At the end of the last century, online shopping was already starting to catch people’s attention, and was slowly attracting consumers to use it as a channel, primarily because of it’s ease in completing purchases (i.e. not needing to step out of the home) and also in providing information as, even then, some sites already provided extensive information (Gay 1999, Gehrt et al 2007). But we are well into the first decade of the 21st century, and since then times have changed and certainly, consumers’ motivations, as evidenced in this literature review and the results of the research project, have changed.
The use of the online channel for shopping varies greatly by country with the UK and the US ranking high up in the list with greatest ratio of online shoppers among Internet users, in addition to also having a large penetration of users for Internet access (Bhatti 2006). In the UK, Internet access among households has increased from 34% in 2000 to 54% in 2004, while Internet access for adults increased from 40% in 2000 to 64% in 2005 (Datamonitor 2006).
1.1 Research aims and objectives
The project had two key questions to focus on and this acted as a guide to the research design and methodology. The two key research questions in my project were:
- What are the key consumer motivations for online shopping and how are these impacting the development of the online channel? This question focused on the key drivers acting as impetus for consumers to pursue online shopping, and how these drivers were impacting the online channel as an alternative channel for making purchases.
- What are the emerging trends for online shopping, and how will the online shopping channel develop? As online shopping continues to increase, both organisations and consumers are expected to be better-placed with having a good understanding of where online shopping trends seem to be directed at.
1.2 Consumer motivations
The project sought to understand the consumer motivations for choosing online shopping as an alternative channel or, for some consumers, their main channel for shopping particular items. This part of the project was based on determining what consumers have stated as their key motivation factors through secondary research. This was supported by primary research by surveying and interviewing consumers on their motivational factors. The objective was to list out the key motivational factors consumers have for online shopping.
1.3 Emerging trends for online shopping
In addition to understanding consumer motivation, this project also sought, as an objective, to understand the emerging trends in online shopping, and establish a viewpoint on where the online channel was expected to move to. Similar for consumer motivations, this part of the project was based on a combination of primary and secondary research.
1.4 Rationale for research project
There was a strong rationale for pursuing this project as it aimed to provide a greater understanding of the consumer and the motivations behind online shopping. As the importance of the online channel becomes increasingly greater for organisations, there is greater need for determining the consumers’ key drivers in choosing this as an alternative channel for shopping. The project results impact both consumers and organisations. For consumers, this gave them a venue for stating their preferences and key requirements to continue using the online channel which could lead to improvements on the online shopping experience. For organisations, this project provided an understanding of the current situation and also the emerging trends based on competitive dynamics, in order to be able to provide the consumers their requirements.
This project was also important for me as the student as it gave me an opportunity to develop the knowledge and pursue the analysis of a critical management issue which was becoming a greater value add channel for a large number of organisations. The project, I believe, has led to new insights and a confirmation of consumers’ key motivations to online shopping. I believe this contributes to the growing knowledge on the online shopping experience of consumers
1.5 Overview of the study
- Chapter 1 is the introduction chapter where the background, research question and rational, objective and the structure of the research are stated.
- Chapter 2 contains a brief literature review on online shopping and provided basic understanding about consumer motivations and emerging trends for online shopping which is related to the research question.
- Chapter 3 is brief about the case study on online shopping.
- Chapter 4 contains research methodology which includes research frame work the design of the research, sampling and questionnaire.
- Chapter 5 describes the critical review of the findings.
- Chapter 6 discusses on recommendation and conclusions.
2. LITERATURE REVIEW
The study attempts to analyze research works relating to consumer motivations for online shopping and related issues are critically evaluated. This research project was pursued with a ‘qualitative research’ approach as the focus was on consumer motivations, which, while it could have been developed with quantitative metrics, seemed to translate better into a qualitative focus. The objective was more focused on going in greater depth across the key consumer motivations instead of tallying figures in terms of which factors consumers felt were their key motivations. The qualitative aspect of the research project was pursued through surveys and in-depth questionnaires.
2.1 Consumer motivations
Childers et al (2001) defines ‘‘consumer motivations for online retail shopping conducted a few years ago, some of the consumer motivations cited were interest in use of a new technology, ease of navigation and use, and convenience of online shopping”. While the research mentioned looked at consumer motivations, the research was only a subset of what could be learned from consumer behaviour as the study focused on only a few possible factors of online shopping activity.
Linked to the increase of online shopping is the increase in access and usage of the Internet. Rodgers and Sheldon (2002) researched ‘‘the increasing use of the Internet and highlighted shopping as one of the key motivations for increased consumer use”. In this work, the authors looked at shopping as a consumer motivation for increased consumer use.
(Ko et al 2005, Tamimi et al 2005, Dadzie et al 2005) discussed that ‘‘it should be noted that there has been considerable growth in Internet access and usage, and this has created a significant market in marketing and communications of organisations”. Online shopping has been growing and organisations have been focusing more on developing the online channel to capture a greater share of the wallet of the consumer.
Hult et al (2007) defines that ‘‘online shopping can relate to any offering of service quality, product quality, or e-Business quality where the objective is the customer-based value creation for organisations”. Based on this definition, we can see that the number of online shoppers has indeed increased significantly in the UK, with the percentage of UK Internet users shopping online (including ordering tickets of buying goods and services) grew from 36% in 2000 to 61% in 2005 (Datamonitor 2006).
For this research project, the broad definition is reasonable as the key focus of the research is in understanding consumer motivations for online shopping in general, with no specific product or service in mind. Undoubtedly, there are a large number of ways in which to cut the issue and there would be differences in the consumer motivations for specific products in specific markets.
The works cited in this section provided a good starting point in the consumer motivations to be considered. The research works also provided an indication of the increasing use of the Internet and online shopping as an activity. From the limitations cited in the research works, further research needs to be conducted on a general understanding of consumer motivations which are not limited to a few factors. The rest of this section discusses some motivating factors cited by consumers as driving their online shopping activity.
Bramall et al (2004) reported that ‘‘motivation by consumers is the 24-hour access provided or allowed by most online shopping channels. Thus, the online channel is utilised by consumers as it provides them with 24-hour access for information, customer service, and purchase opportunity”. This essentially gives the consumer the opportunity to browse products and purchase at the consumer’s own leisure. While the research of the authors states this factor as a motivation, the focus of the research work was actually on potential trust issues in online shopping. This specific motivating factor was not analysed in comparison to other motivating factors for consumers.
One oft-mentioned reason and an early consumer motivating factor, for shopping online is the convenience of doing so as consumers won’t need to go to the retail stores and experience the ‘hassle’ of buying products in the stores (NBC News 2007).
According to one study Furnham (2007) ‘‘not only highlight the convenience of shopping online but also states that shopping only also helps decision-making as a large part of the information requirements a consumer may need to make the decision are found online”. Clearly, shopping convenience is expected to rank high among the consumers in terms of their motivations for pursuing online shopping.
Gehrt et al (2007) reported that ‘‘Shopping convenience is a large factor for the US and UK consumers but this is not limited to the US or the UK markets only as even in Japan, online shopping has seen increasing growth rates, with shopping convenience as the greatest factor motivating consumers to do online shopping”.
The shopping convenience factor has been recognised across a number of research works, but these only tend to highlight that consumers have different meanings attached to the terminology, and may actually be referring to different sub-factors under the general term of convenience. In understanding this factor further, specific meanings were attached to and discussed in the surveys and interviews for the research.
Craver (2006) reported that ‘‘not only consumers are expected to continue increasing their online purchases but only if they receive greater bargains from sellers in their online sites versus their retail stores”. Thus, consumers are already building the expectations that prices online will be less that prices in retail stores.
Hajewski (2006) pointed out that ‘‘If only to hammer the point of increasing consumer expectations, two factors mentioned by consumers in their increased interest in doing online shopping were free shipping of their products purchased and also everyday low pricing particularly relative to the retail stores of the sellers”.
The key limitation in the citations for ‘greater bargains’ is that these are from press articles and the approaches were not based on proper research conducted to determine the consumer motivations for online shopping. Nevertheless, this should still be accepted as a consumer motivation as this has been mentioned to be a factor based on the articles cited.
Overall online shopping site experience
Elliott & Speck (2005) discussed that ‘‘touches on the overall online shopping site experience which in a way, relates to the overall customer experience in online shopping. This factor is quite specific to online shopping sites which consumers may visit but this nevertheless provides a motivation for some specific consumers and it relates to the overall online shopping site experience and having a positive satisfaction to the experience”. Specifically, the authors argued that the following factors impacted on the consumer motivation to complete their online shopping transactions: ease of use of online shopping site, product information available, trust in the brand and the online shopping site, customer support, and entertainment experienced while in the site.
The focus of the research conducted by the authors was not on online shopping specifically but rather on the attitude towards retail web sites but using the online shopping experience as an example, with an analysis of the resulting impact on the consumers. Similar to some of the other published research cited in this section, the key limitation is the set of respondents considered for the research which, in this case, consisted of undergraduate marketing students. The results are interesting and provide a good preview of what the results could be if the research is expanded to capture a greater sample of the population.
2.2 Emerging trends for online shopping
In reviewing the related literature touching on online shopping and also consumer motivations, a number of emerging trends were clearly seen. These include the following:
* Increased efforts in improving online security
* Potential for an expanded product range and ancillary businesses
* Usability of an online site as an increasing differentiator
* Management of Internet product returns
* Increasingly demanding consumers
* Increasing opportunity for organisations to develop consumer relationships
* Increasingly older market
* Greater share of ad market
Each of these trends is discussed in greater detail in this section.
Increased efforts in improving online security
(Bramall et al 2004, Arnold et al 2007, O’Connell 2005, Cullen 2005) explained that ‘‘online shopping has shown strong growth and yet the belief is that online shopping growth rates could actually be much higher if not for security-related concerns by some consumers”.
Biswas et al (2006) described ‘‘there are two trends to be noted in relation to the security concerns of consumers. The first, as mentioned, is that there are greater efforts placed by organisations in improving online security as breaches to their security could have considerable consequences. The second trend is that a complementary approach to improving reputation for managing online security risks is paramount”. In support of this, where there are great concerns for risk, it has been established that utilising expert endorsers, as opposed to celebrity endorsers or even non-celebrity non-expert endorsers, can actually help in bringing consumers over their risk concerns.
Potential for an expanded product range and ancillary businesses
Another trend is that organisations are increasingly seeing potential for an expanded product range and ancillary businesses. For example, in recent months, Kohl’s, a US department store chain, has offered products online which were not normally found in their department stores and these included higher-priced items such as leather chairs, high-end home entertainment centres, and flat screen televisions (Hajewski 2007).
This trend is not without its implications for organisation. In the Kohl’s example, one problem with the expanded product range as done by Kohl’s was that Kohl’s did not offer everything they had online in their retail stores. This is a concern as some consumers utilise the online site for their ‘window shopping’ before moving to the retail stores to try on and purchase the items (Dodes 2006). The article states that more than 80% of online shoppers research products online first before sometimes going to the stores to see the products firsthand. Given that not all products are available in the stores, it would be prudent for online sites to be clear about which products are available in the stores and which products are not.
In terms of ancillary businesses, the increase in online usage and online shopping has even spawned related business such as businesses which monitor traffic into organisations’ websites with the objective of increasing an organisation’s online sales (Newman 2007). Another ancillary business opportunity is from online shopping sites is as a social shopping space, such as Jellyfish.com which was recently acquired by Microsoft as it saw the growing opportunity in the business (Gallagher 2007). However, these new business are still untested as these are fairly new and would need some time before potentially growing into profitable businesses. As online shopping continues to grow, organisations will continue to seek out other opportunities that could help build the rationale for investments in establishing a highly competitive online shopping site.
Usability of online site is an increasing differentiator
Massey et al (2007) reported that ‘‘while the extent of technological readiness of the consumer plays a part in determining the level of comfort in navigating through an online shopping site, the general usability of an online shopping site is an increasing differentiator and distinguishes between the different sites that consumers will utilize in online shopping”. The goal with these sites is to have it easily navigated through by consumers such that any potential barriers to keep consumers from purchasing products and services are effectively taken out of the equation.
An example of an initiative moving into the direction of overall ease of usability is the recent transaction involving Abazias.com and Google wherein Abzias.com partnered with Google for their shopping checkout process which is considered fast and very convenient (M2 Presswire 2007). The challenge for organisations is to continue making their online shopping sites easier to use. And to support the point, some online shopping sites now provide potential live help from customer service if particular requirements are needed in order to limit the number of lost purchases resulting from consumers abandoning their purchases (Prince 2005). Overall, the design of the website and the ease of use have a large impact on the online shopping site’s performance (Auger 2005).
Management of Internet product returns
Mollenkopf et al (2007) explained that emerging trend is the establishment of clear guidelines in the management of Internet product returns, which then addresses a key concern or questions by some consumers. Internet product returns has been one of the key factors limiting part of the online shopping growth as the uncertainty surrounding how returns of defective or unwanted products impacted on the overall cost and inconvenience for the consumer. Organisations which are able to state clearly their policies on Internet product returns, and which provide a seamless process for allowing consumers to make returns for products bought online are at an advantage versus other organisations which have a perception of ‘being difficult’ to coordinate with in processing Internet product returns.
Increasingly demanding consumers
As the development of the online shopping channel continues, we are now seeing increasingly demanding consumers. This is shown in the UK supermarket sector. In this sector, online shopping is still considered a poor offering by the UK supermarkets as none of the top five supermarket chains passed a service test conducted by a consumer affairs staff of a newspaper (Prunn 2006). Their failures were from their product offering to the product substitutes provided. The key good news for the UK supermarkets though was that the websites were generally easy to use for online shopping. Also, the delivery drivers were helpful and friendly.
In contrast, in the US, online shopping offering for the supermarkets is a competitive offering with various supermarkets increasingly providing greater online shopping offerings for their consumers including chef-prepared, fresh-food delivery service (Food Institute Report 2006). Thus, the US supermarkets are able to provide the US consumers with their ‘demands’ from US supermarkets. UK supermarkets will need to focus on improving their offering in order to capture the consumer wallet for shopping deliveries.
Increasing opportunity for organisations to develop consumer relationships
(Kennedy 2006) pointed out that the online shopping channel provides organisations with an additional channel to develop consumer relationships. Organisations which are able to effectively capture value from their online shopping offering are the organisations which are able to “collect and analyze data on consumer patterns, interpret customer behaviour, respond with timely and effective customised communications, and deliver product and service value to consumers”.
The game is not new to most organisations. The only difference is that there is a new channel to consider for the consumer relationships. In order to be competitive, organisations should be able to learn from their interactions with the consumers, and develop the channel into one that consumers will find value from. With the growth of the online shopping channel, more organisations will invest in ensuring that consumer information is managed properly to be leveraged by the organisation in capturing value from the interactions.
Increasingly older market
Iyer & Eastman (2006) has noted that the “older internet users market comprises the fastest-growing demographic group in the Internet market” and are, aside from large and growing, generally financially secure.
This potential trend has large implications on various organisations that can benefit from this research work. Thus, a greater understanding of the key trends is important in order to allow the organisations to plan and invest properly in their online shopping channels.
Greater share of ad market
Finally, another trend worth noting is the increasing share of the ad market by the online channel. With the growth of the online shopping consumer market, the ad share of this channel is expected to grow as well from about 5-8% to up to one-fifth of total ad budgets over the next three years (Ong 2005). The greater share of the ad market by the online channel has implications for organisations across two key points. First is that there needs to be a decision on the amount of the ad budget that will be allotted to the online channel. After deciding on the first point, the second key point is that it is imperative for organisations to understand the business model of the online channel, and that the organisations have a plan in ensuring their investments will eventually generate good returns.
3. CASE STUDY
3.1 History of online shopping
Shopping online is the process for the customer to buy products or services via the Internet. In other words, consumers can buy it from the comfort of a holiday home of their own products from a store online. The concepts of this show before the first World Wide Web that are used with real-time transactions are processed from the domestic television! The technology used is called Videotext and shows the first time in 1979 by M. Aldrick, designed and installed the system in the UK. T. 1990 by Berners-Lee created the first WWW server and browser, and in 1995 by expanding the Amazon online shopping experience.
History of Online Shopping is amazing. Gone are the days of waiting in traffic and work our way through the store is too full. All we need is a computer, bank account, credit or debit card and freedom voila! From books, to cosmetics, clothes and accessories to name a few, online shopping is the best in the century to 21… Simply find a site that offers things you want, price and delivery terms and in a matter of a few days of your purchase is at your door. Benefits and the ease of clear predictable as we offer a wider selection, competitive prices and greater access to information in regards to our purchase. Online stores are usually available 24 hours a day, and allow consumers to shop in their spare time and without travelling outside normal working hours.
Another to consider is the first time the Internet was not well prepared that they will change the way we shop. On the web is created as a tool for communication, which in time to let the ease of virtual shopping. History of online shopping by itself represents a change by the people and now has become a service used by the ordinary business and shopping in the world.
(Online blog, http://roomen-online.blogspot.com/2009/08/history-of-online-shopping.html)
3.2 Growth of online shopping
The ability to shop online has transformed the way many consumers go about purchasing a product or service, giving the power to the individual consumer to access information, allowing easy and convenient research and comparison of various factors prior to making a purchase. The growth rate of online commerce is unparalleled in any other industry, growing twenty times faster than the overall UK retail market in 2005. Furthermore, the number of online shoppers grew by 25.5% to 14.6 million; with the number over the age of 55 doubling to 2.7 million. Forrester Research predict that UK shoppers will drive UK e-commerce from €43bn in 2006 to €76bn in 2011, accounting for 29% of total European internet retail. As such, we see the market study as a good opportunity to ‘take stock’ of online shopping in the UK, looking at what it has done for UK plc as a whole since its growth through the internet boom of the late nineties to the stable yet competitive market we see today. It is worth noting many of the businesses that lived through the dot-com crash were internet retail sites, a clear indication of the valuable role they play for consumers.
( OFT Market Study on Online Shopping, http://22.214.171.124/ndbs/positiondoc.nsf/1f08ec61711f29768025672a0055f7a8/6174E87FE56AFC3F8025735300568DBA/$file/oftonlineshopping250706.pdf )
3.3 Current trend
As far as online shopping in UK is concerned, there is clear trend that those who resort to this new system of shopping will increase by 30 to 40 per cent in a period of 4 years. Remember, there was a delay of 2 to 6 years for people to shift to online shopping after getting acquainted to the internet. But the online system is gaining momentum in an unprecedented market reaction. In the early years only younger generation was using the online shopping services, but then came a remarkable change in the pattern of users. More and more people from older generation are getting attracted to the online shopping system.
According to reliable projections, by 2050 the retail marketing scene will undergo a thorough change in its form and magnitude, and the shopping in UK will evolve beyond recognition with high street dominating the field. Everyone will be online, every hour every day! It will become an automatic process and convert the high street to something like a gallery style showroom!
If the prediction becomes a reality, the Britons will be spending nearly 63 billion pounds for the online shopping. 860 million parcels will be shipped to the United Kingdom to serve 26 million internet shoppers. Each shopper will spend £ 2400 each on an average. The number of people using online shopping will exceed the predictions and projections, if the present trend is an indication to that. At present, 10 per cent of the total retail selling is through internet. It will go up to 20 percent in 3 years.
There will be a remarkable change in the composition of customers, patronizing online shopping. Men and women of all ages and professions will adopt the new system for the advantages inherent in the online shopping. The older generation, will increasingly use the online shopping, to avoid the ordeals of travelling, searching and bargaining involved in the conventional shopping. It is easier, faster, safer and valuable, according to those who have changed over to the system. No doubt the online shopping will gain popularity and momentum in the coming years.
Globalization of trade has given a new impetus to this new market initiative. The political borders are disappearing as far as trade and commerce are concerned. The online trading and international postal services are giving new thrust to economy. Cross border shopping is flourishing.
The internet has helped to widen the area of information much to the benefits of the customers. More accurate information is available now, about the companies, their products and services. The consumers are able to browse online catalogues and acquire vital information about a variety of goods displayed by several companies in their websites.
Regarding prices there is a distinctively clear advantage for the consumer. The absence of middle men in the online shopping system will permit the dealers to trim their profit margins in favour of the customer. There are many price comparison service providers who serve the consumer by providing product information and price advantages. Retailers also publish their price ranges in such websites. The shopping web portals are more than the online version of yellow pages. The price comparison services search and retrieve data directly from retailers and feed them to the consumers through the internet. A comprehensive list of retailers and detailed list of prices are available with regular updating.
(Future of ONLINE SHOPPING in UK, http://www.edealsuk.com/articles/online-shopping-trend-uk.html)
4. RESEARCH METHODOLOGY
This research project was conducted with an explanatory research approach as the focus was in discovering ideas and insights into consumer motivations and emerging trends on online shopping (Mariampolski 2001). The research methodology also followed the framework of analysis defined in the previous section which resulted from the literature review.
As the research work was largely qualitative, the exploratory approach and the analysis and results from the primary research provides a good understanding of the consumer motivations for online shopping, and also provides a framework for further analysis if needed by other researchers focusing on greater depth in some areas or expansion of issues not covered in this research project.
The focus of the research project is on consumer motivations on online shopping and will not touch on specific online sites unless these are discussed in the context of increasing online shopping activities and consumer motivations.
4.1 Primary research
The key primary research activities for this project included surveys and in-depth interviews to understand the key consumer motivations for online shopping.
The surveys gave a preview of the various factors which were impacting on online shopping. An open-ended survey was conducted to give consumers the opportunity to give factors which they truly feel were their key motivating considerations. The survey was divided into two main sections:
* Open-ended and unprompted – This section was designed to allow the respondents to give answers freely without any prompts. This was to ensure that the consumers’ thoughts were captured properly, and that their ideas and key motivations were the ones that were included in their responses.
* Prompted with specific factors – After the unprompted section, the survey had a section which had some of the preliminary findings from the literature review. This was designed to test the literature review findings, and also provide the respondents an opportunity to highlight some factors which may be important but were not mentioned by the respondent during the first part of the survey.
4.1.2 In-depth Interviews
The in-depth interviews were