Abstract

General Background: E-commerce has revolutionized business practices by offering cost reduction, especially in marketing, through advancements in electronics and communication, expanding reach, and reducing operational costs. Specific Background: This study investigates the potential of e-commerce in reducing marketing costs and improving business efficiency, despite challenges faced by many firms. Knowledge Gap: While extensive research exists on e-commerce, the specific relationship between e-commerce strategies and the reduction of promotional costs remains underexplored, especially in terms of practical implementation by companies. Aims: The study explores the link between e-commerce strategies and reduced promotional expenses, highlighting how digital marketing can boost profitability and reduce costs for businesses. Results: Statistical analysis revealed that companies effectively reduced advertising costs, such as salaries, bonuses, and training expenses, by utilizing e-commerce strategies. However, many firms failed to capitalize on further cost-saving opportunities in inventory management, travel, and research expenses. The t-value (17.062) and p-value (0.000) indicate a significant relationship between e-commerce strategies and reduced promotional costs. Novelty: This research provides empirical evidence on the significant cost-saving potential of e-commerce, highlighting its underutilization in areas beyond marketing, such as operational expenses. Implications: The study emphasizes the importance of integrating e-commerce into operational strategies for cost reduction and competitive pricing, providing practical insights for businesses aiming to improve efficiency and profitability.

Highlights:

1. E-commerce reduces marketing costs and boosts business efficiency.
2. Firms often miss broader cost-saving potential of e-commerce.
3. Strong correlation found between e-commerce use and lower promotional expenses.

Keywords: E-commerce, digital marketing, cost reduction, promotional expenses, business efficiency

Introduction

Despite being a relatively recent phenomenon, the utilization of e-commerce originated in the early 1970s with various applications. One notable application during that period was the use of electronic money transfers, although it was primarily limited to large institutions and corporations. Subsequently, an additional form of application emerged known as electronic data interchange, which played a pivotal role in broadening the scope of e-commerce beyond just financial transactions. This advancement also led to an increase in the participation of various sectors, including financial institutions, factories, retailers, and other service providers, in utilizing this technology.

Subsequently, the utilization of this kind of commerce expanded to encompass additional applications, including the trading of stocks and airline tickets, referred to as wired and wireless communication applications.

The current form of e-commerce did not exist initially, as the applications lacked the capability to be widely adopted until significant advancements in electronics and communication technology occurred. These advancements made electronic devices and communication tools more affordable, compact, and user-friendly, enabling institutions and companies of all sizes to utilize them. These technological advancements were accompanied by administrative and organizational changes in communications that aimed to free this crucial sector from monopolistic regulations. These regulations limited the use of networks for telephone communications and neglected data transmission services and other advanced services.

With the advent of the Internet in the 1990s, the word e-commerce emerged and subsequently witnessed substantial advancements in its uses. Another factor that has helped to the growth of e-commerce is the escalating level of competition among enterprises. Since 1995, there has been a proliferation of innovative applications showcased in commercials, auctions, and virtual reality experiences, leading to the establishment of websites by nearly every major or mid-sized corporation. The emergence of e-commerce may be attributed to the mid to late 1990s and experienced significant growth in the 21st century.

Methods

1- The research Problem : The research issue revolves on the fact that many firms want to minimize the cost of their end product in order to maximize their sales and profits. While there are several ways to reduce expenses, not all of them may be useful or impactful for every company. E-commerce has become a prominent aspect of information technology advancement and a crucial method for cost reduction, especially in terms of promotional expenses. By electronically marketing a company's products, e-commerce enables trade stimulation, sales growth, faster product marketing, time and effort reduction, and minimization of marketing costs. These factors significantly impact overall costs and the net profits of the company.

2- The significance of the research: The study is significant because it focuses on the relationship between two main variables: e-commerce and promotional costs. It aims to explore the nature and essence of this relationship and establish a connection between theory and practice. Additionally, it aims to demonstrate the influence of each variable on the other.

3- Study objectives: The study aims to accomplish the following objectives:

• This paper offers a comprehensive and practical analysis of e-commerce, including its key stakeholders and benefits, making a significant addition to the field of information technology.

• This text aims to explain the significance of promotional costs in relation to the total cost of a final product. It will discuss the different classifications and distinguishing characteristics of these costs, as well as their impact on overall costs and company profits.

• Additionally, it will explore the relationship between e-commerce and promotional costs, analyzing how each affects the other.

4- Research hypothesis : The study is grounded on the primary hypothesis that there exists a correlation between the utilization of e-commerce in the realm of digital marketing and the reduction of promotional expenses

Result and Discussion

1. Electronic commerce :

A: The idea of e-commerce: E-commerce encompasses several definitions, with the most crucial ones being succinctly defined as follows:

E-commerce is a novel idea that elucidates the process of purchasing, selling, or exchanging goods, services, and information using computer networks, such as the Internet. [1].

It refers to a cohesive system of corporate operations that involves electronic processing and is relied upon by all activities, institutions, and individuals. "They are commercial transactions that are conducted via public networks." [2]

The field of communications defines e-commerce as "the process of transmitting information, services, or products through telephone lines, computer networks, or any electronic methods." [3]

There is no text provided. E-commerce is commonly defined as a means to fulfill the needs of businesses, customers, and managers by reducing service costs, improving efficiency, and expediting service delivery. The Internet defines e-commerce as the commercial exchange of goods, services, and information facilitated by online platforms.

However, amidst the various definitions and opinions put forth by researchers, there is consensus among them regarding the definition provided by the World Trade Organization (W.T.O). According to the W.T.O, e-commerce refers to the commercial activity encompassing the entire process of producing, promoting, marketing, selling, and distributing goods and services through an electronic communications network. According to researchers, this definition is regarded as the most thorough, accurate, and relevant to the research aims and major hypothesis. Based on the definitions provided above, we may draw the following conclusions: [4]

E-commerce has facilitated the growth of commercial marketplaces by creating open markets accessible to customers worldwide, overcoming the limitations of time and space that impede the flow of commercial transactions.

a) It facilitates the establishment of a worldwide electronic marketplace and fosters an atmosphere that empowers customers to exert greater control over the purchase process and access information as needed.

b) It relies on reciprocal operations, whether in commerce or services, involving multiple parties interacting with each other. It also involves a technological or electronic component, eliminating the need for physical meetings or direct contact between the parties involved.

c) It enhances performance efficiency and facilitates effective work.

B: Participants in electronic commerce:

There are several parties and users involved in e-commerce transactions. The most significant transactions include:

a) Transactions occurring between two separate corporate entities. Intercompany transactions occur when one business unit use information technology and communication networks to get purchase orders from suppliers in other organizations and facilitate the payment process. This particular transaction is considered to be one of the most ancient and often occurring forms of transactions.

b) Business transactions between a company and its customers: This form of transaction occurs via the Internet, as numerous e-commerce platforms on this network showcase a wide array of products and services for businesses. Customers can utilize these platforms to complete the purchasing and payment process, employing methods such as credit card payments, cash on delivery, or other available options.

c) Interactions involving financial exchanges between government authorities and a corporate unit

d) This transaction involves government entities electronically publishing fees, processes, rules, and transaction forms on the Internet for firms to access

e) Interagency transactions: This transaction involves the transfer of data and information between government entities, as well as the cooperation between them. Additionally, this encompasses the business component, since several government agencies make their assets available for purchase by other government agencies via e-commerce. [6]

f) Business unit-government agency transactions: This transaction involves enterprises electronically presenting information about their work, resources utilized, outputs, and cash budget to enable government organizations, such as the Tax Authority or companies that sell or provide services to government agencies, to easily access this information.

g) Customer transactions: This sort of transaction happens when an individual engages in the sale of a product or the provision of a service to other individuals. Instances of this phenomenon include when an individual strategically displays adverts on their website to market personal belongings or offer specialized knowledge, as well as online auctions. [7]

h) Customer-business unit transactions: This transaction type involves people who provide goods and services to corporations.

i) Interactions involving financial exchanges between individuals and governmental organizations: This form of transaction has experienced significant growth and advancement, including many activities such as persons online remitting taxes and transaction fees. [8]

Figure 1.Parties involved in e-commerce

The advantages of electronic trade

1. Advantages of electronic trade for firms and institutions: E-commerce offers several advantages for organizations and institutions, with the most significant being:[9]

a) E-commerce broadens the market's reach to a worldwide and global level. At a minimal expense, any corporation may efficiently and expeditiously locate additional consumers, superior suppliers, and more compatible partners.

b) It decreases the expenses associated with generating, handling, disseminating, storing, and retrieving physical documents.

c) It facilitates the establishment of highly specialized enterprises.

d) E-commerce solutions have replaced some occupations in organizations, resulting in reduced labor costs. This particularly affects enterprises that rely on a big workforce.

It facilitates the re-engineering of business processes for firms, resulting in a productivity increase of over 100% for sellers, workers, and administrators.

a) It offers a crucial service to companies and institutions by assessing their current situation, the productivity of their employees, the reliability and efficiency of their technical systems, and the effectiveness of their administrative training programs. Additionally, it helps to minimize the time gap between making payments and receiving products and services.

b) The withdrawal procedure in the supply chain management system enables inventory reduction. The withdrawal process in this system starts with acquiring a commercial order from the customer, followed by the corporation furnishing the consumer with an order through just-in-time production. It enables organizations to achieve substantial and evident growth in their revenue.

c) It lowers the expenses associated with wired and wireless communications, as the Internet is far more cost-effective than the value add network.

2. Advantages of electronic trade for consumers: The advantages of e-commerce for customers are as follows: [10]

E-commerce facilitates the comprehension of client requirements and offers them a broad range of buying choices, resulting in a much higher level of customer contentment compared to conventional commerce. It is important to observe that the growing number of clients is being accommodated by an expanded market area for providers. • E-commerce provides a strong motivation to enhance competitiveness. It encourages researchers to explore innovative ways and techniques for utilizing electronic coupons and checks, while also enhancing suppliers' competitiveness in terms of product quality for customers.

a) By shipping products directly from the factory to the end consumer, the commercial cycle is shortened, resulting in cost savings and reduced time for suppliers. This approach also allows for quick fulfillment of consumer needs, particularly for electronically delivered goods like magazines and newspapers, and leads to associated price reductions.

b) It enables engagement in online auctions , Customers can utilize the Internet to discuss experiences, ideas, and seek guidance from intermediaries. The user did not provide any text. Advantages of electronic trade at the local level: [6]

The advantages of e-commerce for society encompass the subsequent: [11]

a) E-commerce enables the efficient and cost-effective provision of public services, such as healthcare, education, and other social services.

b) It enables individuals residing in developing nations to get items and commodities that are not accessible in their native countries, and they can also attain university degrees over the Internet.

c) It enables individuals to telecommute, so reducing the time allocated for shopping and subsequently decreasing traffic congestion on the streets, leading to a reduction in environmental pollution.

d) It facilitates the sale of certain commodities at affordable costs, enabling low-income residents to purchase them, therefore enhancing the overall level of living within the community.

2. Advertising expenses:

A- The notion of promotional and promotional expenses: Researchers have made several efforts to provide a complete and precise definition of promotional expenses. Although there are multiple definitions, the most significant ones may be summarized as follows: According to the Institute of Cost and Management Accounting in England, promotional costs refer to the expenses incurred in a series of activities that start with the preparation of packaged items for processing and finish with the renewal of empty packages that can be reused. [10]. Promotional costs encompass the expenses associated with storing products and delivering them to the consumer. On the other hand, promotional costs encompass all the costs directly linked to marketing the company's product until it reaches the consumer, including storage expenses, sales personnel salaries, advertising, and distribution expenses. Based on the definitions provided, promotional costs are defined by researchers as "all expenses associated with a company's marketing efforts that occur after the production process is completed." These expenses include advertising costs, promotion costs, storage costs, distribution costs, selling costs, transportation costs, costs for promotional studies and research, and other costs related to marketing activities.

B- Categorization of promotional expenses: Various approaches can be utilized to categorize promotional expenses. The purpose of categorizing promotional expenses is to ascertain the cost of each distinct promotional activity undertaken by the company, with the objective of enhancing control over them, minimizing expenditure, and curbing excessive and wasteful practices. This aligns with the overarching goals pursued by the company's management. Some individuals categorize promotional expenses based on their inherent characteristics in the following manner: [11]

a. Direct promotional costs refer to expenses that are specifically associated with the product and may be directly assigned to it. These costs can also be directly linked to certain departments or geographical distribution regions. For instance, packaging charges are classified as direct marketing expenses for the product that received this service, along with advertising expenses, sales people wages, insurance, and all other costs that may be directly attributed to a certain distribution region or department.

b. Indirect promotional costs refer to expenses that are associated with many parties or activities. These costs are divided among different distribution locations, goods, or client segments. Examples include water and power bills, management fees, sales services, and the depreciation of sales vehicles.

C: Promotional expenses has distinct attributes that set them apart from production costs. The following traits are of utmost importance:[4]

a. The majority of promotional expenses are considered indirect, which poses a challenge in establishing a direct correlation between these expenses and the overall cost of the end product, unlike manufacturing costs.

b. Promotional costs are influenced by various external factors, including market fluctuations during periods of economic growth and recession, shifts in consumer behavior, competition, the introduction of new products, government intervention through legislation to restrict imports and exports or regulate prices, and the challenge of determining the optimal time period for promotional expenses.

c. Measuring the productivity of promotional expenses is challenging due to their long-term influence, which makes it difficult to precisely assess their effectiveness over time.

d. Challenge in allocating promotional expenses. One distinguishing feature of these expenses is their indivisibility. There are several methods for analyzing and allocating promotional expenses to cost units, reflecting the varied approaches to analyzing promotional expenditures.

Pragmatic aspect

This part focuses on the presentation and analysis of the data collected through the questionnaire forms. The data is examined in relation to the study variables, which have been categorized based on the research topic and hypothesis. The classification of variables is as follows:

- Strategies for conducting business online: Table (1) presents the statistical analysis of the responses from the research sample persons evaluating the impact of adopting e-commerce tactics. The table contains the weighted arithmetic means, standard deviations, and relative relevance.

The data shown in Table (1) indicate the following:

The e-commerce strategies variable had a weighted arithmetic mean of 3.23, with a standard deviation of 1.36. It was observed that the weighted arithmetic mean was higher than the test standard of 3, indicating that this variable is easily understood by the individuals in the study sample.

The user did not provide any text. The respondents' perception of the importance of the e-commerce strategies variable in the study community ranged from 40% to 77%. This indicates that the study community highly valued this variable, leading to its adoption. The paragraphs of variables X4, X3, X2, and X1 showed an increase in the weighted arithmetic mean, indicating a higher level of community adoption compared to the test standard. The arithmetic means for these variables were 3.33, 3.83, 3.5, and 3.46, respectively, which are higher than the hypothetical mean of 3. The results revealed that the relative significance of the aforementioned paragraphs was as follows: 69.17%, 70%, 79.67%, and 66.67%. Additionally, the standard deviation coefficients for these paragraphs were 1.10, 1.5, 1.2, and 1.3, respectively. These coefficients serve as indicators of the level of acceptance of the variables by the research community. Based on this, we see the consensus among the sample persons about the indicators shown in Table 1. Regarding paragraphs 1-4.

of paragraph x5, its arithmetic mean was 2, with a relative importance of 40% and a standard deviation of 0.93. This suggests a lack of understanding of the distinction in utilizing technical advancement. The significance might be demonstrated in the follows manner:

Figure 2.displays the relative significance of paragraphs.

The impact of employing strategies on promotion and digital marketing is demonstrated in Table (2), which presents the statistical analysis of the responses from the study sample participants. This table includes the weighted arithmetic means, standard deviations, and relative importance.

The data shown in Table (2) indicate the following:

The weighted arithmetic mean of the variable measuring e-commerce strategies in digital promotion and marketing is 1.91, with a standard deviation of 1.15. It was observed that the weighted arithmetic mean is lower than the test standard of 3, indicating the need for a technological revitalization and the development of digital policies.

The paragraphs showed a decrease in the weighted arithmetic mean of X10, x9, x8, x7, x6, x5, with values of 2.63, 1.96, 1.5, 1.25, and 2.21 respectively. These values are lower than the hypothetical mean of 3, which is the test standard. The study sample individuals considered these paragraphs to be relatively important, with percentages of 52.5%, 39.17%, 30%, 25%, and 44% respectively. The standard deviation coefficients for these paragraphs were 0.96, 1.3, 1.14, 0.84, and 0.97. The results validate that the participants in the research acknowledge the interconnectedness between strategies and digital promotion and marketing, and recognize their mutual reinforcement. The significance and correlation can be demonstrated in the below format:

Figure 3.displays the relative significance of the factors mentioned above.

In order to test the hypothesis, the t-test and the correlation coefficient were utilized, as shown in the table:

Based on the data in Table (3), it is evident that the average responses after presenting the information were (3.12), which is higher than the Likert average of (3). The p-value was (0.000), which is lower than the significance level (5%). Additionally, the calculated t-value was (17.062), which is greater than the tabular value (1.96). This indicates the significance of the relationship between presenting e-commerce strategies and digital promotion and marketing and it helps to reduce their costs.

Conclusion

The statistical analysis revealed that the company being studied aims to decrease advertising and promotion costs by utilizing e-commerce for marketing its products. This includes reducing expenses related to advertising, salaries, wages, bonuses, programs, and training courses in the advertising department. Additionally, the analysis indicated that companies do not evaluate the effectiveness of advertising through e-commerce by comparing the expenditures on advertising campaigns with the achieved outcomes.

The statistical analysis revealed that the company does not capitalize on the potential benefits of utilizing e-commerce to decrease inventory, reduce salaries and wages of warehouse workers, lower travel expenses to target markets, minimize warehouse insurance costs, cut office supplies expenses, and decrease consumption of warehouse machinery and equipment. The statistical research revealed that the firm aims to enhance its market share and maintain its competitive position by utilizing e-commerce to reduce selling expenses and offer items at competitive pricing. Furthermore, the companies included in the study sample fail to consider the potential cost savings associated with utilizing e-commerce, such as reducing expenses related to research and promotional studies, as well as decreasing salaries and bonuses for marketing professionals. This hypothesis was confirmed by the study's acceptance.

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