Task One – Electronic commerce and the internet customer - Topic Three

Task One – Electronic commerce and the internet customer - Topic Three

After studying this topic I fully realised how e-commerce and technology has changed the way we live. We use the internet to do so many of our day to day dealings; our banking, talking to our friend using social networking sites, buying tickets to the theatre, searching for new places to live, looking for new jobs, booking our holidays. Often the internet is the first place we start when thinking about making a purchase.

As stated in Laudon & Traver p. 176 there are four main types on online business models; virtual merchants, multi-channel merchandisers, catalogue merchants and manufacturer-direct firms. All of which are competing in a very competitive market for consumers online dollars.

Early predictions about the success of online trading proved to be incorrect and greatly overestimated the success companies could achieve from e-commerce. Conducting business online presented a whole lot of new challenges for businesses. I can understand the difficulty that pure-play companies have in turning visitors to their sites into customers.

After studying this topic I was interested in the types of products people are purchasing online. According to a Nielsen Report the most popular and purchased items over the Internet are Books (41% purchased in the past three months), Clothing/Accessories/Shoes (36%), Videos / DVDs / Games (24%), Airline Tickets (24%) and Electronic Equipment (23%). Most of these seemed to be products of one size fits all. I firstly thought the most popular items brought over the internet would have been clothing; however the limitation of not being able to try on articles of clothing may limit the number of people buying clothing online.

For myself as an internet customer my biggest concern is with security and reliability. Not so much as whether my credit card details will be misused but whether the goods that I purchased online will turn up. I therefore feel more secure when buying from a company that has a physical presence in the traditional marketplace or buying from a company that lets you track your order the entire way through the delivery chain such as Amazon. As a customer I personally feel more secure when purchasing from Click and Mortar companies or well known companies that trade over the internet such as Amazon or Dell. I also often will only buy from a site if I have heard other people having success with that site.

With the increase in fraudulent activity increasing with transactions occurring over the internet I like to know that if I need to I could physically contact business or speak to someone face to face. Brand loyalty is an important factor for me as a consumer when purchasing over the internet. I would rather pay a little more to purchase something from a well established company that take the risk of buying a cheaper product else where. I believe support during and after the sale to be an important success factor with the business to customer business model.

I agree with the use of email as a successful way to market to online users. This seems to me to be the most affective way of marketing to the internet customer. I know from my own experiences that I will often read and follow the link to the URL.

The ‘dissolving of distance’ to me as a consumer of internet products is a great advantage. Living in remote and rural parts of Australia I have found that on many occasions I have purchased and searched for goods over the internet with great success, things that without access to the internet and electronic technology I would not be able to purchase due to my isolated location.

After reading Laudon & Travers (2007), E-Commerce: Business technology and society about the top 15 retail websites in America I was interested in seeing what business sites where popular with Australian users. From the CHOICE website located a list of some of the most popular websites. I noted that many of these popular sites are well known brick and mortar companies that have a well established brand names and presences off the web. This seems to correspond with Laudon & Traver 2007 who quote that the online audience is very sensitive to brand names and is not primarily cost driven.


Popular Australian e-commerce websites
Website
Unique audience
Active reach (%)
www.ebay.com.au
2,617,000
26.0
www.virginblue.com.au
913,000
9.1
www.qantas.com.au
905,000
9.0
www.ticketek.com.au
477,000
4.8
www.tradingpost.com.au
382,000
3.8
www.greaterunion.com.au
375,000
3.3
www.jetstar.com.au
322,000
3.2

Source: Nielsen//NetRatings NetView, home & work panel measurement.
Doing some research on internet buying I was interested in seeing that many of the articles mentioned security and secure sites to be one of the biggest concerns to consumers. The Australian Government has responded to the fast developing industry and developed the Australian E-Commerce Best Practice Model in 2000 which set the standards for Australian customer protection. However this has been superseded by the 2006 Australian Guidelines for Electronic Commerce it aims to provide businesses with guidelines when partaking in e-commerce. It is good to see that the government has recognised the need to protect consumers in this changing retail environment.

I do believe that those businesses with a web and physical presence using a multi-channelled approach will be the most successful e-tailers. As studies such as those Hanchard cites an by Forrester in May 2007 that estimated almost $400 billion of store sales are directly influenced by the web, and that will grow to $1 trillion in the next five years indicate that more and more people are and will search for product information online before they go and purchase offline. I feel this trend will continue until consumer become more confident and secure with purchasing online.

I think personally that the biggest challenge that e-Businesses face is the fact that you cannot replace the social interaction that one has when shopping. Humans are social creatures and enjoy interacting with other people this is something that sitting on a computer cannot replace. Shopping is a legitimate hobby for some people one that can’t be replicated by using a computer.

Overall I found this topic to be very thought provoking and an extremely interesting. It has made me thinking carefully about my actions as an internet customer.

References

Hanchard, S. 2007. Leveraging online consumer behaviour. http://www.insideretailing.com.au/articles-

Laudon, KC & Traver, CG 2007, E-Commerce: Business technology and society [MGT330 Readings 1].
Charles Sturt University.

The Australian Guidelines for Electronic Commerce 2006 http://www.treasury.gov.au/documents/1083/HTML/docshell.asp?URL=australian_guidelines_for_electronic_commerce.htm


The Nielsen Report 2008 Over 875 Million Consumers Have Shopped Online -- The Number of Internet Shoppers Up 40% in Two Years http://www.nielsen.com/media/2008/pr_080128b.html