impact of e-commerce upon customers’ buying behaviour

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The impact of e-commerce upon customers’ buying behaviour

Table of Content

1. Introduction……………………………………………………………………………………….2
2. Aims and Objectives………………………………………………………………………….3
3. Literature Review……………………………………………………………………………..4
4. E-commerce nature…………………………………………………………………………….5
5. Profile and motivation of online shoppers………………………………………….5
6. E-commerce advantages and their impact on customers…………………..6
7. E-commerce disadvantages and their impact on customers……………….6
8. Methodology………………………………………………………………………………………..7
9. Research philosophy…………………………………………………………….……………..7

10. Research approach……………………………………………………………………………..8

11. Research strategy……………………………………………………………………………….9
12. Research methods ……………………………………………………………………………..9
13. Sampling…………………………………………………………………………………………….10
14. Type of research……………………………………………………………………………….10
15. Access issues……………………………………………………………………………………..11
16. Data analysis…….……………………………………………………………………………….11
17. Research ethics………………………………………………………………………………….11
18. Time scale………………………………………………….……………………………………..12
19. Conclusion………………………………………………….……………………………………..12
20. References…………………………………………………………………………………………14
21. Appendix A: Gantt Chart ………………..………………………………………………19
22. Appendix B: Ethics Form………………………………………………………………….20

Introduction

All people consume goods or services every day and there are many ways for customer to obtain what they want and satisfy their every day needs.  This paper is focused on the e-commerce which is a successful marketing mechanism for selling a large variety of products, used in the United States, Europe and Asia. Chaffey (2007) states that e-commerce includes all electronically mediated transactions between an organization and any other third parties it deals with. However, e-commerce has many definitions depending on a wide range of perspectives Shih (2004) gives one of the simplest, defining e-commerce as the process of buying and selling goods or service via Internet or other networks. According to Yannopoulos (2011) the advent of Internet empowers the customers allowing them to search among a large variety of products, compare prices, easily place an order and pay electronically.

 According to the information posted in the Internet World Stats the number of Internet users for 2011 has increased with 480% compared to 2000. Thus, now 2,095,006,005 people worldwide use Internet to work, search for information, shop, etc. According to Nie and Erbring (2000) 36 % of all Internet users purchase products online. Achille(2008) reports that online shoppers number has increased with 40% to 875 million for the last two years. The UK, USA, South Korea, Germany and Japan are among the countries where people prefer to shop more online. According to the European Travel Commission, there is 62% increase of the online shoppers in the UK (32 million) compared to 2010. Tong (2010) states that in 2009 online shoppers in the UK have spent £38 billion. According to Enright (2011) the UK consumers are expected to spend 15.6 billion euros online only for the several weeks before Christmas.

Not surprisingly, in terms of the dynamic market environment, e-commerce is seen as a powerful tool that business can use to increase their sales, decrease distribution costs and obtain a competitive advantage (Yannopoulos, 2011). However, in order to be successful in this field companies should understand better the impact of this marketing phenomenon upon their customers’ behaviour.

The researcher’s personal interest in this topic is found in her desire to work in the sales and marketing department of a multinational corporation. Nowadays e-commerce is said to impact the business models, strategies, and marketing structures of the companies, allowing them to market their products globally from their domestic location (Doole and Lowe, 2008; Reynolds, 2010).  Thus, further investigation on the matter will provide her knowledge and play a significant role of her future career development.

Therefore, the researcher’s intention is to provide information about the e-commerce that is useful for any researchers working in the business field. The results of this research can be also of interest to other researchers in charge of projects in the marketing and management filed.

Aims and Objectives

Aim

This paper aims to explore in details the impact that electronic commerce have on customers’ buying behaviour.

Objectives

 The objectives of this research are:

To determine the nature of e-commerce as a part of the marketing concept

To find out what are some of the advantages and disadvantages of the online shopping websites for customers

To examine the profile of online shoppers and investigate the factors that motivate them to shop online

Evaluate the impact of this marketing phenomenon on customers’ buying behaviour

Literature review

The e-commerce begun in 1995 and for a short period of time it had a huge impact on the economies, business, markets and customers all around the world (Laudon and Travel, 2011). During the 1990s, the development of e-commerce was mainly based on inspiration and experimentation. This is the time when key e-commerce concepts were developed and thousand of dot.com companies were found (Laudon and Travel, 2011). From this time companies started to sell directly to customers, small domestic companies were enabled to sell internationally and entire niches of new business begun to emerge almost every day (Shim et. al., 2000). Also the e-commerce vision as a commerce where the information is equally distributed, transaction costs are low and are prices accurate to the demand, was estimated. Later, there was a period of retrenchment and re-evaluation, followed by the market crash of 2000-2001. Surprisingly, during this period the attractiveness of e-commerce grew significantly across global business communities and there was a 90% increase of the value of the e-commerce, telecommunications and other technology stocks (Fellenstein and Wood, 2000; Laudon and Travel, 2011).

From 2001 to 2006 was a period related to the use of e-commerce as a tool for the business firms to strengthen their market positions and extend their brands. The following period is associated with reinvention of the e-commerce and it lasts to the present day. It involves technology innovations, social networking and the development of new customer oriented business models (Laudon and Travel, 2011).

During all this time e-commerce has exceed rapidly in customers and revenues. For example, from 2002 to 2008, retailer e-commerce grew at over 25% per year. This steady growth of e-commerce continues and in 2010 when online consumers only in the USA are 133 billion. Even in times of the recession 2008- 2009 when traditional retail lost was 4.5%, the online sales grew. This slow growth was followed by 12.5% annual growth of the retail e-commerce in 2010-2011, while the traditional retailed commerce was growing six times slower (Laudon and Travel, 2011).

E-commerce nature

Although ten years ago e-commerce was divided into online shopping (the information, provided by companies in order to help customers to make buying decision) and online purchasing (the technology infrastructure used for data exchange and purchase of a product online) (Rosen, 2000), few years later there are several types of e-commerce. In order to answer the first objective, clear distinction between several, relevant to this research, types of e-commerce based on the parties involved in the business transaction, should be made.

Business-to-consumer (B2C) refers to e-commerce that happens between a supplier and retailer consumer (Green and Pearson, 2009). According to Laudon and Travel (2011) this is one of the most popular types of e-commerce among the customers. This category includes different modules such as online retailers, marketing creators, service and community providers. Amazon is just one of the numerous examples of a general merchandiser that operates in the business- to- consumer field (Rayport and Jaworski, 2001).

Consumer-to-consumer (C2C) refers to e-commerce between individuals or consumers (Wang and Lin, 2009). Here, the consumer prepares a product to the market, places the product for auction and using the facilities of this type of sites realizes sales. For example, those are sites such as Priceline.com and the auction site eBay which last year was expected to generate over $60 billion in gross merchandise volume worldwide (Laudon and Travel, 2011; Turban et. al., 2010). Furthermore, according to Chaffey (2007) this category includes social networks such as Facebook and Myspace, peer-to-peer such as Skype, etc.

Mobile commerce (m-commerce) refers to the use of wireless digital devices that allow online transactions like stock trades and banking to be made. This type of e-commerce includes the use of laptops, smartphones and iPads and is expected to have a huge success over the next few years (Laudon and Travel, 2011; Sadeh, 2002).

Profile of online shopper and their motivation to shop online

E-consumers are relatively young, well-educated and reasonably affluent people all over the world who have a good knowledge of English. However, few years ago man tended to shop more online than women, now this tendency is changing (Brennan et. al., 2008). Books, computer software, gifts, clothing and travel and hotel services are among the most purchased online products (Doolin et. al., 2005). According to European Travel Commission in 2011, clothing remains one of the most popular online purchases. The basic motivation for shopping is to obtain goods that satisfy every-day needs. Additionally, people shop online motivated by personal motives such as learning about new trends or social motives such as status (Evans et. al., 2010). Many motives for people to use e-commerce are closely related to the advantages that it provides.

Advantages of e-commerce and impact on the customers

Many authors investigate the opportunities that e-commerce provides to customers. No doubt that e-commerce provides 247 service, reduces search efforts and costs, allowing customers to shop easily, saving them time (Chu et. al., 2005; Doolin et. al., 2005; Rayport and Jaworski, 2001; Zhang et. al., 2007). It also reduces the possibility that customers are becoming impulsive or compulsive shoppers, buying products that they do not need and will never use (East, 1997).

This has an impact on their behavior, making them more efficient and effective shoppers (Zeng and Reinartz, 2003). Harman et. al.(2001) argue that at the same time customers are becoming more price sensitive, demanding a wide range high quality products. Zhang et. al.(2007) state that the e-commerce affects the customers’ willingness to shop more. Harman et. al.(2001) share the same opinion explaining that customers quickly started buying technology online, but they felt more reluctant to depend on the Web for clothing. According to Laudon and Travel (2011) customers today are more confident to spend bigger amounts of money on items like electronics, furniture and jewellery than they were before. However, to make high-value purchase customers search for product information in Internet or ask friends and salespeople (Blythe, 2009).  Gong and Maddox (2011) believe that all those factors have an impact on customers’ decision making. However, about 28% of the Internet users do not shop online (Laudon and Travel, 2011).

Disadvantages of e-commerce and impact on customers

There are several factors that prevent Internet users from online shopping. Concerned about ethical issues such as their privacy and safety when they shop via Internet people simply decide to shop the traditional way (Stead and Gilbert, 2001). Reynolds (2010) explains that although there is a rising awareness of the threats of providing information online, the consumers express different level of concern that affects their decisions. According to Dahiyat (2011) customers need to feel that their transmissions are adequately safeguarded and authenticated. Despite that customers are suspicious about security issues most of them are willing to shop online (Chaston, 2001). Blythe (2008) outlines that before making a purchase customers choose a brand and seller that they trust. Additionally, Doolin et. al. (2005) state that people are worried about making poor purchase decision, shipping costs, returns and inability to touch and feel the product.

All these factors have an impact upon customers’ behaviour. For example, today new social media platforms like Facebook and Twitter bring people together, allow them easily to find people with the same needs and interests who can share information about the products. Furthermore, customers now meet in blogs and form internet groups that affect not only their personal life but their customer behaviour as well (Klein, 2010). Customers today gather together in order to obtain products and services with significant discounts on condition that a minimum number of customers will buy them for a certain period of time. This phenomenon is known as group buying (Wei et. al., 2011).

Methodology

Research philosophy

 In this part the researcher will explain hisher way of approaching the topic and extending the scope of knowledge on the matter.

Ontology

According to Maylor and Blackmon (2005) our assumptions about the nature of reality or ontology should be considered by researchers. There are two generally accepted types of ontology that are used by researchers to produce knowledge. However, many researchers adopt the position of objectivism and research only what is physically real, the researcher believes in subjectivism. Thus, in order to prove the impact of e-commerce on customers the researcher will explore customers` buying behaviour and look for the subjective purposes motivating the customers to use websites for online shopping instead of going to the stores.

Epistemology

In order to produce a good research the researcher needs to define hisher epistemology or take into consideration what is considered as knowledge in the field (Maylor and Blackmon, 2005). However, there are four main types of ontology (Positivism, Realism, Interpretivism and Pragmatism) for the purposes of this research interpretivism will be used for the following reasons:

1.   It is useful in cases of business and management research in marketing field because it is appropriate for explaining human behaviour (Maylor and Blackmon, 2005; McAuley et al. 2007; Saunders et al., 2009)

2.  It helps for better understanding the difference between humans as social actors (Saunders et al., 2009)

Therefore, the researcher will stick to the interpretivism, considering that the impact of e-commerce on customers’ buying behaviour all over the world cannot be generalized because the impact mentioned above is seen as a consequence of many factors affecting people’s behaviour in different situations.

Research approach

Two different and even contradictory approaches (deductive and inductive) are used by researches. Lee and Lings (2008) state that although researchers choose one or the other approach, in practice a clear distinction is rarely made. Saunders et. al., (2003) believe that both approaches used in combination increase the possibility of production of a good research. Induction is known as the process of starting from specific observations and moving to general theory and deduction is the opposite process (Lee and Lings, 2008).  As a logical sequence of the researchers choice to use interpretivism by rather collecting qualitative than quantitative data, this research will follow the inductive approach. Therefore, it is necessary first the data to be collected in order to be developed a theory (Saunders et. al., 2003).

Research Strategy

The author has chosen to use primary and secondary data for the purposes of this research. Primary data, unlike secondary data, does not exist unless it is generated to the research process and it is considered to be very flexible. Thus, the researcher will establish suitable system for data collection and try to increase the internal validity, eliminating confounding variables by full control over the data collection process. Although primary data is not easy accessible, the possibility to increase the internal validity, is the main motivation for the researcher’s choice. On the other hand, to decrease the negative effect of primary data on the external validity of the research, secondary data will be used as well, as this will help the researcher to fulfil hisher aim to produce a good research (Raymond-Alain Thietart et. al., 2001). Therefore, in order to answer the research questions and meet the objectives of this research the author will use all types of secondary data such as documentary data (textbooks, business and marketing articles published in magazines, journals, newspapers and official websites of professional organizations), survey-based secondary data about the marketing trends and multiple- source secondary data (Saunders et al. 2009). Maylor and Blackmon (2005) state that the use of this type of data saves researcher’s  money and time, allowing himher to concentrate on data analysis and fully exploit the data set.

Research methods

In order to validate and supplement the data obtained by secondary research, primary data will be collected and analysed on the base of ten semi-structured interviews of people who shop online quite often. Doing interviews the researcher will gain valid data that is relevant to the aim and objectives in this research (Saunders et. al., 2009). According to Lee and Links (2008) the use of interviews is a useful technique for collecting qualitative data because of they provide flexibility in terms of the research’s time and content. This way using tailored questions the researcher can obtain qualitative data that can help himher better understand why people prefer to buy goods, distributed via Internet rather than use some other ways to shop.

Sampling

The researcher will use ten semi- structured interviews with online shoppers. This type of interview is chosen because it contains pretty specific questions, useful to meet the objectives of this research, but it also includes general questions and allows the respondents to make some individual points to the topic (Lee and Links, 2008). Furthermore, doing interviews the researcher has full control over who answers hisher questions and by establishing personal contact higher response rate can be achieved (Saunders et. al., 2009). According to Eriksson and Kovalainen (2008) the materials for semi-structured interviews are systematic and comprehensive and the style of the interview is fairly informal. Saunders et. al. (2009) state that however, the researcher has prepared a list of questions to be covered for the interview, they might vary depending on the flow of the conversation. After opening the interview the researcher will concentrate on questioning, listening to the responses and observing the non-verbal cues in order to better understand their behaviour.  Therefore, the interviews will be audio recorded as later the information need to be transcribed, word-proceed and analysed. Moreover, for the purposes of this research, purposive sampling is considered to be the best method, because it allows the researcher to use a small sample of a relevant to the research people (online shoppers) (Lee and Links, 2008).

Type of research

There are two types of data that will be used in this research. Qualitative data is based on meanings that can be expressed by words and analysed by conceptualization. This type of data analysis is characterized relies more on interpretation and does not follow a strict structure (Saunders et. al., 2009). According to Lancaster (2005) this type of data is rich and ungeneralizable that makes it appropriate for better understanding of people behaviour. Raymond-Alain Thietart et. al. (2001) recommends that qualitative data should be used in combination with quantitative data that a greater validity can be achieved. Thus, in this research quantitative data from secondary sources will be used as a complementary as it is reliable and replicable. This will help the researcher to find facts about customers` buying behaviour and explain the causes for the increased interest of e-commerce in the society (Lancaster, 2005).  

Access issues

To meet the forth objective to evaluate the impact of e-commerce upon the customers` buying behaviour, the researcher will interview ten online shoppers. In order to gain access to those people the researcher will use both warm contacts such as family and acquaintances and cold contacts of people who the researcher does not personally know (Maylor and Blackmon, 2005). The researcher’s plan is to access them by explaining what the research is about and why it is significant for the business and the society. Then the researcher will ask each of the participants for their permission to take part in a single interview lasting about 60 minutes (Eriksson and Kovalainen, 2008). Some people may refuse to participate and others who agree may cause some difficulties during the interview such as giving too long or too short answers (Saunders et. al., 2009).

Data analysis

The researcher will world-proceed the recorded data manually. However, details about the date, time and place of the interview will be included in the transcript, the respondents names will be kept anonymous. The researcher will try to describe pause in speech, tone of voice, facial and other visual cues. Then the transcript will be checked for typographical and spelling mistakes. Several questions will be developed to test the possible propositions. Due to time limitations the researcher will not use any software to systematically analyse the collected data. Then the relevant data will be divided into categories depending on whether it is related to the objectives, does it support the theory, etc. (Saunders and Lewis, 2012). Easterby- Smith et. al. (2008) suggest that grounded analysis is helpful as it provides open approach to the data and is closely related to the theory. Using it, the researcher needs to go through stages like reflection, conceptualization, re-coding, linking, re-evaluation, etc.

Research ethics

This research will be conducted in respect of the ethical guidelines of Southampton Solent University and the completed ethics form is attached in Appendix B. Thus, the researcher will interview online shoppers on voluntary participation basis. Furthermore, the researcher will provide them with information about the purpose of this study, its aim, the significance of the topic and what the results of it can be used for. However, consent for participation might be difficult to obtain from some people who think that exploring their behaviour is an intrusion into their lives.  What is more, the anonymity of the participants is guaranteed by the researcher and their identities and research records will be kept confidential (Eriksson and Kovalainen, 2008; Maylor and Blackmon, 2005).

Time scale

Following the recommendation of Fisher (2004) that Gantt charts are useful in business research, the researcher’s Gantt chart can be found in Appendix A. This chart will be used as a tool to determine the types of activities that need to be accomplished and the plan time that the researcher has. On the basis of the information in this chart, the viability of this research can be seen. What is more, it can serve as a guide to the researcher, showing what should be done at different periods of time so that a good research can be produced.

Conclusion

The information in the introduction and in the literature review shows the significance of the advent of Internet in people lives. As a result of this revolutionary step people changed the way they search and access information, the way they communicate, work, etc. Furthermore, the emergence of the e-commerce few years later has a huge impact on the business, causing a revolution in many areas such as marketing, advertising, finance, logistics, production, etc. However, e-commerce has its advantages and disadvantages it undoubtedly affected customers’ buying behaviour.  

Thus, in order to gain better understanding on the matter, in this research e-commerce will be explored in details and its advantages and disadvantages will be examined. To evaluate the impact of e-commerce on customers, the researcher will collect and analyse primary (on the basis of interviews) and secondary data (using previous studies in the field). The researcher’s intention to combine qualitative with quantitative data (which is easy replicable) leads to the assumption that the future results of this research would be similar to previous studies in the field.

Therefore, the researcher anticipates proving that e-commerce impacts upon customers’ perception and behaviour. This affects their decision making process and willingness to shop. However, there are some obstacles that can have a negative impact on the achievement of these results. Apart from the limitation of time and problems with the expensive or difficult data access, the researcher is concerned about the interview plan and the selection of the questions. Additionally, the researcher might have problems finding participants, willing to take part in the interview or face difficulties with them during the interview. Another area of concern is related to the selection of sufficient, specific and relevant information that is appropriate for the fulfilment of the research’s aim.

Finally, this research will be considered incomplete if the researcher does not manage to summarize and accurately interpret the data collected by the interview. Failing to do this, it would be difficult for the researcher to provide more insight on some of the main ways in which e-commerce influence the consumers to change the way they shop.

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Appendix A

Gantt Chart

Tasks

October

November

December

January

May

June

July

August

September

Feasibility Study

Thinking about research topics

Searching and reading information about several topics

Generating ideas about definite topic

Aims and objectives determination

Writing feasibility study

Hand in date

Proposal

Further reading and research

Writing Introduction and Literature review

Writing Methodology part and Conclusion

Thinking about interview questions

Hand in date

Dissertation

Further reading and research

Preparation for the interview

Interview

Type in, analyse and evaluate findings

Write the dissertation

Hand in date

Appendix B

Completed Ethics Form

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