Introduction
The use of the Internet as a shopping medium has empowered shoppers with advantages
over traditional storefront shopping. This paper identifies and discusses
these advantages in terms of: 1) convenience and time-saving, 2) powerful
research instrument, 3) lower search costs and better product selection,
and 4) better price information and lower prices.
1. Convenience and time-saving
Shopping on the Internet offers convenience and time-saving
benefits to shoppers, as compared to shopping in traditional brick-and-mortar
stores. Changing consumer lifestyles and lack of time may make it more
difficult for consumers to shop at physical locations such as stores
and shopping malls (Davies 1995, Cheeseman and Breddin 1995). Shopping
on the Internet addresses this problem as shoppers can shop in the comfort
and convenience of home. Results of the MasterCard Survey 'Internet Shopping'
(1996) revealed that consumers viewed the Internet as an "Instrument
of Convenience".
The Internet operates 24 hours a week, seven days a week,
and can be accessed anywhere in the connected world; shoppers can expect
to browse and purchase goods on the Internet anytime, unlike traditional
storefronts that have fixed opening hours. Shoppers can also purchase
goods that are unavailable at their location, and are able to bypass
restrictive import policies, as the Internet allows shoppers to make
purchases from vendors in other locations around the world. Ernst and
Young's reports 'Internet Shopping' and 'Global Online Retailing' (1998,
2000) noted that in comparison to brick-and-mortar stores, when shopping
on the Internet, there were no store lines, surly clerks, pickpockets
or panhandlers to contend with, no bad weather to travel under, nor any
transportation cost involved; the Internet allows shoppers to develop
their own timetables for research and purchasing.
The 'Australian Online Shopping and Future Expenditure Report'
(2001) reported that Australian shoppers cited convenience as the leading
reason to purchase online, followed by price and product selection. A
survey carried out by the Danish E-commerce Association stated similar
results, with convenience cited as the most important reason for Danish
shoppers to shop online, followed by price and product selection, which
were tied in importance (Nielsen 1999). GartnerG2 research director David
Schehr mentioned that all of their research shows that consumers are
most interested in convenience, not price. According to him, shoppers
do still expect bargains online, but fast delivery and a wide selection
are more important factors; price comes into the picture along with convenience,
but it's no longer the main reason people shop online (Regan 2002).
2. Powerful research instrument
Shoppers are able to use the Internet as a powerful research
instrument in the purchasing process. For certain products such as books
and Videos/CDs/DVDs, reviews and recommendations are important factors
in influencing purchase decision. With such products, shoppers are not
only able to browse through a larger selection on the Web in sites such
as Amazon.com, but are also able to conveniently obtain reviews and recommendations
that are usually unavailable in offline stores.
Shoppers who shop online do not necessarily make the purchase
online, but 'offline' from a brick-and-mortar storefront, and vice versa.
46 percent of online buyers research online to purchase offline, while
27 percent research offline to purchase online and 17 percent research
in both ways, according to Forrester Research (Vigoroso 2001). Ernst
and Young's report ('Internet Shopping' 1998) found that more than half
of the customers with Internet access gathered information and researched
products online and later bought them through traditional channels; 46
percent of consumers with Internet access researched online and them
bought products by fax or telephone while 64 percent researched products
online and then bought them through traditional stores; these purchases
were double of those of consumers (32 percent) who researched online
and them bought on the Web. Similar results were found in the 1997 American
Internet User Survey conducted by Cyber Dialogue ('Online Shopping Gaining'
1998); this research noted that 75 percent of Web consumers sought online product information with
36 percent of those searchers purchasing in traditional stores. The above
information gives evidence that the Internet can also be viewed as a
supplement to traditional storefront purchasing, rather than as a competitor.
Ernst and Young's report ('Internet Shopping' 1998) concluded that this
ability to shop, research, and view potential purchases on the Internet
empowered customers and accelerated their purchase decisions.
3. Lower search costs and better product selection
Shopping using the Internet overcomes the time and pecuniary
costs of traditional shopping; shoppers can shop from the comfort and
convenience of home, and need not travel to physical storefronts. Shoppers
are able to locate many vendors online using search engines and websites
designed to navigate shoppers, view detailed product information from
a variety of vendors' websites, compare price and quality among different
vendors, and make purchases online.
With online shopping, shoppers no longer have to suffer the
costs and incomplete information of traditional hierarchical search,
making product searches easier and more effective. For example, a shopper
is able to search over 3 million titles in Amazon.com from the computer
screen at home, as compared to going physically to the bookstore, which
carries an average of 80,000 titles
The Internet offers a greater selection for shoppers as compared
to physical retail storefronts. According to Sharma and Krishnan (2002),
the Internet store can provide a larger inventory of products and sizes,
and can virtually guarantee the availability of any type and size of
merchandise. According to Ernst and Young's 'Global Online Retailing'
survey (2000), 56 percent of consumers surveyed cited the Internet's
good selection of items, 14 percent of which were not available in stores,
and 40 percent cited its competitive prices as helping to simplify their
shopping experiences. Grewal et. al. (2002) state that in the past, retail
salespeople had a captive audience; for many merchandise categories,
few viable alternatives were available to going to a store; today, the
Internet provides an extremely viable alternative shopping mode.
4. Better price information and Lower Prices
The Internet makes it easier for shoppers to compare prices
between vendors. Online vendors offer the prices of their goods in their
websites. Simply by viewing different vendor websites, shoppers are able
to obtain and compare prices easily, as compared to visiting different
physical storefronts, which is costly and time consuming. Shoppers are
able to find lower prices using the Internet due to the wider reach of
information, and navigator websites such as www.autobytel.com that offers
prices of competing vendors. With price information on the Internet,
shoppers are less vulnerable to overpaying when buying from physical
storefronts that may manipulate prices to shopper's disadvantages.
Shoppers are able to obtain lower prices when buying online.
According to the Ernst and Young Survey ('Internet Shopping' 1998), prospective
shoppers viewed price savings and selection as more important benefits
than convenience, which was ranked third. Edgecliffe-Johnson et. al.
(2002) reported that online shoppers are more concerned about price than
about new features or convenience - the advantage which e-tailers once
thought would allow them to charge more than offline stores. Moynagh
and Worsley (2002) state that online shopping could transform consumer
behaviour, driven by cost saving and convenience and spurred on by competition.
Shoppers are able to buy direct from a manufacturer's or wholesaler's
website using the Internet. As more manufacturers and wholesalers cut
off retail intermediaries to sell direct to consumers via the Internet,
costs are lowered and hence they are able to offer lower prices. Examples
of such companies are Dell Computer and Amazon.com, which are able to
offer its products at lower prices as compared to most physical retail storefronts.
Online stores are not burdened by the costs of running a physical
store, such as the rent of the physical premises and operating costs
such as the wages of sales staff. The cost savings by online stores lead
to lower pricing on the Internet, passing on cost savings to shoppers.
The Internet encourages online vendors to compete amongst one another
by lowering prices. Sharma and Krishnan (2002) state that in the last
three years, the threat of the Internet has increased the competitive
pressure that retailers face. According to Evans and Wurster (2000),
online vendors are aware that due to the wider informational reach of
consumers on the Internet, which leads to low levels of pricing secrecy,
they have to focus on low prices to gain the competitive advantage.
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