Why Are More Customers Switching to Online Shopping from Traditional Shops - Coursework Example

WHY АRЕ MОRЕ СUSTОMЕRS SWITСHING TО ОNLINЕ SHОРРING FRОM TRАDITIОNАL SHОРS Name: Student Reg. No: Discipline: Tutor: RESEARCH PAPER (LITERATURE REVIEW) Date of Submission: WHY АRЕ MОRЕ СUSTОMЕRS SWITСHING TО ОNLINЕ SHОРРING FRОM TRАDITIОNАL SHОРS Background Online shopping is a contemporary trend that is growing and gaining wide-spread acceptance as the preferred method of purchasing goods and services. Online shopping utilizes the use of technology particularly the computers, credit and debit cards and the internet to perform marketing operations. The advancement in technology through the internet has improved communication where parties can conduct business without necessarily coming into contact to one another. The capacity of the networked world to exchange information is accountable for the proliferation of Internet shopping. The inception of e-commerce and e-marketing systems has transformed the business arena from the conventional ways of purchasing. Currently, individuals do not have to physically visit the retail outlets or scramble for parking space at malls. Technology has made the process easier for consumers who are seeking convenience, price variability, and also to save time while shopping. In addition, online retailing platforms offer the consumers unique payment options which enhance their comfort with this channel of distribution. The online business model has provided consumers with an extended choice from the variety of retailers to select their items for instance Amazon and eBay have dominated the online retail business for years now. It has also changed the dynamics of marketing by enabling businesses to market their products through digital media. Companies are seeking information on their online clientele. As a result, they use the information gathered to suggestively market their products to them as well as tailoring enormous amounts of data to influence their purchasing decisions. A great deal of research has attempted to find out the consumer’s behavior while shopping online. The studies, however, have failed to identify the potential risks that these customers are likely to encounter when shopping online and how these can be mitigated. This research intends to identify the reason why customers are transitioning from the conventional shopping model to a modern business model that applies too much of technology. The paper focuses on the major influences for the increased migration of buyers from physical purchasing to electronic purchasing. These include increased access to information, convenience, reduced prices, variety, and time saving. However, there are some risks and drawbacks to this model such as the financial risks and non-delivery risks (Javadi et.al, 2012). Literature Review Some typical themes, particularly rational consumer behavior, internet, and purchasing attitudes emerge repeatedly throughout the wider literature reviewed. The literature review was guided by the aim to inquire what influences purchase decisions when consumers purchase online. Also, the study aims to answer the question why more customers prefer buying goods online as opposed to the traditional shops. Lim et.al, (2016) while studying the impact of purchase intention on the consumer’s behavior while shopping online, identified that the customer’s purchase objective was an outstanding predictor of their tendency to buy online. The Theory of Reasoned Action (TRA) purposes to expound human conduct. It stipulates that human behavior is led by intentions. The attitude of individuals towards perceived norms determines the formation of intentions (Javadi et.al, 2012). The actions of consumers online can be predicted through their perceived uncertainty of the channel, their intentions to search product prices, the energy they spend evaluating various products, and the delivery period, between buying online and offline (Gupta, Su & Walter, 2004). In coming up with their analysis, they studied a model with data of four items that had diverse features both jointly as well as separately. These products included wine, stereo systems, flight tickets, and books. The study characterized these items into experienced goods and search goods. They stipulated that search goods include those whose quality does not require to be tested before their purchase hence an increase in online shopping. However, experience goods include those products whose quality must be tested by consuming them before they are bought. According to Akbar & James, (2014), understanding the customer’s decision-making behavior can help online retail developers tailor their offers more directly to the customers. To comprehend the online decision process, 9 critical factors on business-to-business trading are suggested to influence customers to shop online. Some of the outstanding factors among the nine are price and refund. On these, they identified that online customers found the price variance among different digital retailers very small and that it took much of their time to evaluate each product. Also, e-retailers should incorporate a suitable refund policy to their systems to assist them to capture the trust of the buyers. These, and seven other factors, were considered important influencers of the consumer’s acceptance of online shopping. According to a study carried out on the Consumers’ Perception on Online Shopping by Shanthi & Kannaiah, (2015), customers perceive online shopping very convenient as it allows them to make purchase decisions at the comfort of their homes. Consumers necessarily don’t have to visit the shop. They can find information about available products online, where it is easier to compare the prices with those of rivals to conclude on their purchase. Hence, e-retailers have developed platforms to convince their clientele and change them into active customers by tailoring their marketing plans to them in a manner that encourages them to make a buying decision. In their Study on the Influencing Factors of Online Shopping, Wang, Liu and Cheng, (2008) identified that the transacting of business online experienced various risks since its inception. Some of the issues proposed by them were the safety of the various methods of payment and dispensation of credit, the privacy of individual’s information, the customer’s cognition, as well as the consumer’s experience in using computers and the internet. The study proposed that despite the highest levels of internet usage in both China and the U.S., the percentage of individuals who have used online shopping platforms was still wanting. Hence, this raised the concern on what impacted such a low consumption of e-retailing services despite these countries’ high population and a surge in online shopping globally. The ability to offer 24 hours service is accountable for the increased motivation for customers to buy goods and services online (Katawetawaraks & Wand, 2011). Buyers tend to associate with the convenience offered by online stores where they can access information and the products they require even after the close of normal business. Customers are also likely to benefit from the vast access to information online as well as the customer reviews about products. Also, customers have the prospect of accessing a variety of items from all over the world that are only availed through the internet. Online shopping allows the consumers to compare prices offered by various retailers and select the relatively lower price for the same product. Since online retailing services can be accessed from anywhere at any given time, customers do not have to undergo the stress of staying in long queues to pay for their products or get caught up in traffic when intending to shop (Rigby, 2011). The commonality of the customers’ interaction with the internet does not primarily impact on their online shopping behavior (Zhou et.al, 2007). The literature associates decreasing internet know-how with its rapid penetration into mankind’s diurnal life as well as the growth of the world population consuming the internet. The authors stipulate that emotions can have a far-reaching impact on the ability to convert an online product seeker into a buyer. Nevertheless, the impact of emotions on online purchasing decisions can vary based on the consumer’s experience online and the available product categories (Morris, 2013). The availability of a wide selection of products, fast delivery and lower prices are more important factors that influence online shopping character. The study also identified that an online store could act as powerful research tools since the customers can search for a product online and but it offline (Chang, 2015). Therefore, the internet has emerged as a substitute to the old-versioned model of trading, rather than as a rival. According to Paul and Hogan, (2015), customers tend to listen to recommendations from personal contacts as well as those on social media before making a purchase decision. Therefore, retailers have diversified their systems to incorporate communicative features that permit customers to discuss and obtain responses from other customers who have previously had an online experience. The research suggests that consumers happen to trust reviews by third-parties rather than those of the retailing companies. Discussion Many notions have been stipulated to explain the behavior of consumers when doing shopping online. A majority of these studies propose the factors that influence the purchase decision. There is limited literature on the factors that scare online users from making purchases through the internet. These potential risks of using networked technology pose a challenge that requires further reading. Only one of the literature reviewed attributed consumer behavior to the perceived uncertainties the customers are likely to face when shopping online. Some of these risks such as the privacy of the user’s information and the uncertainty of delivery affect the actions of customers online (Hamza, V., & Saidalavi, 2016). The potential of the Internet to facilitate the actions of consumers is also overlooked in the majority of studies conducted. It is reasonable to assume that improvement in access to the Internet has resulted in the increased number of customers purchasing goods online (Yannopoulos, 2011). There is little research to support this view. However, the advancements in mobile technology have contributed to the upsurge of online transactions. Also, a majority of the e-retailers are utilizing mobile payment methods to facilitate transactions (Ilkin, 2003). Therefore, it can be argued that increased consumption of technology and the Internet has played a major role in many customers switching to the online shopping platform from the traditional method. Conclusion Online shopping is tremendously overtaking the traditional mode of conducting business. This research on the factors causing switching between the online and traditional platforms identified that convenience is the leading factor that impacted purchase decisions. Cost and time saving followed while perceived risks also affected the consumers’ online purchasing character. Nevertheless, there is a knowledge gap that must be filled by future studies regarding the capacity of technology and the internet to render this seamless online experience through the unique features that facilitate interaction and customized services through an empirical analysis on what are the motivational factors that impact online shopping and how to mitigate security concerns related to online shopping?. The qualitative nature of this research provides no data on the statistics of online shoppers or internet users. More quantitative research needs to be carried out maybe through the use of a questionnaire to provide more informed analysis. References Akbar, S., & James, P. T. ( 2014). Consumers' Attitude Towards Online Shopping: Factors Influencing EMployees of Crazy Domains to Shop Online. Journal of Management and Marketing Research, 1-9. Chang, J. ( 2015). 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