Internet As A Well Developed Global Network

Published Date: 02 Nov 2017

The rapid progression of the internet as a well-developed global network has enabled the advent of online shopping. Shopping online is somehow similar to shopping from a paper catalog since products are intangible (Spiller and Lohse, 1997). Resultantly, given physical inspection is impossible, the potential of online is greatly dependant on interaction issues with computers (Hoque and Lohse, 1999; Griffith et al., 2001).The internet has been a tool used mostly by young persons. Consequently the initial adopter of online shopping could well be categorised as being this young generation (Sorce, 2005; Perotti, 2005). However, this category of people has been extended to resemble that of the general population with the internet being more accessible (Stores, 2001). A study in the year 2000 in the USA showed 60 percent of the online shoppers were women (Sorce, 2005; Perotti 2005). A report by Jupiter Media Metrix showed consumers age 50 and above consisted of 16 percent of new online shoppers in the USA (Tedeschi, 2002). It is however surprising to note that the uptake of online shopping services has progressed slower than expected (Huang and Oppewal, 2006). With respect to grocery shopping specifically, PricewaterhouseCoopers found out after a study in the US that e-commerce websites managed to capture around a mere one percent of grocery shopping sprees (Huang and Oppewal, 2006).

Determinants of Online Purchase

Motivational factors

According to Babin et al. (1994), there are two main reasons for shopping:

shopping for fun (hedonic) and,

shopping with a goal in mind (utilitarian).

A qualitative analysis by Wolfinbarger and Gilly (2001) showed that these two motives were also typical of online shoppers. They found that the hedonic shopper (also called experiential shopper) normally sought a product specific online shopping experience.

On the other hand, goal-oriented shoppers had four motives for online shopping namely: convenience, informativeness, selection, and the ability to control the shopping experience. Surveys conducted by the Graphics, Visualization and Usability group at Georgia Tech (1994-1998) concluded that the online shopper was able to save time and get satisfaction with the convenience delivered by the web. Alreck and Settle (2002) established that compared to traditional modes of shopping, considerable time was saved through internet shopping.

Korgaonkar and Wolin, 1999 recognised seven motivations for using the web in the context of shopping: social escapism; transaction security and privacy; information; interactive control; socialization; non-transactional privacy; and economic motivation. As per their findings, "using ever-having-purchased-online as the dependent measure, the significant motivational reasons were transaction-based security concerns, interactive control, conversation motives, and economic motives. Joines et al. (2003) extended the framework of Korgaonkar and Wolin and found that only the economic motivation (e.g. "enjoy the convenience of shopping online") and transaction-based security concerns (e.g. "worried about the security of financial information") were found to be marginally statistically significant predictors of the amount of time searching for products online. For frequency of online purchasing, four motives were significant predictors: information motivation (e.g. "quick access to large volumes of information"), interactive control, economic motivation, and transaction-based security concerns" (Sorce, Perotti, 2005).

Another motivational factor could be on how the assessment of online products are done now for example with 360 degrees view or through virtual 3D simulation compared to earlier on when flat pictures and standard feature specifications were considered to be one of the most relevant sources of information obtained on the web when purchasing online (Jiyeon K., and Forsythe S. (2010). Currently consumers have the possibility to examine the products inside out hence increasing the positive experience brought by online shopping.

According to Liu and Arnett (2000), the two equally important categories of attributes in the selection of which online stores customers will be willing to trade with are Intrinsic and Extrinsic. Intrinsic attributes are mostly concerned with features such as color and design whereas Extrinsic attributes focuses on features like competitive pricing with low search costs, wide selection of products and easy access to information (Shang et al., 2005). The previously mentioned attributes have been evaluated and explained in the context of a three-stage important transaction process by (Ahn et al., 2004; Wolfinbarger and Gilly,. 2003; Ranganathan and Ganapathy,. 2002), and these are Product-Search, Purchase-Services and After-Sales Service.

A well-designed website could be another incentive which drives customers to do online shopping. Internet marketers could tap this potential with the help of easily maneuverable websites and adequate capacity to prevent system overload. This would effectively manage a customer’s waiting experience with special features to neutralise the potential negative effects (Dellaert and Kahn, 1999). Managing the interactivity of a customer’s online shopping experience is comparable to managing the physical contact in a traditional store. Novak et al. (2000) conducted an online survey with highly experienced users and found that one’s focused state of mind arises as a result of achieving flow on the web.

Behaviours and Attitudes

In relation with the subject matter, a survey by Rowley and Okelberry (2000) noted that 20 percent of consumers surveyed in 2000 expressed discomfort with shopping online.

Szymanski and Hise (2000) used focus groups of internet shoppers to explore e-satisfaction and based the results on the consumers’ perceptions on online convenience, merchandising, site design, and financial security. The internet has been the most convenient medium to shop. The more the web site facilitated searching and browsing online, the more satisfaction a customer got. Positive factors include wide product assortments, availability of product information online, and ease of search and comparative shopping for desired products. Online shopping websites should be well designed so that there is ease of navigation, lack of clutter and fast access. One major issue is that of credit card security from the advent of e-commerce (Kwon and Lee, 2003; Chain Store Age, 1999; Szymanski and Hise, 2000). Szymanski and Hise (2000) found that the level of financial security consumers feel with online retailers is related to their e-satisfaction.

Elements that encourage consumers to purchase products online include web page design, ease of navigation and the searching for information, security guarantees, and clearly stated return policies (Siddiqui et al., 2003). According to other popular literature sources, some of the reasons resulting in an increase in online shopping are: holiday crowd avoidance, low prices, ease of comparison shopping, low shipping costs, timely delivery, tax exempt status, avoidance of bad weather, improved security of information, improved customer service, convenience and time saving, and speedy e-mail response (Lorek, 2003; Magee, 2003; Maloy, 2003; Retail Merchandiser, 2003; Rowley and Okelberry, 2000). This is the case despite the fact that there is the threat of credit card fraud and a risk of diminished customer confidence (Magee, 2003).

Consumers are keener to do online shopping as they are provided with the services of alternative off-line payment methods which make their life more hassle-free.

Consumer responses in cases of online shopping are affected in many different ways such as the sense-making and the exploratory potentials of the environment. Consumers' involvement plays an important role in producing shopping value and intention to revisit. Both the hedonic and utilitarian value increases the consumers' intention to revisit the site.

The difference between the sense-making and the exploratory potential of online shopping environments lies in the relevant organizing framework. The framework helps us to understand the consumers' perception with respect to online shopping environments and how they process the information they get when they shop online. Although online shopping websites are conceived and designed by marketers and designers, their ultimate success depends on marketers’ and designers’ understanding of how holistically, the cues which contribute to create the virtual environment are seen, processed and used by consumers. Moreover, exploratory potential is crucial in resolving the relationship between sense-making potential and involvement.

Kaplan and Kaplan’s (1982) debate that people are not satisfied with just making sense of an environment. They are quickly bored and look for exploring ways to take a look beyond the boundaries of their world. The same appears to apply to online shopping contexts.

Age and Experience

The demographic variables such as income, education and age were found to have a modest impact on the decision of whether to buy online in a study conducted by Bellman et al. (1999). Previous online purchasing experience was the main determinant of buying on the web.

Alongside the seven motivational factors discovered by Korgaonkar and Wolin (1999), age and gender were also found to have a big influence on online purchasing. This is consistent with the results of Donthu and Garcia’s (1999) research, who found that older internet users were more likely to buy online when compared to younger users, even though the younger users had more positive attitudes towards internet shopping.

As consumers’ online shopping experience increases, their inhibitions diminish and they tend to see the benefits outweigh the risks associated with internet shopping (Doolin et al., 2005; Liebermann and Stashevsky, 2002), and thus show a greater inclination to use the internet as a shopping medium for their future purchases (Drennan et al., 2006; Forsythe et al., 2006).

Chua et al. found that "the level of anxiety consumers feel about a technology tends to be negatively related to their level of experience with the technology" (1999). Past study has looked into the relationship between internet usage and the risk that consumers perceived. For example, Liebermann and Stashevsky (2002) found that heavy internet users identified less risk using the internet than light internet users. A demographic factor, Age has been seen to reduce the perception of the risk factor. Therefore, the online purchase intention is higher in mature consumers as they find fewer risks associated with online shopping.

Product performance risk (related to functional aspects of the product (Shimp and Bearden, 1982) and financial risks (the uncertainty associated with the potential loss of money due to the security issue of online transactions or service failure (Grewal et al., 1994)) are the two types of risk which have been extensively studied in the online shopping literature (Bhatnagar and Ghose, 2004; Bhatnagar et al., 2000). Moreover, there exists time/convenience risk in online shopping owing to the difficulties or delays that can be experienced during web site navigation, order submission, or waiting for the delivery (Biswas and Biswas, 2004; Forsythe and Shi, 2003).

Along with risks, perceived benefits have been investigated as another predecessor of consumers’ online shopping behavior.

Some useful benefits pertaining to online shopping are: convenience, cost saving, or merchandise selection aspects. Convenience has been the main benefit of online shopping due to the fact that no time or space constraints exist on the internet (Bhatnagar and Ghose, 2004; Forsythe et al., 2006). In addition there is a large quantity of product and price-related information as well as the variety of product choices available on the internet. These are other advantages that draw consumers to online shopping (Forsythe et al., 2006; Wolfinbarger and Gilly, 2001). Some benefits which are more fun can also be sought through online shopping, namely the entertainment package which is enjoyed through online browsing and purchasing activities (e.g. Forsythe et al., 2006; Ja¨rvenpa¨a and Todd, 1996).

Online shopping now allows consumers to evaluate the functionality and appearance of a product, creating an enthralling web-based experience. It also enables marketers to deliver more accurate product specifications thus reducing perceived risk customers might undergo if the product does not match their own expectations, and engaging consumers in spending a good time shopping on the Internet. It has the possibility to increase the level of distinctive and recurrent visitors to the site, growing electronic sales, and eventually foster an online competitive advantage.

For example, Sony at sonyericson.com provides an "interactive phone simulator" function for a shopper to simulate many features of its cell phones. Shoppers cannot only view the product in 360 views, but also push a menu button and change phone settings such background colour and ring tone.

Determinants of Online Repurchase

Customers’ repurchasing or loyalty is critical to the success and profitability of online stores. A study by Mainspring and Bain & Company (2000) showed that the average customer must shop four times at an online store before the store profits from that customer.

Research supports the notion that shopping can provide both hedonic and utilitarian value (Babin et al., 1994; Babin and Darden, 1995). Utilitarian value indicates task-related worth and is a general evaluation of functional benefits and costs, while hedonic value focuses on entertainment and emotional worth, and is an overall assessment of experiential benefits and costs (Overby and Lee, 2006).

Many researchers have argued that trust is a critical triggering factor in online transactions, where there is uncertainty, information asymmetry and fear of opportunism (Gefen et al., 2003; Triandis, 1980). If trust can be considered as an important aspect of online shopping, then understanding the antecedents of trust should be given particular attention by online retailers.

The determinants of trust relating to customers may include familiarity with the web site, online savvy/expertise, online shopping experience, and entertainment or chatting experience (Bart et al., 2005).

Customers who have completed the shopping task of product acquisition in an efficient and successful manner will be more prone in displaying stronger repurchase intentions (Babin and Babin, 2001).

An online vendor who unsuccessfully communicates a feeling of trustworthiness will prevent buyers from engaging in online shopping because of fears of seller opportunism (Hoffman et al., 1999). Moreover consumers will be reluctant to shop online if they do not get the assurance that their credit card information is secure, kept confidential and protected from potential hackers (Collier and Bienstock, 2006). Collier and Bienstock (2006) also argued that online vendors need to keep in mind that a web site occasionally experiencing problems, such as always being down and never working, prevent customers from shopping and purchasing products.

Customers feel much confident about an e-commerce website which provides feedback and report their problems in addition to providing solutions and follow-up schemes to them.

The perceptions that Mauritian consumers have regarding the internet as a shopping channel often have a different impact on their usage. It all depends on their usage needs and patterns. To be more precise, the perception of relative advantage of the internet as a shopping channel surely have a more important impact on initial adoption and post-adoption actual usage of an innovation than do other innovation characteristics.

Another matter to be taken into consideration is that when consumers buy experience products online, it is product risk, not channel risk, which may truly hinder online purchase. As a consequence, product risks still have a great impact on use of the internet in buying experience products (Chuanlan and Forsythe, 2010).

Internet Retailers

In the mid 1990’s serious attempts to trade online started to emerge when innovative, technically savvy companies responded to the opportunities and challenges created by the internet. Sophisticated web sites were implemented to serve customers, in their homes. However, long after this fast-paced electronic business environment started to evolve, the ultimate success of online shopping was far less certain.

Conforming to what Pyle (1996), Jones and Vijayasarathy (1998) clearly stated, the internet at the starting point appeared obvious with highly effective communications channel was easily noticed, with facts like ease of access, global reach, speed and flexibility, ease of maintenance and so on. It was however soon identified that the most critical effect of the internet were to be experienced by the retailers despite the fact that those capabilities of the internet were mostly hindered at first by sectors like manufacturing, education, healthcare and banking. Retailers adopted the means of internet since they noticed that the service was apt to provide a two-way communication with the consumers.

According to Doherty et al (1998), the internet was helping in promoting goods and services, providing data and collecting market research information and eventually supporting the online ordering of merchandise, thus producing a flexible and rich retail channel.

Pyle (1996) in this context did say that the worldwide connectivity of the internet brings up modern approaches in a way that cannot be matched by traditional commerce. Conforming to what Alba et al (1997) said the internet is serving us with a variety of complementary merchandise, a collection and relevance of customer information as well as unusual and unique products.

Compared to former information technologies the internet was very distinctive in the sense that the larger organizations were not primarily being favored since massive investment in skills and physical resources were not being required. Chatterjee and Narasimha (1994) noticed that very low entry and exit barriers for firms existed on the web, which is why according to Rowley (1996) relatively easy and low-cost entrance, were allowed in this field. Thus many early commentators did forecast that a golden opportunity for those small businesses which are operating in a highly specialized market would be present thanks to the internet (Hsieh and Lin (1998).

It has been widely noticed that the scope, power and interactivity of the internet has the potential to change the shopping experience of customers with the help of retailers (Evanschitzky et al (2004); Wolfinbarger and Gilly (2003). And therefore in this context Doherty and Ellis-Chadwick (2009); Levenburg (2005) strongly emphasized on the fact that their competitive positions are going to be strengthen through this process. The internet is providing retailers with a mechanism for developing target markets, extending product lines, enhancing customer relationships, improving customer communication and cost efficiency (Srinivasan et al (2002).

Several benefits such as site traffic generation, marketing synergies,access to web-site management and fulfillment services and the power to provide consumers with a multi-channel retailing experience, are delivered to traditional retailers while making use of the shopping portal. However, certain shortcomings like restricted organizational learning and delivery capabilities and partner interdependence and turnover might as well be present.

The creation of an online shopping portal requires quite a large amount of investment as well as full of challenges such as fulfillment and site development, which is why a solution has been put forward. The solution caters for the rapid development of a meaningful website while offering a favorable business proposition to e-tailers facilitating a low risk entry mechanism by giving complementary access to resources and competences for defined periods of time.

Strategic implications need to be considered by retailers while establishing their web strategies in both short and long term on such online shopping portal. In context with the firms organizational and financial resources the decision of the online shopping portal must be made while taking care of the variety of products and critically the predicted online sales value to the overall business performance.

It has been stated by Czaja et al. (2008), that within the last two years, online shopping has increased by more than 40% and above 85% of internet users have made purchases online.

For the past several years, online purchases have been increasing annually resulting in a relatively unlimited potential for growth. With more scope in this field many online businesses have been created. Online retailers or preferably e-tailers, a new type of business has been rising through the promoting features of this particular type of market segment. Expanding role of the internet in consumer and business procurement has created unprecedented (remarkable)access to consumers.

Apparently, it has been found through researches that online retailers have been providing many facilities onto their web sites so as to attract more and more customers. The facilities are basically extra incentives for example, free shipping on returns and exchanges as well as making full use of the new technologies. Thus allowing customers to view the items with functions such as zoom, in different colors and rotating the items before purchasing it so that they get a brief overview of its features, looks and contents.

Certain aspects of obtaining large-scale successful online operations are maintaining a user-friendly web site and creating a developed supply chain. It is also to be noted that online consumers basically expect the ability to control the transaction from the comfort of their own home. Therefore catering for this particular demand from customers, detailed product information along with accurate images are expected on the website. The website is also expected to provide information of the whole transaction on a timely basis that is order’s status in the fulfillment process and receive shipping notification along with tracking information once it has shipped. Finally once the customers receive their purchased items, they expect the latter to be in good condition and meet the expectations the web site sets, failure to which the customers will be reluctant to use the website in future.

According to (Anderson and Srinivasan, 2003; Reichheld and Schefter, 2000),in the early days e-tailers were focusing more on changing visitors into buyers so as to keep on ensuring repeated profits in the business. However nowadays, for e-commerce to be successful, online retailers are required to consider the needs of both potential and existing online customers based on the facts that customers’ demands are no longer the same.

The basic requisite to persuade consumers to become online customers is mainly to reduce the time frame and cost of searching for information and also to provide maximum predictability about products through provision of tailored product specifications (Bakos, 1991, 1997). It has been noted with respect to online grocery shopping that the moment online shoppers’ experiences a problem, very soon his or her interest with the service decreases resulting in discontinue use the service (Huang and Oppewal, 2006). Therefore, the different approach to promote online shopping should lay emphasis on communicating the benefits gained by shopping online. Additionally, one of the reasons for the low and slow uptake seems to be the delivery charge that the online retailers charge. Other reasons may include issues such as privacy and security (Maignan and Lukas, 1997; Miyazaki and Fernandez, 2001). This study therefore aims at finding out how several factors impact on consumers’ decision on whether they should shop online and the main issues involving adoption of internet retailing.