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Knowing how to respond to organizational conflict as a manager is an overlooked and underdeveloped skill. Given the pervasiveness of conflict in workplaces, though, it’s hardly optional.

The phases of organizational conflict offer an important perspective. For instance, if you’re able to notice the signs of an escalating, negative conflict, you can step in before things get out of hand. You can then intervene with a more positive approach.

In 1967, professor and author Louis R. Pondy outlined the different phases of organizational conflict. His article in Administrative Science Quarterly remains a standard for identifying conflict stages in the workplace.

Pondy’s Model of Organizational Conflict

There are five phases of organizational conflict that Pondy identified for any given episode.

1. Latent Stage

The latent stage is characterized by the potential for conflict. When Pondy identified this stage, he observed three basic types of latent conflict in the current literature.

1. Competition for Scarce Resources: Participants’ demand for resources exceeds available resources.
2. Drives for Autonomy: A party’s desires control over an activity that another party believes is his or her own domain.
3. Divergence of Subunit Goals: Two parties who must work together on a joint activity can’t reach a consensus on what they should do.

Something was missing: role conflict. Pondy defined that concept by someone receiving incompatible role demands or expectations from others. “This model has the drawback that it treats the focal person as merely a passive receiver than as an active participant in the relationship,” he added. Role conflict can be a factor in all three types of latent conflict.

None of the participants or outside parties may recognize latent conflict conditions. It’s also possible for the latent conflict to last for a long time and never get to the next stage, especially in environments where conflict is actively avoided.

2. Perceived Stage

In the perceived stage, one or more parties become aware of actual conflict. Note that there may be no conditions of latent conflict present in the perceived stage. In that case, conflict may be resolved by simply improving communications between affected parties. A caveat is that if parties’ positions are in opposition, open communication can make the conflict worse.

Similar to latent conflict, the perceived stage of conflict can exist for quite some time. If parties don’t feel the need to bring up minor differences, they might just adapt, for better or worse.
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3. Felt Stage

The felt stage of conflict concentrates on emotions coming into play for affected parties. In other words, two people are aware that they’re having a conflict in the workplace. It contributes to feelings of tension, stress, and anxiety.

Pondy called those feelings the “personalization of conflict.” Often, the result is a dysfunctional form of conflict that worries researchers and practitioners. Why does that occur? One explanation is that inconsistent demands of organizational and individual growth cause anxieties. A second explanation is that the whole personality of the affected individual becomes involved.

4. Manifest

In the manifest stage, conflict is out in the open. One way to define conflict in this stage is to say it is behavior that frustrates the goals of another participant. In other words, one person consciously blocks another person’s goal achievement.

What the conflict looks like can vary quite a bit. Pondy mentioned that the most obvious form of open aggression, such as physical and verbal violence, is forbidden by organizational norms. More common are covert attempts to sabotage or impede the other person’s plans. For instance, lower-level participants may engage in apathy and rigid adherence to the rules to resist mistreatment from those higher up in the organization.

Most conflict resolution efforts are concentrated on behavior that moves to the manifest stage. The behavior can move straight from the perceived stage to the manifest stage or from the felt stage to the manifest stage.

5. Aftermath

The aftermath of a conflict episode refers to its outcome, which can be positive or negative.

On the positive side, a genuine resolution can lead to satisfied parties who are better able to work with each other. It’s also possible for the aftermath of an episode to cause participants to focus on latent conflicts that they haven’t perceived and dealt with previously.

On the negative side, conflict may be suppressed and not resolved. That can cause latent conditions of conflict to build and explode in more serious forms. Either the matter is rectified or the relationship dissolves.

Responding to the Different Phases of Organizational Conflict

As a manager, you play an important role in dealing with conflict. Your words and actions will set the tone for how employees interact with conflict and the signs leading up to it.

Some managers don’t address it at all. Instead, they model avoidance behavior that a lot of people, inside or outside of an organizational context, naturally have. The result is that conflict becomes something to suppress and ignore, which only adds to the tension. Ignoring conflict isn’t realistic, though. Organizations deal with conflict on a regular basis; you can’t hide from it.

One of your goals should be to address conflict head-on and model how it can be positive. People should embrace alternative opinions and challenging points of view because those approaches can help workers gain a better understanding of topics and explore new solutions. There’s a big difference between seeing conflict as something negative and seeing conflict as an opportunity to grow. As long as conflict and the signs of conflict are framed appropriately, conflict can be productive.

Train your employees to have a healthier view of conflict. The result can lead to professional growth and better team relations. You can also teach them the skills they need when conflict becomes negative. That way they’ll have the skills to properly handle confrontation at work .

You may not feel confident in your ability to develop a better view of conflict for you and your team. It’s unfortunate that managers don’t often receive the training they need for this topic. If that describes, you, however, the right education can help you manage conflict and become a better communicator. Earn an online MBA that emphasizes strategic leadership, business ethics, and other areas that directly impact how you lead others. You’ll also receive instruction in areas like economics, finance and accounting, marketing, and more.

Earn one of the most sought-after degrees in a fully online format from Concordia University, St. Paul. There’s no GMAT or GRE score required, and you can transfer up to 50% of your graduate credits to CSP. Pursue your career goals and learn from professors who have real-world experience.

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Conflict in the workplace is an all-too-familiar, even universal, phenomenon in business. A survey of 5,000 employees revealed that 85% of them deal with conflict in their working lives. Twenty-nine percent said they deal with it “always” or “frequently,” according to a study commissioned by CPP, Inc., a provider of assessments and training tools.

Still, workplace conflict and its resolution doesn’t get the attention it deserves. The authors of the study were surprised that formal or informal training for managing conflict wasn’t more pervasive. They found that less than half of employees questioned (44%) had received some type of training to deal with conflict in the workplace. That finding may seem misleading. You might think, isn’t dealing with conflict on managers? Not based on the study. When asked whose ultimate responsibility it is to ensure conflict in the workplace is managed more effectively, 62% of employees responded with “everyone.” Managers came in second place at 27%.

Nevertheless, the responsibility of dealing with conflict often falls on managers, whether or not it’s reasonable or fair. And they may be just as unprepared as employees. “Rather than hire third party specialists, managers are expected to handle conflicts as they make decisions and resolve differences among employees,” according to Dean Tjosvold and Fang Su in “The Blackwell Handbook of Mediation.” “However, most managers have little formal training in conflict and are unprepared to meet the demands of mediation.”

Follow along for a look at conflict in the workplace and how you can best respond to it.

The Surprising Cost of Workplace Conflict

Conflict in the workplace may seem like a nuisance, but its consequences can undermine company culture and impact a company’s bottom line directly.

In the CPP, Inc. study, researchers estimated the cost of workplace conflict for U.S. companies is $359 billion annually. That figure is based on employees spending 2.8 hours per week dealing with conflict, at average hourly earnings of $17.95 (or annual salary of approximately $37,300).

But that’s not the only cost of workplace conflict. The $359 billion estimate for lost employee time is just one element of what happens when conflict impacts an organization. Take a look at the other negative outcomes respondents said they have witnessed.

• Personal insults/attacks: 27%
• Sickness/absence: 25%
• Cross-departmental conflict: 18%
• Bullying: 18%
• People left the organization: 18%
• People were fired: 16%
• Employees were moved to different departments: 13%
• Project failure: 9%

Providing a dollar figure for some of those consequences is difficult. For instance, cost estimates for job turnover start high when replacing entry-level employees and get higher depending on who is being replaced. According to corporate economist Bill Conerly in Forbes, replacing an entry-level employee costs about 50% of that position’s salary. Replacing a mid-level employee costs 125% of that position’s salary, and it requires more than 200% of a senior executive’s salary to replace that position. Conerly noted that high estimates are due to human resources costs being “the tip of the iceberg,” as other considerations need to include interviewing, what it takes for other employees to cover the role, and on-the-job training.

And turnover is only a secondary segment of the overall cost of workplace conflict. It gets even more complicated when conflict interferes with the completion or quality of work projects. Further problems occur when personal insults and attacks impact work culture. When those types of things occur, employee motivation takes a hit. That type of situation can make high turnover look like the lesser of two evils.

What’s the ultimate cost of workplace conflict? No one has put a full dollar amount on it. You can gauge what it might be like by considering lost employee time and topics like turnover and absenteeism. More difficult to estimate and come to terms with may be what conflict can do to morale and work culture.

Types of Conflict in the Workplace

There are three types of conflict in the workplace, according to Negotiation Journal.

• Process conflict relates to delegation and logistics. Arguments may arise out of a wide range of methods, procedures, and strategies. Process conflict can have a negative effect on people’s emotions, and it has been linked to an increased likelihood of experiencing conflict in future interactions.
• Task conflict relates to disagreements about tasks being performed. Arguments stem from work-related problems and the best ways to solve them. Task conflicts have been linked to decreased satisfaction and intent to stay with the employer. Like process conflicts, task conflicts are associated with decreased well-being, but not to the extent of relationship conflict.
• Relationship conflict relates to personal issues not related to work. Arguments may develop out of clashes of personality, political views, hobbies, or social events. Relationship conflicts have the greatest detriment to self-esteem than any other type of conflict in the workplace. Here, one’s identity and self-esteem are threatened, which can lead to a more emotional reaction. Morale is affected and can result in decreased satisfaction with the job, group, and organization.

One thing to keep in mind about the types of conflict in the workplace is that perceptions can create misconceptions. For instance, an ongoing task-related disagreement could be perceived as a personal attack (relationship conflict). It could happen quite often, actually. Applied Psychology mentioned how numerous studies have found moderate to high correlations between those two types of conflict in the workplace.

However, misattribution of task conflict is less likely to happen when teams report high levels of intrateam trust or tolerate open expressions of different views. Furthermore, group attitudes and beliefs about conflict can affect how conflict is perceived and reacted upon in teams. Those types of ideas lead into the importance of approaching conflict in a healthier, positive way.

Reframing Conflict in the Workplace

There’s no denying that conflict costs organizations. Conflict undermines employee’s time and morale. Conflict can lead to misunderstandings that make clashes seem like something personal. Both of those things are deeply negative.

That’s not the end of the story, though. In the right environment, conflict can actually become an asset. Your role as a manger can be instrumental in taking something that’s typically negative and turning it into a positive.

Productive Conflict

Organizations are traditionally built on two assumptions: conflict is harmful, and it can be avoided. Both notions are false, according to Dean Tjosvold and Fang Su.

“Conflict pervades organization life,” they wrote about the latter assumption in “The Blackwell Handbook of Mediation.” “Each person within a department is unique, and they all see the world from their own perspective. They inevitably develop different opinions and reactions. Even less realistic is the expectation that different groups, often separated by distance and diverse training, will be able to work harmoniously.”

Researchers also have debunked the other notion that conflict always being harmful. Take a few older examples in the area of task-related conflict. In the Academy of Management Journal, one study from 1996 demonstrated how arguments over task-related issues can be beneficial to strategic decision-making. Another study was published in the same journal in 1989, and it showed the benefits of argumentative approaches (such as devil’s advocacy) to group strategic decision-making over consensus approaches. Finally, a 1995 study from Administrative Science Quarterly found advantages of task-related conflicts for non-routine tasks.

Not all conflict is equal. Those studies show that keeping conflicts in the domain of task-related conflict can reap advantages. As noted in Applied Psychology, that’s why conflict researchers constantly offer a simple piece of advice: “Avoid relationship conflict and enhance task conflict.”

Controversy challenges ideas and helps people process new and opposing information. When other opinions are expressed, employees can ask questions, explore alternative views, and better understand a given situation or topic. Without controversy, employees may not have a chance to fully explore opposing ideas and challenging questions that other people, who are often operating from a different perspective, can pose.

Conflict can help people explore the complexity of a problem and then create a proper solution. This social problem-solving is rooted in productive conflict that organizations and managers should strive to implement.

Moving Toward a Healthier View of Conflict

It’s clear that from even a quick look at the research around conflict, organizations need to view the topic differently. As a manager, you can help build support for your organization to train employees as well as other leaders in how to deal with conflict appropriately. Formal training can help people see conflict as an asset and to learn constructive ways of interacting with it.

Employees in the CPP, Inc. study demonstrated the value of training. Take a look at the differences between the 44% who received formal training in conflict and the rest of employees.

• Fifty-six percent of employees who received conflict training have seen conflict lead to a better understanding of other people, compared with 41% of employees who received no training.
• Forty-two percent of employees who received conflict training said it led to a better solution to some problem or challenge, compared with 29% of employees who received no training.
• Nineteen percent of employees who received conflict training said disputes resulted in a major innovation, compared with 9% of employees who received no training.

Furthermore, 31% of employees who received conflict training said that conflict “gets to them” less, and almost as many said that they’re now more proactive in dealing with conflict than in the past. Perhaps most noteworthy is that 85% of employees who received conflict approach disagreements differently now compared to how they used to.

Given the value of training, consider taking the opportunity to provide conflict training to your team. Ideally, changing the way conflict is viewed starts as an organization, but you can start implementing those changes in your immediate domain. As you engage your team in providing and receiving constructive ideas, challenging the status quo, and maintaining the positive side of conflict, you can share what you’ve learned with other managers and teams. Maybe you can develop the conflict training that your organization eventually adopts.
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Responding to Conflict as a Manager

What should you do when you actually face conflict? The next subsection offers some practical advice and questions to consider, which can help you figure out if any intervention is needed at all. If you need to step in, the ensuing subsection examines how you can resolve conflict.

Some Practical Considerations

The previous discussion about positive conflict should play a chief role in how you respond to conflict in the workplace. After all, if the goal is to adhere to a perspective that conflict can be productive and an asset to your team, then that should change everyone’s perspective.

Try to incorporate that mindset before negative conflict sets in. Of course, it’s a lot easier to demonstrate the value of conflict when things are going well. But if team members are currently embroiled in tough difficulties and challenges, conflict as positive might be a tougher sell. That’s especially true in a case like someone perceiving task-related conflict as a personal statement or attack.

If those fundamentals are there, then you have a set of healthy expectations that can guide behavior. As a result, a little bit of conflict could be healthy, and even if it’s not, hopefully employees can work it out. You won’t need to get involved unless it escalates outside the boundaries of those expectations for conflict.

Remember that in a work environment where conflict is seen as an asset, there’s no need for you to step in right away. Small amounts of negative conflict can give employees an opportunity to deal with it themselves. If you attempt to reconcile employees’ conflict quickly through a strategy like mediation, your actions can be harmful. Quick intervention can violate their sense of due process and their perceptions of fairness, according to M. Susan Taylor and Ashley Fielbig in “Handbook of Principles of Organizational Behavior.” Intervening too quickly can also undermine the effectiveness and longevity of any agreements reached.

If the conflict builds, then you can explore intervention methods. Generally speaking, interventions have the highest rates of success when there are medium levels of conflict. React too soon and you don’t give people the opportunity to work it out on their own. React too late and emotions may be too high for people to think rationally; they may not be willing to concede anything.

Understanding when to step in and when to let employees deal with conflict is key. It may not be easy, but it’s crucial in order to know when to leave things alone, when to have preliminary conversations about the matter, and when to start resolving the conflict actively. Try to see issues through your employees’ perspectives for help. Keep an eye on how people are feeling about certain issues to identify potential flare ups.

How to Resolve Conflicts

There are times when conflict is productive or low levels of negative conflict can be worked out by employees. As a result, a big part of managing conflict is simply knowing when to step in. If conflict needs to be resolved, you’ll need to get involved actively.

What should you do? This section provides a brief overview to two important strategies at your disposal: negotiation and mediation. According to M. Susan Taylor and Ashley Fielbig “negotiation and mediation processes, when used appropriately, enhance managers’ effectiveness in resolving many of the conflicts that confront them at work,” they said in “Handbook of Principles of Organizational Behavior.”

Negotiation

Negotiation is particularly helpful when you’re an active party in conflict. This tool can help reconcile your interests with others in the workplace, such as your employees, their managers, or people outside that chain of command (e.g., human resources professionals in the organization).

It’s important to recognize that negotiation isn’t just a strategy for resolving conflict. It’s rooted in the core of what you do. Managers negotiate to win contracts, come up with successful ideas for projects, and in their everyday interactions with others. As a result, it’s only natural for negotiation to play a role in how you resolve conflict.

Negotiation works best it’s a collaborative win/win situation, instead of the win/lose outcome of distributive negotiation. Collaborative negotiation is especially useful in a few types of situations. The first is when long-term relationships exist or are at least envisioned. The second is when parties share important values or principles that can shape goals in the negotiation. Finally, collaborative negotiation is effective when there are different issues at stake as there’s a higher likelihood of creating a situation of joint gain.

Taylor and Fielbig offered five important principles for collaborative collaboration.

1. Parties should engage in a candid and open exchange of information about each other’s interests.
2. Each party should aim to satisfy the other’s interest to some degree. Ultimately, the focal party’s interests (the manager, or leader of the two managers involved) should be satisfied to the greatest extent.
3. Creativity should be used in identifying the options that might satisfy the other party’s interests.
4. Instead of various opinions, parties should rely on external standards and facts to resolve disputes.
5. Parties should work on what’s called a “BATNA” — best alternative to a negotiated agreement — which helps people not feel forced to accept an undesirable offer to end the negotiation. The idea behind it is to have a strong alternative you can move to if your partner doesn’t meet your interests or goals. If no agreement is reached, you can have some options that will keep both of you moving forward on the issue.

Several aspects of negotiation can be integrated into the process. For instance, making small concessions at the beginning of bargaining can be helpful. Likewise, trying to build a positive working relationship through mutually beneficial situations or problem-solving workshops can help matters. Make sure you set your priorities so you know what you must have and what could serve as a tradeoff.

Mediation

In addition to times when you’re directly involved as a participant in conflict, there are circumstances when you’re a third party. Most often, it’s a case when two employees from your team or group have a dispute.

There are several ways that you can respond. In 1984, Blair Sheppard put forth four options for third-party conflict intervention in Organizational Behavior. His seminal work on the research and theory behind conflict resolution techniques is still used by researchers to identify the various approaches third parties have. Here’s an overview of those approaches.

• Inquisitorial Intervention (high process control/high outcome control): Managers actively control not only the discussion, but the outcome by enforcing a solution. Sheppard found it to be the most common intervention method used by managers.
• Adversarial Intervention/Judge (low process control/high outcome control): This mode is marked by managers deciding how the conflict will be resolved and, if needed, enforcing the solution. However, compared to the previous intervention type, the difference here is the manager allows both parties to present information. The manger will then decide. This style was the second most frequently used by managers.
• Avoiders, Delegators, Impetus Providers/Motivating (low process control/low outcome control): Managers may ignore the conflict, delegate it to other leaders (human resources or lower-level managers), or motivate parties to resolve it themselves, often through questions about the dispute or by threatening punishment if not resolutions is made. This style was the third most common type of third-party intervention.
• Mediation (high process control/low outcome control): Managers control how parties reveal information about their conflict, but no attempt is made to control how the conflict is resolved. Sheppard found that this style was virtually unused by the managers studied.

Research on the modes of third-party intervention methods has favored mediation. It tends to produce better outcomes than other methods that rely on questioning parties, opposing their perspectives, and resolving things unilaterally if the parties can’t figure things out. People who experienced the mediator mode of intervention perceived the conflict outcome, resolution process, and the mediator to be fairer than the other three methods (or any combination of the three methods).

Perception of fairness is important. As Negotiation Journal noted, researchers have even overlooked that aspect of conflict management. Those authors conducted a study that verified how employee perceptions of leaders as a third party in conflict can amplify or buffer the employee’s stress experience. Leaders who avoided conflict or were too forceful amplified employee’s stress. Leaders who focused on problem-solving behavior buffered employee’s stress.

Integrating the right mindset can help you become more effective as you intervene as a mediator. As for the actual mediation interventions, there are three primary types available to you as a manager. You may use all of them in a single mediation or just one or two.

• Diagnostic Intervention: This occurs early in the process and refers to you becoming familiar with the situation, bonding with them, and establishing ground rules so that things won’t escalate until you have a better understanding. Then, you attempt to diagnose the conflict and what tactics can lead to an agreement. Your actions in this mode are helpful for increasing trust and perceptions of fairness and effectively identifying the underlying causes of conflict.
• Contextual Intervention: Refers to your attempts to impact how the two parties interact to discuss, negotiate, and resolve their conflict. Note that it doesn’t address content of the conflict resolution, but issues like climate, structure, and conflict within each party’s team. The aim for contextual interventions is to encourage parties to keep trying to resolve their conflict and to help them engage in problem solving that will allow them to develop their own solution. Intervention may get at poor communication, diffusing anger, and focusing on the problem.
• Substantive Intervention: Refers to how you as a mediator deal directly with issues for the conflicting parties. Behaviors can include exploring potential compromises, suggesting possible agreements, and assisting in looking at the pros and cons of proposals.

Becoming a More Effective Communicator and Leader

Learning how to manage and resolve conflict is a broad and important topic. Unfortunately, it’s also something that a lot of managers lack training on.

You can’t escape conflict, and if you look at what it takes to become a successful manager more broadly, conflict management is connected to other areas of your role. If you become better at dealing with conflict, you’re likewise improving as a communicator and resource for your employees. All of it is connected.

How do you take a step forward? The right education can help. You can earn an online MBA that emphasizes strategic leadership, business ethics, and other areas that directly impacts how you communicate and lead others. You’ll also receive instruction in areas like economics, finance and accounting, marketing, and more.

Earn one of the most sought-after degrees in a fully online format from Concordia University, St. Paul. There’s no GMAT or GRE score required, and you can transfer up to 50% of your graduate credits to CSP. Pursue your career goals and learn from professors who have real-world experience.

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Being able to purchase items online used to be quite new. Now, it’s a given. In under one minute, you can open an app or web browser and get something delivered the next day. Or you can reserve your order and pick it up the same day. The phenomenon of electronic commerce, or e-commerce, appeals to consumers and businesses alike and, as the statistics demonstrate, it has taken off dramatically.

According to the U.S. Census Bureau, e-commerce sales in 2018 accounted for 9.7% of total sales. That’s more than six times the figure 15 years prior, when, in 2003, e-commerce sales represented just 1.6% of total sales.

E-commerce doesn’t appear to be slowing down. In 2017, market research company Forrester predicted that e-commerce would comprise 17% of retail sales in the United States by 2022. The same report predicted 13% year-over-year growth for online sales. A separate forecast from the National Retail Federation estimated the annual online retail growth at 10-12%.

Those figures are impressive and help put e-commerce into perspective, but there’s a lot more that you need to know. This guide can help you learn about the benefits of online storefronts, opportunities to market to prospective customers online, and grow your general business knowledge. The upcoming sections explore themes like the benefits of e-commerce, specific trends in e-commerce, and the future of e-commerce.

Follow along to develop a basic understanding of e-commerce.

What is E-commerce?

Don’t feel ashamed if you’re not 100% sure what e-commerce is. Although it’s a pretty simple concept, you can easily find multiple definitions that have slight variations. More on that later.

The easiest way to define e-commerce is electronic transactions that take place online. If buying or selling is involved of products or services online, then it qualifies as e-commerce. As a result, all of the following examples are considered e-commerce:

• Purchasing and downloading digital music files online.
• Buying a physical book online and having it delivered to your home.
• Reserving products at a home improvement store’s website and then picking them up in-person.

Each of those scenarios uses an online platform in some part of the transaction’s life cycle. It could be completely online, in the case of a digital music purchase, or simply using the internet to find what you need at a local store. Note that all of the previous examples are business-to-consumer e-commerce. As you’ll discover in the section on the types of e-commerce, online transactions can be involved in other areas, like when businesses sell products and services to other businesses.

If you’re wondering how some sources vary in their definitions for e-commerce, that typically revolves around how much of the transaction needs to take place online. Some say that if terms of the sale don’t take place online (e.g., you see a product online and purchase it in-person locally), or that if payment doesn’t take place online, then it’s not e-commerce.

You don’t need to worry about those intricacies, but if you’re interested in seeing a comprehensive definition, here’s how the U.S. Census Bureau approached the term:

E-commerce sales are sales of goods and services where the buyer places an order, or the price and terms of the sale are negotiated over an Internet, mobile device (M-commerce), extranet, Electronic Data Interchange (EDI) network, electronic mail, or other comparable online system. Payment may or may not be made online.

Evolution of E-commerce

E-commerce may command a large share of the current retail market, but that’s a relatively recent development. Brick and mortar businesses dominated until companies like Amazon and eBay utilized online technologies to reach customers. Now, “click and mortar” businesses regularly blend physical stores and online platforms to sell products and services.

How did the present generation of internet-savvy businesses get to where it is today? Here are some of the major events and trends in the of e-commerce.

Precursors to E-commerce

Several technological advancements led to modern-day e-commerce.

You can go as far back to the 1960s, which marked electronic transactions on primitive computer networks. Instead of computers processing purchase orders and invoices on paper, they could communicate information electronically through a concept known as the Electronic Data Interchange (EDI). Meanwhile, the military created ARPAnet, allowing the transfer of important information if a nuclear attack occurred. It’s hard to imagine, but the EDI and ARPAnet actually served as the foundation to e-commerce as we know it.

The next set of events took place in the 1980s. In the early part of the decade, research computers at universities could send emails and share documents. In 1984, CompuServe added a service allowing home computer users to browse the Electronic Mall, which featured products from more than 100 online retailers. Product demos and full-color photos were also available to consumers, which was innovative for the time. The Electronic Mall wasn’t a big success, but it was one of the earliest examples of online retail.

Until 1991, there was a ban prohibiting commercial businesses from operating over the internet. When the National Science Foundation lifted its ban at that time, e-commerce became possible. The only thing left to address was security, and that was ironed out in 1994. Secure Socket Layer (SSL) was integrated onto the internet browser Netscape 1.0, enabling secure financial transactions to take place online.

It didn’t take long for them to start. On August 11, 1994, a consumer purchased a Sting album online. The consumer reportedly used a secret code to send his credit card number to a team of young cyberspace entrepreneurs who developed a secure online marketplace. This transaction made headlines and paved the way for modern-day e-commerce.

Amazon and eBay Enter the Conversation

There’s no question that Amazon and eBay did more for the evolution of e-commerce than any other companies. They began in the mid-1990s, and within just a decade, both businesses had amassed tens of millions of users.

Amazon began by selling books to shoppers. With virtually no competition, Jeff Bezos, Amazon’s founder and CEO, was able to expand from books into product categories like music, clothing, and now, virtually anything you can think of. In 2005, 10 years after Amazon sold its first book, the company earned $359 million in revenue, according to International Business Times. In the first quarter of 2019 alone, Amazon reported $59.7 billion in revenue.

eBay started the same year Bezos launched Amazon. eBay began as AuctionWeb and offered users the ability to bid on other people’s used items. The auction platform appealed to a wide range of consumers who could now find deals on a wide range of products. By 2007, eBay amassed more than 220 million users and earned $52.5 billion.

The Modern E-commerce Landscape

There’s an obvious overlap to what Amazon and eBay did, and then looking at what e-commerce is today. Thanks to the two e-commerce giants, online transactions are now a regular part of how companies do business.

It’s so foundational that it’s now unusual for a retailer to be 100% brick and mortar. Today, consumers expect companies to offer their products online in some capacity. From having an online catalog to, for larger retailers, the ability to reserve products online for in-store pickup, the click and mortar approach to business is now standard. That trend refers to how businesses have online and offline operations, to accommodate customers on either end of the spectrum. That way, people can enjoy the convenience of either option. Consumers can shop from the comfort of their own home late at night or head to a store to see different products options in person.

There’s a lot more on what the modern e-commerce landscape looks like, and the rest of the guide investigates that further. Take a look at the upcoming sections to get filled in on what the evolution of e-commerce has led to. The next topic, on the types of e-commerce, exemplifies how widespread online transactions have become in all kinds of business models.

Types of E-commerce

The revolutionary e-commerce business models of Amazon and eBay affected more than online retail. It led to companies across any business model spectrum recognizing how e-commerce could enhance business.

The result is that there are now several types of e-commerce. Here’s a quick look at each one.

Business-to-Consumer (B2C) E-commerce

B2C e-commerce is probably what comes to mind when you first hear the term “e-commerce.” It basically refers to products or services marketed from a business to individual people.

Many popular examples illustrate B2C e-commerce. For instance, if you head to Amazon or Walmart’s website to purchase something, that’s B2C e-commerce in action. The same is true for most things that you purchase online for personal use. If it’s sold by a company, then it fits in with this type of e-commerce.

B2C e-commerce is what started it all. From the Electronic Mall to the first official online purchase in the form of a Sting album, those early examples are rooted in B2C e-commerce.

Business-to-Business (B2B) E-commerce

Not all businesses market to individual consumers. Some sell products and services to other companies. When that takes place online, you have B2B e-commerce.

One example of B2B e-commerce is web development. Every company practically needs a website, due in part to, ironically, concepts like e-commerce. If a company wants to have a virtual storefront, they’ll need to build a website. That business might look around for a web development company that has experience in e-commerce, and if they find one online that they hire, that’s B2B e-commerce in action. The web development company provided a product for another business.

The same basic idea occurs in other industries. Your typical local business may purchase office equipment online from a retailer like Xerox. If that local business needs vehicles to perform core functions, they might order parts, such as tires, online from a company like Goodyear. Xerox and Goodyear in those examples are taking part in B2B e-commerce. Of course, those two companies are also involved in B2C e-commerce.

Consumer-to-Business (C2B) E-commerce

Sometimes, the traditional roles are reversed. You might be used to businesses selling products and services to consumers online (B2C e-commerce), but sometimes individual customers can sell products and services to businesses.

One example is with paid reviews. If a consumer owns his or her own blog, that person may approach a relevant business with an opportunity to place a product or service on the blog. The business pays the individual for the blog post, video, or podcast, and benefits from the marketing opportunity. Because all of that happens online, it qualifies as C2B e-commerce.

Another good example of C2B e-commerce reflects a popular trend for individuals to earn or supplement their living. Platforms have emerged that allow freelancers to market their skills to clients. On those websites, freelance photographers, writers, developers, and more will secure assignments from businesses. It’s C2B e-commerce because individuals are selling products and services to businesses online.

Consumer-to-Consumer (C2C) E-commerce

If consumers can sell products and services to businesses online in C2B e-commerce, it’s only a small step to consumers selling to other consumers.

An easy way to illustrate C2C e-commerce is through the freelance platforms in the previous type of e-commerce. Instead of freelancers selling their products and services to businesses, freelancers in C2C e-commerce engage in work with other consumers. Think of a consumer who wants a professionally designed graduation party announcement done or a family website built. Neither party is an established business.

Other examples are even more straightforward. Imagine a married couple who wants pictures taken from someone they find online who has a passion for photography. Since the provider doesn’t have an actual photography business, that type of relationship and transaction would constitute C2C e-commerce. Another common scenario is when people sell items online, at websites like eBay and Craigslist, to other people. Transactions take place online and no party is an established business. Thus, it’s C2C e-commerce in action.

Government E-commerce

It’s also possible for businesses or consumers to engage in e-commerce transactions.

One example is found in consumer-to-government (C2G) e-commerce, when individuals pay the government online for taxes or university tuition. Another type of government e-commerce is when businesses perform services for governmental organizations. The strategic information technology company Synergetics has a client list that includes the National Institutes of Health, the Department of Veterans Affairs, the Department of Defense, and the Department of Agriculture. That model of business is referred to as business-to-government (B2G) e-commerce.

Other opportunities may be possible in the future, too. “The 2018 National Defense Authorization Act called for the creation of an Amazon.com-like portal for federal buyers, which put the General Services Administration on a tight schedule to develop and test such a platform,” according to Federal Computer Week. “GSA plans an initial pilot of the system in late 2019 with a limited number of agency participants.”

Why E-commerce?

Compare to traditional retail, e-commerce has benefits that can take a business to the next level. A lot of people simply assume that businesses should integrate e-commerce capabilities into their business plan, but it’s important to understand why that’s often the case.

The most obvious benefit to e-commerce is so basic that you may think it doesn’t need to be addressed: consumers can shop online. The ability for people to purchase products and services online instead of in person is, to put it plainly, huge. All of a sudden, geography doesn’t matter as much. An e-commerce website means that a business doesn’t have to have a prime location in the city or even a traditional store at all.

Customers shopping online instead of in person leads to other benefits for businesses. Instead of marketing to an audience locally through more traditional advertising methods, online marketing is the focus in e-commerce. Concepts like search engine optimization (SEO), pay-per-click advertisements, and social media help level the playing field a bit. Costs are typically lower in online marketing than the traditional marketing methods required to succeed in traditional retail. It’s also cheaper to run an e-commerce store once you consider personnel costs versus what it takes to run an automated website. Having no real estate costs in e-commerce is another bonus.

Trends in E-commerce

What are some notable concepts that are impacting the world of e-commerce. You could find dozens upon dozens of examples, but here are just a few trends that demonstrate what businesses can do with online storefronts.

Influencer Marketing

Influencer marketing is a social media marketing strategy that uses influential people to draw attention to the product or brand.

Think of it as a new spin on having a spokesperson. However, influencer marketing is often more short-term in nature. In influencer marketing, a person is approached online by a business looking to capitalize on the influencer’s considerable social media following. If that following is closely linked to the business’s niche, then it makes for a good partnership. The influencer is paid for marketing a product or service. One example might be a fashion influencer being paid by an up-an-coming designer to showcase a new line of accessories.

Those types of relationships can exist in nearly any type of business. Across platforms like Instagram, Twitter, and even YouTube, influencer marketing can help businesses quickly get in front of a specific audience that they’re trying to target.

One-click Purchasing

One-click purchasing is exactly what it sounds like. E-commerce stores can simplify the shopping process by enabling users to complete their entire purchase without having to go through several steps to checkout.

Both sides benefit from one-click purchasing. Customers save time by avoiding the need to select saved or default options, like shipping speed and payment method. Businesses can enhance their profits because one-click purchasing increases impulse buys. Additionally, this concept caters to mobile users who need to make a purchase when they don’t have the time to spend with unnecessary checkout steps. If the system is as easy as possible to complete, consumers are more likely to make purchases at the site.

Social Shopping

Social shopping is another e-commerce trend that builds off the idea that making things easier for consumers to shop will result in increased profits. In social shopping, people viewing products on social media networks receive a direct link where they can make a purchase.

This feature has been integrated on Instagram and Pinterest. When people are searching for something like art project ideas for children or a way to decorate their home, they may come across a great activity or a set of matching pillows and blanket. In each scenario, viewers are finding a solution, but even if they’re not looking to purchase something, they may be led to buy a product that can help. Providing a direct link enables businesses to make it as easy as possible to purchase the product. Similar to one-click purchasing, doing adding a direct link is a powerful way to increase sales.

Subscription Services

Subscription services appeal to customers by providing a product that people need on a regular basis. Customers simply sign up for a subscription box, and every month they receive a new order.

What can shoppers get with subscription services? Just about anything. One of the most basic examples is for shaving products. Customers get the same thing every month or two, fulfilling a simple need. Businesses have expanded into all types of industries, including fashion, beauty, food, toys, and education. Imagine getting a delivery of makeup, clothes, or a certain type of snacks every so often. Mix that convenience in with the ability to personalize what you receive and being able to return what you don’t like, and it’s easy to see why subscription boxes are a big trend in e-commerce.

The Future of E-commerce

There’s no question that e-commerce will continue to thrive and redefine the way business is done. Once, e-commerce was seen as optional for brick and mortar retailers, but now, the click and mortar model is alive and well. Perhaps business having a physical space is now the option.

Looking ahead, expect technology to better cater to customers. One of the biggest trends in e-commerce is personalization, and brands continue to make progress in that area. Integrating artificial intelligence will help e-commerce platforms predict what customers are looking for, based on past purchases and other indicators, like browser cookies that indicate how consumers arrived at the website. Artificial intelligence tools can also automate customer service, send automated engagement emails for marketing purposes, and compile data that can improve the overall e-commerce platform.

That’s only the beginning of what the future of e-commerce holds, and businesses of all sizes need to be prepared. Learn the skills to help lead companies navigate e-commerce with an online business degree or an online marketing degree. In a fully online format, you’ll gain the knowledge and skills needed to thrive in the business world.

Both of these programs from Concordia, St. Paul feature small class sizes with a personal learning environment geared toward your success. Learn from knowledgeable faculty who have industry experience. Get started with CSP today.

Download the Beginner’s Guide to E-commerce as a PDF.

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You’ve trained Carol for months and things haven’t been going well. She’s struggling. It’s like she hasn’t been listening to you this whole time . . . and now she’s actively ignoring you.

So, you start thinking of how you can change things. You wonder if you need to be direct and let her know you’ve been doing this job for years and are the expert. After all, if she wants to succeed, she needs to listen to you. Maybe you think it’s time to send a sternly worded email to Carol and carbon copy your manager to get the point across.

If you’ve ever been in this type of situation, it’s worth taking a step back. Acting hastily is a great way to lose your temper – or even your job. Don’t let frustration get the best of you. Learning how to deal with confrontation at work requires composure and understanding to reach an acceptable solution for all sides.

How to Handle Confrontation at Work

What should you do about Carol? Here are some steps for knowing how to confront a coworker professionally. Hopefully, they’ll come in handy whether you have a Carol in your work life or if you’re the one being confronted.

1. Prepare

The first thing you should do is prepare for the confrontation.

Examine your emotions and start planning what you’ll say to Carol. Take some time to think about your goals. Confronting someone with tact can improve your working relationship with that person as well as improve your working environment and quality of work. Remember that as you think of what you’ll say to Carol and how you say it.

Confrontation doesn’t have to be scary. It should lessen the tension. If you approach the whole situation as an opportunity for positive change, then you’ll have the right mindset for discussing misunderstandings or challenges with Carol.

If You’re Being Confronted: It’s certainly tough to prepare for something you don’t know is coming. What you can do is adopt a positive view of confrontation and conflict preemptively. That way, even if you’re caught off-guard with a tough conversation in the future, you’ll have the tools for responding to it well.

2. Check Your Emotions

Examine your emotions to see if you’re feeling and projecting the right things toward Carol in your upcoming conversation.

If you can already feel bitterness and defensiveness toward Carol, that’s a bad sign. Even if you don’t outright say something wrong, your body language and attitude could be a giveaway to her. It could undermine the conversation regardless of what you say.

Try to overcome any doubts you have during the conversation and speak with care. After all, you probably don’t know Carol’s story and why she’s frustrated. Maybe she’s received conflicting information from another coworker or your manager. Maybe she came from a workplace that did things a different way, and it’s simply taking some time to get used to things here.

Avoid making assumptions. Get into a state of mind that will help Carol sense that you care. Exude gentleness and friendliness.

If You’re Being Confronted: Do your best not to respond to confrontation with frustration. You may be blindsided by a coworker and not understand where that person is coming from. Take a step back emotionally from the situation and listen to what you’re coworker is saying. Then, you can process the matter and know how to respond, which can include discussing next steps or asking for some time to think about it.

3. Discuss the Matter

Discuss the situation with Carol openly and stick to the facts.

Those standards are vital for negotiations, according to M. Susan Taylor and Ashley Fielbig in “Handbook of Principles of Organizational Behavior.” A candid and open exchange of information about each party’s interests helps each side satisfy the other’s interest to some degree. Sticking to the facts helps eliminate various opinions that dictate the conversation too much.

Here’s where you’ll get valuable information from Carol. Hopefully, she’ll share why she’s doing things the way she has been, and you can share why you’re teaching her from a certain perspective. By looking at her training objectively, both of you can look at the situation from a wider angle. One or both of you could be operating from a certain expectation that’s not realistic. Maybe there’s something process-related at play that one or both of you don’t know.

If You’re Being Confronted: Be open to hearing the other person’s perspective so that you can get insight into where the other person is coming from. Keep the conversation productive by discussing the facts. That’s the best way to redirect the conversation if opinions and emotions are playing a prominent role.

4. Negotiate Solutions

Offer Carol some solutions that you came up with during the planning stage. You should have at least one or two options ready to go, and as the conversation takes place, you can modify what you’ve prepared or offer more solutions.

Say you believe another approach might help Carol with her training. So, you head into your meeting with her by offering to give feedback on her work more often. Or maybe instead of email-based input, you do it in person so she can hear your thought process for doing assignments.

Those solutions are helpful to have ready when entering in the meeting. If nothing changes, you could focus on them as ideal solutions.

But during your meeting, Carol might indicate that feedback isn’t the problem. She could be having a problem with the research required to complete projects. It could be a matter of not being comfortable with the company’s tools. New pieces of information like that could require you to offer another solution to help Carol learn the position well.

If You’re Being Confronted: You don’t have the advantage of being able to prepare potential solutions. Once you’re up to speed on what your coworker is saying and offering, discuss what you’d like from him or her. Maybe you’ll need to brainstorm something that your coworker hasn’t thought of. Express what you’re thinking and try to work out something that makes sense.

5. Use Your Backup Plan (If Needed)

If you and Carol can’t agree on a solution, try to come up a “BATNA” — best alternative to a negotiated agreement.

Taylor and Fielbig recommended a BATNA to help people not feel forced to accept an undesirable offer just to end a negotiation. It can be a strong alternative if Carol isn’t meeting your interests or goals. In the place of an agreement, you’ll have options to keep both of you moving forward.

What might that look like? You might need to continue training Carol as you get further input from your manager. Or, if you’ve discussed the matter with your manager before meeting Carol, your BATNA may involve you asking your manager if someone else should train her.

Sometimes you’ll reveal your BATNA and sometimes you won’t. In the situation with Carol, it’s probably best to avoid mentioning those alternatives and go to your manager with them. Your short-term communication with Carol should be focused on maintaining and improving your relationship. One of the worst things would be for your task-related conflict with Carol to spiral into a relationship conflict (issues not related to work). You don’t want Carol to think you just dislike her. That would only lead to more problems.

If You’re Being Confronted: If the two of you can’t come up with a solution in the meeting, there’s nothing wrong with asking for a day or two to think about it. That’ll buy you some time to come up with solutions and a BATNA.

Managing Conflict in the Workplace

There’s another perspective for dealing with confrontation at work. How should managers get involved?

One way managers can help is by stopping negative conflict before it starts. Conflict doesn’t have to harm working relationships and harm productivity. When framed correctly, conflict is helpful. Teams challenge each other and people consider opposing ideas. As a result, building and reinforcing a healthier view of conflict can prevent disagreements from having as much power as they sometimes do. The earlier example with Carol is evidence of how conflict can become a major distraction and lead to further issues.

Managers can also help mediate conflicts. If conversations like the one with Carol don’t go well, employees should receive guidance from their manager. The manager will be able to help guide the discussion in a productive way and engage each party in problem-solving.

Sadly, managers don’t often receive training for managing conflict in the workplace. If that describes you, the right education can help you manage conflict and become a better communicator. Earn an online MBA that emphasizes strategic leadership, business ethics, and other areas that directly impact how you lead others. You’ll also receive instruction in areas like economics, finance and accounting, marketing, and more.

Earn one of the most sought-after degrees in a fully online format from Concordia University, St. Paul. There’s no GMAT or GRE score required, and you can transfer up to 50% of your graduate credits to CSP. Pursue your career goals and learn from professors who have real-world experience.

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When you think about buying something online, how do you decide whether to follow through with your purchase? If you’re like most shoppers, you might turn to on online reviews for guidance.

According to research from Nielsen, 73% of online respondents use reviews to make purchase decisions. “Perhaps nothing is more important than word-of-mouth testimonials from satisfied customers, whether in person or online via reviews and social media,” added Patrick Dodd, chief commercial offer at Nielsen.

If online reviews aren’t available, 92% of customers are impacted, according to a survey from marketing agency Fan & Fuel. That group expressed a lot of hesitation in what would happen next; Thirty-five percent said they were less likely to buy, 32% said they’d wait until they could do more research, 23% said their buying decision would be difficult, and 2% said that they simply wouldn’t buy the product/service.

E-commerce businesses need to understand how crucial online reviews are for sales. The following sections expand on how online reviews affect business directly and how to get customers to leave reviews.

Benefits of Online Reviews for E-commerce

It may seem natural that online reviews affect business and lead to more sales, but it’s worth exploring some of the primary and supplementary reasons. You’ll start to realize why reviews play such a crucial role in the e-commerce world.

• Unbiased Insight into Products: People want to know if products they’re considering fit their needs. In the Fan & Fuel survey, 37% of respondents said the main thing they look for in online reviews are details that help them understand if the product/service is right for them. That led all other reasons for reading reviews. There’s a certain level of trustworthiness for online reviews. In fact, based on a survey of U.S. mom internet users, people trust consumer reviews nearly 12 times more than descriptions provided by manufacturers.
• Build Trust: Another benefit to reviews is they can help portray the business in a positive light. People are accustomed to purchasing products from familiar sellers like Amazon. If they’re on a different site, they may be unsure. “Will the product arrive quickly?” “What if I need to return it?” In unfamiliar territory, consumers need to know that other shoppers have had positive experiences. As a result, they’ll read product reviews and online business reviews to make sure everything seems right. Online reviews form an important trust factor for customers.
• Increase Traffic Through Search Engine Optimization (SEO): If you own an e-commerce store or work for a company that sells products and services online, you need to focus on SEO. It increases traffic to the store by improving the visibility of it on search engines like Google. Compete for search keywords that are relevant to your store, and you’ll draw more traffic and sales to the business. How do online reviews relate to SEO? In his guide to SEO for e-commerce websites, expert marketer Neil Patel noted how customer reviews “positively impact your SEO because more reviews = more content, and frequent reviews = fresh content, which Google loves to see.”

How to Encourage Customers to Leave Reviews

Understanding just how much online reviews affect business is the easy part. Here are some tips and tricks on how to get customers to leave reviews.

• Use Email: Maybe you’ve received an email after purchasing something online, asking you if they can help you with anything. Those types of messages are the perfect opportunity to ask for a review. It’s timely, relevant, and gives you a way to offer customer support if needed. If not, customers might take a few minutes to respond to an appeal for a review. You can automate these emails and combine them with the next idea for getting customer reviews.
• Integrate Promotions: Offering a discount on a customer’s next purchase for leaving a review is an effective incentive. You can also consider giving access to a sneak peak of an upcoming product. Whatever the case is, try rewarding your loyal customers with something for writing a review. Some e-commerce platforms can create coupon codes when a review is completed. Otherwise, you can manually do it by having customers email you when they’re finished. Or simply put the coupon code in the email and go by the “honor system,” trusting they’ll leave a review if they use the promotional code.
• Make Everything Accessible: Test what people have to do to leave a review. An easy way to do it is by limiting it to registered users. Beware of making more than one or two fields required to submit the review.
• Ask for Review and Respond to Them on Social Media: Your audience might not be used to seeing a message on Facebook or Twitter about how they can get a discount for leaving a review. Mix things up a little bit. Use social media in addition to email to get reviews. You should also respond to reviews about your company. For instance, on Facebook, expressing appreciation or addressing issues on online business reviews can demonstrate how your company does customer service. Show your brand’s personality in how you thank customers and try to resolve negative experiences.

Reviews are just part of the equation for running a successful e-commerce business. For instance, there are other strategies you can implement to help persuade customers begin a shopping cart to complete their order. By curbing shopping cart abandonment, you’ll help your business or employer drastically increase sales.

Learn the skills to lead your business or help other companies navigate e-commerce with an online business degree or an online marketing degree. In a fully online format, you’ll gain the knowledge and skills needed to thrive in the business world.

Both of these programs from Concordia University, St. Paul feature small class sizes with a personal learning environment geared toward your success. Learn from knowledgeable faculty who have industry experience. Get started with CSP today.

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It’s easy to get tunnel vision in e-commerce. Selling a product or service is the ultimate goal for marketers and small business owners, but focusing on it too much can lead to missed opportunities.

Imagine your company attracts 10 people to its website or social media platform. A successful outcome for those users is not necessarily in sales. It could be much simpler. Some users may follow a social media page. Others may start doing research on whether your business is a legitimate option for their needs. The rest might be ready to make a purchase and are just looking for that final push to complete their shopping cart.

That’s why it’s important to understand the e-commerce sales funnel. It refers to the fact that different people who interact with your company are in different stages of potentially becoming your customer. And because of that, they have different needs. They respond to different tactics.

It’s not enough to create a powerful e-commerce landing page and hope it appeals to everyone. You’ll need to work in more aggressive marketing tactics when your audience is ready for them. Take a look at how the e-commerce sales funnel can inform your overall strategy.

Stages of the E-commerce Sales Funnel

Here’s a closer look at each step of the e-commerce sales funnel.

Awareness

The awareness stage is at the very top of the e-commerce sales funnel. People in this stage are interested in information about a particular topic or need to solve some sort of problem. As a result, they come across your website or social media presence. They’re becoming aware of how you can help.

It’s true that some visitors may buy from you immediately, but that’s not often the case in this stage. More often, they’re looking to learn from you and, as a result of your targeted content, can begin developing an understanding of how your products and services can help them.

Educate your audience about your industry and what you have to offer, and work on building their trust. Content marketing is a powerful way to reach your audience through Google or social media, and it can draw as many people in as possible. Once they read or watch what you have to say, you’ll ideally become a company that they’ll want to interact with more.

• Who’s in This Stage? People new to your business who are looking for help.
• What Are Your Goals? Find as many leads as possible. Educate them and build their trust by providing value before you try to sell to them.
• What Are Your Tools? Utilize content marketing, social media, SEO, and public relations.

Interest

People in the interest stage are no longer new to your company. This segment of the e-commerce sales funnel is marked by people who are starting to consider you closely.

They’re doing more research. From comparison shopping to examining how different companies, products, and services compare, consumers are taking a deeper look at their options. Once again, don’t try to sell to them too aggressively. You can mention promotional offers, but you don’t want to chase them away by going over the top.

Focus on getting them to take that next step. It could be subscribing to a newsletter, following a social media platform, downloading a white paper. The key is that you want to connect with them in any way possible. You’re here to help them.

• Who’s in This Stage? People interested in what you have to offer.
• What Are Your Goals? Connecting with your leads and helping them.
• What Are Your Tools? Utilize newsletters, e-books, case studies, white papers, and other (free) valuable content. Engage them on social media.

Decision

People in this part of the sales funnel process are ready to buy, but they’re deciding whether you’re the right company for their needs.

This is the defining moment in the sales funnel. It’s where you need to put your best foot forward, and hopefully you’ll compel a large percentage of your audience to follow through. Persuasive copy and irresistible offers are definitely a major component, but it’s not all. Don’t overlook how prices, user experience, service, and selection can play into customers’ decisions.

After all, take a look at the top reasons for shopping cart abandonment. You’ll start to see how nearly every aspect of your e-commerce experience — from ease of use and website speed to free delivery options — impact whether customers will finalize their purchases.

• Who’s in This Stage? People ready to make a purchase, but not sure you’re the best option.
• What Are Your Goals? Convince and compel them to purchase from you.
• What Are Your Tools? Utilize persuasive copy, promotions, case studies, social proof, landing pages, emails, and personalized messages.

Action and Retention

The e-commerce sales funnel stages end with action and retention. Consumers purchase your product or service, but that’s not where the story ends.

The numbers demonstrate the value of customers who return to your website. Based on a survey from BIA/Kelsey and Manta, 61% of small businesses generate the majority of their annual revenue from repeat customers. Adobe found that 41% of total online revenue in the United States comes from returning or repeat customers, even though they represent only 8% of all visitors. Additionally, to match the revenue of a single repeat customer, 5 new shoppers would be required.

How do you make the most of customers who complete a purchase? Focus on ways to bring them back to your site. You can also investigate how they can advocate for your brand.

• Who’s in This Stage? People who have made a purchase on your website.
• What Are Your Goals? Convince them return and make another purchase. Turn them into brand advocates.
• What Are Your Tools? Utilize loyalty programs, testimonials and reviews, user-generated content, referral marketing programs, and customer retention messages.

Taking advantage of the e-commerce sales funnel is the beginning of an effective strategy for generating sales. You can learn the skills to lead your business or help other companies navigate e-commerce with an online business degree or an online marketing degree. In a fully online format, you’ll gain the knowledge and skills needed to thrive in the business world.

Both of these programs from Concordia University, St. Paul feature small class sizes with a personal learning environment geared toward your success. Learn from knowledgeable faculty who have industry experience. Get started with CSP today.

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If you own an e-commerce storefront or work for a company that sells products and services online, you’re probably familiar with a simple, frustrating fact: Shopping cart abandonment is common.

How frequent is it? For every ten shopping carts created, only about three will result in completed transactions. According to Baymard Institute, an independent web usability research institute, the average online shopping cart abandonment rate is 69.57%. That figure is based on 41 different studies.

Baymard Institute found an interesting reason for shopping cart abandonment when conducting its own study. Out of all U.S. online shoppers who abandoned a cart within the previous three months, the top reason, at 58% of respondents, was that they were just browsing or were otherwise not ready to purchase anything. The institute didn’t list it on their top reasons for abandonment, however. They considered it unresolvable.

The other reasons for shopping cart abandonment are easier to face head-on, and as a result, this article will concentrate on those factors. If you begin to consider the following reasons and implement strategies to overcome them, you’ll help your business or your employer drastically increase sales. You might just persuade even the most casual consumers who begin a shopping cart to complete their order.

7 Leading Reasons for Shopping Cart Abandonment

Here are the leading reasons for shopping cart abandonment and strategies on overcoming the factors. The list follows Baymard Institute’s study results, which gave respondents the option to choose more than one reason for abandoning their shopping carts. The reasons are in order from most frequently chosen reason to least, with the exception of “just browsing,” which was excluded.

1. Extra Costs Are Too High (shipping, taxes, fees) — 55%

It’s reasonable to imagine how consumers abandon shopping carts after seeing unexpected, pricey costs. Shipping, taxes, and fees can add to the total amount of an order well beyond the actual price of products.

A simple way to cater to customers is by providing all information upfront. If something like shipping incurs an extra charge, make that information easy to notice. Having a level of transparency early in the shopping process will help assure consumers they can trust the business or website. Also think about how, according to a report from the National Retail Federation (NRF), shoppers look at shipping costs before they even get to the checkout page. Sixty-five percent look up thresholds for free shipping before starting a cart.

Alternatively, consider free shipping. On orders less than $50, 75% of consumers in the NRF study expected delivery to be free, which is up from 68% in the previous year’s report. In a survey from e-commerce fulfillment services provider Dotcom Distribution, 91% of the 1,400 consumers questioned said that free shipping would make them more likely to become a repeat customer.

Look into adding to the price of items to provide customers with free shipping and related perks.

2. Required to Create an Account — 34%

Consumers who are required to create an account may shy away from completing the purchase. It takes time to create “yet another” account, and for some people, they don’t want their personal and sensitive information saved on another website.

It’s true there are benefits on both ends when checkout requires customers to create an account to complete a purchase. Customers benefit from not having to re-enter information in the future, and they get customized offers and recommendations. Businesses benefit from customized offers and recommendations too, along with other marketing opportunities. Plus, accounts make returns, exchanges, and refunds easier.

If the storefront has a strong base of repeat customers, you can consider requiring accounts — but appealing to customers’ desire to have a guest account is generally a good idea. It can especially help to reverse the trend of abandoned carts on mobile when checkout speed is at a premium. Mobile solutions provider Moovweb analyzed 1.8 million smartphone sessions and found that guest checkout increases mobile conversion rates. The share of revenue from mobile shoppers who chose guest checkout was 13% higher than users who were logged in.

3. Checkout Process Too Long/Complicated — 26%

This reason goes hand-in-hand with required account creation. Shoppers want to finish the checkout process as quickly as possible, and if it’s too long — due to having to create an account or otherwise — then they may leave.

An article from Baymard Institute noted that the average checkout flow had 14.88 field forms, which is twice as many as necessary. For most checkouts, websites can reduce form elements 20-60%.

4. Couldn’t See/Calculate Total Cost Upfront — 21%

Some shoppers go through the motions of creating their order because they want to see what the cost will be. To them, it’s a mystery; they don’t have the information they need from the outset.

So, provide the information upfront. If shipping is free and there are no hidden costs, integrate that onto the website’s front page and in marketing. Help customers understand what they’ll pay as quickly as possible to eliminate any questions they may have about an order’s cost.

5. Didn’t Trust Site with Credit Card Info — 17%

One of the most problematic reasons for shopping cart abandonment revolves around security concerns. It’s particularly concerning because it can undermine the root of an e-commerce business

There are many factors that can contribute to this lack of trust. If a site is outdated, has missing images, or other design flaws, it can put the whole website and business under question. Assessing how the website looks and feels compared to competitors can reveal any opportunities to improve on that front. A more direct reason may be missing SSL certificates, which indicates that the website is safe. Make sure that’s present and consider implementing a security seal on the site. Baymard Institute performed a survey and found that Norton, McAfee, TRUSTe, and BBB Accredited seals were the most trustworthy security seals.

6. Website Had Errors/Crashed — 17%

This reason complements the previous entry on the list. Any errors or lack of performance for e-commerce websites can cast doubt in consumers’ minds. That even extends to an issue like site speed. According to Google, 53% of mobile site visits exit a page that takes longer than three seconds to load.

7. Delivery Was Too Slow — 16%

If shipping is too slow — yes, even if it’s free — the sale may not happen.

In the NRF report, 39% of consumers said that they expected two-day shipping to be free, and 29% backed out of a purchase because two-day shipping wasn’t free. Unfortunately for some businesses, that may be the new standard. Amazon popularized “free” two-day shipping for paid Prime customers, making fast shipping an expectation for many shoppers. In May 2019, Walmart announced it would offer free two-day shipping, matching Amazon in, as Bloomberg dubbed it, the e-commerce “arms race.”

It’s clear that businesses need to stay current with online consumers’ expectations and best practices for e-commerce websites. Otherwise, abandoned carts and decreased sales can result. You can learn the skills to lead your business or help other companies navigate e-commerce with an online business degree or an online marketing degree. In a fully online format, you’ll gain the knowledge and skills needed to thrive in the business world.

Both of these programs from Concordia, St. Paul feature small class sizes with a personal learning environment geared toward your success. Learn from knowledgeable faculty who have industry experience. Get started with CSP today.