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Online shopping is a form of
electronic commerce E-commerce (electronic commerce) is the activity of electronically buying or selling of Product (business), products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, su ...
which allows consumers to directly buy
good In most contexts, the concept of good denotes the conduct that should be preferred when posed with a choice between possible actions. Good is generally considered to be the opposite of evil and is of interest in the study of ethics, morality, ph ...
s or services from a seller over the
Internet The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a '' network of networks'' that consists of private, p ...
using a
web browser A web browser is application software for accessing websites. When a User (computing), user requests a web page from a particular website, the browser retrieves its Computer file, files from a web server and then displays the page on the user' ...
or a
mobile app A mobile application or app is a computer program or software application designed to run on a mobile device such as a smartphone, phone, tablet computer, tablet, or smartwatch, watch. Mobile applications often stand in contrast to desktop appli ...
. Consumers find a product of interest by visiting the
website A website (also written as a web site) is a collection of web pages and related content that is identified by a common domain name and published on at least one web server. Examples of notable websites are Google Search, Google, Facebook, Amaz ...
of the retailer directly or by searching among alternative vendors using a shopping search engine, which displays the same product's availability and pricing at different e-retailers. As of 2020, customers can shop online using a range of different computers and devices, including
desktop computer A desktop computer (often abbreviated desktop) is a personal computer designed for regular use at a single location on or near a desk due to its size and power requirements. The most common configuration has a computer case, case that houses th ...
s,
laptop A laptop, laptop computer, or notebook computer is a small, portable personal computer (PC) with a screen and alphanumeric keyboard. Laptops typically have a Flip (form), clam shell Form factor (design), form factor with the computer scr ...
s,
tablet computer A tablet computer, commonly shortened to tablet, is a mobile device, typically with a mobile operating system and touchscreen display processing circuitry, and a rechargeable battery in a single, thin and flat package. Tablets, being comput ...
s and
smartphone A smartphone is a Mobile device, portable computer device that combines Mobile phone, mobile telephone and Mobile computing, computing functions into one unit. They are distinguished from feature phones by their stronger hardware capabilities ...
s. An online shop evokes the physical analogy of buying
product Product may refer to: Business * Product (business), an item that serves as a solution to a specific consumer problem. * Product (project management), a deliverable or set of deliverables that contribute to a business solution Mathematics * Pr ...
s or services at a regular "bricks-and-mortar"
retailer Retail is the sale of goods and Service (economics), services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturing, manufacturers, dire ...
or
shopping center A shopping center (American English) or shopping centre (English in the Commonwealth of Nations, Commonwealth English), also called a shopping complex, shopping arcade, shopping plaza or galleria, is a group of shops built together, sometimes ...
; the process is called business-to-consumer (B2C)
online shopping Online shopping is a form of electronic commerce which allows consumers to directly buy good (economics), goods or Service (economics), services from a seller over the Internet using a web browser or a mobile app. Consumers find a product of in ...
. When an online store is set up to enable businesses to buy from another businesses, the process is called
business-to-business Business-to-business (B2B or, in some countries, BtoB) is a situation where one business makes a commercial transaction with another. This typically occurs when: * A business is sourcing materials for their production process for output (e.g., a ...
(B2B) online shopping. A typical online store enables the customer to browse the firm's range of products and services, view photos or images of the products, along with information about the product specifications, features and prices. Online stores usually enable shoppers to use "search" features to find specific models, brands or items. Online customers must have access to the Internet and a valid method of payment in order to complete a transaction, such as a
credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the credit card issuer, card issuer to pay them for the ...
, an
Interac Interac is a Canadian interbank network that links financial institutions and other enterprises for the purpose of exchanging electronic financial transaction A financial transaction is an Contract, agreement, or communication, between a ...
-enabled
debit card A debit card, also known as a check card or bank card is a payment card that can be used in place of cash to make purchases. The term ''#Plastic card, plastic card'' includes the above and as an identity document. These are similar to a credi ...
, or a service such as
PayPal PayPal Holdings, Inc. is an American multinational financial technology company operating an online payments system in the majority of countries that support E-commerce payment system, online money transfers, and serves as an electronic altern ...
. For physical products (e.g., paperback books or clothes), the e-tailer ships the products to the customer; for digital products, such as
digital audio file An audio file format is a file format for storing digital audio data on a computer system. The bit layout of the audio data (excluding metadata) is called the audio coding format and can be uncompressed, or audio compression (data), compressed to r ...
s of
song A song is a musical composition intended to be performed by the human voice. This is often done at melody, distinct and fixed pitches (melodies) using patterns of sound and silence. Songs contain various song form, forms, such as those includ ...
s or
software Software is a set of computer programs and associated software documentation, documentation and data (computing), data. This is in contrast to Computer hardware, hardware, from which the system is built and which actually performs the work. ...
, the e-tailer usually sends the file to the customer over the Internet. The largest of these online retailing corporations are Alibaba, Amazon.com, and
eBay eBay Inc. ( ) is an American multinational e-commerce company based in San Jose, California, that facilitates consumer-to-consumer and business-to-consumer sales through its website. eBay was founded by Pierre Omidyar in 1995 and becam ...
.


Terminology

Alternative names for the activity are "e-tailing", a shortened form of "electronic
retail Retail is the sale of goods and services to consumers, in contrast to wholesaling, which is sale to business or institutional customers. A retailer purchases goods in large quantities from manufacturers, directly or through a wholesaler, a ...
" or "e-shopping", a shortened form of "electronic shopping". An online store may also be called an e-web-store, e-shop, e-store, Internet shop, web-shop, web-store, online store, online storefront and virtual store. Mobile commerce (or m-commerce) describes purchasing from an online retailer's mobile device-optimized website or
software application Software is a set of computer programs and associated software documentation, documentation and data (computing), data. This is in contrast to Computer hardware, hardware, from which the system is built and which actually performs the work. ...
("app"). These websites or apps are designed to enable customers to browse through a companies' products and services on
tablet computer A tablet computer, commonly shortened to tablet, is a mobile device, typically with a mobile operating system and touchscreen display processing circuitry, and a rechargeable battery in a single, thin and flat package. Tablets, being comput ...
s and
smartphone A smartphone is a Mobile device, portable computer device that combines Mobile phone, mobile telephone and Mobile computing, computing functions into one unit. They are distinguished from feature phones by their stronger hardware capabilities ...
s.


History


History of online shopping

One of the earliest forms of trade conducted online was IBM's
online transaction processing In online transaction processing (OLTP), information systems typically facilitate and manage transaction-oriented applications. This is contrasted with online analytical processing Online analytical processing, or OLAP (), is an approach to answ ...
(OLTP) developed in the 1960s, which allowed the processing of financial transactions in real-time. The computerized ticket reservation system developed for
American Airlines American Airlines is a major airlines of the United States, major US-based airline headquartered in Fort Worth, Texas, within the Dallas–Fort Worth metroplex. It is the Largest airlines in the world, largest airline in the world when measured ...
called Semi-Automatic Business Research Environment (SABRE) was one of its applications. There, computer terminals located in different travel agencies were linked to a large IBM mainframe computer, which processed transactions simultaneously and coordinated them so that all travel agents had access to the same information at the same time. At some point between 1971 and 1971, students at Stanford and MIT used the internet precursor
ARPANET The Advanced Research Projects Agency Network (ARPANET) was the first wide-area packet-switched network with distributed control and one of the first networks to implement the TCP/IP protocol suite. Both technologies became the technical fo ...
to make a deal to exchange
marijuana Cannabis, also known as marijuana among List of names for cannabis, other names, is a psychoactive drug from the cannabis plant. Native to Central or South Asia, the cannabis plant has been used as a drug for both Recreational marijuana, recr ...
, but the interaction doesn't qualify as e-commerce because no money was transferred online. The emergence of online shopping as it is known today developed with the emergence of the Internet. Initially, this platform only functioned as an advertising tool for companies, providing information about their products. It quickly moved on from this simple utility to actual online shopping transaction due to the development of interactive Web pages and secure transmissions. Specifically, the growth of the Internet as a secure shopping channel has developed since 1994, with the first sales of
Sting Sting may refer to: * Stinger A stinger (or sting) is a sharp Organ (anatomy), organ found in various animals (typically insects and other arthropods) capable of injecting venom, usually by piercing the epidermis of another animal. An inse ...
's album '' Ten Summoner's Tales''. Wine, chocolates, and flowers soon followed and were among the pioneering retail categories which fueled the growth of online shopping. Researchers found that having products that are appropriate for
e-commerce E-commerce (electronic commerce) is the activity of electronically buying or selling of Product (business), products on online services or over the Internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, su ...
was a key indicator of Internet success. Many of these products did well as they are generic products which shoppers did not need to touch and feel in order to buy. But also importantly, in the early days, there were few shoppers online and they were from a narrow segment: affluent, male, 30+. Online shopping has come a long way since those early days and – in the UK – accounts for significant percentage (depending on product category as percentages can vary).


Growth in online shoppers

As the revenues from online sales continued to grow significantly researchers identified different types of online shoppers, Rohm & Swaninathan identified four categories and named them "''convenience shoppers, variety seekers, balanced buyers, and store-oriented shoppers''". They focused on shopping motivations and found that the variety of products available and the perceived convenience of the buying online experience were significant motivating factors. This was different for offline shoppers, who were more motivated by time saving and recreational motives. English entrepreneur Michael Aldrich was a pioneer of online shopping in 1979. His system connected a modified domestic TV to a real-time transaction processing computer via a domestic telephone line. He believed that
videotex Videotex (or interactive videotex) was one of the earliest implementations of an end-user information system. From the late 1970s to early 2010s, it was used to deliver information (usually pages of text) to a user in computer-like format, typi ...
, the modified domestic TV technology with a simple menu-driven human–computer interface, was a 'new, universally applicable, participative communication medium — the first since the invention of the telephone.' This enabled 'closed' corporate information systems to be opened to 'outside' correspondents not just for transaction processing but also for e-messaging and information retrieval and dissemination, later known as
e-business Electronic business (or "Online Business" or "e-business") is any kind of business or commercial transaction that includes sharing information across the internet. Commerce constitutes the exchange of products and services between businesses, grou ...
. His definition of the new mass communications medium as 'participative' nteractive, many-to-manywas fundamentally different from the traditional definitions of
mass communication Mass communication is the process of imparting and exchanging information through mass media to large segments of the population. It is usually understood for relating to various forms of media, as its technologies are used for the dissemination o ...
and
mass media Mass media refers to a diverse array of media (communication), media technology, technologies that reach a large audience via mass communication. The technologies through which this communication takes place include a variety of outlets. Bro ...
and a precursor to the social networking on the
Internet The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a '' network of networks'' that consists of private, p ...
25 years later. In March 1980 he launched Redifon's Office Revolution, which allowed consumers, customers, agents, distributors, suppliers and service companies to be connected online to the corporate systems and allow business transactions to be completed electronically in real-time. During the 1980s he designed, manufactured, sold, installed, maintained and supported many online shopping systems, using videotex technology. These systems which also provided voice response and handprint processing pre-date the Internet and the
World Wide Web The World Wide Web (WWW), commonly known as the Web, is an information system enabling documents and other web resources to be accessed over the Internet. Documents and downloadable media are made available to the network through web se ...
, the
IBM PC The IBM Personal Computer (model 5150, commonly known as the IBM PC) is the first microcomputer released in the IBM PC model line and the basis for the IBM PC compatible de facto standard. Released on August 12, 1981, it was created by a team ...
, and
Microsoft Microsoft Corporation is an American multinational corporation, multinational technology company, technology corporation producing Software, computer software, consumer electronics, personal computers, and related services headquartered at th ...
MS-DOS, and were installed mainly in the UK by large corporations. The first
World Wide Web The World Wide Web (WWW), commonly known as the Web, is an information system enabling documents and other web resources to be accessed over the Internet. Documents and downloadable media are made available to the network through web se ...
server and browser, created by
Tim Berners-Lee Sir Timothy John Berners-Lee (born 8 June 1955), also known as TimBL, is an English computer scientist best known as the inventor of the World Wide Web. He is a Research fellow, Professorial Fellow of Computer Science at the University of Oxf ...
in 1989, opened for commercial use in 1991.Palmer, Kimberly.(2007) News & World Report. Thereafter, subsequent technological innovations emerged in 1994: online banking, the opening of an online pizza shop by
Pizza Hut Pizza Hut is an American multinational restaurant chain and international Franchising, franchise founded in 1958 in Wichita, Kansas by Dan and Frank Carney. They serve their signature pan pizza and other dishes including pasta, breadsticks and ...
,
Netscape Netscape Communications Corporation (originally Mosaic Communications Corporation) was an American independent computer services company with headquarters in Mountain View, California and then Dulles, Virginia. Its Netscape (web browser), Netsc ...
's SSL v2 encryption standard for secure data transfer, and
Intershop Intershop was a chain of government-owned and operated retail stores in the German Democratic Republic German(s) may refer to: * Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is t ...
's first online shopping system. The first secure retail transaction over the Web was either by NetMarket or Internet Shopping Network in 1994. Immediately after, Amazon.com launched its online shopping site in 1995 and eBay was also introduced in 1995. Alibaba's sites
Taobao Taobao () is a Chinese online shopping platform. It is headquartered in Hangzhou and is owned by Alibaba Group, Alibaba. According to Alexa rank, it is the eighth most-visited website globally in 2021. Taobao.com was registered on April 21, 200 ...
and
Tmall Tmall (), formerly Taobao Mall, is a Chinese-language website for business-to-consumer (B2C) online retail, spun off from Taobao Taobao () is a Chinese online shopping platform. It is headquartered in Hangzhou and is owned by Alibaba Group, ...
were launched in 2003 and 2008, respectively. Retailers are increasingly selling goods and services prior to availability through " pretail" for testing, building, and managing demand.


International statistics

Statistics show that in 2012, Asia-Pacific increased their international sales over 30% giving them over $433 billion in revenue. That is a $69 billion difference between the U.S. revenue of $364.66 billion. It is estimated that Asia-Pacific will increase by another 30% in the year 2013 putting them ahead by more than one-third of all global ecommerce sales. The largest online shopping day in the world is
Singles Day The Singles' Day () or Double 11 (), originally called Bachelors' Day, is a Chinese unofficial holiday and shopping season that celebrates people who are not in a relationship. The date, 11 November (11/11), was chosen because the numeral 1 res ...
, with sales just in Alibaba's sites at US$9.3 billion in 2014.


Customers

Online customers must have access to the Internet and a valid method of payment in order to complete a transaction. Generally, higher levels of education and personal income correspond to more favorable perceptions of shopping online. Increased exposure to technology also increases the probability of developing favorable attitudes towards new shopping channels.


Customer buying behaviour in digital environment

The
marketing Marketing is the process of exploring, creating, and delivering value to meet the needs of a target market in terms of goods and services; potentially including selection of a target audience; selection of certain attributes or themes to empha ...
around the digital environment, customer's buying behaviour may not be influenced and controlled by the brand and firm, when they make a buying decision that might concern the interactions with search engine, recommendations, online reviews and other information. In modern shopping environments, people are more likely to use their mobile phones, computers, tablets and other digital devices to gather information. In an online shopping environment, interactive decision may have an influence on aid customer decision making, through online product reviews and
user-generated content User-generated content (UGC), alternatively known as user-created content (UCC), is any form of content, such as images, videos, text, testimonials, and audio, that has been posted by User (computing), users on online platforms such as social m ...
, typically provided through software from companies like
Bazaarvoice Bazaarvoice is a technology company A technology company (or tech company) is an electronics-based technology, technological company, including, for example, business relating to digital electronics, software, and internet-related services, such ...
and
Trustpilot Trustpilot Group plc, is a Danish consumer business operating a review website founded in Denmark in 2007 which hosts reviews of businesses worldwide. Nearly 1 million new reviews are posted each month. The site offers freemium services to busine ...
, or via social media. This content, which can include text or video-based reviews, customer photos, and feedback, is often displayed alongside products being sold on websites like
Amazon Amazon most often refers to: * Amazons, a tribe of female warriors in Greek mythology * Amazon rainforest, a rainforest covering most of the Amazon basin * Amazon River, in South America * Amazon (company), an American multinational technology co ...
,
Target Target may refer to: Physical items * Shooting target, used in marksmanship training and various shooting sports ** Bullseye (target), the goal one for which one aims in many of these sports ** Aiming point, in field artillery, fi ...
, and most other digital storefronts. Subsequently, risk and trust would also are two important factors affecting people's' behavior in digital environments. Customers consider to switch between e-channels, because they are mainly influence by the comparison with offline shopping, involving growth of security, financial and performance-risks In other words, a customer shopping online that they may receive more risk than people shopping in stores. There are three factors may influence people to do the buying decision, firstly, people cannot examine whether the product satisfy their needs and wants before they receive it. Secondly, customer may concern at after-sale services. Finally, customer may afraid that they cannot fully understand the language used in e-sales. Based on those factors customer perceive risk may as a significantly reason influence the online purchasing behaviour. Online retailers has place much emphasis on customer trust aspect, trust is another way driving customer's behaviour in digital environment, which can depend on customer's attitude and expectation. Indeed, the company's products design or ideas can not met customer's expectations. Customer's purchase intention based on rational expectations, and additionally impacts on emotional trust. Moreover, those expectations can be also establish on the product information and revision from others. In several studies, perceived value, shopping style, and brand trust are the main factors that affect online consumers' decisions.  The perceived value means that people can compare the products and prices online, bringing them the perceived value of getting more benefits online than in an offline store. The comfortable environment that online shopping brings to customers can make consumers get more perceived value.


Product selection

Consumers A consumer is a person or a group who intends to order, or uses purchased goods, products, or Service (economics), services primarily for personal, social, family, household and similar needs, who is not directly related to entrepreneurial or bu ...
find a product of interest by visiting the website of the retailer directly or by searching among alternative vendors using a shopping search engine. Users can compare and evaluate products using product information on the website, as well on other websites such as websites about product tests. Once a particular product has been found and selected on the website of the seller, most online retailers use
shopping cart software Shopping cart software is a piece of electronic commerce, e-commerce software on a web server that allows visitors to have an Internet site to select items for eventual purchase.Farris, Paul W.; Neil T. Bendle; Phillip E. Pfeifer; David J. Reib ...
to allow the consumer to accumulate multiple items and to adjust quantities, like filling a physical shopping cart or basket in a conventional store. A "checkout" process follows (continuing the physical-store analogy) in which payment and delivery information is collected, if necessary. Some stores allow consumers to sign up for a permanent online account so that some or all of this information only needs to be entered once. The consumer often receives an e-mail confirmation once the transaction is complete. Less sophisticated stores may rely on consumers to phone or e-mail their orders (although full credit card numbers, expiry date, and
Card Security Code file:CVC2SampleVisaNew.png, The card security code is located on the back of Mastercard, Visa Inc., Visa, Discover Card, Discover, Diners Club, and JCB Co., Ltd., JCB credit or debit cards and is typically a separate group of three digits to the ...
, or bank account and routing number should not be accepted by e-mail, for reasons of security).


Impact of reviews on consumer behavior

One of the great benefits of online shopping is the ability to read product reviews, written either by experts or fellow online shoppers.
The Nielsen Company Nielsen Holdings plc is an American information, data and market measurement firm. Nielsen operates in over 100 countries and employs approximately 44,000 people worldwide. The company was listed on the New York Stock Exchange (NYSE) and used ...
conducted a survey in March 2010 and polled more than 27,000 Internet users in 55 markets from the Asia-Pacific, Europe, Middle East, North America, and South America to look at questions such as "How do consumers shop online?", "What do they intend to buy?", "How do they use various online shopping web pages?", and the impact of
social media Social media are interactive media technologies that facilitate the Content creation, creation and information sharing, sharing of information, ideas, interests, and other forms of expression through virtual communities and Network virtualization, ...
and other factors that come into play when consumers are trying to decide how to spend their money on which product or service. According to the research,Nielsen, "Online Shopping Trends", (USA: The Nielsen Company, 2010) reviews on electronics (57%) such as DVD players, cellphones, or PlayStations, and so on, reviews on cars (45%), and reviews on software (37%) play an important role in influencing consumers who tend to make purchases online. Furthermore, 40% of online shoppers indicate that they would not even buy electronics without consulting online reviews first. In addition to online reviews, peer recommendations on online shopping pages or social media websites play a key role for online shoppers when they are researching future purchases. 90% of all purchases made are influenced by social media.


Payment

Online shoppers commonly use a
credit card A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt (i.e., promise to the credit card issuer, card issuer to pay them for the ...
or a
PayPal PayPal Holdings, Inc. is an American multinational financial technology company operating an online payments system in the majority of countries that support E-commerce payment system, online money transfers, and serves as an electronic altern ...
account in order to make payments. However, some systems enable users to create accounts and pay by alternative means, such as: * Billing to
mobile phones A mobile phone, cellular phone, cell phone, cellphone, handphone, hand phone or pocket phone, sometimes shortened to simply mobile, cell, or just phone, is a portable telephone that can make and receive telephone call, calls over a radio freq ...
and
landline A landline (land line, land-line, main line, home phone, fixed-line, and wireline) is a telephone connection that uses wire, metal wires or optical fiber telephone line for transmission, as distinguished from a cellular network, mobile cellula ...
s *
Bitcoin Bitcoin ( abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public dist ...
or other
cryptocurrencies A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it. It is ...
* Cash on delivery (C.O.D.) *
Cheque A cheque, or check (American English American English, sometimes called United States English or U.S. English, is the set of variety (linguistics), varieties of the English language native to the United States. English is the Langua ...
/ Check *
Debit card A debit card, also known as a check card or bank card is a payment card that can be used in place of cash to make purchases. The term ''#Plastic card, plastic card'' includes the above and as an identity document. These are similar to a credi ...
*
Direct debit A direct debit or direct withdrawal is a financial transaction in which one organisation withdraws funds from a payer's bank account., https://www.directdebit.co.uk/direct-debit-explained/what-is-direct-debit/ Formally, the organisation that calls f ...
in some countries *
Electronic money Digital currency (digital money, electronic money or electronic currency) is any currency A currency, "in circulation", from la, Wikt:currens, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in ...
of various types *
Gift card A gift card also known as gift certificate in North America, or gift voucher or gift token in the UK is a prepaid stored-value card, stored-value money card, usually issued by a retailer or bank, to be used as an alternative to cash for purcha ...
s *
Invoice An invoice, bill or tab is a commerce, commercial document issued by a sales, seller to a buyer relating to a sale transaction and indicating the product (business), products, quantities, and agreed-upon prices for products or Service (economic ...
, especially popular in some markets/countries, such as Switzerland * Postal money order *
Wire transfer Wire transfer, bank transfer, or credit transfer, is a method of electronic funds transfer from one Legal person, person or entity to another. A wire transfer can be made from one bank account to another bank account, or through a transfer of ca ...
/delivery on payment Some online shops will not accept international credit cards. Some require both the purchaser's billing and shipping address to be in the same country as the online shop's base of operation. Other online shops allow customers from any country to send gifts anywhere. The financial part of a transaction may be processed in real time (e.g. letting the consumer know their credit card was declined before they log off), or may be done later as part of the fulfillment process.


Product delivery

Once a payment has been accepted, the goods or services can be delivered in the following ways. For physical items: *
Package delivery Package delivery or parcel delivery is the delivery of shipping containers, parcels, or high value mail as single shipments. The service is provided by most postal systems, express mail, private courier companies, and less than truckload s ...
: The product is shipped to a customer-designated address. Retail
package delivery Package delivery or parcel delivery is the delivery of shipping containers, parcels, or high value mail as single shipments. The service is provided by most postal systems, express mail, private courier companies, and less than truckload s ...
is typically done by the public
postal system The mail or post is a system for physically transporting postcards, letter (message), letters, and parcel (package), parcels. A postal service can be private or public, though many governments place restrictions on private systems. Since the mid ...
or a retail
courier A courier is a person or organisation that delivers a message, package or letter from one place or person to another place or person. Typically, a courier provides their courier service on a commercial contract basis; however, some couriers are ...
such as
FedEx FedEx Corporation, formerly Federal Express Corporation and later FDX Corporation, is an American multinational corporation, multinational Conglomerate (company), conglomerate holding company focused on Package delivery, transportation, e-comme ...
, UPS,
DHL DHL is an American founded, German logistics company providing courier, package delivery and express mail service, which is a Division (business), division of the German logistics firm Deutsche Post. The company group delivers over 1.8 billion ...
, or TNT. *
Drop shipping Drop shipping is a form of retail business where the seller accepts customer orders without keeping stock on hand. Instead, in a form of supply chain management, the seller transfers the orders and their shipment details either to the manufacture ...
: The order is passed to the manufacturer or third-party distributor, who then ships the item directly to the consumer, bypassing the retailer's physical location to save time, money, and space. * In-store pick-up: The customer selects a local store using a
locator software An online locator service (also known as location finder, store finder, or store locator, or similar) is a feature found on websites of businesses with multiple locations that allows visitors to the site to find locations of the business within pro ...
and picks up the delivered product at the selected location. This is the method often used in the
bricks and clicks Omnichannel retail strategy, originally also known in the U.K. as bricks and clicks, is a business model by which a company integrates online and offline, both offline (''bricks'') and online (''clicks'') presences, sometimes with the third extra ...
business model. For digital items or tickets: *
Download In computer networks, download means to ''receive'' Data (computing), data from a remote system, typically a Server (computing), server such as a web server, an File Transfer Protocol, FTP server, an email server, or other similar system. This ...
ing/
Digital distribution Digital distribution, also referred to as content delivery, online distribution, or electronic software distribution, among others, is the delivery or distribution of digital media content (media), content such as Sound recording and reproductio ...
: The method often used for digital media products such as software, music, movies, or images. *
Printing Printing is a process for mass reproducing text and Printmaking, images using a master form or template. The earliest non-paper products involving printing include cylinder seals and objects such as the Cyrus Cylinder and the Cylinders of Nabo ...
out, provision of a code for, or
e-mail Electronic mail (email or e-mail) is a method of exchanging messages ("mail") between people using electronic devices. Email was thus conceived as the electronic ( digital) version of, or counterpart to, mail, at a time when "mail" mea ...
ing of such items as
admission ticket A ticket is a voucher that indicates that an individual is entitled to admission to an event or establishment such as a theatre, amusement park, or tourist attraction, or has a right to travel on a vehicle, such as with an airline ticket, ...
s and
scrip A scrip (or ''wikt:chit#Etymology 3, chit'' in India) is any substitute for legal tender. It is often a form of credit (finance), credit. Scrips have been created and used for a variety of reasons, including exploitive payment of employees under ...
(e.g., gift certificates and coupons). The tickets, codes, or coupons may be redeemed at the appropriate physical or online premises and their content reviewed to verify their eligibility (e.g., assurances that the right of admission or use is redeemed at the correct time and place, for the correct dollar amount, and for the correct number of uses). * Will call, COBO (in Care Of Box Office), or "at the door" pickup: The patron picks up pre-purchased tickets for an event, such as a play, sporting event, or concert, either just before the event or in advance. With the onset of the Internet and e-commerce sites, which allow customers to buy tickets online, the popularity of this service has increased.


Shopping cart systems

Simple shopping cart systems allow the off-line administration of products and categories. The shop is then generated as HTML files and graphics that can be uploaded to a webspace. The systems do not use an online database. A high-end solution can be bought or rented as a stand-alone program or as an addition to an
enterprise resource planning Enterprise resource planning (ERP) is the integrated management of main business processes, often in real time and mediated by software and technology. ERP is usually referred to as a category of Business management tools, business management ...
program. It is usually installed on the company's web server and may integrate into the existing
supply chain In commerce, a supply chain is a network of facilities that procure raw materials, transform them into intermediate goods and then final products to customers through a distribution system. It refers to the network of organizations, people, activ ...
so that ordering, payment, delivery, accounting and warehousing can be automated to a large extent. Other solutions allow the user to register and create an online shop on a portal that hosts multiple shops simultaneously from one back office. Examples are BigCommerce,
Shopify Shopify Inc. is a Canadian multinational e-commerce E-commerce (electronic commerce) is the activity of electronically buying or selling of Product (business), products on online services or over the Internet. E-commerce draws on technolog ...
and FlickRocket.
Open source Open source is source code that is made freely available for possible modification and redistribution. Products include permission to use the source code, design documents, or content of the product. The open-source model is a decentralized sof ...
shopping cart packages include advanced platforms such as Interchange, and off-the-shelf solutions such as Magento, osCommerce, WooCommerce, PrestaShop, and Zen Cart. Commercial systems can also be tailored so the shop does not have to be created from scratch. By using an existing framework, software modules for various functionalities required by a web shop can be adapted and combined.


Design

Customers are attracted to online shopping not only because of high levels of convenience, but also because of broader selections, competitive pricing, and greater access to information. Business organizations seek to offer online shopping not only because it is of much lower cost compared to bricks and mortar stores, but also because it offers access to a worldwide market, increases customer value, and builds sustainable capabilities.


Information load

Designers of online shops are concerned with the effects of information load. Information load is a product of the spatial and temporal arrangements of stimuli in the web store. Compared with conventional retail shopping, the information environment of virtual shopping is enhanced by providing additional product information such as comparative products and services, as well as various alternatives and attributes of each alternative, etc. Two major dimensions of information load are complexity and novelty. Complexity refers to the number of different elements or features of a site, often the result of increased information diversity. Novelty involves the unexpected, suppressed, new, or unfamiliar aspects of the site. The novelty dimension may keep consumers exploring a shopping site, whereas the complexity dimension may induce impulse purchases.


Consumer needs and expectations

Internet consumers are self-conscious and emphasize personalized consumption, which makes the demand for online consumption different. Online consumers have different needs depending on their time and environment. Even different online consumers have different needs at the same level of demand due to the difference in income level and other factors. Compared with the centralized nature of traditional markets, online consumption is more decentralized. In the online consumer market, consumers have a short decision time, a large variability of consumer demand, a large number of purchases, but a relatively small amount of each purchase, a considerable mobility of purchases, a strong substitutability of goods, and a large elasticity of demand. According to the output of a research report by
Western Michigan University Western Michigan University (Western Michigan, Western or WMU) is a Public university, public research university in Kalamazoo, Michigan. It was initially established as Western State Normal School in 1903 by Governor Aaron T. Bliss for the tr ...
published in 2005, an e-commerce website does not have to be good looking with listing on a lot of search engines. It must build relationships with customers to make money. The report also suggests that a website must leave a positive impression on the customers, giving them a reason to come back. However, resent research has proven that sites with higher focus on efficiency, convenience, and personalised services increased the customers motivation to make purchases. Dyn, an Internet performance management company conducted a survey on more than 1400 consumers across 11 countries in
North America North America is a continent in the Northern Hemisphere and almost entirely within the Western Hemisphere. It is bordered to the north by the Arctic Ocean, to the east by the Atlantic Ocean, to the southeast by South America and the Car ...
,
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
,
Middle-East The Middle East ( ar, الشرق الأوسط, ISO 233: ) is a geopolitical region commonly encompassing Arabian Peninsula, Arabia (including the Arabian Peninsula and Bahrain), Anatolia, Asia Minor (Asian part of Turkey except Hatay Pro ...
and
Asia Asia (, ) is one of the world's most notable geographical regions, which is either considered a continent in its own right or a subcontinent of Eurasia, which shares the continental landmass of Afro-Eurasia with Africa Africa is ...
and the results of the survey are as follows: * Online retailers must improve the website speed * Online retailers must ease consumers fear around security These concerns majorly affect the decisions of almost two thirds of the consumers.


User interface

The most important factors determining whether customers return to a website are ease of use and the presence of user-friendly features.
Usability Usability can be described as the capacity of a system to provide a condition for its users to perform the tasks safely, effectively, and efficiently while enjoying the experience. In software engineering, usability is the degree to which a soft ...
testing is important for finding problems and improvements in a web site. Methods for evaluating usability include
heuristic evaluation A heuristic evaluation is a usability inspection Usability inspection is the name for a set of methods where an evaluator inspects a user interface. This is in contrast to usability testing Usability testing is a technique used in user-centered ...
, cognitive walkthrough, and
user testing Usability testing is a technique used in user-centered interaction design Interaction design, often abbreviated as IxD, is "the practice of designing interactive digital products, environments, systems, and services." Beyond the digital aspect, ...
. Each technique has its own characteristics and emphasizes different aspects of the user experience.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


Market share

The popularity of online shopping continues to erode sales of conventional retailers. For example,
Best Buy Best Buy Co. Inc. is an American multinational consumer electronics retailer headquartered in Richfield, Minnesota. Originally founded by Richard M. Schulze and James Wheeler in 1966 as an audio specialty store called Sound of Music, it was rebra ...
, the largest retailer of electronics in the U.S. in August 2014 reported its tenth consecutive quarterly dip in sales, citing an increasing shift by consumers to online shopping. Amazon.com has the largest market share in the United States. As of May 2018, a survey found two-thirds of Americans had bought something from Amazon (92% of those who had bought anything online), with 40% of online shoppers buying something from Amazon at least once a month. The survey found shopping began at amazon.com 44% of the time, compared to a general search engine at 33%. It estimated 75 million Americans subscribe to
Amazon Prime Amazon Prime is a paid subscription service from Amazon (company), Amazon which is available in various countries and gives users access to additional services otherwise unavailable or available at a premium to other Amazon customers. Services ...
and 35 million more use someone else's account. There were 242 million people shopping online in China in 2012. 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.


Advantages


Convenience

Online stores are usually available 24 hours a day, and many consumers in Western countries have Internet access both at work and at home. Other establishments such as Internet cafes, community centers and schools provide internet access as well. In contrast, visiting a conventional retail store requires travel or commuting and costs such as gas, parking, or bus tickets, and must usually take place during business hours. Delivery was always a problem which affected the convenience of online shopping. Additionally, the online shopping industry has not only involved the concept of providing convenience for customers but also improved perceptions of social inclusion. However to overcome this many retailers including online retailers in Taiwan brought in a store pick up service. This now meant that customers could purchase goods online and pick them up at a nearby convenience store, making online shopping more advantageous to customers. In the event of a problem with the item (e.g., the product was not what the consumer ordered or the product was not satisfactory), consumers are concerned with the ease of returning an item in exchange for the correct product or 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). A 2018 survey in the United States found 26% of online shoppers said they never return items, and another 65% said they rarely do so.Online Shoppers Say They Rarely Return Purchases. Why?
/ref> Merchants may benefit from online shopping due to low sales inventory pressure, low operating costs, and the scale of operation is not limited by the site.


Delivery

Especially in cases of large or heavy products, delivery can be not only more convenient but also not require having or using a car. Not using or depending on personal vehicles, which can have substantial impact on the environment, to travel to local stores can make online shopping more sustainable than buying in local stores if such are used otherwise (especially if items are bundled and delivery vehicles are electric and use optimized routes).


Information and reviews

Online shopping is usually more informationally rich than shopping at physical stores traveled to and usually has higher comparability and customizability. Online stores must describe products for sale with text, photos, and multimedia files, and sometimes have features such as question and answers or filters, 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 site A review site is a website A website (also written as a web site) is a collection of web pages and related content that is identified by a common domain name and published on at least one web server. Examples of notable websites are Google S ...
s that host user reviews for different products. Reviews and even some blogs give customers the option of shopping for cheaper purchases from all over the world without having to depend on local retailers. 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-mails or phone calls to handle customer questions. Even if an online store is open 24 hours a day, seven days a week, the customer service team may only be available during regular business hours.


Price and selection

One advantage of shopping online is being able to quickly seek out deals for items or services provided by many different vendors (though some local search engines do exist to help consumers locate products for sale in nearby stores). Search engines, online
price comparison service A comparison shopping website, sometimes called a price comparison website, price analysis tool, comparison shopping agent, shopbot, aggregator or comparison shopping engine, is a vertical search engine that shoppers use to filter and compare produ ...
s and discovery shopping engines can be used to look up sellers of a particular product or service. Shipping costs (if applicable) reduce the price advantage of online merchandise, though depending on the jurisdiction, a lack of
sales tax A sales tax is a tax paid to a governing body for the sales of certain goods and services. Usually laws allow the seller to collect funds for the tax from the consumer at the point of purchase. When a tax on goods or services is paid to a govern ...
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. Another major advantage for retailers is the ability to rapidly switch suppliers and vendors without disrupting users' shopping experience.


Disadvantages


Fraud and security concerns

Given the lack of ability to inspect merchandise before purchase, consumers are at higher risk of fraud than face-to-face transactions. When ordering merchandise online, the item may not work properly, it may have defects, or it might not be the same item pictured in the online photo. Merchants also risk fraudulent purchases if customers are using stolen credit cards or fraudulent repudiation of the online purchase. However, merchants face less risk from physical theft by using a warehouse instead of a retail storefront.
Secure Sockets Layer Transport Layer Security (TLS) is a cryptographic protocol designed to provide communications security over a computer network. The communication protocol, protocol is widely used in applications such as email, instant messaging, and voice over I ...
(SSL)
encryption In cryptography, encryption is the process of Code, encoding information. This process converts the original representation of the information, known as plaintext, into an alternative form known as ciphertext. Ideally, only authorized parties can ...
has generally solved the problem of credit card numbers being intercepted in transit between the consumer and the merchant. However, one must still trust the merchant (and employees) not to use the credit card information subsequently for their own purchases, and not to pass the information to others. Also, hackers might break into a merchant's web site and steal names, addresses and credit card numbers, although the
Payment Card Industry Data Security Standard The Payment Card Industry Data Security Standard (PCI DSS) is an information security Information security, sometimes shortened to InfoSec, is the practice of protecting information by mitigating information risks. It is part of Risk management ...
is intended to minimize the impact of such breaches.
Identity theft Identity theft occurs when someone uses another person's personal identifying information, like their name, identifying number, or credit card number, without their permission, to commit fraud or other crimes. The term ''identity theft'' was c ...
is still a concern for consumers. 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 Phishing is a type of Social engineering (security), social engineering where an attacker sends a fraudulent (e.g., spoofed, fake, or otherwise deceptive) message designed to trick a person into revealing sensitive information to the attacker ...
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. Denial of service attacks are a minor risk for merchants, as are server and network outages. Quality seals can be placed on the Shop web page 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 online shoppers. However, 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. These include: * Sticking with well-known stores, or attempting to find independent consumer reviews of their experiences; also ensuring that there is comprehensive contact information on the website before using the service, and noting if the retailer has enrolled in industry oversight programs such as a trust mark or a trust seal. * Before buying from a new company, evaluating the website by considering issues such as: the professionalism and user-friendliness of the site; whether or not the company lists a telephone number and/or street address along with e-contact information; whether a fair and reasonable refund and return policy is clearly stated; and whether there are hidden price inflators, such as excessive shipping and handling charges. * Ensuring that the retailer has an acceptable
privacy policy A privacy policy is a statement or legal document (in privacy law) that discloses some or all of the ways a party gathers, uses, discloses, and manages a customer or client's data. Personal information can be anything that can be used to identify ...
posted. For example, note if the retailer does not explicitly state that it will not share private information with others without consent. * Ensuring that the vendor address is protected with SSL (see above) when entering credit card information. If it does the address on the credit card information entry screen will start with "HTTPS". * Using strong passwords which do not contain personal information such as the user's name or birthdate. Another option is a "pass phrase," which might be something along the lines: "I shop 4 good a buy!!" These are difficult to hack, since they do not consist of words found in a dictionary, and provides a variety of upper, lower, and special characters. These passwords can be site specific and may be easy to remember. Although the benefits of online shopping are considerable, when the process goes poorly it can create a thorny situation. A few problems that shoppers potentially face include identity theft, faulty products, and the accumulation of
spyware Spyware (a portmanteau A portmanteau word, or portmanteau (, ) is a Blend word, blend of wordsfraud In law, fraud is intentional deception to secure unfair or unlawful gain, or to deprive a victim of a legal right. Fraud can violate civil law (e.g., a fraud victim may sue the fraud perpetrator to avoid the fraud or recover monetary compe ...
more difficult. However, criminals are constantly responding to these developments with new ways to manipulate the system. Even though online retailers are making efforts to protect consumer information, it is a constant fight to maintain the lead. It is advisable to be aware of the most current technology and scams to protect consumer identity and finances. Product delivery is also a main concern of online shopping. Most companies offer shipping insurance in case the product is lost or damaged. Some shipping companies will offer refunds or compensation for the damage, but this is up to their discretion.


Lack of full cost disclosure

The lack of full cost disclosure may also be problematic. While it may be easy to compare the base price of an item online, it may not be easy to see the total cost up front. Additional fees such as shipping are often not visible until the final step in the checkout process. The problem is especially evident with cross-border purchases, where the cost indicated at the final checkout screen may not include additional fees that must be paid upon delivery such as duties and
brokerage A broker is a person or firm who arranges transactions between a buyer Procurement is the method of discovering and agreeing to terms and purchasing goods, Service (economics), services, or other works from an external source, often with the ...
. Some services such as the Canadian-based Wishabi attempts to include estimates of these additional cost, but nevertheless, the lack of general full cost disclosure remains a concern.


Privacy

Privacy of personal information is a significant issue for some consumers. Many consumers wish to avoid spam and telemarketing which could result from supplying contact information to an online merchant. In response, many merchants promise to not use consumer information for these purposes, Many websites keep track of consumer shopping habits in order to suggest items and other websites to view. Brick-and-mortar stores also collect consumer information. Some ask for a shopper's 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 or through a bank (money transfer, in which case there is also proof of payment).


Product suitability

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. Other successful marketers use drop shipping or
affiliate marketing Affiliate marketing is a marketing arrangement in which Affiliate (commerce), affiliates receive a wiktionary:commission, commission for each visit, signup or sale they generate for a merchant. This arrangement allows businesses to Outsourcing ...
techniques to facilitate transactions of tangible goods without maintaining real inventory. 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 in a standard mailbox—such as music CDs, DVDs and books—are particularly suitable for a virtual marketer. 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, some web sites have had success delivering groceries and clothing sold through the internet is big business in the U.S.


Aggregation

High-volume websites, such as
Yahoo! Yahoo! (, styled yahoo''!'' in its logo) is an American web services provider. It is headquartered in Sunnyvale, California and operated by the namesake company Yahoo Inc., which is 90% owned by investment funds managed by Apollo Global M ...
, Amazon.com and eBay offer hosting services for online stores to all size retailers. These stores are presented within an integrated navigation framework, sometimes known as virtual shopping malls or
online marketplace An online marketplace (or online e-commerce marketplace) is a type of e-commerce website where product or service information is provided by multiple third parties. Online marketplaces are the primary type of multichannel ecommerce and can be a way ...
s.


See also

* Bricks and clicks business model * Dark store *
Digital distribution Digital distribution, also referred to as content delivery, online distribution, or electronic software distribution, among others, is the delivery or distribution of digital media content (media), content such as Sound recording and reproductio ...
*
Electronic business Electronic business (or "Online Business" or "e-business") is any kind of business or commercial transaction that includes sharing information across the internet. Commerce constitutes the exchange of products and services between businesses, grou ...
*
Online auction business model An online auction (also electronic auction, e-auction, virtual auction, or eAuction) is an auction An auction is usually a process of Trade, buying and selling Good (economics), goods or Service (economics), services by offering them up for Bi ...
*
Online music store A digital music store is a business that sells Audio file format, digital audio files of Sound recording and reproduction, music recordings over the Internet. Customers gain ownership of a license to use the files, in contrast to a music streami ...
* Online pharmacy * Online shopping malls * Online shopping rewards *
Open catalogue Open catalogue is an open content catalogue or free content catalogue, a structured database with information about products or other stored items in a standardized format. A catalogue implies categorization or classification of the items involve ...
*
Package delivery Package delivery or parcel delivery is the delivery of shipping containers, parcels, or high value mail as single shipments. The service is provided by most postal systems, express mail, private courier companies, and less than truckload s ...
*
Personal shopper ''Personal Shopper'' is a 2016 Supernatural fiction, supernatural psychological thriller film written and directed by Olivier Assayas. The film stars Kristen Stewart as a young American woman in Paris who works as a personal shopper for a cele ...
* Product tracing systems: allow to see source factory of a product * Retail therapy * Types of retail outlets


References


External links

* {{DEFAULTSORT:Online Shopping Consumer behaviour Merchandising