Shopping Online is Better than Shopping in Mall
Online shopping has become the emerging trend for 2020, with the increasingly competitive global online marketplaces through Google, Social Media, and large companies such as Amazon. By the end of this year, the online market is expected to reach 4 trillion dollars. Online shopping gives consumers the ability to shop and purchase products in the comfort of their own homes with the ease of returning products they don’t want.
In this case study, we will discuss how online shopping started, what online shopping is today, what gets in the way of online shopping and is it hurting our economy, what is the projected rate of online shopping and what does this mean for businesses today.
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How it works
Online shopping is defined as the act of one purchasing a product or service over the internet. Online shopping is also known as e-commerce, was invented by Michael Aldrich, who was an English inventor from the United Kingdom in 1979. Michael was out for a walk with his wife and they were discussing their weekly journey to the supermarket. Michael decided to come up with a way to connect his television to the supermarket to deliver groceries. Michael used television with a telephone cord to actual time, a multi-user transaction processing computer. Michael called this invention ‘Teleshopping.’ This system was sold in the United Kingdom, Spain, and Ireland. During the same time in the United States, we developed the concept of Infomercials. People would watch infomercials with the ability to call in and purchase the products that were being broadcasted at the time. (Inventor’s Story, 2011).
A man named Tim Berners-Lee had invented the World Wide Web in 1990. The World Wide Web started the new revolution as to where we are today. (Thomas, 2015) The internet opened to the public in 1991, which made online shopping possible. Charles M. Stacks created the first online bookstore called Book Stacks Unlimited in 1992. This company was accessed on a dial-up bulletin board and was later transferred to the internet in 1994 as Books.com, (Barnes & Noble). The very first online transaction was a sale of a Sting CD between two friends on August 12, 1994. (Miva, 2011)
In 1998 Paypal, which enables customers to exchange money online without compromising their personnel safety or financial information, was invented. Paypal gives customers the freedom to purchase products online with the added protection and security. (Thomas, 2015)
E-commerce has become one of the most popular ways for consumers to purchase new products. In today’s world, shopping online is a very common thing to do. Though it hasn’t always been. There weren’t always regulations and laws protecting both the producer and consumer when dealing with e-commerce.
As e-commerce expanded, one of the growing concerns as a customer is who is accessing their private information, making e-commerce seem risky to the general public. This caused the government to implement a law, General Data Protection Regulation, also known as the GDPR. (Miva, 2011) In 2001, Amazon launched its first mobile application allowing consumers the ability to shop and purchase products from their mobile phones. Consumers were able to utilize their phones if they were either connected to WIFI or if they had a data plan. Over the next two decades, this expanded the online market to where it is today. (Miva, 2011)
In 2017, over 215 million people were making purchases online, with a projected 230 million people shopping online by 2021. (Clement, 2019) Marist College and National Public Radio conducted a poll in 2019 showing more than 76% of American adults shop online, 25% making online purchases at least once a month, where 16% make online purchases at least once a week! (Brophy, 2019)
With the expected increase in online shopping, it leads one to ask, why are so many people purchasing items online and what kind of items are being purchased? Most shoppers have time constraints and resort to purchasing items online for convenience, item availability, free shipping, free returns, impulse, and even to avoid pushy salespeople. Almost 80% of young Americans make impulse or unplanned purchases. (Brophy, 2019) Speaking of convenience, since buy online and pick up in-store has become so popular, 65% of shoppers regularly use this option for added convenience when shopping online. (Brophy, 2019)
Clothes and shoes are among the top items purchased online, with 84% of shoppers purchasing these items online. (Selyukh, 2018) Surprisingly only 27% of online consumers purchase household basics online, and 19% purchasing groceries online. (Selyukh, 2019)
From a vendor standpoint, the demand for online shopping is increasing tremendously and is allowing more e-commerce shops and even brick and mortar retail stores to offer lower prices to consumers. E-commerce shops can eliminate warehouse costs and other physical retail costs by drop-shipping products instead of storing these items causing a company to focus their attention on the consumer and the quality of their products. (Clement, 2019)
Shopping online gives consumers the ability to expand the number of products they can purchase at a discounted price. Online stores are competitive with other stores online as well as brick-and-mortar competitors. Price difference websites make deal hunting easier and help guide shoppers to online stores with the best statuses by posting reviews submitted by other shoppers. Although online shopping appears to be great, it comes with several pros and cons.
A few advantages of online shopping are point-of-sale advantages include stores offering no shipping charges and free ship-to-store options. A lot of online stores do not pass on sales tax (unless required by the state) to customers, which can add up to significant savings for those shoppers who buy primarily online. Many online stores sell products at low prices because of the lack of money spent on overhead. Local stores have operating costs like rent, staffing, water, heat, and air that are figured, at least partially, into the markup of the products.
A few disadvantages of online shopping are that sometimes a deal that looks great falls short of what has been advertised. Communicating dissatisfaction can be difficult online and often takes enormous patience and tenacity to achieve satisfaction. Problem-solving face-to-face with local store employees is often faster and more satisfying. Contacting the next level of management is much easier at local stores than online. (Montaldo 2019)
With more and more people shopping online, there are ultimately going to be fewer sales tax profits. Several online shopping sites are not required to issue a sales tax unless the company has a physical existence in the state of Texas. How does the state make up that money and level the playing field for those local businesses who have to issue a sales tax? U.S. Congressman Jeb Hensarling says right now taxes are too high. Instead of increasing taxes on online vendors and purchasers, Hensarling says he’s ‘working to reduce taxes on East Texas brick and mortar businesses.’ State Senator Kevin Eltife doesn’t believe we have come that far. (Reuter 2007)
Is Black Friday or Cyber Monday better for discount buyers? Surveys have found that Cyber Monday has better deals overall. Cyber Monday conventionally comes three days after Black Friday and revolves around online deals. ‘When comparing the two days last year, we noticed more savings on Cyber Monday, as shoppers shifted their purchasing channels online,’ said Ted Donath, vice president of communications for the coupon- and discount-shopping browser extension Honey. Honey’s research showed that last year’s Cyber Monday average savings (per user, per purchase) peaked at 21%, while Black Friday savings peaked at 18.5%. Different products receive better discounts each day, and the deals that each retailer offers will vary. (Chin 2019)
As e-commerce continued to build, before the year 2000, there were still limited options for the producers and consumers using e-commerce as a means of business. The only products accessible were larger brands that could afford the ability to expand to the e-commerce market. As the years went by, more businesses grew to the e-commerce market, no matter the size of a corporation. This caused the e-commerce market to explode with customer sales. Customers can explorer many options, read reviews before making a purchase. As the e-commerce market continues to expand, they were expected to reach 3.535 trillion dollars at the end of 2019 (Gagliardi, 2019).
The rate of online shopping is only projected to grow until 2022, at the very least. The image shown here gives a look at the past rates of online commerce with a glimpse of a projected path two years in the future. (CBRE 2020) This chart only confirms the belief that online shopping has been a great source of economic health and wealth for not only America but all countries that have citizens participating in the new world practice.
E-commerce is becoming an increasingly more convenient way to do business not only for the consumer but for producers as well. Since the rise in e-commerce, it has been increasingly easy to start and run an online business. Given the opportunity, it is very easy to make an online business with limited resources and know-how. (Edmondson 2019) The ability to create more business allows for more options for consumers and more availability of products online.
E-commerce has been an idea since the ’70s and has only become more popular since the creation of the internet. Since the concept of online shopping was created, the popularity of the idea had only increased giving way to knew privacy laws, better business practices, and a higher rate in sales across the board. As some businesses paved the way for better forums to buy and sell, becoming more user-friendly, shopping online has become the most prevalent means of producer to consumer transactions for the general public. This leads one to speculate, store, other than for food, going to one day be a thing of the past? Is the way of e-commerce going to be the only way we buy things we want in the future?
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