Improvements In Economy Digitization Quality Based On Innovative Technologies In E-Commerce

Features of innovative processes implementation

Digital economy being continuously affected by innovative processes of varying scale and quality of its functionality development is extensively influenced by information products and services. E-commerce and its core component – online trade – actively consume new information technologies and the effectiveness and efficiency of their implementing determine the industry’s efficiency in general (Salminen et al., 2017).

A major role is being played by innovations in the field of human resources where they generate preconditions for increasing the significance of endogenous factors aimed at developing technologies in e-commerce.

Identifying principal factors affecting competitiveness in E-commerce

Within the area of online trade Russia is extensively developing B2C technologies for seller-buyer interaction. The quality of B2C interaction is determined directly on how efficiently, considering competitiveness factor, a company will be able to develop strategically correct and original concept for its virtual business.

Also, ever more immediate and urgent is the problem of entering the market and gaining advantage as compared to the competition in the market (Neligan, 2018). Competition in online retailing is becoming increasingly tough. And an ever more crucial role is being played by the task of forecasting e-trade growth indicators.

Evaluation of sustainability in e-commerce

A key factor of economic analysis in e-commerce is evaluation of Internet-projects economic sustainability. Such analysis is required for both new-born companies and for those long-established businesses which already effectively operate in the e-market. Here, an increasing significance is given to responsibility for managerial decision-making within the framework of e-market participants’ interaction, with a special emphasis placed on providing high-quality decision-making.

The economic sustainability evaluation allows developing well-based approaches to strategic decision-making by companies with account of competitiveness factors along with area-specific pricing, sales volumes and production costs.

Investigating technological innovations in e-commerce

The world economy is being transformed by new information technologies and the character and the quality of socio-economic systems in developed countries is being changed, changes resulting from extensive acquisition of technological innovation (Ananyin et al., 2018). Transformation processes are being characterized as more active and more systemic becoming the main economic resource and the principle productive force.

Digital economy is characterized by ever more crucial role as growth catalyst of continuous innovation while improving and renovating productive potential. Technological innovations become drivers for growth and qualitative transformation of the country’s GDP allowing for increased productivity and rendering decisive influence on the country’s economic growth (Yastrebov & Yastrebov, 2018).

Digital economy is also characterized by high-level intelligence and informational capacity – these being signature of both individual industries and economy on the whole. Digital transformation notably implies most modern resource-saving technologies and innovations and underlying hi-tech which rely on the global network.

In the Internet-economy two interrelated processes can be identified, one of which is making informatization less costly, the other is making information transfer and sharing cheaper. Information technologies affect all aspects of economic activity and the complex of optimization, control and execution functions (Nissen et al., 2018).

Digital economy stimulates fast development of technological innovations aimed at providing sustainable development of human resources. It allows establishing various forms of accumulating intangibles as well as innovative information technologies including e-commerce which has recently transformed into an integral part of the world economy.

Applying innovative technologies in e-commerce radically transforms the functions of logistics, the latter becoming one of principal factors in gaining competitive advantage by a product. Competitive advantage of the whole business is determined to a considerable degree by its ability to quickly react to changing consumer demands and post-sale consumer servicing. This implies – for e-commerce – development of an absolutely different and innovative management and criteria for performance evaluation, which, in its turn, will eventually result in a qualitatively new company brand.

The philosophy of digital economy is largely determined by convergence of traditional and e-commerce. When applied to already established businesses e-trade allows creating an extra channel of distribution for both B2B and B2C (Arenkov et al., 2019). Development of web-technologies lays foundations for the global electronic financial market.

One of continuously developing areas of e-business today is B2C which is deemed a highly promising opportunity for new-born companies since online trade is characterized by lowest threshold values of market entry. For such companies success in commercial activity largely depends on well-based strategic development plan, of development of online shopping option, in particular.

In the current conditions the primary task is development of innovative, progressive, strategy-based activities in Internet-trade which include:

• merger of online shops into holdings which will allow minimizing overhead costs and will improve the level of business organization;

• wider product ranges, improved content related to product features, specifications etc. and efficient pricing policies (Bressanelli et al., 2018);

• continuous improvement of customer servicing including development and improvement of delivery service.

Here, a crucial role is to be played by all-inclusive study of the specific features of e-market and its target groups, ability to determine opportunities for growth in online trade as well as ability to quickly react to changes in the market through extensive and effective application of marketing tools.

Investigating major competitiveness factors in online trade

Currently the majority of businesses are planning for their entry into e-markets based on presupposition that traditional models of goods and/or services distribution are far less efficient than Internet-trade (Plaksin et al., 2017). Not all of the e-markets, however, can be characterized by positive dynamics as compared to physical markets as recent applied studies indicate. Securing sustainable competitive advantage in such markets will require companies to continuously analyze a number of aspects (financial, legal, organizational, and communicational) related to developing a complex integration of measures, actions and activities.

When selling online, sellers and stores can establish lower prices for their products and/or services by minimizing businesses’ costs of searching, analyzing and processing of the necessary data. Principal factors which contribute to e-market efficiency are perfect competition, saturation of target groups in relation to promotion and information, savings on rental costs, simplified settlement and payment procedures. When considered in terms of economic theory, the factors which determine the e-market efficiency can be identified as the following: level of costs, price dispersion, and high price-elasticity of demand. It can be argued that the latter for the market discussed is higher in comparison with traditional models of distribution and hence the costs will be lower. The studies conducted and the analysis of current markets, however, indicate that the rates of price variations appear in fact to be much higher in e-markets.

The economic theory suggests that price dispersion in such markets is to be much lower than in traditional markets, while none of the studies conducted indicates the presence of such condition. The principal components underlying high degrees of online price variability are the following:

Heterogeneous goods and/or services. Different features and qualities, saturation with information, wider functionality, packaging, etc. which can vary significantly with sellers of the same categories of goods and/or services.

Disproportionate promotional and informational saturation. Core target groups can be either well or less informed on the seller pricing policies in relation to certain goods and/or services, the factor dependent on the quality of providing the promotional and informational service. The buyers who are most informed enjoy buying at lowest prices and vice versa. It is this factor which allows e-sellers with the maximum promotional and informational saturation and lowest prices to secure considerable market shares.

Brand loyalty. Brand is defined as a core element which allows target audiences identifying certain goods and/or services among similar goods and/or services in the market (Cherenkov & Vereteno, 2019). It is worth mentioning that both sellers and target audiences in e-markets are differentiated in terms of various features, time and/or distance, for instance, and here it is the brand loyalty that is to play a decisive role (Molchanov & Golovnev, 2016).

Price discrimination strategy. In e-commerce price discrimination can be said to play a more significant role than in traditional models of distribution which is determined by the following factors: feedback to sellers from the target audience, this allowing both parties to timely collect and analyze information about each other; cost minimization, this allowing sellers to adjust prices quickly reacting to both internal and external to the market factors; heterogeneous buyers, this allowing sellers segmentation of buyers into the core and peripheral target groups.

To maintain the equilibrium in a given e-market market participants can establish positive conditions. Suppose target audience reacted positively to adjustments in prices by a given e-seller (Davyy et al., 2018). This fact was immediately communicated to primary and secondary competition in the market and they reacted with retaliatory measures (lowering prices for certain products and/or services). Such measures will deprive the first-to-lower-prices e-seller an opportunity to benefit considerably from price variation.

Competition between e-market participants is primarily distributed within market groups with two constituent groups to be identified (Gulieva & Chunikhina, 2019). First group of e-market participants position themselves as primary competition with higher market shares and start with competing with each other. Second group of e-market participants regard themselves secondary competition – they set priorities to prices established by the first group and compete within the group of secondary competition. Such groups tend to establish implicit price collusions and their actions have very insignificant influence on the pricing policies of the first group.

The recent overall trend in the market of advertizing and promotion services can be characterized as the advent of Internet-advertising. Another noticeable trend in this market is constantly and rapidly increasing numbers of Internet-users. Development of new online platforms, increased numbers of social networking result in emergence of innovative and/or improved advertizing methods and media which, in competition with each other, widen the market of advertizing and raise it to a new level (Rudakova & Molchanova, 2020).

At present development of advertizing and information technologies in e-markets requires from companies to apply innovations for timely analysis. Efficiency indicators developed for digital environment (number of demonstrations, targeting, clicking rates, tracking, CR, CTR, CTI, CTB< frequency, median time elapsing between demonstration and clicking, etc.) are evidently important, however, attention should be also paid to such tools for analysis as Leads, CPC, CPA and ROAS. Accuracy in organizational decision-making by online stores management is directly dependent on operative and/or wave analysis of their advertizing campaigns.

Investigating economic sustainability of e-trade

Objectively, financial capacity is determined by both modern structure standards in certain sector of economy, and by hi-tech industry structure.

Currently, what the sellers can offer and what the customers demand in multi-product and multi-service markets depend largely on every stage of product or service life-cycle, and their economic analysis allows identifying that some of them depend strongly and immediately on improving the methods of selling and distribution based on application of modern technological developments. It has an enormous impact, for instance, on investment and production stages.

The content of the above stages and their ability to affect the forecast competitiveness rates, the variability of their implementation requires specific methodologies and approaches for investigating and examining the results of which will allow for more accurate managerial decision-making based on innovative information technologies, e.g. distant business projects via the Internet (Tambovtsev, 2017).

Financial assessment and expertise related to e-commerce components are characterized as highly problematic given current economic conditions, but solutions seem to root in objective assessment of invulnerability, i.e. feasibility and sustainability of projects implemented in virtual markets. This fact has many implications for both financially independent and for promising new participants in information technologies market.

Financial expertise and assessment of business activities in information markets allows both evaluating the competitive advantage of a participant, analyzing and specifying major factors of influence, determining those most prospective and feasible and prioritizing in terms of sources of funding (Taranukha, 2017). The data obtained are to be used for identifying the objective items and for determining the content of strategic marketing planning which will determine managerial decision-making.

Methods and techniques of financial expertise and assessment simplify finding best solutions for quickly changing information technologies market (Vasin & Kursky, 2019). They account for the existing methods of pricing to determine the required levels of markup, discount and price adjustment differentiation in terms of continuous changes in modern markets for certain product or service ranges given the company’s capacities, partner relations and results of marketing studies conducted to identify the market’s needs, competition and consumer purchasing power.

Pricing policy allows manipulations with the sales volumes and costs components in terms of both increasing and decreasing these. Such marketing activities and measures are focused primarily on securing sustainable profitability in market conditions, which sometimes requires lowering profits for further increasing the entity’s levels of profitability in information market.

By applying the techniques of economic analysis the company can determine the fixed levels of sales volumes for particular range of products, resources used for it and market-based pricing variability for providing marginal break-even business activity (Gryazev et al., 2019). Quickly changing and highly competitive environment of Internet-trade regards as more reliable not calculations of break-even point, but determining the area of financial sustainability the parameters of which can secure positive efficiency rates. This area is characterized by varying levels of profitability allowing to achieve possible volumes of sales for specific product ranges under which certain costs values result in even adjustments of revenues and expenses on selling.

Market-based approach implies constant monitoring of the rates with which the volumes of revenues and costs and expenses are changing within the area identified. The company is to develop a strategy for selling in certain volumes and for certain product range, for reducing or increasing the sales volumes of a given range, even for ceasing selling certain product(s) altogether in case the marginal costs in this area exceed the marginal revenues given even changes in expenses for selling the product(s) online.

Modern investment strategies in information markets allows flexibility in reacting to changing market environment, company’s limited capacities and multi-vector consumer demands (Shirokova et al., 2017). This results in the necessity for operative adjustments in strategic planning for sales to achieve the point of equilibrium.

Most often such changes are possible in long-term planning of a business firm’s activities in e-market. In the short-term adjustments for correction of deviations from the point of equilibrium need to de made quickly based on the results of express assessment which also provides for possible negative outcomes to be corrected further (Chattergy & Novak, 2017).

Existing developments in information technologies allow forecasting growing volumes of online trade. Evidently, for achieving the forecast efficiency a company is to apply innovative approaches in e-commerce.