Online shopping or online retailing is a form of Amazon.com, both of which are based in the US.

Contents

History

In 1990 [1]

Customers

Online customers must have access to a computer and a method of payment.

Generally, higher levels of education, income, and occupation of the head of the household correspond to more favorable perceptions of shopping online. Also, increased exposure to technology increases the probability of developing favorable attitudes towards new shopping channels.[2]

In a December 2011 study Equation Research found that 87% of tablet users made an online transaction with their tablet device during the early holiday shopping season.[3]

Logistics

Consumers find a product of interest by visiting the website of the retailer directly or by searching among alternative vendors using a shopping search engine.

Once a particular product has been found on the website of the seller, most online retailers use shopping cart software to allow the consumer to accumulate multiple items and to adjust quantities, like filling a physical shopping cart or basket in a conventional store. A “checkout” process follows (continuing the physical-store analogy) in which payment and delivery information is collected, if necessary. Some stores allow consumers to sign up for a permanent online account so that some or all of this information only needs to be entered once. The consumer often receives an e-mail confirmation once the transaction is complete. Less sophisticated stores may rely on consumers to phone or e-mail their orders (though credit card numbers are not accepted by e-mail, for security reasons).

Payment

Online shoppers commonly use a credit card to make payments. However, some systems enable users to create accounts and pay by alternative means, such as:

Some sites will not accept international credit cards. Some require both the purchaser’s billing address and shipping address to be in the same country in which the site does its business. Other sites allow customers from any country to send gifts anywhere. The financial part of a transaction might be processed in real time (for example, letting the consumer know their credit card was declined before they log off), or might be done later as part of the fulfillment process.

Product delivery

Once a payment has been accepted the goods or services can be delivered in the following ways.

  • Downloading: This is the method often used for digital media products such as software, music, movies, or images.
  • Drop shipping: The order is passed to the manufacturer or third-party distributor, who ships the item directly to the consumer, bypassing the retailer’s physical location to save time, money, and space.
  • In-store pick-up: The customer orders online, finds a local store using bricks and clicks business model.
  • scrip (e.g., gift certificates and coupons). The tickets, codes, or coupons may be redeemed at the appropriate physical or online premises and their content reviewed to verify their eligility (e.g., assurances that the right of admission or use is redeemed at the correct time and place, for the correct dollar amount, and for the correct number of uses).
  • Shipping: The product is shipped to the customer’s address or that of a customer-designated third party.
  • Will call, lCOBO (in Care Of Box Office), or “at the door” pickup: The patron picks up pre-purchased tickets for an event, such as a play, sporting event, or concert, either just before the event or in advance. With the onset of the Internet and e-commerce sites, which allow customers to buy tickets online, the popularity of this service has increased.

Shopping cart systems

  • Simple systems allow the offline administration of products and categories. The shop is then generated as HTML files and graphics that can be uploaded to a webspace.the systems do not use an online database.
  • A high end solution can be bought or rented as a stand-alone program or as an addition to an supply chain so that ordering, payment, delivery, accounting and warehousing can be automated to a large extent.
  • Other solutions allow the user to register and create an online shop on a portal that hosts multiple shops at the same time.
  • Open source shopping cart packages include advanced platforms such as Interchange, and off the shelf solutions as Avactis, osCommerce, Shopify, Magento, Zen Cart, VirtueMart, Batavi, PrestaShop, E-Junkie, Clickbank, Fetch, DPD, Pulley, BitBuffet, Dbox, PayLoadz, FastSpring, Cerizmo, Digital Content Center, byteCommerce, PHPurchase[6].
  • Commercial systems such as BigCommerce can also be tailored to one’s needs so the shop does not have to be created from scratch. By using a pre-existing framework, software modules for various functionalities required by a web shop can be adapted and combined.

Online shopping

Like many ecommerce software solutions.

Design

Customers are attracted to online shopping not only because of the high level of convenience, but also because of the broader selection, competitive pricing, and greater access to information.[9]

Information load

Designers of online shops are concerned with the effects of information load – whether consumers can be given too much information in virtual shopping environments. Information load is a product of the spatial and temporal arrangements of stimuli in the webstore.[11]

Two major dimensions of information load are complexity and novelty.[11]

Consumer needs and expectations

A successful webstore is not just a good looking website with dynamic technical features, listed in many search engines.[13] In addition to disseminating information, it is about building relationships and making money.

Businesses often attempt to adopt online shopping techniques without understanding them and/or without a sound business model, producing webstores that support the organizations’ culture and brand name without satisfying consumer’s expectations. User-centered design is critical. Understanding the customer’s wants and needs and living up to promises gives the customer a reason to come back and meeting their expectations gives them a reason to stay. It is important that the website communicates to the customer that the company cares about them.[13]

Customer needs and expectations are not the same for all customers. Age, gender, experience, culture are all important factors. For example, Japanese cultural norms may lead users there to feel privacy is especially critical on shopping sites and emotional involvement is highly important on financial pensions sites.[14]

To increase online purchases, businesses must expend significant time and money to define, design, develop, test, implement, and maintain the webstore.[15]

User interface

 

An automated online assistant, with potential to enhance user interface on shopping sites.

The most important factors determining whether customers return to a site are ease of use and the presence of user-friendly features.[16]

Market share

[20]

For developing countries and low-income households in developed countries, adoption of e-commerce in place of or in addition to conventional methods is limited by a lack of affordable Internet access.

Advantages

Convenience

Online stores are usually available 24 hours a day, and many consumers have Internet access both at work and at home. Other establishments such as internet cafes and schools provide access as well. A visit to a conventional retail store requires travel and must take place during business hours.

In the event of a problem with the item it is not what the consumer ordered, or it is not what they expected—consumers are concerned with the ease with which they can return an item for the correct one or for a refund. Consumers may need to contact the retailer, visit the post office and pay return shipping, and then wait for a replacement or refund. Some online companies have more generous return policies to compensate for the traditional advantage of physical stores. For example, the online shoe retailer Zappos.com includes labels for free return shipping, and does not charge a restocking fee, even for returns which are not the result of merchant error. (Note: In the United Kingdom, online shops are prohibited from charging a restocking fee if the consumer cancels their order in accordance with the Consumer Protection (Distance Selling) Act 2000).[21]

Information and reviews

Online stores must describe products for sale with text, photos, and multimedia files, whereas in a physical retail store, the actual product and the manufacturer’s packaging will be available for direct inspection (which might involve a test drive, fitting, or other experimentation).

Some online stores provide or link to supplemental product information, such as instructions, safety procedures, demonstrations, or manufacturer specifications. Some provide background information, advice, or how-to guides designed to help consumers decide which product to buy.

Some stores even allow customers to comment or rate their items. There are also dedicated review sites that host user reviews for different products. Reviews and now blogs gives customers the option of shopping cheaper organise purchases from all over the world without having to depend on local retailers.

In a conventional retail store, clerks are generally available to answer questions. Some online stores have real-time chat features, but most rely on e-mail or phone calls to handle customer questions.

Price and selection

One advantage of shopping online is being able to quickly seek out deals for items or services with many different vendors (though some discovery shopping engines can be used to look up sellers of a particular product or service.

Shipping costs (if applicable) reduce the price advantage of online merchandise, though depending on the jurisdiction, a lack of sales tax may compensate for this.

Shipping a small number of items, especially from another country, is much more expensive than making the larger shipments bricks-and-mortar retailers order. Some retailers (especially those selling small, high-value items like electronics) offer free shipping on sufficiently large orders.

Another major advantage for retailers is the ability to rapidly switch suppliers and vendors without disrupting users’ shopping experience..

Disadvantages

Fraud and security concerns

Given the lack of ability to inspect merchandise before purchase, consumers are at higher risk of fraud on the part of the merchant than in a physical store. Merchants also risk fraudulent purchases using stolen credit cards or fraudulent repudiation of the online purchase. With a warehouse instead of a retail storefront, merchants face less risk from physical theft.

Secure Sockets Layer (SSL) encryption has generally solved the problem of credit card numbers being intercepted in transit between the consumer and the merchant. However, one must still trust the merchant (and employees) not to use the credit card information subsequently for their own purchases, and not to pass the information to others. Identity theft is still a concern for consumers when hackers break into a merchant’s web site and steal names, addresses and credit card numbers. A number of high-profile break-ins in the 2000s has prompted some U.S. states to require disclosure to consumers when this happens. Computer security has thus become a major concern for merchants and e-commerce service providers, who deploy countermeasures such as firewalls and anti-virus software to protect their networks.

Phishing is another danger, where consumers are fooled into thinking they are dealing with a reputable retailer, when they have actually been manipulated into feeding private information to a system operated by a malicious party. Denial of service attacks are a minor risk for merchants, as are server and network outages.

Quality seals can be placed on the Shop web page if it has undergone an independent assessment and meets all requirements of the company issuing the seal. The purpose of these seals is to increase the confidence of the online shoppers; the existence of many different seals, or seals unfamiliar to consumers, may foil this effort to a certain extent. A number of resources offer advice on how consumers can protect themselves when using online retailer services. These include:

  • Sticking with known stores, or attempting to find independent consumer reviews of their experiences; also ensuring that there is comprehensive contact information on the website before using the service, and noting if the retailer has enrolled in industry oversight programs such as trust mark or trust seal.
  • Before buying from a new company, evaluate the website by considering issues such as: the professionalism and user-friendliness of the site; whether or not the company lists a telephone number and/or street address along with e-contact information; whether a fair and reasonable refund and return policy is clearly stated; and whether there are hidden price inflators, such as excessive shipping and handling charges.
  • Ensuring that the retailer has an acceptable privacy policy posted. For example note if the retailer does not explicitly state that it will not share private information with others without consent.
  • Ensuring that the vendor address is protected with SSL (see above) when entering credit card information. If it does the address on the credit card information entry screen will start with “HTTPS”.
  • Using strong passwords, without personal information. Another option is a “pass phrase,” which might be something along the lines: “I shop 4 good a buy!!” These are difficult to hack, and provides a variety of upper, lower, and special characters and could be site specific and easy to remember.

Although the benefits of online shopping are considerable, when the process goes poorly it can create a thorny situation. A few problems that shoppers potentially face include identity theft, faulty products, and the accumulation of fraud more difficult, however, the criminals are constantly responding to these developments with new ways to manipulate the system. Even though these efforts are making it easier to protect yourself online, it is a constant fight to maintain the lead. It is advisable to be aware of the most current technology and scams out there to fully protect yourself and your finances.[20]. One of the hardest areas to deal with in online shopping is the delivery of the products. Most companies offer shipping insurance in case the product is lost or damaged; however, if the buyer opts not to purchase insurance on their products, they are generally out of luck. Some shipping companies will offer refunds or compensation for the damage, but it is up to their discretion if this will happen. It is important to realize that once the product leaves the hands of the seller, they have no responsibility (provided the product is what the buyer ordered and is in the specified condition).

Lack of full cost disclosure

The lack of full disclosure with regards to the total cost of purchase is one of the concerns of online shopping. While it may be easy to compare the base price of an item online, it may not be easy to see the total cost up front as additional fees such as shipping are often not be visible until the final step in the checkout process. The problem is especially evident with cross-border purchases, where the cost indicated at the final checkout screen may not include additional fees that must be paid upon delivery such as duties and brokerage. Some services such as the Canadian based Wishabi attempts to include estimates of these additional cost,[22] but nevertheless, the lack of general full cost disclosure remains a concern.

Privacy

Privacy of personal information is a significant issue for some consumers. Different legal jurisdictions have different laws concerning consumer privacy, and different levels of enforcement. Many consumers wish to avoid spam and telemarketing which could result from supplying contact information to an online merchant. In response, many merchants promise not to use consumer information for these purposes, or provide a mechanism to opt-out of such contacts.

Many websites keep track of consumers shopping habits in order to suggest items and other websites to view. Brick-and-mortar stores also collect consumer information. Some ask for address and phone number at checkout, though consumers may refuse to provide it. Many larger stores use the address information encoded on consumers’ credit cards (often without their knowledge) to add them to a catalog mailing list. This information is obviously not accessible to the merchant when paying in cash.

Hands-on inspection

Typically, only simple pictures and or descriptions of the item are all a customer can rely on when shopping on online stores. If the customer does not have prior exposure to the item’s handling qualities, they will not have a full understanding of the item they are buying. However, Written and Video Reviews are readily available from consumers who have purchased similar items in the past. These can be helpful for prospective customers, but these reviews can be sometimes subjective and based on personal preferences that may not reflect end-user satisfaction once the item has been received.

Because of this, many consumers have begun going to real-world stores to view a product, before purchasing online, a practice known as [23]

Product suitability

Many successful purely affiliate marketing techniques to facilitate transactions of tangible goods without maintaining real inventory.

Some non-digital products have been more successful than others for online stores. Profitable items often have a high value-to-weight ratio, they may involve embarrassing purchases, they may typically go to people in remote locations, and they may have shut-ins as their typical purchasers. Items which can fit in a standard mailbox—such as music CDs, DVDs and books—are particularly suitable for a virtual marketer.

Products such as spare parts, both for consumer items like washing machines and for industrial equipment like centrifugal pumps, also seem good candidates for selling online. Retailers often need to order spare parts specially, since they typically do not stock them at consumer outlets—in such cases, e-commerce solutions in spares do not compete with retail stores, only with other ordering systems. A factor for success in this niche can consist of providing customers with exact, reliable information about which part number their particular version of a product needs, for example by providing parts lists keyed by serial number.

Products less suitable for e-commerce include products that have a low value-to-weight ratio, products that have a smell, taste, or touch component, products that need trial fittings—most notably clothing—and products where colour integrity appears important. Nonetheless, some web sites have had success delivering groceries and clothing sold through the internet is big business in the U.S.

Aggregation

High-volume websites, such as online marketplaces.

Impact of reviews on consumer behaviour

One of the great benefits of online shopping is the ability to read others’ reviews, which could be from experts or simply fellow shoppers on one product and service.

social media and other factors that come into play when consumers are trying to decide how to spend their money on which product or service.

According to that research,[24] reviews on electronics (57%) such as DVD players, cell phones or PlayStations and so on, reviews on cars (45%), and reviews on software (37%) play an important role and have influence on consumers who tend to make purchases and buy online.

In addition to online reviews, peer recommendations on the online shopping pages or social media play a key role[24] 40% of online shoppers indicate that they would not even buy electronics without consulting online reviews first.

See also

References

  1. ^ c Palmer, Kimberly.(2007) News & World Report.
  2. ^ Bigne, Enrique (2005). “The Impact of Internet User Shopping Patterns and Demographics on Consumer Mobile Buying Behavior”. Journal of Electronic Commerce Research 6 (3).
  3. ^ http://mashable.com/2011/12/08/tablets-to-holiday-shop/.
  4. ^ Lopresti, Michael (Saturday, September 1, 2007,). “Bill-2-Phone Lets Customers Add Online Purchases to Their Phone Bill”. Allbusiness.com. http://www.allbusiness.com/media-telecommunications/8910400-1.html. Retrieved 23 November 2010.
  5. ^ Geena Rao (July 19, 2010). “Mopay Now Allows You To Bill Mobile Payments To A Landline Account”. TechCrunch.com. http://techcrunch.com/2010/07/19/mopay-now-allows-you-to-bill-mobile-payments-to-a-land-line-account/. Retrieved 23 November 2010.
  6. ^ http://vandelaydesign.com/blog/tools/selling-digital-products/
  7. ^ Jarvenpaa, S. L., & Todd, P. A. (1997). Consumer reactions to electronic shopping on the world wide web. International Journal of Electronic Commerce, 1, 59–88.
  8. ^ Peterson, R. A., Balasubramanian, S., & Bronnenberg, B. J. (1997). Exploring the implications of the Internet for consumer marketing. Journal of the Academy of Marketing Science, 25, 329–346.
  9. ^ “A framework for internet channel evaluation”, International Journal of Information & Management 24 (2004), 473–488
  10. ^ Mehrabian, A., & Russel J.A. (1974) An Approach to Environmental Psychology. Cambridge, MA: The MIT Press.
  11. ^ b Huang, M. (2000) Information load: its relationship to online exploratory and shopping behavior. International Journal of Information Management 20: 337–347.
  12. ^ Campbell, D.J. (1988) Task complexity: A review and analysis. Academy of Management Review, 13(1), 40–52.
  13. ^ d Falk, Louis K.; Sockel, Hy; Chen, Kuanchin. (2005) “E-Commerce and Consumer’s Expectations: What Makes a Website Work.” Journal of Website Promotion, 1(1) (65–75)
  14. ^ Ram L. Kumar et al., “User interface features influencing overall ease of use and personalization”, Information & Management 41 (2004): 289–302
  15. ^ Steve Elliot and Sue Fowell, “Expectations versus reality: a snapshot of consumer experiences with Internet retailing”, International Journal of Information Management 20 (2000): 323–336
  16. ^ b Sherry Y. Chen en Robert D. Macredie, “The assessment of usability of electronic shopping: A heuristic evaluation”, International Journal of Information Management 25 (2005), 516–532
  17. ^ “Forrester Research, Understanding Online Shopper Behaviors, US 2011, May 17, 2011”.
  18. ^ NPD
  19. ^ National Retail Federation survey
  20. ^ “Forrester: Online Retail Industry In The US Will Be Worth $279 Billion In 2015”. TechCrunch. February 28, 2011. http://techcrunch.com/2011/02/28/forrester-online-retail-industry-in-the-us-will-be-worth-279-billion-in-2015/.
  21. ^ “A guide for businesses on distance selling”. http://www.oft.gov.uk/shared_oft/business_leaflets/general/oft698.pdf. Retrieved 2008-12-24.
  22. ^ “Keeping It Real for Cross-Border Online Shoppers”. http://www.ecommercetimes.com/story/69105.html. Retrieved 2010-02-10.
  23. ^ http://online.wsj.com/article/SB10001424052970204624204577177242516227440.html. Retrieved 28 January 2012.
  24. ^ b Nielsen, “Online Shopping Trends”, (USA: The Nielsen Company, 2010)
  25. ^ By Bonsoni.com on July 10, 2011 (2011-07-10). “Research shows word of mouth drives online sales”. Bonsoni.com. http://www.bonsoni.com/blog/research-shows-word-of-mouth-drives-online-sales/. Retrieved 2012-01-19.
  26. ^ “Nielsen Global Online Shopping Report”. Blog.nielsen.com. 2010-06-29. http://blog.nielsen.com/nielsenwire/consumer/global-online-shopping-report/. Retrieved 2012-01-19.

This article uses material from the Wikipedia article Online Shopping, which is released under the Creative Commons Attribution-Share-Alike License 3.0.