use, showing real reviews and a return policy, and reminding cart abandoners by message or email (with their permission).

The Online Audience and Consumer Behavior in Nepal

The online audience in Nepal is large and growing. Nepal Telecommunications Authority (NTA) reports show internet subscriptions, mostly mobile data, at roughly the size of the country’s population. Subscriptions are not the same as people, because many users hold more than one SIM or both a mobile and a home connection, but the figures show that most adults are now online and that the mobile phone is their main access point.

The demographics of the online audience in Nepal are also changing. In the past, the online audience was dominated by young, urban, and educated men. However, in recent years, there has been a growing number of women, older people, and people from rural areas who are coming online.

The online shopping behavior of consumers in Nepal is also evolving. In the past, most online shoppers were looking for deals on electronics and other high-ticket items. However, in recent years, there has been a growing demand for a wider variety of products, including fashion, beauty, and home goods.

Some of the key characteristics of online consumer behavior in Nepal include:

  • Mobile-first: The majority of online shoppers in Nepal use their mobile phones to make purchases.
  • Social media influence: Social media plays a big role in the online shopping decisions of consumers in Nepal. Many people use social media to discover new products and to get recommendations from friends and family.
  • Cash on delivery preference: Cash on delivery is still the most popular payment method for online shopping in Nepal.

Worked example: building trust for a new online shop

A new online shop in Kathmandu selling handmade leather bags gets many Facebook messages but few orders. Customers ask, “Is this real leather?” and “What if it does not look like the photo?”

The shop makes four changes:

  1. Posts short videos showing the bags being made and close-ups of the leather.
  2. Adds customer photos and reviews to every product.
  3. Offers cash on delivery and a seven-day exchange if the bag does not match its description.
  4. Shows its delivery charge for each city before checkout.

The questions shift from “Is it real?” to “When can it arrive?”, and more conversations become orders. The lesson: in markets where trust is low, reducing the buyer’s risk is often worth more than a discount.

Summary

The online audience is large and still growing, and in Nepal it is mostly mobile. Online consumers go through the same five-stage decision process as offline shoppers, but the internet changes every stage: search engines, reviews, and social media shape what people consider and buy. Demographics, social influence, trust, convenience, price, and site quality influence purchases. Most visitors do not buy, so firms work to reduce cart abandonment and build trust.

Key Takeaways

  • Online consumers follow a five-stage decision process, influenced at every stage by search and social media.
  • Trust, convenience, and price are major drivers of online purchase.
  • Conversion rates are low; cart abandonment is common and can be reduced.
  • In Nepal, buying is mobile-first, social-media-led, and still often paid by cash on delivery.
  • Reducing the buyer’s risk is a powerful way to increase sales.

Discussion Questions

  1. Why do many Nepali shoppers prefer cash on delivery even when wallets are available?
  2. Which stage of the decision process is most influenced by social media? Why?
  3. How would you reduce cart abandonment for a mobile phone accessories shop?

Exam-Style Questions

Short answer

  1. List the five stages of the consumer decision process.
  2. What is a conversion rate?
  3. What is cart abandonment? Give two reasons it happens.

Long answer

  1. Explain the consumer decision process and how the internet influences each stage.
  2. Discuss the characteristics of online consumer behaviour in Nepal and how e-commerce firms can build trust.