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DIGITAL BUSINESS
AND E-COMMERCE
MANAGEMENT

2
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DIGITAL BUSINESS AND E-
COMMERCE MANAGEMENT
SEVENTH EDITION
DAVE CHAFFEY,
TANYA HEMPHILL
DAVID EDMUNDSON-BIRD
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First published 2002 (print)
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ISBN: 978-1-292-19333-5 (print)
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A catalogue record for the print edition is available from the British
Library
Library of Congress Cataloging-in-Publication Data
Names: Chaffey, Dave, 1963- author. | Edmundson-Bird, David,
author.
| Hemphill, Tanya, author.
Title: Digital business and e-commerce management : strategy,
implementation and
practice / Dave Chaffey, David Edmundson-Bird and Tanya
Hemphill.
Other titles: E-business and e-commerce management
Description: Seventh edition. | Harlow, England ; New York :
Pearson, [2019]
Identifiers: LCCN 2018048265| ISBN 9781292193335 (print) |
ISBN 9781292193359 (pdf) |
ISBN 9781292193366 (epub)

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Subjects: LCSH: Electronic commerce. | Business enterprises--
Computer networks.
Classification: LCC HF5548.32 .C472 2019 | DDC 658.8/72--dc23
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NOTE THAT ANY PAGE CROSS REFERENCES REFER TO
THE PRINT EDITION

7
Brief contents
Preface
About the authors
Acknowledgements
Publisher’s acknowledgements
Part 1 Introduction
1 Introduction to digital business
2 Opportunity analysis for digital business and e-commerce
3 Managing digital business infrastructure
4 Key issues in the digital environment
Part 2 Strategy and applications
5 Digital business strategy
6 Supply chain and demand
7 Digital marketing
8 Customer relationship management
Part 3 Implementation

8
9 Customer experience and service design
10 Managing digital business transformation and growth
hacking
Glossary
Index

9
Contents
Preface
About the authors
Acknowledgements
Publisher’s acknowledgements
Part 1 Introduction
1 Introduction to digital business
Learning outcomes
Management issues
Links to other chapters
Introduction
The impact of digital communications on traditional businesses
Inbound marketing
Social media marketing
Trends update: Social media usage
Case Study 1.1: The Uber business model
Mobile commerce
Trends update: Mobile usage
What is the difference between a digital business and an e-
commerce business?
E-commerce defined

10
Trends update: E-commerce growth rates
Digital business defined
Intranets and extranets
Different types of sell-side e-commerce
Digital marketing
Trends update: Social network usage
Options for organisations to reach a digital audience
Owned, earned and paid media options
The six key types of digital media channels
The social internet and user-generated content
Supply chain management
Business or consumer models of e-commerce transactions
Dot Gov defined
Digital business opportunities
Drivers of digital technology adoption
Cost/efficiency drivers
Competitiveness drivers
Barriers to the adoption of technology by digital business
stakeholders
Evaluating an organisation’s digital business capabilities
Drivers of consumer technology adoption
Barriers to consumer digital adoption
Case Study 1.2: Amazon - the world’s largest digital
business?
Summary
Exercises
References
Web links
2 Opportunity analysis for digital business and e-commerce
Learning outcomes
Management issues
Introduction

11
Business and revenue models for e-commerce
Digital marketplace analysis
Case Study 2.1: How Boden grew from an eight-product
menswear catalogue to an international brand with over
£300 million in sales
Strategic agility
Case Study 2.2: Unilever demonstrates strategic agility
A process for digital marketplace analysis
Case Study 2.3: Macy’s - using omnichannel growth
strategies to improve customer experience
1 Customer segments
2 Search intermediaries
3 Intermediaries, influencers and media sites
4 Destination sites
Location of trading in the marketplace
Review of marketplace channel structures
Location of trading in the marketplace
The importance of omnichannel marketplace models
Commercial arrangement for transactions
Different types of online intermediary and influencers
Summary of the types of intermediary
The importance of search engines
Business models for e-commerce
Revenue models
Online publisher and intermediary revenue models
Calculating revenue for an online business
Focus on Digital start-up companies
Assessing digital businesses
Valuing tech start-ups
1 Concept
2 Innovation
3 Execution
4 Traffic

12
5 Financing
6 Profile
Case Study 2.4: i-to-i - a global marketplace for a start-up
Summary
Exercises
References
Web links
3 Managing digital business infrastructure
Learning outcomes
Management issues
Introduction
Supporting the growing range of digital business
technology platforms
Desktop, laptop and notebook platforms
Mobile phone and tablet platforms
Trends update: Mobile usage
Other hardware platforms
Augmented reality
Digital business infrastructure components
A short introduction to digital technology
Management issues in creating a new customer-facing digital
service
Domain name selection
Uniform resource locators (URLs)
Domain name registration
Managing hardware and systems software infrastructure
Layer II - systems software
Managing digital business applications infrastructure
Focus on The development of customer experiences and digital
services
Benefits of web services or SaaS
Application programming interfaces (APIs)

13
Challenges of deploying SaaS
Cloud computing
Examples of cloud computing web services
Virtualisation
Service-orientated architecture (SOA)
Selecting hosting providers
Managing service quality when selecting Internet service
and cloud hosting providers
ISP connection methods
Issues in management of ISP and hosting relationships
Speed of access
Availability
Service level agreements
Security
Managing internal digital communications through internal
networks and external networks
Intranet applications
Extranet applications
Encouraging use of intranets and extranets
Streaming TV
Voice over IP (VoIP)
Widgets
Technology standards
Examples of XML applications
Semantic web standards
Microformats
Focus on Internal and external governance factors that impact
digital business
The Net neutrality principle
The Internet Corporation for Assigned Names and
Numbers (ICANN, www.icann.org)
The Internet Society (www.isoc.org)
The Internet Engineering Task Force (IETF, www.ietf.org)

14
The World Wide Web Consortium (www.w3.org)
Telecommunications Information Networking Architecture
Consortium (TINA-C, www.tinac.com)
How can companies influence or take control of Internet
standards?
Open-source software
Case Study 3.1: Innovation at Google (2017 update)
Summary
Exercises
References
Web links
4 Key issues in the digital environment
Learning outcomes
Management issues
Introduction
Social factors
Legal and ethical factors
Economic factors
Political factors
Technology factors
Cultural factors
Factors affecting e-commerce buying behaviour
Understanding users’ access requirements
Consumers influenced by using the online channel
Motivation for use of online services
Business demand for digital business services
E-commerce sales across the EU
Privacy and trust in e-commerce
Privacy legislation
Why personal data is valuable for digital business
Worldwide regulations on privacy and electronic
communications

15
Viral email marketing
Other e-commerce legislation
1 Marketing your e-commerce business
2 Forming an electronic contract (contract law and
distance-selling law)
3 Making and accepting payment
4 Authenticating contracts concluded over the Internet
5 Email risks
6 Protecting intellectual property (IP)
7 Advertising on the Internet
8 Data protection
Environmental and green issues related to Internet usage
Taxation
Tax jurisdiction
Freedom-restrictive legislation
Economic and competitive factors
Case Study 4.1: The implications of microlocalisation vs
globalisation based on consumer attitudes
The implications of e-commerce for international B2B trading
Government and digital transformation
Internet governance
E-government
Technological innovation and technology assessment
Approaches to identifying emerging technology
Summary
Exercises
References
Web links
Part 2 Strategy and applications
5 Digital business strategy
Learning outcomes

16
Management issues
Introduction
Development of the social business
What is digital business strategy?
The imperative for digital business strategy
Digital channel strategies
Platform strategy
Strategy process models for digital business
Strategic analysis
Resource and process analysis
Stage models of digital business development
Application portfolio analysis
Organisational and IS SWOT analysis
Human and financial resources
Competitive environment analysis
Demand analysis
Assessing competitive threats
Competitive threats
Sell-side threats
Buy-side threats
Competitor analysis
Resource-advantage mapping
Strategic objectives
Defining vision and mission
VMOST
How can digital business create business value?
Case Study 5.1: Arriva Bus redesigns its m-ticket app and
boosts revenue by over 17%
Objective setting
The online revenue contribution
Conversion modelling for sell-side e-commerce

17
Case Study 5.2: Setting the Internet revenue contribution at
Sandvik Steel
The balanced scorecard approach to objective setting
Strategy definition
Selection of digital business strategy options
Decision 1: Digital business channel priorities
The diversification of digital platforms
Decision 2: Market and product development strategies
Decision 3: Positioning and differentiation strategies
Decision 4: Business, service and revenue models
Decision 5: Marketplace restructuring
Decision 6: Supply chain management capabilities
Case Study 5.3: Zappos innovates in the digital
marketplace
Decision 7: Internal knowledge management capabilities
Decision 8: Organisational resourcing and capabilities
Strategy implementation
Failed digital business strategies
Digital business strategy implementation success factors
for SMEs
Case Study 5.4: Boo hoo - learning from the largest
European dot.com failure
Focus on Aligning and impacting digital business strategies
Elements of information systems (IS) strategy
Investment appraisal
Decisions about which business applications to invest
in
The productivity paradox
Summary
Exercises
References
Web links
6 Supply chain and demand

18
Learning outcomes
Management issues
Introduction
Case Study 6.1: Fast-fashion retailer Zara uses its supply
chain to achieve competitive advantage
Problems of supply chain management
What is supply chain management and e-procurement?
A simple model of a supply chain
Case Study 6.2: Shell Chemicals redefines its customers’
supply chains
What is logistics?
Push and pull supply chain models
Focus on The value chain
Restructuring the internal value chain
The value stream
Value chain analysis
Value networks
Options for restructuring the supply chain
Using digital business to restructure the supply chain
Technology options and standards for supply chain
management
Case Study 6.3: Argos uses e-supply chain management to
improve customer convenience
IS-supported upstream supply chain management
RFID and the Internet of Things
IS-supported downstream supply chain management
Outbound logistics management
IS infrastructure for supply chain management
Supply chain management implementation
Data standardisation and exchange
The supply chain management strategy process
Goal-setting and performance management for eSCM

19
Managing partnerships
Managing global distribution
Case Study 6.4: RFID - keeping track starts its move to a
faster track
What is e-procurement?
Understanding the procurement process
Types of procurement
Participants in different types of e-procurement
Drivers of e-procurement
Examples of the benefits of e-procurement
Case Study 6.5: Honeywell improves efficiency through
SCM and e-procurement
Focus on Estimating e-procurement costs
The impact of cost savings on profitability
Barriers and risks of e-procurement adoption
Implementing e-procurement
Integrating company systems with supplier systems
Focus on B2B marketplaces
Types of marketplace
The future of e-procurement
Summary
Exercises
References
Web links
7 Digital marketing
Learning outcomes
Management issues
Introduction
Chapter structure
What is digital marketing?
Marketing defined
Inbound marketing

20
Content marketing
Digital marketing planning
Is a separate digital marketing plan required?
Situation analysis
Customer demand analysis
Qualitative customer research
Competitor analysis
Intermediary or influencer analysis
Internal marketing audit
Objective setting
Case Study 7.1: The evolution of easyJet’s online revenue
contribution
Strategy
Market and product positioning
Target market strategies
Content strategy
Focus on Characteristics of digital media communications
1 Interactivity
2 Intelligence
3 Individualisation
4 Integration
5 Industry restructuring
6 Independence of location
Tactics
Product
Case Study 7.2: Dell gets closer to its customers online
Price
Place
Promotion
People, process and physical evidence
Focus on Digital branding
Brand identity
The importance of brand online

21
Actions
Control
Summary
Exercises
References
Web links
8 Customer relationship management
Learning outcomes
Management issues
Introduction
Marketing applications of CRM
Case Study 8.1: How Warby Parker disrupted the eyewear
industry
What is eCRM?
From eCRM to social CRM
Benefits of eCRM
Customer engagement strategy
Permission marketing
Customer profiling
Conversion marketing
The online buying process
Differences in buyer behaviour in target markets
Differences between B2C and B2B buyer behaviour
Influences on purchase
The net promoter score
Customer acquisition management
Focus on Marketing communications for customer acquisition,
including search engine marketing, digital PR, online
partnerships, interactive advertising, email marketing and
social media marketing
The characteristics of interactive marketing
communications

22
1 From push to pull
2 From monologue to dialogue
3 From one-to-many to one-to-some and one-to-one
4 From one-to-many to many-to-many communications
5 From ‘lean-back’ to ‘lean-forward’
6 The medium changes the nature of standard
marketing communications tools such as advertising
7 Increase in communications intermediaries
8 Integration remains important
Assessing marketing communications effectiveness
Digital marketing communications
1 Search engine marketing (SEM)
2 Digital PR
Focus on Social media and social CRM strategy
3 Online partnerships
4 Digital advertising
5 Email marketing
6 Social media marketing
Customer retention management
Personalisation and mass customisation
Creating personalisation
Extranets
Opt-in email
Techniques for managing customer activity and value
Lifetime-value modelling
Focus on Excelling in e-commerce service quality
Improving online service quality
Tangibles
Reliability
Responsiveness
Assurance
Empathy
Customer extension

23
Advanced online segmentation and targeting techniques
Sense, Respond, Adjust - delivering relevant e-
communications through monitoring customer
behaviour
Recency, Frequency, Monetary value (RFM) analysis
Technology solutions for CRM
Types of CRM applications
Integration with back-office systems
The choice of single-vendor solutions or a more
fragmented choice
Data quality
Case Study 8.2: Tesco.com increases product range and
uses triggered communications to support CRM
Summary
Exercises
References
Web links
Part 3 Implementation
9 Customer experience and service design
Learning outcomes
Management issues
Introduction
Analysis for digital technology projects
Process modelling
Process mapping
Task analysis and task decomposition
Process dependencies
Workflow management
Flow process charts
Effort duration analysis

24
Network diagrams
Event-driven process chain (EPC) model
Validating a new process model
Data modelling
1 Identify entities
2 Identify attributes for entities
3 Identify relationships between entities
Big Data and data warehouses
Design for digital technology projects
Architectural design of digital business systems
Focus on User-centred site design and customer experience
management
Customer experience management framework
Customer experience design
Implementation
Usability
Evaluating designs
Use-case analysis
Persona and scenario analysis
Stages in use-case analysis
Designing the information architecture
Card sorting
Blueprints
Wireframes
Customer orientation
Elements of site design
Site design and structure
Page design
Content design
Mobile design
Mobile site design option A. Responsive design
Mobile site design option B. Adaptive design
Mobile site design option C. HTML5

25
Mobile site design option D. Separate mobile domain
(screen scrape)
Web accessibility
Case Study 9.1: Providing a better online user experience
in a B2B market
Focus on Security design for digital business
Secure e-commerce transactions
Principles of secure systems
Approaches to developing secure systems
Digital certificates
Digital signatures
The public-key infrastructure (PKI) and certificate
authorities (CAs)
Virtual private networks
Current approaches to e-commerce security
Secure Sockets Layer protocol (SSL)
Certificate authorities (CAs)
Reassuring the customer
Summary
Exercises
References
Web links
10 Managing digital business transformation and growth
hacking
Learning outcomes
Management issues
Introduction
Case Study 10.1: Transforming an entire industry and
supply chain: Spotify and Spotify Connect
Definitions of digital transformation
Definitions of digital business transformation
Why is digital business transformation not just about IT?

26
The applications portfolio - a precursor to digital
business transformation
The emergence of digital transformation as a discipline
History of change and change management
The change in strategic position of digital versus
technology
The need for digital transformation
Understanding the reasons for digital transformation
The opportunities provided by digital
Where does digital transformation occur?
Customer experience and service design
Customer insight
Adding value
Interfaces with customers
Business process
The business model
New business where digital is at the heart of the
opportunity
Adapting the existing business to a digital opportunity
The framework of digital transformation
The process of review
What the digital opportunity is
How sure the organisation is of the opportunity
What level of digital the leadership of the organisation
possesses
How mature as a digital business the organisation sees
itself
The process of strategy
A focus on the objective for the future rather than
solving an existing problem
The process of resourcing and planning
The design of the transformation
A programme for change
The process of deployment

27
The process of living with, and evaluating, digital
transformation
What is growth hacking?
Defining goals and KPIs
How to use a single metric to run a start-up
Creating a growth hacking mindset
Ideal skill set of a growth hacking team
Use of Scrum, an agile methodology, in digital marketing
Scrum meetings
Sprint planning
Daily Scrum
Sprint review and retrospective
Developing agile marketing campaigns
The growth hacking process
1 Product/market fit (create an MVP - Minimum Viable
Product)
Trigger
Action
Rewards
Investment
2 User data analysis
Main areas of user testing
3 Conversion rate optimisation
Key CRO elements
A/B and multivariate testing
Clickstream analysis and visitor segmentation
Budgeting
Case Study 10.2: Learning from Amazon’s culture of
metrics
4 Viral growth
Inherent virality: Skype
Artificial virality: Giffgaff
Word-of-mouth virality: Zappos

28
Measuring virality
5 Retention and scalable growth
Creating the right environment for growth hacking
Bridging the digital and physical world
Best traditional marketing methods for growth hacking
Case Study 10.3: How Leon used PR to growth hack
Growth hacking framework
Twenty traction channels to test
Data analysis
Measuring implementation success
Focus on Web analytics: Measuring and improving
performance of digital business services
Principles of performance management and improvement
Stage 1: Creating a performance management system
Stage 2: Defining the performance metrics framework
Focus on Measuring social media marketing
Stage 3: Tools and techniques for collecting metrics
and summarising results
Collecting site outcome data
Selecting a web analytics tool
User testing prioritisation
Summary
Exercises
References
Web links
Glossary
Index
Lecturer Resources

29
For password-protected online resources tailored to support the
use of this textbook in teaching, please visit
www.pearsoned.co.uk/chaffey

30
Preface
In 1969, the United States was able to land two men on the Moon, only
seven years after John F. Kennedy’s famous ‘We choose to go to the
Moon’ speech in Houston in 1962 as part of NASA’s Apollo space
programme. NASA used advanced computing (for the time) to get their
payload into orbit and then send the crew to the Moon and land there.
Known as the Apollo Guidance Computer (AGC), the system remained
unmatched in power for more than a decade, until the advent of the
personal computing era.
Only 50 years later, a device many times more powerful than the AGC
is carried around by several billion people. Smartphones contain more
computing power and offer a dizzying array of functions compared to
NASA’s computers. Even modern washing machines now contain more
computing power.
The smartphone is a gateway for many digital business opportunities,
and most users of smartphones are blissfully unaware of the intricacies of
the infrastructure that supports their telephony, their access to the Internet
or the functionality of their apps. The development of everything that
underpins digital business is not straightforward and fraught with
difficulties of selecting the correct strategic direction and surviving in an
increasingly harsh competitive environment. Not all who follow the route
survive. But whether it’s the start-up businesses or an existing business,
what they have in common is that those who prosper learn to optimise to
take the right strategic decisions about digital technology, digital
marketing and supply chain management.
This book is intended to equip current and future managers with some
of the knowledge and practical skills to help them navigate their
organisation towards digital business.

31
A key aim of this book is to identify and review the key management
decisions required by organisations moving to digital business and
consider the process by which these decisions can be taken. Key questions
include: What approach to digital business strategy do we follow? How
much do we need to invest in digital business? Which processes should be
our digital business priorities? Should we adopt new business and revenue
models? What are the main changes that need to be made to transform an
organisation that uses technology to a true digital business?
Given the broad scope of digital business, this book takes an
integrative approach drawing on new and existing approaches and models
from many disciplines, including information systems, strategy,
marketing, supply chain management, operations and human resources
management.
What is digital business management?
As we will see in Chapter 1, digital business is aimed at enhancing the
competitiveness of an organisation by deploying innovative digital
technologies throughout an organisation and beyond, through links to
partners and customers and promotion through digital media. It does not
simply involve using technology to automate existing processes, but is
about digital transformation by applying technology to help change these
processes to add value to the business and its customers. To be successful
in managing digital business, a breadth of knowledge is needed of
different business processes and activities from across the value chain,
such as marketing and sales, through new product development,
manufacturing and inbound and outbound logistics. Organisations also
need to manage the change required by new processes and technology
through what have traditionally been support activities such as human
resources management.
Digital business
How businesses apply digital technology and media to improve the
competitiveness of their organisation through optimising internal
processes with digital and traditional channels to market and supply.

32
From this definition, it is apparent that digital business involves
looking at how electronic communications can be used to enhance all
aspects of an organisation’s supply chain management. It also involves
optimising an organisation’s value chain, a related concept that describes
the different value-adding activities that connect a company’s supply side
with its demand side. The digital business era also involves management
of a network of interrelated value chains or value networks.
Supply chain management (SCM)
The coordination of all supply activities of an organisation, from its
suppliers and partners to its customers.
Value chain
A model for analysis of how supply chain activities can add value to
products and services delivered to the customer.
Value networks
The links between an organisation and its strategic and non-strategic
partners that form its external value chain.
What is e-commerce management?
To set the scope of this text, in its title we reference both ‘digital business’
and ‘e-commerce’. Both these terms are applied in a variety of ways; to
some they mean the same, to others they are quite different. As explained
in Chapter 1, what is most important is that they are applied consistently
within organisations so that employees and external stakeholders are clear
about how the organisation can exploit digital communications. The
distinction made in this text is to use electronic commerce (e-commerce)
to refer to all types of electronic transactions between organisations and
stakeholders, whether they are financial transactions or exchanges of
information or other services. These e-commerce transactions are either
buy-side e-commerce or sell-side e-commerce and the management
issues involved with each aspect are considered separately in Part 2 of the
book. ‘Digital business’ is applied as a broader term encompassing e-
commerce but also including all digital interaction within an organisation.

33
Electronic commerce (e-commerce)
All electronically mediated information exchanges between an
organisation and its external stakeholders.
Buy-side e-commerce
Transactions between an organisation and its suppliers and other
partners.
Sell-side e-commerce
E-commerce transactions between an organisation and its customers.
Management of e-commerce involves prioritising buy-side and sell-
side activities and putting in place the plans and resources to deliver the
identified benefits. These plans need to focus on management of the many
risks to success, some of which you may have experienced when using e-
commerce sites, from technical problems such as transactions that fail,
sites that are difficult to use or are too slow, through to problems with
customer service or fulfilment, which also indicate failure of
management. Today, the social media or peer-to-peer interactions that
occur between customers on company websites, blogs, apps and social
networks have changed the dynamics of online commerce. Likewise, the
frenzied consumer adoption of mobile technology platforms via mobile
apps offers new platforms to interact with customers that must be
evaluated and prioritised. Deciding which of the many emerging
technologies and marketing approaches to prioritise and which to ignore is
a challenge for all organisations!
Social media
A category of media focusing on participation and peer-to-peer
communication between individuals, with sites providing the
capability to develop user-generated content (UGC) and to exchange
messages and comments between different users.
Mobile technology platforms
Devices and services used by consumers to interact with other
consumers and companies, including smartphones, tablets and
wearable technology.

34
Mobile apps
A software application that is designed for use on a mobile phone or
tablet, typically downloaded from an app store. iPhone apps are best
known, but all smartphones support the use of apps, which can
provide users with information, entertainment or location-based
services such as mapping.
How is this text structured?
The overall structure of the text, shown in Figure P.1, follows a logical
sequence: introducing the foundations of digital business concepts in Part
1; reviewing alternative strategic approaches and applications of digital
business in Part 2; and how strategy can be implemented in Part 3. Within
this overall structure, differences in how electronic communications are
used to support different business processes are considered separately.
This is achieved by distinguishing between how electronic
communications are used, from buy-side e-commerce aspects of supply
chain management in Chapters 6 and 7, to the marketing perspective of
sell-side e-commerce in Chapters 8 and 9. Figure P.1 shows the emphasis
of perspective for the particular chapters.
Part 1: Introduction (Chapters 1-4)
Part 1 introduces digital business and e-commerce. It seeks to clarify basic
terms and concepts by looking at different interpretations of terms and
applications through case studies.
• Chapter 1: Introduction to digital business. Describes the impact of
digital communications on traditional businesses and shows the
difference between a digital business and an e-commerce business.
• Chapter 2: Opportunity analysis for digital business and e-
commerce. Introduction to new business models and marketplace
structures enabled by digital communications.
• Chapter 3: Managing digital business infrastructure. Background
on the technology that needs to be managed to achieve digital
business.

35
• Chapter 4: Key issues in the digital environment. Describes the
macro-environment of an organisation, which presents opportunities
and constraints on strategy and implementation.
Part 2: Strategy and applications (Chapters
5-8)
In Part 2 of the text, approaches to developing digital business strategy
and applications are reviewed for the organisation as a whole (Chapter 5),
and with an emphasis on buy-side e-commerce (Chapters 6 and 7) and
sell-side e-commerce (Chapters 8 and 9).
• Chapter 5: Digital business strategy. Approaches to developing
digital business strategy. How to do strategic analysis and define
strategic objectives. The link with business strategy. How to
implement a digital business strategy.
• Chapter 6: Supply chain and demand. A supply-chain perspective
on strategy, with examples of how technology can be applied to
increase supply-chain and value-chain efficiency. How to manage
demand. Dealing with e-procurement.
• Chapter 7: Digital marketing. Understanding digital marketing.
Planning for digital marketing.
• Chapter 8: Customer relationship management. Reviewing
marketing techniques that apply ‘digital’ for acquiring and retaining
customers.
Part 3: Implementation (Chapters 9-10)
Management of digital business implementation is described in Part 3 of
the text, in which we examine practical management issues involved with
creating and maintaining digital business solutions.
• Chapter 9: Customer experience and service design. Analysis for
digital projects. Business processes. Designing a digital business.
Looking at customer experience.
• Chapter 10: Managing digital transformation and growth
hacking. An overview of the key elements of digital transformation.
Principles of growth hacking and measuring the performance of
digital.

36
Figure
P.1
Who should use this text?
Students
This text has been created as the main student text for undergraduate and
postgraduate students taking specialist courses or modules that cover

37
digital business, e-commerce information systems or digital marketing.
The book is relevant to students who are:
• undergraduates on business programmes that include modules on the
use of the Internet and e-commerce; this includes specialist degrees
such as digital business, e-commerce, digital marketing and
marketing, or general business degrees such as business studies,
business administration and business management;
• undergraduate project students who select this topic for final-year
projects or dissertations - this book is an excellent resource for these
students;
• undergraduates completing work placement involved with different
aspects of digital business, such as managing digital resources or
company digital communications;
• postgraduate students on specialist master’s degrees in e-commerce,
digital business or digital marketing and generic MBA, Certificate in
Management or Diploma in Management Studies that involve
modules or electives for e-commerce and digital marketing.
What does the text offer to lecturers teaching
these courses?
The text is intended to be a comprehensive guide to all aspects of
deploying digital business and e-commerce within an organisation. The
text builds on existing theories and concepts and questions the validity of
these models in the light of the differences between the ‘digital’ and other
media. It references the growing body of literature specific to digital
business, e-commerce and digital marketing. As such, it can be used
across several modules. Lecturers will find that the text has a good range
of case studies, activities and exercises to support their teaching. These
activities assist in using the text for student-centred learning as part of
directed study. Web links given in the text and at the end of each chapter
highlight key information sources for particular topics.
Practitioners
There is also much of relevance in this text for the industry professional,
including:

38
• senior managers and directors seeking to apply the right digital
business and e-commerce approaches to benefit their organisation;
• digital managers who are developing and implementing digital
business and e-commerce strategies;
• marketing managers responsible for defining a digital marketing
strategy and implementing and maintaining organisational digital
communications channels;
• supply chain, logistics and procurement managers wanting to see
examples of best practice in using e-commerce for supply chain
management;
• technical project managers who may understand the technical details
of building digital resources, but have a limited knowledge of
business or marketing fundamentals.
Student learning features
A range of features has been incorporated into this text to help the reader
get the most out of it. The features have been designed to assist
understanding, reinforce learning and help readers find information easily.
They are described in the order you will encounter them.
At the start of each chapter
• Chapter at a glance: a list of main topics, ‘focus on’ topics and case
studies.
• Learning outcomes: a list describing what readers can learn through
reading the chapter and completing the activities.
• Management issues: a summary of main issues or decisions faced by
managers related to the chapter topic area.
• Web support: additional material on the companion website.
• Links to other chapters: a summary of related topics in other chapters.
• Introductions: succinct summaries of the relevance of the topic to
marketing students and practitioners, together with content and

39
structure.
Within each chapter
• Activities: short activities in the main text that develop concepts and
understanding, often by relating to student experience or through
reference to websites. Model answers to activities are provided at the
end of the chapter where applicable.
• Case studies: real-world examples of issues facing companies that
implement digital business. Questions at the end of the case study
highlight the main learning points from that case study.
• Real-world digital business experiences: interviews with e-commerce
managers at a range of UK, European and US-based organisations
concerning the strategies they have adopted and their approaches to
strategy implementation.
• Digital trends updates (in Chapters 1 and 3): references to relevant
statistical sources to update information on the latest consumer and
business adoption of digital technology.
• Box features: these explore a concept in more detail or give an
example of a principle discussed in the text.
• ’Focus on’ sections: more detailed coverage of specific topics of
interest.
• Questions for debate : suggestions for discussion of significant issues
for managers involved with the transformation required for digital
business.
• Definitions: when significant terms are first introduced in the main
text, succinct definitions can be found in the margin for easy
reference.
• Web links: where appropriate, web addresses are given for further
information, particularly those that update information.
• Chapter summaries: intended as revision aids and to summarise the
main learning points from the chapter.
At the end of each chapter
• Self-assessment exercises: short questions that will test understanding
of terms and concepts described in the chapter.

40
• Discussion questions: questions requiring longer essay-style answers
discussing themes from the chapter, which can be used for essays or
as debate questions in seminars.
• Essay questions: conventional essay questions.
• Examination questions: typical short-answer questions found in
exams, which can also be used for revision.
• References: list of books, articles or papers referred to within the
chapter.
• Web links: these are significant sites that provide further information
on the concepts and topics of the chapter. All website references
within the chapter, for example company sites, are not repeated here.
The website address prefix ‘http://’ is omitted from www links for
clarity.
At the end of the book
• Glossary: a list of definitions of all key terms and phrases used within
the main text.
• Index: all key words and abbreviations referred to in the main text.
Learning techniques
The text is intended to support a range of learning styles. It can be used
for an active or student-centred learning approach whereby students
attempt the activities through reflecting on questions posed, answering
questions and then comparing their answer to a suggested answer at the
end of the chapter. Alternatively, students can proceed straight to
suggested answers in a more traditional learning approach, which still
encourages reflection about the topic.
Module guide

41
Table B presents one mapping of how the text could be used in different
weekly lectures and seminars through the core eleven weeks of a module
where the focus is on management issues of digital business and e-
commerce.
A full set of PowerPoint slides and accompanying notes to assist
lecturers in preparing lectures is available for download at
www.pearsoned.co.uk/chaffey.
Enhancements for the seventh edition
The effective chapter structure of previous editions has been retained, but
many other changes have been incorporated based on lecturer and student
feedback. We now refer to ‘digital business’ throughout, rather than the
dated term ‘e-business’ which we had included from the first edition in
2002. The rationale is that the term e-business is less used now in
industry; instead, companies increasingly reference management of digital
technologies, channel strategies, digital marketing and digital
transformation.
You will see from the listing of updates below that the most significant
additions to the content reflect the growth in importance of mobile
marketing and commerce and inbound marketing, including content
marketing and social media marketing.
Each chapter has been rationalised to focus on the key concepts and
processes recommended to evaluate capability and develop digital
business strategies. The main updates for the seventh edition on a chapter-
by-chapter basis are:
• Chapter 1. The chapter starts by introducing the major trends now
determining selection of digital services, which are a major theme in
the text, but the focus is increasingly around the nature of ‘digital’ as
opposed to simply technology or ‘e’ components. There are new cases
on businesses where digital is at the heart of the proposition,
particularly Uber and Amazon.

42
• Chapter 2. Increased emphasis on new business models for digital
start-up businesses, of particular interest to students. Mini case studies
on Boden and Macys have been added to give recent examples of how
businesses are evolving with changes in consumer behaviour because
of mobile.
• There is also a new case on the Dollar Shave Club.
• Updated review of online ecosystem to explain the increasing role
of omnichannel in the customer journey.
• A focus on tech start-ups introduced. A useful guide for students to
consider emerging business models driven by technology and
understand new terms, such as unicorn businesses.
• Chapter 3. Updates to cases and enhancements to the language to
reflects changes in the technology and changes to professionals’
views of the technology, with an emphasis on the understanding of the
capability of technology rather than knowing exactly how it works.
There are many new cases and a big update to reflect changes in
Google.
• Chapter 4. A lot of updates have been made in this new edition
because of changes in consumer attitudes and behaviour. This
includes discussions on showrooming, influencer marketing and
multiscreening. It also includes sections on M-shopping segmentation
and attitudes to behavioural ad targeting. Other updates include recent
political changes and how they link to micro-localisation vs
globalisation.
• This update also includes changes to data protection and privacy laws,
in relation to the 2018 EU General Data Protection Regulation
(GDPR). Other changes include information on the UK government’s
digital strategy and discussion around how companies are utilising
tech incubators and accelerators for innovation.
• Chapter 5. This chapter has been updated with new sections on
disruptive innovation and platform strategy. A new case study on how
Zappos has innovated a marketplace and the company’s unique
culture has been added. There are also two new mini case studies
from Onedox about peer-to-peer lending and Arriva Bus and their M-
ticket app.
• Chapter 6. This chapter has merged Chapters 6 and 7 from the last
edition and has been renamed ‘Supply chain and demand’. It covers
supply chain management (SCM) and e-procurement.

43
• Most of the updates include how technology is making the supply
chain and e-pro-curement more efficient and effective. A new case
study on Zara explains how the fashion retailer uses the supply
chain to gain competitive advantage. Mini case studies from Boots
and Honeywell have also been added.
• Chapter 7. This has now become the chapter on digital marketing. It
as has been updated with an interview from the co-founder and
marketing director of Country Attire, an independent online retailer.
There are also two new mini case studies, one about how Firebox
used crowdfunding to tap into a ready-made distribution network and
the other about Hotel Chocolat’s brand identity.
• Chapter 8. This chapter covers customer relationship management. It
includes discussions on changes to customer service expectations and
the growing use of new technologies such as Live Chat. A new case
study has been added, which explains how Warby Parker has
disrupted the eyewear market. There are also new mini cases from
Hubspot and First Choice.
• A discussion on eCRM versus social CRM has also been added.
• Chapter 9. This is a revised chapter, which was Chapter 11 in the last
edition. It has been renamed ‘Customer experience and service
design’ and has a focus on customer experience (CX). Updates
include an interview with the Head of Digital at Domino’s Pizza UK
and an introduction to the six pillars of customer experience, as well
as a CX management framework. A new B2B mini case study has
been added from Miele. The cyber security section has been updated
and massive security breaches at TalkTalk and Uber are discussed.
• Chapter 10. This is a completely new chapter, in line with changes in
the marketplace, which includes a section on digital transformation
and growth hacking. The section on digital transformation looks at the
way organisations as a whole now have to think of themselves when
they engage in change that is centered around a digital opportunity.
The section on growth hacking is a relatively new concept that is
particularly relevant to digital start-ups, but can be applied to existing
businesses too. Case studies and mini case studies from Spotify,
Hotmail, Instagram, Leon and others have been added.

44
Table A In-depth case studies in Digital Business and E-
Commerce Management, 7th edition
Chapter Case study
1 Introduction to
digital business and
e-commerce
1.1 The Uber business model
1.2
Amazon - the world’s largest digital
business?
2 Opportunity
analysis for digital
business and e-
commerce
2.1
How Boden grew from an eight-
product menswear catalogue to an
international brand with over £300
million in sales
2.2
Unilever demonstrates strategic
agility
2.3
M acy’s - using omnichannel growth
strategies to improve customer
experience
2.4
i-to-i - a global marketplace for a
start-up company
3 Managing digital
business
infrastructure
3.1 Innovation at Google (2017 update)
4 Key issues in the
digital environment
4.1
The implications of micro-
localisation vs globalisation based
on consumer attitudes
5 Digital business
strategy
5.1
Hrriva Bus redesigns its m-ticket
app and boosts revenue by over 17%
5.2
Setting the Internet revenue
contribution at Sandvik Steel
5.3 Zappos innovates in the digital

45
marketplace
5.4
Boo hoo - learning from the largest
European dot.com failure
6 Supply chain and
demand
6.1
Hast-fashion retailer Zara uses its
supply chain to achieve competitive
advantage
6.2
Shell Chemicals redefines its
customers’ supply chains
6.3
Argos uses e-supply chain
management to improve customer
convenience
6.4
RFID - keeping track starts its move
to a faster track
6.5
Honeywell improves efficiency
through SCM and e-procurement
7 Digital marketing 7.1
The evolution of easyJet’s online
revenue contribution
7.2
Dell gets closer to its customers
online
8 Customer
relationship
management
8.1
How Warby Parker disrupted the
eyewear industry
8.2
Tesco.com increases product range
and uses triggered communications
to support CRM
9 Customer
experience and
service design
9.1
Providing an effective online
experience for local markets
10 Managing digital
business
transformation and
growth hacking
10.1
Hransforming an entire industry and
supply chain: Spotify and Spotify
Connect

46
10.2 Learning from Amazon’s culture of
metrics
Table B Module guide

48
About the authors
Dave Chaffey BSc, PhD, FCIM, HIDM
Dave manages his own digital business, Smart Insights
(www.smartinsights.com), an online publisher and analytics company
providing advice and alerts on best practice and industry developments
for digital marketers and e-commerce managers. The advice is also
created to help readers of Dave’s books. The most relevant information is
highlighted at www.smart-insights.com/book-support.
Dave also works as an independent Internet marketing trainer and
consultant for Marketing Insights Limited. He has consulted on digital
marketing and e-commerce strategy for companies of a range of sizes
from larger organisations like 3M, Barclaycard, HSBC, Mercedes-Benz
and Nokia to smaller organisations like Arco, Confused.com, Euroffice,
Hornbill and i-to-i.
Dave’s passion is educating students and marketers about the latest
and best practices in digital marketing, so empowering businesses to
improve their online performance through getting the most value from
their web analytics and market insight. In other words, making the most
of online opportunities and avoiding waste.
He is proud to have been recognised by the Department of Trade and
Industry as one of the leading individuals who have provided input to,
and influence on, the development and growth of e-commerce and the
Internet in the UK over the past 10 years. Dave has also been recognised
by the Chartered Institute of Marketing as one of 50 marketing ‘gurus’
worldwide who have helped shape the future of marketing. He is also
proud to be an Honorary Fellow of the IDM.

49
Dave is a visiting lecturer on e-commerce courses at different
universities, including Birmingham, Cranfield, Derby, Manchester
Metropolitan and Warwick. He is a tutor on the IDM Diploma in Digital
Marketing, for which he is also senior examiner.
In total, Dave is author of five best-selling business books, including
Internet Marketing: Strategy, Implementation and Practice, eMarketing
eXcellence (with PR Smith) and Total Email Marketing. Many of these
books have been published in new editions since 2000 and translations
include Chinese, Dutch, German, Italian and Serbian.
When offline he enjoys fell-running, indie guitar music and travelling
with his family
Tanya Hemphill BA (Hons), MSc (Dist.), Chartered Marketer, MCIM,
MCIPR
Tanya runs her own digital marketing training and consultancy firm
WeDisrupt (www.wedisrupt.co.uk). She has worked with a wide range of
different-sized organisations to help them with digital marketing strategy
and digital transformation, including: the Chartered Institute of
Marketing, Harvey Nash, Ingredion, KPMG, the NHS, Alder Hey
Hospice, Monsanto and AkzoNobel.
Passionate about technology, Tanya is one of the UK’s leading experts
in growth hacking for tech start-ups and is often asked to be a keynote
speaker on the subject. She is an Associate Lecturer at Manchester
Metropolitan University and has developed and taught MBA units and
undergraduate courses such as Retail Life.
She has also worked closely with the Chartered Institute of Marketing
to speak at their conferences, run commercial training workshops and
has been a Level Verifier for a number of their professional
qualifications. Her personal blog can be found at www.digitaltanya.co.uk
and she often Tweets from @DigitallTanya.
Outside of work, Tanya enjoys travelling with her family, dancing
(Salsa and Ceroc) and watching action thrillers.
David Edmundson-Bird BA (Hons), MSc, FRSA
David is Principal Lecturer in Digital Marketing & Enterprise at
Manchester Metropolitan University and has worked there since 2004.
He has worked in a variety of organisations, including Leeds
Metropolitan (now Beckett) University, The University of Salford and
Sheffield Hallam University. He helped set up Manchester’s second web

50
design agency, Sozo, in 1995 and was Chief Learning Architect at
Academee from 1999 until 2002.
David set up Manchester Met’s first MSc in Digital Marketing in
2007 in collaboration with Econsultancy and their full-time MSc Digital
Marketing Communications in 2016. He teaches full time on
undergraduate, postgraduate and MBA programmes, specialising in
digital strategy, search engine marketing and content strategy. David has
also worked on many commercial programmes for clients including JD
Sport and McCann Erickson. He speaks widely about digital education
and about digital transformation in the marketing business at conferences
and in the media.
Outside of work, David spends time with his family as much as
possible, is an avid chef and enjoys discovering and using new
ingredients from all over the world. He is a huge fan of Scandi-noir
literature and can be seen tweeting a mixture of industry-relevant and
personal tweets as @groovegenerator

51
Acknowledgements
The authors would like to thank the team at Pearson Education in
Harlow, in particular Eileen Srebernik, Andrew Miller, Rhian McKay,
Angel Daphnee and Emily Anderson for their help in the creation of this
book. We would particularly like to thank the reviewers who undertook
detailed reviews for the second, third and fourth editions - these reviews
have been important in shaping the book: Magdy Abdel-Kader,
University of Essex; Poul Andersen, Aarhus Business School, Denmark;
Michelle Bergadaa, University of Geneva, Switzerland; Bruce Bowhill,
University of Portsmouth; Yaw Busia, University of Middlesex; Hatem
El-Gohary, Bradford University; Janet French, Barking College; Andy
Gravell, University of Southampton; Ulf Hoglind, Örebro University,
Sweden; Judith Jeffcoate, University of Buckingham; Britt-Marie
Johansson, University of Jönköping, Sweden; Matthias Klaes, Keele
University; Mette P. Knudsen, University of Southern Denmark; Tuula
Mittila, University of Tampere, Finland; Barry Quinn, University of
Ulster; Gerry Rogers, EdExcel Qualifications Leader; Chandres Tejura,
University of North London; Ian Watson, University of Northumbria;
Steve Wood, Liverpool John Moores University.
Thanks also to these reviewers who were involved at earlier stages
with this book: Fintan clear, Brunel University; Neil Doherty,
Loughborough University; Jean-Noel Ezingeard, Henley Management
College; Dr Felicia Fai, University of Bath; Lisa Harris, Brunel
University; Sue Hartland, Gloucestershire Business School at
Cheltenham and Gloucester College of Higher Education; Mike Healy,
University of Westminster; Eric Van Heck, Rotterdam School of
Management, The Netherlands; Dipak Khakhar, Lund University,
Sweden; Robert Proops, University of Westminster; Professor Michael

52
Quayle, University of Glamorgan; Richard Riley, University of Central
England; Gurmak Singh, University of Wolverhampton; John Twomey,
Brunel University; Gerry Urwin, Coventry University.

53
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acknowledgements
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