ECOMMERCE

Ecommerce

Ecommerce

Chapter 1: Introduction

Background

The explosive expansion of e-commerce since the 1990s has dramatically changed the retail landscape in the world economy. In the USA, the combined monetary value for Internet-related businesses is expected to grow to around $1.4 trillion by 2003 (Davis, 1999). In the business-to-business sector, Internet technology facilitates numerous changes in corporate infrastructure in information exchange and procurement and distribution process. While the business sector accounts for most of the value of Internet commerce, rapid growth in the retail sector propels retailers to tap into this vast, yet unpredictable, business domain. In the fourth quarter of 2002, online retail sales reached $17.44 billion, an increase of 40 per cent from the same period a year ago (eWeek, 2003).

Purpose of the Study

The investigation of marketing of services over the internet or bricks and mortar outlets is critical because of the inherent contradictions. The suggested advantages of e-tailing are that it is cheaper, more convenient, provides larger selection, quicker transactions, reduces processing errors, protects consumer anonymity, and results in savings for consumers (Buford, n.d.) Likewise, some of the perceived disadvantages of e-tailing are security fears, delayed gratification, lack of return policies, lower rate of order placement, impersonalization of shopping, and lack of customer service. However, if consumers are not enamored by the benefits associated with online outlets, they avoid the internet, preferring instead to shop at traditional outlets. These arguments form the basis for this study. We next examine the current literature, formulate hypotheses, and move on to the research method, results, discussion, and implications.

Rationale of the Study

The fast advancement of the Internet infrastructure presents new opportunities that are rarely seen in the world economy. With assistance from the latest development in communication and information technology, online marketers rush to establish positions in newly identified niches in an attempt to acquire new competitive advantages. One distinctive advantage for Internet marketers is the ability to reach a large number of consumers scattered around in various geographic locations, particularly in hard-to-reach areas, in a matter of minutes or hours (Strauss and Frost, 1999). Another advantage is the ability to reach out to younger generations that are heavily sought after by marketers. Adding Internet advertising to the promotional mix has become a common strategy used by major advertising agencies and marketers (Bush et al., 1998; Johnson, 1997; Schlosser et al., 1999).

Problem Statement

The dramatic growth in e-commerce also introduces new challenges. More consumers lodge complaints with various consumer agencies. The most common types of complaints on Internet transactions include refund and billing disputes, return and exchange policies, defective products, and poor customer services. Inadequate infrastructure, lack of trust, and privacy and security concerns often lead to lost sales.

Objectives and Research Questions

An ensuing managerial issue has been how to evaluate the quality of the consumer's online shopping experience. In the long run, online marketers who are able to maintain competitive advantages in providing superior shopping experience are more likely to prosper in the highly competitive Internet ...