Investigation into Online Retailers and Offline Retailers Shopping Unending Debate
Introduction
Since the advent of technologies supporting online shopping, this new trend has gained popularity steadily. Statistics in the United Kingdom show an exponential growth in the online retail sales. For instance, Herrod (2015) reported that online sales in the United Kingdom n 2015 were 52.25 billion pound sterling. This signified a 16.2% growth from the sales reported in the previous year at 44.97 billion pound sterling (Herrod, 2015). The increase in online sales is fueled by among other factors, the increase in the number of online shoppers. For instance, Herrod (2015) reported that 21.2 of the total purchases in 2015 were made online, an improvement on the18.8% that reported in 2014.
There is also an increase in the amount of money spent purchasing online. According to Herrod (2015), shoppers in the United Kingdom spent 55.36 pound sterling on average for every online transaction in 2015. All these trends tip the debate towards the proponents for online retails. It is of the essence to appreciate these trends that are not just unique for the United Kingdom, but also throughout Europe and other markets. It has been argued that the approaches to marketing communication in online retailing and offline retailing are significantly different. Marketing communication is an integral part in the decision making of the customer (Katawetawaraks & Wang, 2011, p.66).
Among other purposes, this paper explores whether the differences between online and offline retailing can be attributed to the differences in marketing communication. The paper will also assess the relative difference in the sales from the online and offline platforms for the United Kingdom. The paper will finally synthesize what is known and unknown regarding this subject and also delineate the significance of further research into the subject.
There is more impetus for the growth in online sales at the moment. Table 1 below shows the differential in the growth between online and offline sales. While the focus is on the United Kingdom, the inclusion of the other countries and markets serves to contrast the performance of the two retail platforms in the United Kingdom and elsewhere as well as to emphasize the trend denoted. Table 1indicates that in the main markets in Europe, the United States and Canada, the growth in sales for the online platform is in the double digits. This contrasts sharply with the negative growth in the sales of motor and brick stores. The statistics also show that the growth in sales for both online and offline retail is the product of the growth experienced on online retailing stores.
Source: (Herrod, 2015).
While the statistics above show an exponential increase in the online sales, they are only indicators of the growth in this segment and not the dominant platform for retailing.
Figure 1 showing the difference in total sales between online and offline channels
Source: (Statista, 2016).
Figure 1 above shows that while online shopping is gaining popularity, the brick and motor stores still conduct most of the sales in the United Kingdom. In the fashion segment, the offline channels were responsible for 64.4% of the total sales compared to the 28.3% of the sales in the online channels. Britons prefer shopping most of their groceries from offline retailers as seen by the 80.1% of the total sales in this segment. This is compared to the 12.9% in sales by the online retailers. Finally, most of the general goods were purchased from offline stores with a total of 67.5% in sales compared to the 28.8% reported by online stores.
Influence of Marketing Communication on Consumer Behavior
There is a significant correlation between marketing communication and consumer behavior (Călin 2008, p.169). Additionally, the response of the customer to marketing communication varies depending on the different characteristics such as demographics, psychographic, and behavioral characteristics (Jerman, D. and Zavrsnik, B. 2013, p.205). Irrespective of whether the customers are purchasing online or offline, their decision making processes are similar. Katawetawaraks & Wang (2011, p.67) argue that for both models, the decision making process commences with the awareness of a need, searching for information for meet the need, evaluating the alternatives available, the decision to purchase the item, and finally the post-purchase behavior. Marketing communication for online and offline shoppers results in different decisions. During the five stages, the decisions to purchase the product online or offline is made as influenced by various factors.
Factors Influencing Online Shopping
The internet is a potent source of information for shoppers. However, the decision to purchase from online stores is affected by factors beyond the availability of the information online. One of the factors that influence online shopping is the convenience that the online platform offers. Convenience is not limited to the fact that shoppers can purchase their products from the comfort of the home over the internet. Empirical evidence from Wang, Ye, Zhang & Nguyen (2005, p.307) shows that the availability of products online after hours when most motor and brick stores are not in operation amounts to convenience. Another element of convenience that influences online shopping is that one can avoid the massive lines at the checkout that is experienced especially during the holiday season (Wang, Ye,L.R., Zhang & Nguyen, 2005, p.307).
Information is another factor that influences online shopping. Online marketers have compensated the fact that online shoppers cannot see tangible products by offering copious amounts of information to persuade the shopper to purchase the product (Wang, Ye,L.R., Zhang & Nguyen, 2005, p.307). Customers base their decisions on the product with the descriptions that satisfy their needs. Besides, online customers also benefit from product reviews given by other customers who have purchased the product. These reviews influence the decision to purchase the product or whether to purchase it from online stores Tuten (2008, p.117) argues that 77% of the consumers who purchase products online rely on product reviews and ratings in their decision making, a trend that Shaw, Zhang & Yue, (2012, p.47) affirm.
The availability of products and the after sales services also influence online shopping behaviors. Transactions are now easier with the availability of supporting services such as multimodal payments methods and shipping services (Katawetawaraks & Wang, 2011, p.69). Consequently, online shoppers can purchase products from vendors in market further away from their location. Shoppers can also purchase items from preferred outlets that may not be in their locality through their online platforms (Doherty, Ellis-Chadwick, and Hart, 2003, p.20).
For instance, e-bay and Amazon are vendors from whom many consumers world over purchase products. In the same respect, online retailers offer customer support in line with customer relationship management ideals. This is a strategy for online retailers towards creating a relationship that is sustainable. As discussed in the previous submissions, and in line with the argument for increased access to information, online retailers help the customers by availing to them price comparisons, reviews of other customers on certain products, feedback from other users and multimodal payment methods. Indeed, the customer relationship management is a major predictor of growth in the virtual world where the lack of trust is an impediment to growth.
Katawetawaraks & Wang (2011, p.69) also argue that efficiency in terms of cost and time also influence online shopping behavior. Many online retailers offer reduced prices for products that are found in brick and mortar stores in order to gain a competitive advantage. Online retailers also list the prices of their products allowing the customers to compare prices with relative ease. The other element of time efficiency is that it eliminates the travel to the store, looking for parking, waiting at the checkout and other difficulties that come with offline shopping (Katawetawaraks & Wang, 2011, p.69).
Factors Influencing Offline Shopping
A study performed by Walters, Toase, Hong & Meckel, (2005, p.241) where the researchers explored the attitudes and experiences of offline shoppers of groceries revealed three significant influencing factors. 66.2% of the respondents indicated that the biggest influencing factor for shopping offline was that they could possess the groceries they purchased immediately instead of having to wait for deliveries. Another 55% of the respondents argued that the fact that the goods were tangible and that they could inspect them physically prior to the purchase was a significant influencing factor for shopping for groceries offline. Of note is the argument by Katawetawaraks & Wang, (2011, p.70) that the intangibility of products in online retail is one of the impediments to online shopping. This is an argument with which many scholars agree (Zaman, 2010, p.300; Lacka, Chan & Yip, 2014, p.155 & Becker, 2008, p.1703).
Gaps in Knowledge
Many studies have been conducted in the developed nations, a category in which the United Kingdom is included. However, Boateng (2014, p.37) argues that there is minimal research into e-commerce in the developing countries. This is not to say that online shopping is not done in these countries. On the contrary, Boateng (2014, p.37) argues that there is no knowledge regarding the capabilities of the retailers in developing countries to benefit from the opportunities presented by e-commerce. At present, the resource-based view paradigm is used to explore the manner in which and how firms and retailers alike build and sustain a competitive advantage in online retailing. Still, Boateng (2014, p.37) decries that this paradigm and other relevant theories have been applied in limited studies in the developing countries. In addition to this knowledge gap, the arguments of Boateng (2014, p.37) delineate a context gap.
This is significant for online retailers in countries such as the United Kingdom who are hoping to capitalize on the opportunities for increased business that result from globalization. Due to globalization, retailers have an expanded market where they can vend their products. Many online retailing outlets are reaping benefits from the borderless market created by globalization. The limited knowledge of the capabilities of the online retailers in the developing worked erects impediments for online retailers in other markets hoping to tap into pool of online shoppers in the developing countries. There context gap also highlights a lack of knowledge on the reaction of customers regarding online shopping in these countries. This is a further impediment to retailers in other markets.
Conclusion
The debate between online and offline retailing takes many perspectives. The paper has provided evidence that offline retailing is the more dominant of the two. However, the exponential growth experienced in online sales is noteworthy. The paper has shown that this is not just trend in the United Kingdom. Indeed, the evidence shows that this is the trend in other markets within Europe and elsewhere. Online sales are project to increase even further even further. Whether this is achieved is dependent on the factors the influence online sales. The paper has highlighted four factors that have fueled positively the growth of online sales. Further influence will come from the development of the supporting services such as methods for multimodal payment processing, website security to increase the trust of the online shoppers. This is in line with the ideals of customer relationship management. As discussed in the paper, globalization presents new opportunities for online retailers. There are expanded markets for online retailers in a world where national borders are virtual for online retailers. This will continue to fuel the growth of online retail and even shape new trends in online retails. The dynamics of the market, market communications, and the response of the customers will be major predictors of growth.
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