Perception of the People towards Online Shopping - Literature review Example

PERCEPTION OF THE PEOPLE TOWARDS ONLINE SHOPPING Prepared by Report distributed 4 March, Prepared for Amazon, eBay The report evaluates the perception of the people towards online shopping. This report contains a review of how the consumers look at online shopping. The purpose of this analysis report is to come up with future strategies that will help e-retailers grow and expand into new markets. The report also provides a deep understanding of how to manage online platforms in order to support the operations of the business. The Internet has other special features that no other shopping medium has. This makes e-retailers gain competitive advantage. The report found out that in web-based shopping, information, perceived usefulness, convenience, security, and perceived enjoyment are the dominant factors that affect consumer perceptions during online shopping. In this perspective, the report found out that the less energy spent, less crowd, unlimited time and space, and shorter service time have made most people prefer online shopping as opposed to physical store shopping. However, time and convenience are major facets of online shopping. There are no delay, queues, and traffic. By saving time, one actually saves money. Web-based shopping has a very bright future since it is a 24/7 affair. However, security and the privacy of the customers’ personal information is their biggest concern. To respond to consumer perception of online shopping, it is recommended that: (1) Convenience and time saving be enhanced by having high quality and faster websites. (2) Come up with secure ways of protecting and storing consumer’s personal information. Secure and confidential storage of customers’ personal information increases the customer’s trust on the e-retailers. (3) The online retailer also needs to use mobile applications to ensure the information reaches a wider customer base because most people own Internet-enabled mobile phones. (4) The company needs to educate its customers about online shopping. TABLE OF CONTENTS ABSTRACT 2 TABLE OF CONTENTS 3 ANALYSIS OF CONSUMER PERCEPTION OF ONLINE SHOPPING 7 Information 7 Perceived usefulness 8 Convenience and ease of use 9 Perceived enjoyment 10 Security 12 CONCLUSION 13 WORKS CITED 15 EXECUTIVE SUMMARY The report analyses the perception of the people towards online shopping. The purpose of this analysis report is to come up with future strategies that will help e-retailers grow and expand into new markets, thus enabling the growth of the firm. If the electronic-marketer knows the factors that influence online consumer behaviors, along with the relationships between these factors and type of Internet-based shoppers, they can further develop their marketing strategies to convert the potential clients into active ones, while maintaining the existing online customers. Consumers around the world share some characteristics. Therefore, to measure the online shopping preferences behavior for consumers around the globe, the factors that affect online shopping behavior were evaluated. Attitude is an effective variable which has a positive impact on future intention of web-based shopping. Therefore, any factors that affect the consumers’ attitude have an impact on the consumers’ perception of the Internet-based shopping. The report found out that the following are the dominant factors that affect consumer perceptions during online shopping: access to adequate information, perceived usefulness of the purchase mode, convenience, security and privacy, and finally, perceived enjoyment. All these factors have an impact on the consumers’ perception of web-based shopping. Time saving, a broad range of products to choose from, and convenience are the major reasons why people prefer shopping online. However, from evaluation of literature the disclosure of personal, credit card and debit card information is their biggest concern. Therefore, the company’s site is supposed to be designed in a manner that consumers’ information is protected from intruders and clients spend less time looking for information. INTRODUCTION This report contains a review of how the consumers look at online shopping. The purpose of this report is to come up with future strategies that will help the firm to grow and expand into new markets. The report also provides a deep understanding of how to manage online platform in order to support the operations of the business. New media has affected the manner in which people shop. The Internet has exerted an increasingly strong influence on people’s lifestyle. The top five online activities include surfing, e-mailing, social networking, chatting, and job searching. Some of the sites that are commonly utilized for these activities comprise of the following: Yahoo, eBay, and Google. The Internet has brought sweeping changes in people’s shopping habits. Initially, the most common mode of shopping was in shopping at an outlet village, shopping-centers, high street, department stores, as well as at the markets. However, the advent of the Internet resulted in another mode of shopping; online shopping and it is developing at a very rapid rate. Flick defines online shopping as “buying products and services via the internet” (p.13). In 2014, a report by ACNielsen found out that more than 500 million have shopped online. By 2013, e-commerce had accounted for about $335 billion in sales. By 2020, e-commerce is expected to account for $700 billion in sales (Vegiayan, Ming, and Harun, 2013). The global e-commerce is growing at an annual rate of 30%. In the coming years, it is expected to grow to 65%. Over 400 million Europeans use the Internet more often for shopping purposes. The boom in the young adult population is projected to increase the online shoppers. This is because the youth are the main buyers who purchase products through the Internet (Changchit 178). Currently, online shopping is the latest trend among shoppers (Cao, Xu, and Douma 957). Traditional shopping is suffering while online shopping selling is soaring. Online sales are increasing because they are attracting customers from the high street. With the entry of the Internet in the market, more people are shifting from the previous purchasing trends. Furthermore, economic pressures have increased tremendously, an aspect that is forcing people to be more reserve and look for efficient strategies to reduce various costs. Therefore, people do not have adequate time to purchase products physically. Moreover, many people are opting to use the online platform because it is fast and reliable. This aspect is creating an opportunity for the businesses to utilize the new purchasing behavior. More people have access to devices that enable them to transact their businesses online. These include phones, laptops, computers, and tablets. Therefore, the number of people that are turning towards the new trend in the market is increasing tremendously. In this regard, the online transacting companies need to come up effective security as well as privacy measures to ensure proper protection of the consumer’s personal information during and after online shopping. ANALYSIS OF CONSUMER PERCEPTION OF ONLINE SHOPPING Saprikis, Chouliara, and Broekhuizen (2) observed that an individual’s purchasing choices are influenced by four major psychological factors, including perception, motivation, learning, beliefs, and attitude. The intention of the customer to shop online is positively linked with the attitude towards online purchasing, and affects their decision-making and purchasing behavior (Gagandeep and Gopal 125). Besides, studies have demonstrated the reciprocal influence between the intention to shop and customer satisfaction. If the expectations are met, the client attains a higher level of satisfaction that in turn influences their online shopping perceptions and attitudes positively. The Internet users are projected to grow to 1 billion by 2020 (Flick 18). About 25% of the regular shoppers on the Internet are aged between 18-25 years, while 49% are aged between 26 to 35 years (Narges, Laily, and Ali 166). Besides that, most of web-based shoppers are females. With an increasing number of online shoppers, it shows that the consumer’s perception towards Internet- based shopping is improving. Convenience, choice, less crowds, and choice among others are driving the people to go and shop online. In this regard, the report found out that the following are the dominant factors that affect consumer perceptions during online shopping: Information The amount of information available for the product plays a very crucial part of a person to decide to purchase the item online. People decide to shop via the Internet because there is increased product selection and information (Broekhuizen 12). Online stores describe product for sale with photos, multimedia files, and sound. On the other hand, the physical retail stores require one to visit the premise in order to get information regarding the product. Additionally, some online stores provide supplemental information about the product, for instance, demonstrations, safety procedures, and instructions. This makes most of the people to choose web-based shopping since they can get background information and advice that will assist them to make a decision on which product to purchase. In some instances, the online stores allow the clients to rate and even comment on their items or services. When a person wants a quick clarification about a product, in physical stores, the customer care personnel may not be available and rely on phone calls to answer customer questions. However, online stores have real time chats that enable customers get in touch with seller at any time. This positively impact on the online purchasing perception. For the high involvement product, such as houses, cars, and boats, a lot of information eases the decision for the consumer to either buy the product or not. In online stores, information complexity would induce impulse buying (Keen et al., 685). Perceived usefulness Perceived usefulness is the extent to which a person believes making use of a certain system will be of great help (Gagandeep and Gopal 124). Perceived usefulness is derived from the ease of use. The ease of use of the Internet and its related gadgets has a positive impact on the consumer’s online purchasing behavior. The Internet is praised for its capabilities to provide interactivity (Broekhuizen 12). The people are finding it easy to use their mobile phones for shopping. A person who is conversant with using an Internet enabled phone is more likely to purchase things online. Besides that, most people often use mobile phones as shopping assistants both in physical store and online shopping (see Fig.1). 56% of the consumers compare prices and search for promotions through the mobile phones. However, only 13% use it to contact the retailer. This shows that the mobile phones are a crucial element of online shopping. Figure 1: Use of mobile devices as shopping assistants (Gagandeep and Gopal 127). Convenience and ease of use Perceptions can be able to impact on the purchase decisions of a customer. When somebody perceives that online shopping is convenient and flexible, he or she may be persuaded to shop online. Vegiayan, Ming, and Harun posit that: “Today, online shopping has become massively convenient and offers a wide range of products to be purchased” (43). This shows that most people are shifting towards online shopping. Internet shopping requires that the consumer does not necessarily have to visit the shopping premises, and a result saves travel time. The perception of convenience means that interests of the consumer to make a purchase is also increased. Saprikis, Chouliara, and Broekhuizen (2) add that people purchase online because of the ease of use in comparison to physical store shopping. Checking out at physical stores can be very tedious (Liu and Forsythe 83). Therefore, the online shoppers value avoidance of queues, availability of shopping on a 24-hour basis and time efficiency as shown in the Figure below. The process is quick and convenient to any person. Figure 2: Process of carrying out an online purchase (Vegiayan, Ming, and Harun 44). The flexibility of purchase allows the customer to make a purchase anytime anywhere. A study carried out by Monsuwe et al. collectively provided all the related literature review regarding convenience as a factor that drives consumers to shop online. One can order the product from the online stores anywhere in the world provided they have access to the Internet. Perceived enjoyment With the growing number of people using the internet, it is crucial to establish if the consumers enjoy purchasing online (Osman, Yin-Fah and Hooi-Choo 139). Enjoyment is an intrinsic source of motivation. Enjoyment is a perception of emotional and hedonic dimensions (Shang, Chen, and Shen 401). Most young people enjoy spending time on the Internet. This is because they underestimate the difficulty of the process of online shopping. Buttner and Goritz argue that, “Higher levels of perceived trust and enjoyment of shopping websites results in more favorable consumer attitudes” (35). Motivational factors influence the likelihood of online purchasing. Even though older males are more likely to purchase on the Internet as compared to the younger users, the younger users have more positive attitudes towards online shopping (Osman, Yin-Fah and Hooi-Choo 135). The younger people enjoy purchasing items from the online stores. This is evidenced in the number of hours young people spend on the Internet. Figure 3: Number of hours spent on the Internet between old and young people (Nayyar, Ruchi and Gupta 54). Nayyar, Ruchi and Gupta (53-66), in their research, they found that age also impacts on the Internet retailing adoption. From the figure above, the young people spend most about 70% of their time on the Internet, while the older persons only spend 30% of their time. As noted by Tan (6), young people are heavy internet users and spend up to 5 hours daily in the Internet, while old people are light Internet users spending less than an hour a day on the Internet. Currently, Generation Y is the majority of the online shoppers. The increasing utilization of the internet by younger generation offers an emerging prospect for the e-based retailers. However, they are females who perceive that they prefer shopping online since they enjoy it. Among the teenagers, females not only do shopping online, but also they prefer shopping in the online stores. A high quality, fast, and easy to navigate website makes one to enjoy carrying online transactions. Consequently, it impacts positively on someone who uses the Internet as a shopping medium. Security Perceived risk is a major determinant in consumer behavior (Rizwan). The perceived economic risk is when a person feels he or she may experience financial loss for the purchase of the product (Childers et al., 511). It is often associated with fraud in online shopping. The additional dimension risk; privacy and security are major concerns for people who shop online. Most people believe that online shopping has numerous risks as compared to traditional stores. The work by Koyunchu and Bhattacharya give an insight on the drawbacks of online shopping, which affects peoples’ perception of web-based shopping. The disadvantages of internet shopping are identity theft and credit card fraud, shipping charges, and the online stores can close anytime as a result of power outages or viruses. Many online transactions require use of credit cards or bank accounts and many shoppers are afraid of releasing such information online. Most consumers fear that their ID and password can be stolen by people who have wrong intentions. Besides that, they also fear that their personal information can be accessed to third parties thus posing a serious threat to their privacy. Khitoliya came to a conclusion that: “An e-firm may get more revenue if the customers are assured that their personal information would be kept private and safe, and can increase their trust by providing facilities that offer more safe transactions for when they carry out web-purchases” (18). CONCLUSION Electronic-commerce is creating an entirely new economy, with online shopping becoming a crucial component of people’s daily lives to meet their never ending requirements in a convenient manner. The continuous advancements in information technology have impacted positively on embracing internet shopping whilst deterring the physical store shopping. The exponential growth in the number of people transacting electronically is evidence that most people are using the Internet as a shopping medium. As evidenced in research, the majority of online shoppers by gender are females and young people by age. With the rapid development of mobile technology and the Internet, online shopping is quickly becoming a trend. More people are engaging in web-based shopping as found out by Flick (35-45), because of the value proposition it provides to a consumer, like, doorstep delivery, wider product choice, ease of comparison, adequate product information, convenience, 24/7 shopping, time saving, and less crowds, as well as no queuing. The major motivating factor for Internet-based shopping is convenience and time saving. The consumers are able to purchase products irrespective of their location. This would positively impact on the consumer’s purchase intentions via the Internet. However, the major concern for people who use the Internet as a shopping medium is the security of their personal information. In the same way, if the security and confidentiality concerns are addressed such as invention of speech software, most people will find it secure to transact business online. RECOMMENDATIONS Firms need to invent and innovate rapidly in order to address the security issues. Technology such as speech software need to be invented to tackle the security concerns. Other technologies like the encryption technologies should be used to reduce incidents of insecurity in internet shopping. This will create consumer trust with the website Few people have credit cards across the globe, and most people are usually hesitant to use them as a mode of web-based payment. Therefore, alternative modes of payment are supposed to be used, for instance, cash on delivery. The consumers are to be made aware of the safety aspects of utilizing the credit cards online. As a consequence, the consumers will be protected from the fraudulent utilization of the credit cards. With growth of the mobile phone usage, the company can come with more mobile-based applications that can be used for online shopping. This is because most people have termed mobile phones as very convenient in its uses. To pay strong attention to the issue of security and come up with innovative safeguards, which protect the consumers, and also make the prospective consumers aware that personal data, communications, and transaction information, can be protected. The company can adopt the click and motor model with real operations to act as a complement to the firm’s online presence, where customers can physically walk in the offices and access the company’s services. Transparency in policies, insurance against fraud, and after sale services must be provided to make online shopping an enjoyable experience. Increase convenience by allowing the consumers to be able to make comparisons of the products via their mobile phones. The company needs to educate its customers about online shopping, for instance, detecting spoof mails, reading the item description, and searching for the seller’s feedback. Time saving and convenience are the major reasons why people prefer shopping online. 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