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Part of a series on |
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Online goods and services |
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Retail product sales |
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Retail services |
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Marketplace services |
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Online shopping is the process consumers go through to purchase products or services over the Internet. An online shop, e-shop, e-store, Internet shop, webshop, online store, or virtual store evokes the physical analogy of buying products or services at a bricks-and-mortar retailer or in a shopping mall.
The metaphor of an online catalog is also used, by analogy with mail order catalogs. All types of stores have retail web sites, including those that do and do not also have physical storefronts and paper catalogs.
Online shopping is a type of electronic commerce used for business-to-business (B2B) and business-to-consumer (B2C) transactions.
The term "Webshop" also refers to a place of business where web development, web hosting and other types of web related activities take place (Web refers to the World Wide Web and "shop" has a colloquial meaning used to describe a place of business, the place where one\'s occupation is carried out).
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Consumers find a product of interest by visiting the website of the retailer directly, or do a search across many different vendors using a shopping search engine.
Once a particular product has been found on the web site of the seller, most online retailers use shopping cart software to allow the consumer to accumulate multiple items and to adjust quantities, by analogy with 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).
Online shoppers commonly use their credit card for making payments, however some systems enable users to create accounts and pay by alternative means, such as:
Some sites will not allow international credit cards and billing address and shipping address have to be in the same country in which site does its business. Other sites allow customers from anywhere 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.
While credit cards are currently the most popular means of paying for online goods and services, alternative online payments will account for 26% of e-commerce volume by 2009 according to Celent. Celent Report: According to figures published by Celent 25 May 2006.
Once a payment has been accepted the goods or services can be delivered in the following ways.
Why does electronic shopping exist? For customers it is not only because of the high level of convenience, but also because of the broader selection; competitive pricing and greater access to information. 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.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.. For organizations it increases their customer value and the building of sustainable capabilities, next to the increased profitsStephen F. King en Juhn-Shiuan Liou, “A framework for internet channel evaluation”, International Journal of Information & Management 24 (2004), 473-488.
In the physical world, the process of creating value for customers is often referred to as a series of value-adding activities, a so called value chain. More recently, executives are increasingly pushed to pay attention to how their companies create value in both the physical world (value chain) and the virtual world (virtual value chain). However, the process by which value can be created in the virtual world, is not the same as in the physical world. The physical world, for instance, considers information as a supporting element of the value-adding process. By contrast, information in the virtual world is seen as a source of value itself.Rayport, J.F. & Sviokla, J.J. (1995) Exploiting the Virtual Value Chain. Harvard Business Review, November-december 1995.
Designers of Webshops should consider the effects of information load. Mehrabian and Russel (1974) introduced the concept of information rate (load) as the complex spatial and temporal arrangements of stimuli within a setting.Mehrabian, A., & Russel J.A. (1974) An Approach to Environmental Psychology. Cambridge, MA: The MIT Press. The notion of information load is directly related to concerns about whether consumers can be given too much information in virtual shopping environments. Compared with conventional retail shopping, computer shopping enriches the information environment of virtual shopping by providing additional product information, such as comparative products and services, as well as various alternatives and attributes of each alternative, etc.Huang, M. (2000) Information load: its relationship to online exploratory and shopping behavior. International Journal of Information Management 20: 337-347.
Two major sub-dimensions have been identified for information load: complexity and novelty.Campbell, D.J. (1988) Task complexity: A review and analysis. Academy of Management Review, 13(1), 40-52. Complexity refers to the number of different elements or features of a site, which can be the result of increased information diversity. Novelty involves the unexpected, suppressing, new, or unfamiliar aspects of the site. A research by Huang (2000) showed that the novelty dimension kept consumers exploring the shopping sites, whereas the complexity dimension has the potential to induce impulse purchases.Huang, M. (2000) Information load: its relationship to online exploratory and shopping behavior. International Journal of Information Management 20: 337-347.
Designers of webshops should consider research outcomes concerning consumer expectations. Research conducted by Elliot and Fowell (2000) revealed satisfactory and unsatisfactory customer experiences.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
It is important to take the country and customers into account. For example, in Japan privacy is very important and emotional involvement is more important on a pension’s site then on a shopping site.Stephen F. King en Juhn-Shiuan Liou, “A framework for internet channel evaluation”, International Journal of Information & Management 24 (2004), 473-488 Next to that, there is a difference in experience: experienced users focus more on the variables that directly influence the task, while novice users are focusing more on understanding the information.Ram L. Kumar et al., “User interface features influencing overall ease of use and personalization”, Information & Management 41 (2004): 289-302
There are several techniques for the inspection of the usability. The ones used in the research of Chen & Macredie (2005) are: Heuristic evaluation, cognitive walkthrough and the user testing. Every technique has its own (dis-)advantages and it is therefore important to check per situation which technique is appropriate.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
When the customers visited the online shop, a couple of factors determine whether they will return to the site. The most important factors are the ease of use and the presence of user-friendly features.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
E-commerce product sales totaled $146.4 billion in the United States in 2006, representing about 6% of retail product sales in the country. The $18.3 billion worth of clothes sold online represented about 10% of the domestic market.6%, 10%Online sales spike 19 percent
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.
Online stores are usually available 24 hours a day, and many consumers have Internet access both at work and at home. A visit to a conventional retail store requires travel and must take place during business hours.
Searching or browsing an online catalog can be faster than browsing the aisles of a physical store. Consumers with dial-up Internet connections rather than broadband have much longer load times for content-rich web sites, and have a considerably slower online shopping experience.
Some consumers prefer interacting with people rather than computers (and vice versa), sometimes because they find computers hard to use. Not all online retailers have succeeded in making their sites easy to use or reliable.
In most cases, merchandise must be shipped to the consumer, introducing a significant delay and potentially uncertainty about whether or not the item was actually in stock at the time of purchase. Bricks-and-clicks stores offer the ability to buy online but pick up in a nearby store. Many stores give the consumer the delivery company\'s tracking number for their package when shipped, so they can check its status online and know exactly when it will arrive. For efficiency reasons, online stores generally do not ship products immediately upon receiving an order. Orders are only filled during warehouse operating hours, and there may be a delay of anywhere from a few minutes to a few days to a few weeks before in-stock items are actually packaged and shipped. Many retailers inform customers how long they can expect to wait before receiving a package, and whether or not they generally have a fulfillment backlog. A quick response time is sometimes an important factor in consumers\' choice of merchant.
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.http://www.oft.gov.uk/shared_oft/business_leaflets/general/oft698.pdf)
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.
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.
One advantage of shopping online is being able to quickly seek out deals for items or services with many different vendors (though some local search engines do exist to help consumers locate products for sale in nearby stores). Search engines and online price comparison services can be used to look up sellers of a particular product or service.
Shoppers find a greater selection online in certain market segments (for example, computers and consumer electronicsConsumer Reports: Online Retailers Better Than Walk-In Stores for Electronics Shopping - Press Release) and in some cases lower prices. This is due to a relaxation of certain constraints, such as the size of a "brick-and-mortar" store, lower stocking costs (or none, if drop shipping is used), and lower staffing overhead.
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.
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. 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. On the other hand, dealing with an automated system instead of a population of store clerks reduces the risk of employees stealing consumer information, or dumpster diving of paper receipts. Denial of service attacks are a minor risk for merchants, as are server and network outages.
Quality seals can be placed on the Shop webpage 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.10 Tips To Safe Online Shopping | Information and Web Site Links These include:
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.
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.
| Category | U.S. online sales (2006)Shop.org Research - The State of Retailing Online 2007 - Press Release May 14, 2007 |
|---|---|
| Apparel, accessories and footwear | $18.3 billion |
| Computer hardware and software | $17.2 billion |
| Autos and auto parts | $16.7 billion |
| Home furnishings | $10.0 billion |
| Total products sales (excluding travel) | $146.4 billion |
| Travel | $73.5 billion$219.9B - $146.4B = $73.5B; $146.4B is from http://money.cnn.com/2007/05/14/news/economy/online_retailing/ |
Many successful purely virtual companies deal with digital products, (including information storage, retrieval, and modification), music, movies, office supplies, education, communication, software, photography, and financial transactions. Examples of this type of company include: Google, eBay and Paypal. Other successful marketers use Drop shipping or Affiliate marketing techniques to facilitate transactions of tangible goods without maintaining real inventory. Examples include numerous sellers on eBay.
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 through a standard letterbox — such as music CDs, DVDs and books — are particularly suitable for a virtual marketer, and indeed Amazon.com, one of the few enduring dot-com companies, has historically concentrated on this field.
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, Tesco.com has had success delivering groceries in the UK, albeit that many of its goods are of a generic quality, and clothing sold through the internet is big business in the U.S. Also, the recycling program Cheapcycle sells goods over the internet, but avoids the low value-to-weight ratio problem by creating different groups for various regions, so that shipping costs remain low. On-line or teleshopping as it is sometimes called is relatively new. Real-time transaction processing from a domestic television was first demontrated by Michael Aldrich[UK 1979] who designed and installed systems in the UK including the first Tesco pilot system in the 1980s.
High-volume websites, such as Yahoo!, Amazon.com, and eBay, offer hosting services for online stores to small retailers. These Stores are presented within an integrated navigation framework. Collections of online Stores are sometimes known as virtual shopping malls or online marketplaces. These virtual shopping malls are sometimes created in order to give the consumer the choice of a variety of online resellers without actually selling product directly themselves, such as not-socks-again.co.uk. These sites receive commision payments via affiliation with the retailers. This gives the retailers another way into the marketplace other than their own websites. Sometimes the metaphor is taken more literally, and a visual representation similar to a conventional shopping mall or village is presented.Virtual Shopping Malls Making a Comeback?, Read/WriteWeb, 5 December 2006.
There are multiple websites that compile coupon or discount information for most online merchants. One example is marketplacepoint.com, a directory of UK retailers with listings of the latest discounts and promotions.
This article is licensed under the GNU Free Documentation License. It uses material from Wikipedia
