Introduction



The notion that Internet use has grown exponentially in just a couple of years leads us to believe that Internet commerce is expected to boom as well in the near future. The two rationalizations should go hand in hand. However, we can not be entirely sure about how much of an impact Internet commerce will have in the near future. Who will be the potential customers? What will be their motivations?

In order to justify Internet commerce and Internet shopping taking off in the next few years, we must take a look at the potential shoppers of the future. Thus, numerous studies have been done on different types of shoppers and the environmental factors affecting their shopping habits. The results of these studies should help us predict whether or not we can expect a bright future for Internet shopping. So grab your favorite libation and pull up a chair. You are about to learn about shopping, Internet style.

Let's start with a little background


Two large trends have made it possible for the Internet to take off. In 1454, Johann Gutenberg perfected the use of movable type. At the time, most people could not foresee the eventual impact that this invention would have on religion and society. But because movable type enabled the broad distribution of the Bible to the common man, the religious elite lost control over the distribution of religious information, and therefore lost control over their constituencies’ knowledge base. This loss of control led directly to the 95 Theses of Martin Luther and the start of the Reformation.

In 1996, most retailers seem to be taking a similar view of this reincarnation of Electronic Retailing. As in the movable type example, the industry has not fully considered the larger, downstream effect that the Internet will have (O'Conner, 1996). The following table will help to present the progress that technology has taken and effect it has had on society.

ERA EVENTS/TRIGGERS BIG PICTURE SIGNIFICANT EFFECT
1400's Perfection of movable type by Gutenberg Allowed broad distribution of the Bible and other religious documents Took control of religious information from the religious elite to the broader masses, leading to the Reformation (Martin Luther)
1700's Invention of the locomotive and creation of the railroad system Created an economic, fast method to transport people over great distances Enabled the mass migration of the East coast population westward and opening of minerals and oil resources
1800's Invention of the cotton gin Allowed cotton to be mass harvested, cleaned, and converted to cloth Created significant wealth for the southern states and conflict over the use of slaves to fuel this wealth; led directly to the Civil War
1950's Building of US Defense Highway system, beginning in 1954 with a 2 mile stretch in New Jersey Easy, fast, personal transportation between cities and from city to suburbs Enabled flight of middle class from urban to suburban living; jobs followed. Resulted in suburban shopping malls and decline of cities
1990's Interactive based shopping, combined with rapid advancements in technology and high speed interconnectivity. Instant access to vast comparisons and alternatives. Unleash and magnify the emerging power of the consumer, by empowering more choices and unprecedented competition Will gradually dismantle the existing value propositions of various players in the supply chain, while providing significant opportunity to others to contact consumers directly
(This information was gathered from Hoffman's work in 1995)


Internet Growth


The number of Internet users has increased exponentially in the last few years, and this is expected to continue (Rutkowski 1996). Although one cannot know exactly how many users there are out there, a minimum of 13 million users can be approximated by the number of Internet host computers connected. This figure is probably manifold, as users share computers.

There is no clear-cut consensus about what "Internet user" means. In some surveys it is World Wide Web users, in others it is email users, weekly users, and users who have tried at least once. In 1996, some user estimates are 23 million to 35 million (Activ Media, 1996). Forecasts are for 120 - 200 million users by the year 1999.

Internet hosts
A look at Internet host computers (Network Wizards, 1996)


A 1996 study conducted by the Yankelovich Partners revealed that 22 percent of the U.S. population uses online services, including the Internet, which is about a 150 percent increase in two years. They predicted that the growth rate will soon slow down however. The amount of sales on the Internet has increased as well, totalling 130 million in June 1996, and is expected to soar to a billion dollars in the year 2000, as technical solutions mature and new customers enter the market(CyberAtlas, 1996).

Internet users in general have a genuine interest toward Internet shopping. Therefore, a typical Internet user is very interesting from the perspective of marketing because the user has buying power and is willing to buy. A great majority (over 2/3) of active Internet users have a very positive attitude toward Internet shopping (GVU, 1994).

Still, only a fraction (15%-50%, depending on how active Internet users the respondents were) of the users have actually bought something (Yankelovich Partners, 1996). According to the GVU, regional differences tend to exist. Internet shopping is more common in the U.S. than in Europe. But after all, the number of potential customers is vast.


Past research


There are not too many scientific publications on Internet shopping because the branch is new and it is developing rapidly. Moreover, quite little research has been conducted on electronic commerce in general. However, a significant number of surveys have been conducted that examine the profile of the Internet user and use of the Internet (Gupta, 1995). This research predicts that Internet commerce will flourish after certain problems, like after security issues have been worked out and after more consumers start using the Internet.


Some study objectives


The main objective of this presentation and of the research done so far is to compare Internet shopping to conventional in-home shopping. Thus, the following questions have been asked in order to compare the two.
  1. What kind of a medium is the Internet in comparison to conventional non-store shopping media?
  2. Which factors influence a consumer's willingness to do Internet shopping?
  3. What kind of motives do Internet shoppers have?
  4. What kind of risks and problems are there with Internet shopping?


Let's get our terminology straight


There is no widely accepted, clear definition of non-store or in-home shopping. Gehrt, Ingram, and Howe (1991) have proposed the following definition for non-store retailing.
Non-store retailing consists largely of exchanges transacted via mail and telephone, but also includes exchanges trasacted via party-selling, door-to-door selling, at-work selling and vending machines. It is highly similar to direct markteing, but does not include business-to-business transactions.



To make it easier for you to understand what the heck I are talking about, this presentation will use the following terminology:


Non-store shoppingA way for a consumer to buy without physically attending a store.
In-home shoppingNon-store shopping that happens at home. This does not include shopping from vending machines or at work.
Conventional in-home shoppingIn-home shopping that does not involve the Internet: Mail-order catalogs, magazine and newspaper advertisements, direct mail, telephone selling, door-to-door selling, party selling, TV shops, etc.
Internet shoppingA way to buy on line without attending to a store. The customer can either buy via the Internet, or see some product information on line and then order off line, using telephone, fax or regular mail.

Let us move on




Welcome ~ Introduction ~ A Shopping Medium ~ In-Home Shopping ~ Survey Results ~ Conclusion ~ Shopping Sites ~ References ~ Webmaster