Online shopping

Overview

Online shopping is a form of electronic commerce which allows consumers to buy goods or services directly from a seller over the Internet using a web browser or a mobile app. Consumers generally find a product of interest by visiting a retailer's website specifically. They may also search among alternative vendors using a shopping search engine, which displays the same product's availability and pricing at different e-retailers. Customers can shop online using a variety of different computers and devices, including desktop computers, laptops, tablet computers and smartphones. Online stores that evoke the physical analogy of buying products or services at a regular "brick-and-mortar" retailer or shopping center follow a process called business-to-consumer (B2C) online shopping. When an online store is set up to enable businesses to buy from another business, the process is instead called business-to-business (B2B) online shopping. A typical online store enables the customer to browse the firm's range of products and services, view photos or images of the products, along with information about the product specifications, features and prices. Unlike physical stores which may close at night, online shopping portals are always available to customers. Online stores usually enable shoppers to use "search" features to find specific models, brands or items. Online customers must have access to the Internet and a valid method of payment in order to complete a transaction, such as a credit card, an Interac-enabled debit card, or a service such as PayPal. For physical products (e.g., paperback books or clothes), the e-tailer ships the products to the customer; for digital products, such as digital audio files of songs or software, the e-tailer usually sends the file to the customer over the Internet. The largest of these online retailing corporations are Alibaba, Amazon.com, and eBay.

Terminology

Alternative names for the activity are "e-commerce", a shortened form of "electronic commerce" or "e-shopping", a shortened form of "electronic shopping". An online store may also be called an e-web-store, e-shop, e-store, Internet shop, web-shop, web-store, online store, online storefront and virtual store. Mobile commerce (or m-commerce) describes purchasing from an online retailer's mobile device-optimized website or software application ("app").

History of online shopping

One of the earliest forms of trade conducted online was IBM's online transaction processing (OLTP) developed in the 1960s, which allowed the processing of financial transactions in real-time. The computerized ticket reservation system developed for American Airlines called Semi-Automatic Business Research Environment (SABRE) was one of its applications. There, computer terminals located in different travel agencies were linked to a large IBM mainframe computer, which processed transactions simultaneously and coordinated them so that all travel agents had access to the same information at the same time. At some point between 1971 and 1972, students at Stanford and MIT used the internet precursor ARPANET to make a deal to exchange marijuana, but the interaction does not qualify as e-commerce because no money was transferred online. The landscape of online shopping as we know it today took shape with the rise of the Internet. Initially serving as a mere advertising platform, the Internet transitioned swiftly into a dynamic space for actual online transactions. This transformation was fueled by the development of interactive web pages and secure transmission protocols, marking a pivotal moment in 1994 with the first online sales of Sting's album, Ten Summoner's Tales. This milestone event set the stage for the diversification of online retail, with early adopters such as wine, chocolates, and flowers paving the way. These products became pioneers in the e-commerce realm, capturing the attention of a growing audience. Researchers identified a crucial factor for internet success – the suitability of products for online transactions. Generic items that didn't necessitate physical interaction gained traction, propelling the online shopping trend forward. In its nascent stages, online shopping faced a limited audience. The early adopters were predominantly affluent males aged 30 and above. However, this demographic landscape underwent significant changes over time, and the online shopping sphere became more inclusive. Over the years, the United Kingdom has witnessed a substantial shift in consumer behavior, with online shopping accounting for a noteworthy percentage of retail transactions. The extent of this influence varies depending on the product category, highlighting the diverse ways in which consumers engage with online platforms.

Growth in online shoppers

As the revenues from online sales continued to grow significantly researchers identified different types of online shoppers, Rohm & Swaninathan identified four categories and named them "convenience shoppers, variety seekers, balanced buyers, and store-oriented shoppers". They focused on shopping motivations and found that the variety of products available and the perceived convenience of the buying online experience were significant motivating factors. This was different for offline shoppers, who were more motivated by time saving and recreational motives.

English entrepreneur Michael Aldrich was a pioneer of online shopping in 1979. His system connected a modified domestic TV to a real-time transaction processing computer via a domestic telephone line. He believed that videotex, the modified domestic TV technology with a simple menu-driven human–computer interface, was a 'new, universally applicable, participative communication medium — the first since the invention of the telephone.' This enabled 'closed' corporate information systems to be opened to 'outside' correspondents not just for transaction processing but also for e-messaging and information retrieval and dissemination, later known as e-business. His definition of the new mass communications medium as 'participative' [interactive, many-to-many] was fundamentally different from the traditional definitions of mass communication and mass media and a precursor to the social networking on the Internet 25 years later. In March 1980 he launched Redifon's Office Revolution, which allowed consumers, customers, agents, distributors, suppliers and service companies to be connected online to the corporate systems and allow business transactions to be completed electronically in real-time. During the 1980s he designed, manufactured, sold, installed, maintained and supported many online shopping systems, using videotex technology. These systems which also provided voice response and handprint processing pre-date the Internet and the World Wide Web, the IBM PC, and Microsoft MS-DOS, and were installed mainly in the UK by large corporations. The first World Wide Web server and browser, created by Tim Berners-Lee in 1989, opened for commercial use in 1991. Thereafter, subsequent technological innovations emerged in 1994: online banking, the opening of an online pizza shop by Pizza Hut, Netscape's SSL v2 encryption standard for secure data transfer, and Intershop's first online shopping system. The first secure retail transaction over the Web was either by NetMarket or Internet Shopping Network in 1994. Immediately after, Amazon.com launched its online shopping site in 1995 and eBay was also introduced in 1995. Alibaba's sites Taobao and Tmall were launched in 2003 and 2008, respectively.

International statistics

Statistics show that in 2012, Asia-Pacific increased their international sales over 30% giving them over $433 billion in revenue. That is a $69 billion difference between the U.S. revenue of $364.66 billion. It is estimated that Asia-Pacific will increase by another 30% in the year 2013 putting them ahead by more than one-third of all global e-commerce sales. The largest online shopping day in the world is Singles Day, with sales just in Alibaba's sites at US$9.3 billion in 2014. In 2018, 9.8% of all retail sales in the United States were made online. In 2019, that figure was 2.8% in Canada. In the United Kingdom, online sales peaked at 37.8% of all retail sales in January 2021, and were at 26.3% in January 2024.

Customers

Online customers must have access to the Internet and a valid method of payment in order to complete a transaction. Generally, higher levels of education and personal income correspond to more favorable perceptions of shopping online. Increased exposure to technology also increases the probability of developing favorable attitudes towards new shopping channels. In addition, age is also a significant factor that affects online shopping. Culture can have a big effect on how shoppers trust reviews and make important decisions. People in different countries can respond differently to online information than someone from their own country. On top of that, after the pandemic, it seems that more people are relying on online websites for things they used to buy in person at the store. People feel that privacy and security factors have an even more significant impact on attitudes toward online shopping than product factors. Shoppers of different age groups have different perceptions of the risk factors of online shopping.

Customer buying behaviour in digital environment

The marketing around the digital environment, customer's buying behaviour may not be influenced and controlled by the brand and firm, when they make a buying decision that might concern the interactions with search engine, recommendations, online reviews and other information. In modern shopping environments, people are more likely to use their mobile phones, computers, tablets and other digital devices to gather information. When people shop online, how risky they feel when purchasing an item plays a big role. Websites that offer secure payment options and good delivery systems make shoppers feel safer and more open to making a purchase. Plus, the way reviews are presented with like the design of the site, layout, and pictures, will also really influence their decisions. In an online shopping environment, interactive decision may have an influence on aid customer decision making, through online product reviews and user-generated content, typically provided through software from companies like Bazaarvoice and Trustpilot, or via social media. This content, which can include text or video-based reviews, customer photos, and feedback, is often displayed alongside products being sold on websites like Amazon, Target, and most other digital storefronts. Subsequently, risk and trust would also are two important factors affecting people's' behavior in digital environments. Customers consider to switch between e-channels, because they are mainly influence by the comparison with offline shopping, involving growth of security, financial and performance-risks In other words, a customer shopping online that they may receive more risk than people shopping in stores. There are three factors may influence people to do the buying decision, firstly, people cannot examine whether the product satisfy their needs and wants before they receive it. Secondly, customer may concern at after-sale services. Finally, customer may afraid that they cannot fully understand the language used in e-sales. Based on those factors customer perceive risk may as a significantly reason influence the online purchasing behaviour. Online retailers has place much emphasis on customer trust aspect, trust is another way driving customer's behaviour in digital environment, which can depend on customer's attitude and expectation. Indeed, the company's products design or ideas can not met customer's expectations. Customer's purchase intention based on rational expectations, and additionally impacts on emotional trust. Moreover, those expectations can be also establish on the product information and revision from others. In several studies, perceived value, shopping style, and brand trust are the main factors that affect online consumers' decisions. The perceived value means that people can compare the products and prices online, bringing them the perceived value of getting more benefits online than in an offline store. The comfortable environment that online shopping brings to customers can make consumers get more perceived value. In the end, E-commerce behavior is still mostly influenced by families that are receptive to new technologies, and to a lesser extent by efficiency concerns.

Product selection

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. Users can compare and evaluate products using product information on the website, as well on other websites such as websites about product tests. Once a particular product has been found and selected 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 (although full credit card numbers, expiry date, and Card Security Code, or bank account and routing number should not be accepted by e-mail, for reasons of security).

Impact of reviews on consumer behavior

One of the great benefits of online shopping is the ability to read product reviews, written either by experts or fellow online shoppers. The Nielsen Company conducted a survey in March 2010 and polled more than 27,000 Internet users in 55 markets from the Asia-Pacific, Europe, Middle East, North America, and South America to look at questions such as "How do consumers shop online?", "What do they intend to buy?", "How do they use various online shopping web pages?", and the impact of 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 the research, reviews on electronics (57%) such as DVD players, cellphones, or PlayStations, and so on, reviews on cars (45%), and reviews on software (37%) play an important role in influencing consumers who tend to make purchases online. Furthermore, 40% of online shoppers indicate that they would not even buy electronics without consulting online reviews first. Studies using eye-tracking can show how people pay attention to certain parts of reviews and product images, which can really show how and what they decide to get. Other research shows that reviews that talk about certain prices, quality, and delivery tend to have a big impact on how customers tend to spend their money online. In addition to online reviews, peer recommendations on online shopping pages or social media websites play a key role for online shoppers when they are researching future purchases. 90% of all purchases made are influenced by social media.

Payment

Online shoppers commonly use a credit card or a PayPal account in order to make payments. Having a safe and reliable payment process can be a great way to build trust. If people feel their money is secure and safe within the buying process, they will most likely purchase the product and feel comfortable about it. However, some systems enable users to create accounts and pay by alternative means, such as:

Billing to mobile phones and landlines Bitcoin or other cryptocurrencies Cash on delivery (C.O.D.) Cheque/ Check Debit card Direct debit in some countries Electronic money of various types Gift cards Invoice, especially popular in some markets/countries, such as Switzerland Postal money order Wire transfer/delivery on payment Some online shops will not accept international credit cards. Some require both the purchaser's billing and shipping address to be in the same country as the online shop's base of operation. Other online shops allow customers from any country to send gifts anywhere. The financial part of a transaction may be processed in real time (e.g. letting the consumer know their credit card was declined before they log off), or may 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. For physical items:

Package delivery: The product is shipped to a customer-designated address. Retail package delivery is typically done by the public postal system or a retail courier such as FedEx, UPS, DHL, or TNT. Drop shipping: The order is passed to the manufacturer or third-party distributor, who then 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 selects a local store using a locator software and picks up the delivered product at the selected location. This is the method often used in the bricks and clicks business model. For digital items or tickets:

Downloading/Digital distribution: The method often used for digital media products such as software, music, movies, or images. Printing out, provision of a code for, or e-mailing of such items as admission tickets and 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 eligibility (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). Will call, COBO (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 shopping cart systems allow the off-line 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 enterprise resource planning program. It is usually installed on the company's web server and may integrate into the existing 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 simultaneously from one back office. Examples are BigCommerce, Shopify and FlickRocket. Open source shopping cart packages include advanced platforms such as Interchange, and off-the-shelf solutions such as Magento, osCommerce, WooCommerce, PrestaShop, and Zen Cart. Commercial systems can also be tailored so the shop does not have to be created from scratch. By using an existing framework, software modules for various functionalities required by a web shop can be adapted and combined.