Online Shopping Internet

Have you ever tried buying your apparel or appliances thru internet? Online shopping is the process of purchasing and selling products or services over the internet. (Akary, 2005). It has gain popularity because of its convenience. There are some factors that are important in online shopping such as the security and the privacy of the consumers. Online shopping has replaced the traditional process of consumers buying goods from a retailer or mall that they must physically go into. (Akary, 2005). Online shopping is one aspect of electronic commerce. Online shopping is important because it offers buyers convenience that has never before been achievable. (Sneddon, 2004). The technology that is now available allows customers to shop on the internet 24 hours a day and seven days a week, without having to leave their homes or offices. Shoppers are provided with an abundance of merchant sites where almost any goods on earth can be bought. Consumers can also compare prices from a variety of different retailers with greater ease, compared to them physically going to shop in a built shopping centre to check prices.

Online shopping popularity started in 1990, only few users are using the system. At the same time, the popularity of the Internet also grew at a phenomenal rate. Rifkin (2004, p. 34). History of online shopping and how it became famous will be discussed in the first part of this paper. The disadvantages and advantages of online shopping will be presented.

The objective of this paper is to be able to present to the readers the pros and cons of on-line shopping. Another objective of the study is to evaluate the e-business that has been gaining the popularity. Most articles that I encounter about e-business presents one conclusion, that a company would not make it in the international market if they were not able to penetrate the online shopping. The paper will also discuss the complexity of the design. This will include the effectiveness and safety of the said design.

The project aims to present a secured and protected online shopping. The main concern of the user of online shopping is their anonymity. Some website promised that they are being protected but actually they are not. This project will present the prototype design using the Multi-agent system (MAS). The MAS will make online shopping much more easily. Traditional shopping involves saleslady or agent that will assist you during your tour in the mall. The MAS will act as your guide in choosing the item you need. This will make online shopping much more convenient than traditional shopping.

In the Literature review, the study done by Sinmao (1999) in the use of intelligent agent is discussed. The analyses done by Giles Malliford (2007) on the problems encountered by online shoppers are enumerated. He presented the reasons why shoppers abandoned their shopping carts. The shop.org (2007) shows the statistics of online users. The primary concern of the user is their security that is why utexas.edu presented the checklist to consider for making your online purchases as safe as possible: (www.utexas.edu). Also in the literature review the psychological effect of online shopping are discussed. (Smith, Swinyard, 2001).

The benefits of online shopping are enumerated to help the user understand why such program is done. Disadvantages and advantages of using the internet in shopping will be discussed. At the end of this paper the reader will be able to decide whether they will choose to shop the traditional way or the online shopping

History of Online Shopping

Online shopping belongs to the so called e-commerce. It started in 1970 wherein invoices and orders are sent thru the internet. And then in 1980 the acceptance of credit cards and automated teller machine where accepted online. When dot com era arrived electronic commerce include activities termed as web commerce – purchases of goods and services over the world wide web, in a secure connections with e-shopping carts and payment where done thru the use of credit card.

Online shopping began in the early to mid 1990’s. First online bank was opened in 1994 and Pizza Hut was the first to offer pizza online on their Web page. Further development of online shopping was done and later that year Netscape introduced SSL (Secure Sockets Layer) that make most transactions secure. In 1995 Jeff Bezos launched Amazon.com and in 1996, e-Bay was founded. By the end of 1997, an estimated 41 million people were shopping online. (Kary, 2005). 1999 saw the UK’s first graphical Internet shopping mall called The Virtual Mall. In 2003, Amazon.com became the first ever full-year profit online shopping merchant. (http://en.wikipedia.org/wiki/Online_Shop). From here the online shopping has become popular. Now dresses, foods, medicines and others can be purchased online.

Safety of the customer is important even in the early years of online shopping. Netscape SSL purpose is to secure the identity of their customer to prevent cyber crime which is common in transactions involving one’s identity in the internet. It has

been the medium of transaction of businesses. The future is now pointing its direction to new technologies.

Literature Review

Several studies are involved in online shopping. The use of an intelligent agent is important in e-commerce specially in online shopping. (Sinmao, 1999). Intelligent agents are a major evolution toward solving this difficult problem.  Intelligent agents empower both buyers and sellers to accomplish e-commerce transactions by enabling efficient, precise, and comprehensive searches on the vast web community and information repository. . (Sinmao, 1999). Intelligent agents are software applications that have a predefined knowledge base and/or learning system about their user’s goals and wishes and, through adaptive reasoning, use this information to execute their user’s request. The continuum of intelligent agents may be characterized along three dimensions:  agency, intelligence, and mobility. In Appendix 1 the three dimensions of intelligent agents are presented to show how intelligent agents work on online shopping.

Statistics (Table 1) shows the problems encountered during the first year of online shopping. Since online shopping during the first years is not yet fully developed problems are piling up. These problems were being resolved as the year goes by. Studies and reaches were done to enhance and improve the e-commerce. Table below shows problems encountered by Canada during the earlier years of online shopping.

Table 1

Source: http://www.shop.org/learn/stats_intshop_canada.asp

In the study done by shop.org, 2007 online sales (including travel) rises 18 percent to $259.1 billion. Sales excluding travel will reach $174.5 billion. This strong growth will come off of an impressive performance in 2006. Online sales last year rose 25 percent to $219.9 billion. Excluding travel, online retail sales rose 29 percent to $146.5 billion, representing six percent of total retail sales in 2006. ( Grannis,

Davis, 2007). According to Mulpuru, Sucharita, (2007) senior analyst of Forrester Research, online retail is moving full speed ahead, the consumers flood the web to purchase merchandise and research products. “This strong growth is an indicator that online retail is years away from reaching a point of saturation.” The profitability through the sector has stabilized, this is a good indication that e-commerce is gaining success. The study done by shop.org and Forrester shows the following profitability result: Eighty-three percent of respondents to the survey reported profitability and 78 percent said they were more profitable than 2005. Profit as a percentage of revenue did not change, the report notes, because revenue and expenses grew as well.

In the article “The Top 10 Reasons Why Online Buyers Abandon Their Shopping Cart” by Miles Galliford (2007), he mentioned the reasons why shopping carts are being abandon by shoppers. Research undertaken by MarketingSherpa (www.marketingsherpa.com) and E-Tailing in 2006 discovered that average abandonment rates were 60% and 47% respectively. This means that the average commercial website is losing as much as half of its potential revenue. (Galliford, 2007). Based on the article the reasons why they abandon their cart during online shopping:

• Hidden charges at the checkout

• Having to register before buying

• The buyer was comparison shopping and found a better deal

• The shipping costs were too high

• The buyer didn’t have time to complete the checkout process

• The product was out of stock

• There were no clear delivery details

• No phone number was provided

• The checkout process was too long

• The buyer was uncomfortable with the checkout process

From the above reasons it seems that online shopping is not yet perfected. That is why study and researches are being done to satisfy the customer. Among other studies done on online shopping includes one that provides several tips on how to make sure that the web site you are purchasing your items are secured. One of the main concerns of the shopper is their security. That is why most of the website offering online shopping states that security is their main concern. However there are some websites that does not really have a security program. As a result of this the data of the customer is easily accessible by others. This is where cyber crime takes place. In order to ensure that you are on a safe website below is the checklist to consider for making your online purchases as safe as possible: (www.utexas.edu).

• Only shop at online stores of reputable companies (companies you already know from retail stores, mail order catalogs or other sources). Know how to contact them offline if there is a problem with your purchase. If you are unsure of the company, do a little research with the Better Business Bureau.

• Secure your Web browser. Check the security settings of your Web browser to increase the security of your transactions.

• Check for security icons before giving your personal information. Before you type in your credit card number or name and address, check for security icons on the Web site. This includes looking for “https” in the Web address or URL. Https indicates the Web site is equipped with an additional security layer. If it’s not there, the site or page is not secure.

• Create unique passwords. Don’t use the same password for all of your online accounts and applications. If you do this, you risk having all of your accounts compromised if only one account is breached. Remember to never use your university passwords for other online accounts.

• Don’t enable the “Save Password” option if prompted to do so. If you are using a shared computer, pre-saved passwords will make it easy for others to access your accounts.

• Use only one dedicated credit card for online purchases. Monitor your monthly statements closely for any unusual activity.

• Don’t use a debit card for online purchases. You are more protected using a credit card instead of a debit card. Credit card companies offer some degree of fraud protection and may be able to reverse charges to your account.

• Check the Web site’s privacy policy. Only shop with online stores offering privacy policies that you agree with. They should provide information about how they will protect your personal information and whether it will be provided to other companies.

• Always log out of a Web site when you are through. Again, this will protect your accounts on a shared computer.

• Review your monthly credit card and bank statements. Check for any unauthorized purchases or errors. Notify your bank or credit card company immediately if you suspect someone is using your accounts without your permission.

Because of these threats on online shopping, the enhancements of websites are being done to ensure that every single person and data is protected.

In the study done by IBM and BYU (Professor William R. Swinyard and Professor Scott M. Smith) online shopping reveals attitude and lifestyle of the user. (2001). The attitudinal study of 4000 Web users reveals the shopping behaviour of eight online consumer types and which types would respond to marketing efforts designed to increase e-commerce sales. The study also suggests what form those efforts should take.

Here’s how each group looks and how Swinyard and Smith think they should be approached:

• With 11.1 percent of the market share, Shopping Lovers enjoy buying online and do so frequently. They are competent computer users and will likely continue their shopping habits. They also spread the word to others about joys of online shopping whenever they have the opportunity. They represent an ideal target for retailers.

• Adventurous Explorers (8.9 percent) are a small segment that presents a large opportunity. They require little special attention by Internet vendors because they believe online shopping is fun. They are likely the opinion leaders for all things online. Retailers should nurture and cultivate them to be online community builders and shopping advocates.

• Suspicious Learners (9.6 percent) comprise another small segment with growth potential. Their reluctance to purchase online more often hinges on their lack of computer training, but they are open to new ways of doing things. In contrast to more fearful segments, they don’t have a problem giving a computer their credit card number. Further guidance and training would help coax them into online buying.

• Among the most computer literate, Business Users (12.4 percent) use the Internet primarily for business purposes. They take a serious interest in what it can do for their professional life. They don’t view online shopping as novel and aren’t usually champions of the practice.

• Fearful Browsers (10.7 percent) are on the cusp of buying online. They are capable Internet and computer users, spending a good deal of time “window shopping.” They could become a significant buying group if their fears about credit card security, shipping charges and buying products sight unseen were overcome.

• Shopping Avoiders (15.6 percent) have an appealing income level, but their values make them a poor target for online retailers. They don’t like to wait for products to be shipped to them, and they like seeing merchandise in person before buying. They have online shopping issues that retailers will not easily be able to overcome.

• Technology Muddlers (19.6 percent) face large computer literacy hurdles. They spend less time than any other segment online and show little excitement about increasing their online comfort level. They are not an attractive market for online retailers.

• Fun Seekers (12.1 percent) are the least wealthy and least educated market segment. They see entertainment value in the Internet, but buying things online frightens them. Although security and privacy issues might be overcome, the spending power of the segment suggests that only a marginal long-term payback would be possible

In the study done by KCB336 New Media Technologies students, they have come up on reasons why many people are still hesitant in using online shopping. Their study resulted in 69% of internet shoppers felt that online retailers should do more to make them feel secure, yet only 15% reported to know others who had experienced credit card misuse advocated her trust for online shopping when she claimed. Because of the concern of the customer in the security measures, retailers employ a number of security measures, including cryptogrpahy and authentication to help the online transactions safe. Cryptography can provide authentication and integrity for electronic transmissions if properly implemented. Authentication is defined as goal of knowing that a particular user is authorized to take an action. Personal identification numbers (PIN) and passwords are the most widespread types of authentication.

Based also on the study done by the New Media Technology (2004), another key issue aside from the security is the privacy. To further ease customer apprehension, many online retailers provide privacy statements which state their stance on sharing customer information with other businesses. Many companies stated that they did not share customer details. In addition to this, online retailers also employ cryptography to ensure that computer hackers cannot easily obtain any stored personal information that companies keep regarding their customers. Some companies only installed privacy and security measures after problems had occurred. Their lack of preventative methods was attributed towards the difficulty of implementing security measures, the high costs associated with these measures, and the continual need to update programs as new technologies and threats emerged.

Internet-based transactions expect to make up 25 percent of all retail transactions in the next decade according to the study done by the New Media Technology (2004), therefore it is imperative for online retailers to continue to provide a secure, private and trustworthy shopping environment for their customers. Those who can best provide this climate for online shoppers will be the retailers who attract the most customers, and ultimately enjoy the most profits.

According to Changchit, Douthit, and Hoffmeyer (2005), the success of online businesses relies heavily upon their ability to attract and retain customers. The better an online business understands the needs of these shoppers, the higher the chance that they can attract and retain customers. Their study includes factors that are important for the consumers. A study compared the experiences that customers have at a brick-and-mortar store versus online shopping. A main difference in the two experiences is that traditional storefronts are able to provide customers with the immediate sensory experience of touching and feeling proffered products whereas online storefronts are more limited in offering physical experiences with their products. Internet customers may have the visual experience of seeing what they are interested in purchasing. They are limited in their ability to touch or feel the merchandise until after delivery. The lack of the physical experiences touching and feeling available in traditional brick-and-mortar storefronts may be a reason why an online business has not risen to the level that some thought possible in the early 1990’s. To overcome this obstacle, online businesses need to focus on satisfiers outside physical experiences with products. They need to convince customers that touching and feeling the merchandise are less important than what they can offer via an online shopping. This study intends to explore which factors are perceived as important to online customers when shopping on the Internet. (Changchit, Douthit, and Hoffmeyer 2005).

Presented in table 3 below are the demographics of online user. The most common user of online shopping belongs to the Caucasian (4.9%) group with ages ranging form 22-25 years old (31.7%). Table 4 shows the factors that are important on online shoppers.

TABLE 2: SUBJECTS’ DEMOGRAPHICS

Age (in years)

Nationality

Annual Income (US$)

Highest Education

Own a Computer

Employment Status

Marital Status

Source: Changchit,  Shawn J. Douthit,  Benjamin Hoffmeyer (2005) http://findarticles.com/p/articles/mi_m0OGT/is_3_5/ai_n16619676/pg_6

TABLE 3: FACTORS ENCOURAGING SHOPPERS TO VISIT A WEBSITE

I will visit the website more often if …. Average

1. a picture of the product is displayed 5.85

2. the website offers free shipping 5.76

3. it is easy to return the products 5.51

4. the website accuracy of the order is high 5.42

5. the website has a brand reputation 5.41

TABLE 4: FACTORS ENCOURAGING SHOPPERS TO PURCHASE FROM A WEBSITE

I am more likely to purchase products/ Average

services from the website if ….

1. the website offers free shipping 5.86

2. the website offers a discount 5.79

3. it is easy to return the products 5.74

4. a picture of the product is displayed 5.70

5. the website offers tax free shopping 5.51

TABLE 5: FACTORS ENCOURAGING SHOPPERS TO PURCHASE MORE ITEMS

I will purchase more items if …. Average

1. the website offers a discount 5.71

2. the website offers free shopping 5.67

3. it is easy to return the products 5.64

4. a picture of the product is displayed 5.59

5. I received tax free shopping. 5.57

TABLE 6: FACTORS ENCOURAGING SHOPPERS TO PURCHASE AT A HIGHER PRICE

I am willing to pay more if …. Average

1. the website offers free shipping 5.20

2. if the item is not available offline 5.14

3. if I can t the product out before-paying 5.10

4. if offered tax free shopping 5.05

5. if the website offers next day shipping 4.94

TABLE 7: FACTORS ENCOURAGING SHOPPERS TO PROVIDE FEEDBACKS

I would provide feedback on my shopping Average

experience for …

1. free shipping 5.61

2. discount 5.41

3. gift card 5.32

4. product sample 5.17

5. discount coupon 5.09

Disadvantages and Advantages of Online shopping

Online shopping has its own set of disadvantages and advantages. Not all online shoppers agree to shop online, they would rather shop at the mall than sit in their living room and search for the item they want. As presented on the first report the following are the disadvantages and advantages of online shopping:

Table 3 Advantages and Disadvantages

The above mentioned advantages and disadvantages are only the major differences of online shopping and the traditional shopping. In some countries like the Asians only a few numbers of their population are using this design. Unlike in the United States, Europe and other developed countries, most of their people are using this system, which is why their shopping malls are not that crowded.

One of the reasons that shopping online has become so popular is that customers can shop around for the best price on a particular item. This is definitely an advantage that online shopping has over shopping in a physical place, such as a mall. If a consumer is in the market for a new laptop computer, they can search the Web sites of many different merchants until they have found the lowest price offered on a particular laptop. If someone was shopping the traditional way, they would have to spend a lot of time and energy as they travel from store to store in search of the lowest price. (Akary, 2005).

The Process

In order to purchase items online you need to log in first on the selected website. Upon log in the website will provide the customers with pictures and descriptions of their products. One of the popular online shopping sites is the Amazon.com, it provides review of the books on sale. The payment is usually done using a credit card. The website will ask you to fill up information that is needed to facilitate the payment online. Then, the modem sends out these details to a financial institution. If they have available funds, the transaction is approved almost instantaneously. The customer will then receive their goods within a specified time frame. Mail is the often the most popular and economical form of delivery that customers choose to receive their purchased items. Many online retailers now provide an additional service that lets customers track their shipments, giving them the option to check on the delivery progression. Credit card is undoubtedly the dominant method of payment used to shop online. As the popularity of online shopping grows, many online retailers have increased their credit card security on their websites. Online retailers use encryption technology to make credit card information more secure and provide the padlock or unbroken key symbols in the status bar at the bottom of the screen. These symbols indicate to customers that they are entering their credit card number in a secure environment. Even credit card merchants have realized the importance that customers place in credit card security. Visa and MasterCard have introduced a new concept called Verified by Visa and MasterCard SecureCode, which require shoppers to enter their password along with their credit card details. This service benefits not only customers by providing them with added confidence and security, but it also greatly benefits online retailers, because customers will be more willing to divulge credit card information.

Mode of Payment

When making an online purchase you need to choose the mode of payment. The most easiest and common mode of payment is by using the credit card. Other method include debit card, various types of electronic money (Ecash or digital money), money transfer (delivery on payment), postal money order, cash on delivery, or check (http://en.wikipedia.org/wiki/Online_Shop). Cash on delivery and checks are commonly used when ordering something like a pizza online. Paypal is also a means of making purchases online. It is a secure process of making payments, without having to give credit card information directly to the vendor.

Online Retailers

On the side of the retailer, it has become quite clear that in order to survive and be profitable, online businesses must pursue the fundamentals of good retailing. One of these principles is knowledge about existing and potential customers and their preferences (Kim & Lim, 2001). Retailers must pay attention to the target market’s perceptions, attitudes, and behaviors rather than the technological characteristics of their websites. Besides competing with traditional storefront businesses, online businesses have to compete with other Internet sites that sell or offer similar services as well. Business livelihood is dependent on the ability to satisfy the crucial need to retain customers and to increase the amount of purchases. Without growth, businesses simply cannot remain profitable. In general, businesses must focus on obtaining new customers alongside maintaining current customers.

Many factors determine why customers return to a store or web-site. It has been shown that a longer length of time spent online by consumers’ increases the likelihood of consumers revisiting a website or becoming customers by buying a product (Huizingh & Hoekstra, 2003). As such, designing a website in such a way as to retain customer attention and satisfaction increases the likelihood of creating repeat customers. Also, understanding customer satisfaction factors can increase the probability of attracting new customers and/or retaining existing customers. A study reported that customers expressed that “customer service” was a key factor in their decision to shop at a store or revisit the website (Changchit & Vokurka, 2003).

Greater number of online retailers now has the technology which lets their customers monitor the goods they have ordered with greater ease. Those buyers can use a company’s online Global Positioning System (GPS) tracking service to check on the location of their goods via the company’s online store. This service offers customers’ added convenience as it eliminates the need for buyers to have to contact the company directly.

Reference:

http://www.utexas.edu/its/secure/articles/safe_online_shopping.php

Changchit, Douthit, Hoffmeyer, March 2005 Online shopping: what factors are important to shoppers? http://findarticles.com/p/articles/mi_m0OGT/is_3_5/ai_n16619676/pg_1

Changchit, C. and Vokurka, R. J., “Factors Influencing the Internet Shopping Behavior,” Proceedings of the Decision Sciences Institute Annual Meeting, November 22-25, 2003, Washington, D. C.

Huizingh, Eelko K. and Hoekstra, Janny C., “Why to consumers like restaurants?”, Journal of Targeting, Measurement and Analysis for Marketing, Vol. 11 (4), 2003, 350-.

KCB336 New Media Technologies students, October 2004, Online Shopping – Customer Concerns http://wiki.media-culture.org.au/index.php/Online_Shopping_-_Customer_Concerns

Kim, S.Y. & Lim, Y.J., “Consumer’s Perceived Importance of and Satisfaction with Internet Shopping”, Electronic Markets, Vol. 11 (3), 2001, 148.

Online vs. Traditional Shopping, 2003-2007 www.shoppingnavigator.co.uk

trends/overview-shopping trends htm.

Online Shopping Trends, 2004-2007, consumers union of US www.consumerreports.org

http://en.wikipedia.org/wiki/Online_Shop