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Wednesday, October 13, 2010

Online Shopping






I) Introduction:
Online shopping is a growing area of technology. Establishing a store on the Internet, allows for retailers to expand their market and reach out to consumers who may not otherwise visit the physical store. The convenience of online shopping is the main attraction for the consumers. Unique online payment systems offer easy and safe purchasing from other individuals. Electronic consumers exhibit different buying behaviors such as; cart abandonment. The benefits of shopping online also come with potential risks and dangers that consumers must be aware of. In the future, we can expect online stores to improve their technology tremendously, allowing for an easier and a more realistic shopping experience.

II) Current Use:
A company that wants to market their items online can establish an online store by developing a website. These stores usually consist of several department areas with the merchandize organized accordingly. The consumer may view the products’ picture, item details, materials, sizing, etc. If the consumer chooses to add the item to his or her virtual shopping cart, they are usually given the option to continue shopping or proceed to checkout. Once the consumer proceeds to checkout, the credit card transaction is completed and the item is prepared and shipped from the retailer to the consumer.
Many physical retail stores have expanded their market by using the Internet. By having both a virtual store and a physical store, companies get the best of both worlds. Stores that are marketing their products in both areas can take advantage of the high demand for online shopping availability. The ability to shop for products online gives consumers the option to purchase goods off of the Internet with the convenience of not even leaving his or her home. Others; however, still enjoy and prefer to go into a physical store to make purchases. For some consumers their method of purchase is not because of a preference but because of generation gap.
In order to shop online, the consumer must be relatively familiar with computers and how to navigate the Internet. Internet retail stores target a specific age group. “The Net-generation is made up of individuals (Net-geners) born between 1977 and 1997” (Kim & Ammeter, 2008). This “is the first generation to grow up surrounded by digital media and the Internet” (Kim & Ammeter, 2008). For those born before the 1970s, “The online market [is] a new innovation for them so they [are] less familiar with online shopping”. “Pre Net-geners have a relatively lower capability to utilize the excess of information available on the Internet” (Kim & Ammeter, 2008). Because of this, online retailers market to the Net-generation in order to be successful and profitable.
Also rising in popularity, are online websites, which allow consumers to sell and purchase to each other. Payment Systems such as PayPal have made shopping online much easier. and more consumers are gaining access to the PayPal system. “Customers with a virtual wallet for online global shopping, empowering a new segment of consumers to buy products and services on the web ' without the use of a credit card” (DBS and PayPal, 2010). This payment option allows for safe transactions between two private parties.

III) Potential Problems:
It is important for consumers to use caution when visiting online shopping websites regularly. The convenience of online shopping could pose a potential threat to those with addictive personalities.“ I have a serious Amazon habit, and spend far too much each month… since I pay the credit-card account, my wife has little inkling of just how much I spend” confesses a man (Spencer, 2010). Because of the easy accessibility and simple click of a button to purchase goods, shopping addictions could be a serious danger of online shopping. This habit can lead to financial and domestic problems in the household.
Making purchases online means consumers will use virtual shopping carts. Online shopping makes picking out items a quick process. It makes picking out items so quick that consumers have the tendency place more items in their cart than they are capable of paying for. Consumers shopping online exhibit an odd behavior of abandoning their shopping carts instead of proceeding to checkout. This behavior would be very unlikely to see in a physical store. While physical shopping carts are used in actual stores with the intent of purchasing the product in the cart immediately, “retailers cannot assume that their website patrons use their carts to purchase a product immediately” (Close & Kukar-Kinney, 2010). Many online shoppers use their shopping cart as a type of “wish list”. “They frequently utilize the Internet as a tool for 'window shopping' and product comparison” (Kim & Ammeter, 2008). Shoppers add their items that they would like to buy and, instead of proceeding to check out, abandoning his or her virtual shopping cart to rethink the possible purchase.
This behavior of abandoning a shopping cart is not seen very often in physical stores. This is a problem very much characteristic of online retail store consumers. If this problem is not given proper examination and paid attention to, sales profit may decrease quite a bit. Retailers need to study the differences between online consumer behaviors versus in-store consumer behaviors. It is important for the online retail companies to learn about consumer behavior so that they can make changes accordingly to increase productivity.

IV) Future use:
“Given the social, interactive and immediate nature of Net-geners”, (Kim & Ammeter, 2008) the online retailers try their best to keep up the consumers’ needs by constantly making various improvements and changes to their online stores. Website layout, easy user ability, and a product in demand have, in the past, been enough to keep an online store profitable. This is not the case anymore. Because consumers are beginning to grow tired of the mainstream online shopping stores, online shopping websites are looking to attract more customers by making some changes.
New innovations will transform online shopping, as we know it. "’The role the store is playing is changing,’ says Mr. Ross” (Steel, 2010, p. B6).  New technology has allowed websites to add virtual mirrors, shopping guides, and mannequins; however, there is more in store for the future. In the future, “Instead of looking at a static mannequin, consumers can interact with the screen to select outfits for an avatar (Steel, 2010, p. B6). One of the down sides to shopping online is that it is that you cannot try on the clothing before you purchase the merchandise. If virtual avatars in online clothing stores are accurate enough to simulate the users individual body, the need for physical stores may decrease. Having interactive technology like this will increase the amount of shoppers that use online stores over traditional physical stores. We can expect online retail to continue to grow and be a successful way to market products.

V) Conclusion:

Online shopping has become extremely popular over the last decade. Utilized mostly by the “Net- Generation”, this service is extremely convenient. Although online shopping can be very convenient and beneficial there are also some potential problems that can arise. Consumers have been seen to exhibit different buying behaviors when shopping online than when they are shopping in a physical store. This makes it imperative that retailers study the behaviors of consumers and make changes in order to remain profitable and successful. Another potential problem that can arise from online shopping is addiction. The convenience of online shopping that can be seen as very beneficial, can also lead to an unhealthy addictive pattern of behavior. If the person does not seek help, this unhealthy pattern, can result in an online shopping addiction, causing more than financial damage. In the future, we can expect online stores to improve their technology tremendously, allowing for an easier and a more realistic shopping experience online. The technology of online shopping websites will continue to grow and, as a result, will expand the online shopping market and benefiting thousands of consumers over the world.
Bibliography

1 ) Close, A., & Kukar-Kinney, M.. (2010). Beyond buying: Motivations behind
consumers' online shopping cart use. Journal of Business Research, 63(9/10), 986.  Retrieved September 19, 2010, from ABI/INFORM Global. (Document ID: 2108881051).
This source is a journal article which talks about the decision stage consumers go through before purchasing items online. Specifically the article talks about the issue of cart abandonment when shopping online.

2) DBS and PayPal team up to offer global online shopping experience for DBS/POSB
customers. (2010, August 16). The Pak Banker. Retrieved September 18, 2010, from Banking Information Source. (Document ID: 2111660421).
This source is a newspaper article that which talks about the online transactions involved in online shopping. In this article   PayPal is introduce to an area for online purchases.  allows for people, without credit cards or those uncomfortable with using their credit cards online, to purchase items online.

3) Kim, D., & Ammeter, A.. (2008). EXAMINING SHIFTS IN ONLINE
PURCHASING BEHAVIOR: DECODING THE 'NET GENERATION'. Allied Academies International Conference. Academy of Information and Management Sciences. Proceedings, 12(1), 7-12.  Retrieved October 9, 2010, from ABI/INFORM Global. (Document ID: 1559955801).

This journal examines the purchasing behavior of the net generation and the pre net generation. The journal goes into detail about the interactions each generation has with the internet.

4) Spencer, Charles.  (2010, July). Fighting addiction. The Spectator.  Retrieved
September 18, 2010, from Research Library Core. (Document ID: 2069789651).
This source is a magazine article explaining the dangers of online shopping. Specifically, this article covers the addiction of a man to online shopping.

5) Steel, Emily.  (2010, August 26). Luring Shoppers to Stores --- Marketers Try
Interactive Mirrors, Discounts via Scanners to Vie With the Web. Wall Street Journal  (Eastern Edition),  p. B.8.  Retrieved September 18, 2010, from ABI/INFORM Global. (Document ID: 2120082301).
This source is a Newspaper Article that talks about the advances in online shopping stores. The latest digital technologies are added to increase consumers purchasing rates online.