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CHAPTER 1

1 INTRODUCTION

At the end of the last century, online shopping was already starting to catch people's attention, and was slowly attracting consumers to use it as a channel, primarily because of it's ease in completing purchases (i.e. not needing to step out of the home) and also in providing information as, even then, some sites already provided extensive information (Gay 1999, Gehrt et al 2007). But we are well into the first decade of the 21st century, and since then times have changed and certainly, consumers' motivations, as evidenced in this literature review and the results of the research project, have changed.

The use of the online channel for shopping varies greatly by country with the UK and the US ranking high up in the list with greatest ratio of online shoppers among Internet users, in addition to also having a large penetration of users for Internet access (Bhatti 2006). In the UK, Internet access among households has increased from 34% in 2000 to 54% in 2004, while Internet access for adults increased from 40% in 2000 to 64% in 2005 (Datamonitor 2006).

1.1 Research aims and objectives

The project had two key questions to focus on and this acted as a guide to the research design and methodology. The two key research questions in my project were:

* What are the key consumer motivations for online shopping and how are these impacting the development of the online channel? This question focused on the key drivers acting as impetus for consumers to pursue online shopping, and how these drivers were impacting the online channel as an alternative channel for making purchases.

* What are the emerging trends for online shopping, and how will the online shopping channel develop? As online shopping continues to increase, both organisations and consumers are expected to be better-placed with having a good understanding of where online shopping trends seem to be directed at.

1.2 Consumer motivations

The project sought to understand the consumer motivations for choosing online shopping as an alternative channel or, for some consumers, their main channel for shopping particular items. This part of the project was based on determining what consumers have stated as their key motivation factors through secondary research. This was supported by primary research by surveying and interviewing consumers on their motivational factors. The objective was to list out the key motivational factors consumers have for online shopping.

1.3 Emerging trends for online shopping

In addition to understanding consumer motivation, this project also sought, as an objective, to understand the emerging trends in online shopping, and establish a viewpoint on where the online channel was expected to move to. Similar for consumer motivations, this part of the project was based on a combination of primary and secondary research.

1.4 Rationale for research project

There was a strong rationale for pursuing this project as it aimed to provide a greater understanding of the consumer and the motivations behind online shopping. As the importance of the online channel becomes increasingly greater for organisations, there is greater need for determining the consumers' key drivers in choosing this as an alternative channel for shopping. The project results impact both consumers and organisations. For consumers, this gave them a venue for stating their preferences and key requirements to continue using the online channel which could lead to improvements on the online shopping experience. For organisations, this project provided an understanding of the current situation and also the emerging trends based on competitive dynamics, in order to be able to provide the consumers their requirements.

This project was also important for me as the student as it gave me an opportunity to develop the knowledge and pursue the analysis of a critical management issue which was becoming a greater value add channel for a large number of organisations. The project, I believe, has led to new insights and a confirmation of consumers' key motivations to online shopping. I believe this contributes to the growing knowledge on the online shopping experience of consumers

1.5 Overview of the study

* Chapter1 is the introduction chapter where the background, research question and rational, objective and the structure of the research are stated.

* Chapter2 contains a brief literature review on online shopping and provided basic understanding about consumer motivations and emerging trends for online shopping which is related to the research question.

* Chapter3 is brief about the case study on online shopping.

* Chapter 4 contains research methodology which includes research frame work the design of the research, sampling and questionnaire.

* Chapter5 describes the critical review of the findings.

* Chapter6 discusses on recommendation and conclusions.

CHAPTER 2

2. LITERETURE REVIEW

The study attempts to analyze research works relating to consumer motivations for online shopping and related issues are critically evaluated. This research project was pursued with a ‘qualitative research' approach as the focus was on consumer motivations, which, while it could have been developed with quantitative metrics, seemed to translate better into a qualitative focus. The objective was more focused on going in greater depth across the key consumer motivations instead of tallying figures in terms of which factors consumers felt were their key motivations. The qualitative aspect of the research project was pursued through surveys and in-depth questionnaires.

2.1 Consumer motivations

Childers et al (2001) defines ‘‘consumer motivations for online retail shopping conducted a few years ago, some of the consumer motivations cited were interest in use of a new technology, ease of navigation and use, and convenience of online shopping''. While the research mentioned looked at consumer motivations, the research was only a subset of what could be learned from consumer behaviour as the study focused on only a few possible factors of online shopping activity.

Linked to the increase of online shopping is the increase in access and usage of the Internet. Rodgers and Sheldon (2002) researched ‘‘the increasing use of the Internet and highlighted shopping as one of the key motivations for increased consumer use''. In this work, the authors looked at shopping as a consumer motivation for increased consumer use.

(Ko et al 2005, Tamimi et al 2005, Dadzie et al 2005) discussed that ‘‘it should be noted that there has been considerable growth in Internet access and usage, and this has created a significant market in marketing and communications of organisations''. Online shopping has been growing and organisations have been focusing more on developing the online channel to capture a greater share of the wallet of the consumer.

Online shopping

Hult et al (2007) defines that ‘‘online shopping can relate to any offering of service quality, product quality, or e-Business quality where the objective is the customer-based value creation for organisations''. Based on this definition, we can see that the number of online shoppers has indeed increased significantly in the UK, with the percentage of UK Internet users shopping online (including ordering tickets of buying goods and services) grew from 36% in 2000 to 61% in 2005 (Datamonitor 2006).

For this research project, the broad definition is reasonable as the key focus of the research is in understanding consumer motivations for online shopping in general, with no specific product or service in mind. Undoubtedly, there are a large number of ways in which to cut the issue and there would be differences in the consumer motivations for specific products in specific markets.

The works cited in this section provided a good starting point in the consumer motivations to be considered. The research works also provided an indication of the increasing use of the Internet and online shopping as an activity. From the limitations cited in the research works, further research needs to be conducted on a general understanding of consumer motivations which are not limited to a few factors. The rest of this section discusses some motivating factors cited by consumers as driving their online shopping activity.

24-hour access

Bramall et al (2004) reported that ‘‘motivation by consumers is the 24-hour access provided or allowed by most online shopping channels. Thus, the online channel is utilised by consumers as it provides them with 24-hour access for information, customer service, and purchase opportunity''. This essentially gives the consumer the opportunity to browse products and purchase at the consumer's own leisure. While the research of the authors states this factor as a motivation, the focus of the research work was actually on potential trust issues in online shopping. This specific motivating factor was not analysed in comparison to other motivating factors for consumers.

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Shopping convenience

One oft-mentioned reason and an early consumer motivating factor, for shopping online is the convenience of doing so as consumers won't need to go to the retail stores and experience the ‘hassle' of buying products in the stores (NBC News 2007).

According to one study Furnham (2007) ‘‘not only highlight the convenience of shopping online but also states that shopping only also helps decision-making as a large part of the information requirements a consumer may need to make the decision are found online''. Clearly, shopping convenience is expected to rank high among the consumers in terms of their motivations for pursuing online shopping.

Gehrt et al (2007) reported that ‘‘Shopping convenience is a large factor for the US and UK consumers but this is not limited to the US or the UK markets only as even in Japan, online shopping has seen increasing growth rates, with shopping convenience as the greatest factor motivating consumers to do online shopping''.

The shopping convenience factor has been recognised across a number of research works, but these only tend to highlight that consumers have different meanings attached to the terminology, and may actually be referring to different sub-factors under the general term of convenience. In understanding this factor further, specific meanings were attached to and discussed in the surveys and interviews for the research.

Greater bargains

Craver (2006) reported that ‘‘not only consumers are expected to continue increasing their online purchases but only if they receive greater bargains from sellers in their online sites versus their retail stores''. Thus, consumers are already building the expectations that prices online will be less that prices in retail stores.

Hajewski (2006) pointed out that ‘‘If only to hammer the point of increasing consumer expectations, two factors mentioned by consumers in their increased interest in doing online shopping were free shipping of their products purchased and also everyday low pricing particularly relative to the retail stores of the sellers''.

The key limitation in the citations for ‘greater bargains' is that these are from press articles and the approaches were not based on proper research conducted to determine the consumer motivations for online shopping. Nevertheless, this should still be accepted as a consumer motivation as this has been mentioned to be a factor based on the articles cited.

Overall online shopping site experience

Elliott & Speck (2005) discussed that ‘‘touches on the overall online shopping site experience which in a way, relates to the overall customer experience in online shopping. This factor is quite specific to online shopping sites which consumers may visit but this nevertheless provides a motivation for some specific consumers and it relates to the overall online shopping site experience and having a positive satisfaction to the experience''. Specifically, the authors argued that the following factors impacted on the consumer motivation to complete their online shopping transactions: ease of use of online shopping site, product information available, trust in the brand and the online shopping site, customer support, and entertainment experienced while in the site.

The focus of the research conducted by the authors was not on online shopping specifically but rather on the attitude towards retail web sites but using the online shopping experience as an example, with an analysis of the resulting impact on the consumers. Similar to some of the other published research cited in this section, the key limitation is the set of respondents considered for the research which, in this case, consisted of undergraduate marketing students. The results are interesting and provide a good preview of what the results could be if the research is expanded to capture a greater sample of the population.

2.2 Emerging trends for online shopping

In reviewing the related literature touching on online shopping and also consumer motivations, a number of emerging trends were clearly seen. These include the following:

* Increased efforts in improving online security

* Potential for an expanded product range and ancillary businesses

* Usability of an online site as an increasing differentiator

* Management of Internet product returns

* Increasingly demanding consumers

* Increasing opportunity for organisations to develop consumer relationships

* Increasingly older market

* Greater share of ad market

Each of these trends is discussed in greater detail in this section.

Increased efforts in improving online security

(Bramall et al 2004, Arnold et al 2007, O'Connell 2005, Cullen 2005) explained that ‘‘online shopping has shown strong growth and yet the belief is that online shopping growth rates could actually be much higher if not for security-related concerns by some consumers''.

Biswas et al (2006) described ‘‘there are two trends to be noted in relation to the security concerns of consumers. The first, as mentioned, is that there are greater efforts placed by organisations in improving online security as breaches to their security could have considerable consequences. The second trend is that a complementary approach to improving reputation for managing online security risks is paramount''. In support of this, where there are great concerns for risk, it has been established that utilising expert endorsers, as opposed to celebrity endorsers or even non-celebrity non-expert endorsers, can actually help in bringing consumers over their risk concerns.

Potential for an expanded product range and ancillary businesses

Another trend is that organisations are increasingly seeing potential for an expanded product range and ancillary businesses. For example, in recent months, Kohl's, a US department store chain, has offered products online which were not normally found in their department stores and these included higher-priced items such as leather chairs, high-end home entertainment centres, and flat screen televisions (Hajewski 2007).

This trend is not without its implications for organisation. In the Kohl's example, one problem with the expanded product range as done by Kohl's was that Kohl's did not offer everything they had online in their retail stores. This is a concern as some consumers utilise the online site for their ‘window shopping' before moving to the retail stores to try on and purchase the items (Dodes 2006). The article states that more than 80% of online shoppers research products online first before sometimes going to the stores to see the products firsthand. Given that not all products are available in the stores, it would be prudent for online sites to be clear about which products are available in the stores and which products are not.

In terms of ancillary businesses, the increase in online usage and online shopping has even spawned related business such as businesses which monitor traffic into organisations' websites with the objective of increasing an organisation's online sales (Newman 2007). Another ancillary business opportunity is from online shopping sites is as a social shopping space, such as Jellyfish.com which was recently acquired by Microsoft as it saw the growing opportunity in the business (Gallagher 2007). However, these new business are still untested as these are fairly new and would need some time before potentially growing into profitable businesses. As online shopping continues to grow, organisations will continue to seek out other opportunities that could help build the rationale for investments in establishing a highly competitive online shopping site.

Usability of online site is an increasing differentiator

Massey et al (2007) reported that ‘‘while the extent of technological readiness of the consumer plays a part in determining the level of comfort in navigating through an online shopping site, the general usability of an online shopping site is an increasing differentiator and distinguishes between the different sites that consumers will utilize in online shopping''. The goal with these sites is to have it easily navigated through by consumers such that any potential barriers to keep consumers from purchasing products and services are effectively taken out of the equation.

An example of an initiative moving into the direction of overall ease of usability is the recent transaction involving Abazias.com and Google wherein Abzias.com partnered with Google for their shopping checkout process which is considered fast and very convenient (M2 Presswire 2007). The challenge for organisations is to continue making their online shopping sites easier to use. And to support the point, some online shopping sites now provide potential live help from customer service if particular requirements are needed in order to limit the number of lost purchases resulting from consumers abandoning their purchases (Prince 2005). Overall, the design of the website and the ease of use have a large impact on the online shopping site's performance (Auger 2005).

Management of Internet product returns

Mollenkopf et al (2007) explained that emerging trend is the establishment of clear guidelines in the management of Internet product returns, which then addresses a key concern or questions by some consumers. Internet product returns has been one of the key factors limiting part of the online shopping growth as the uncertainty surrounding how returns of defective or unwanted products impacted on the overall cost and inconvenience for the consumer. Organisations which are able to state clearly their policies on Internet product returns, and which provide a seamless process for allowing consumers to make returns for products bought online are at an advantage versus other organisations which have a perception of ‘being difficult' to coordinate with in processing Internet product returns.

Increasingly demanding consumers

As the development of the online shopping channel continues, we are now seeing increasingly demanding consumers. This is shown in the UK supermarket sector. In this sector, online shopping is still considered a poor offering by the UK supermarkets as none of the top five supermarket chains passed a service test conducted by a consumer affairs staff of a newspaper (Prunn 2006). Their failures were from their product offering to the product substitutes provided. The key good news for the UK supermarkets though was that the websites were generally easy to use for online shopping. Also, the delivery drivers were helpful and friendly.

In contrast, in the US, online shopping offering for the supermarkets is a competitive offering with various supermarkets increasingly providing greater online shopping offerings for their consumers including chef-prepared, fresh-food delivery service (Food Institute Report 2006). Thus, the US supermarkets are able to provide the US consumers with their ‘demands' from US supermarkets. UK supermarkets will need to focus on improving their offering in order to capture the consumer wallet for shopping deliveries.

Increasing opportunity for organisations to develop consumer relationships

(Kennedy 2006) pointed out that the online shopping channel provides organisations with an additional channel to develop consumer relationships. Organisations which are able to effectively capture value from their online shopping offering are the organisations which are able to “collect and analyze data on consumer patterns, interpret customer behaviour, respond with timely and effective customised communications, and deliver product and service value to consumers”.

The game is not new to most organisations. The only difference is that there is a new channel to consider for the consumer relationships. In order to be competitive, organisations should be able to learn from their interactions with the consumers, and develop the channel into one that consumers will find value from. With the growth of the online shopping channel, more organisations will invest in ensuring that consumer information is managed properly to be leveraged by the organisation in capturing value from the interactions.

Increasingly older market

Iyer & Eastman (2006) has noted that the “older internet users market comprises the fastest-growing demographic group in the Internet market” and are, aside from large and growing, generally financially secure.

This potential trend has large implications on various organisations that can benefit from this research work. Thus, a greater understanding of the key trends is important in order to allow the organisations to plan and invest properly in their online shopping channels.

Greater share of ad market

Finally, another trend worth noting is the increasing share of the ad market by the online channel. With the growth of the online shopping consumer market, the ad share of this channel is expected to grow as well from about 5-8% to up to one-fifth of total ad budgets over the next three years (Ong 2005). The greater share of the ad market by the online channel has implications for organisations across two key points. First is that there needs to be a decision on the amount of the ad budget that will be allotted to the online channel. After deciding on the first point, the second key point is that it is imperative for organisations to understand the business model of the online channel, and that the organisations have a plan in ensuring their investments will eventually generate good returns.

CHAPTER 3

3. CASE STUDY

3.1 History of online shopping

Shopping online is the process for the customer to buy products or services via the Internet. In other words, consumers can buy it from the comfort of a holiday home of their own products from a store online. The concepts of this show before the first World Wide Web that are used with real-time transactions are processed from the domestic television! The technology used is called Videotext and shows the first time in 1979 by M. Aldrick, designed and installed the system in the UK. T. 1990 by Berners-Lee created the first WWW server and browser, and in 1995 by expanding the Amazon online shopping experience.

History of Online Shopping is amazing. Gone are the days of waiting in traffic and work our way through the store is too full. All we need is a computer, bank account, credit or debit card and freedom voila! From books, to cosmetics, clothes and accessories to name a few, online shopping is the best in the century to 21... Simply find a site that offers things you want, price and delivery terms and in a matter of a few days of your purchase is at your door. Benefits and the ease of clear predictable as we offer a wider selection, competitive prices and greater access to information in regards to our purchase. Online stores are usually available 24 hours a day, and allow consumers to shop in their spare time and without travelling outside normal working hours.

Another to consider is the first time the Internet was not well prepared that they will change the way we shop. On the web is created as a tool for communication, which in time to let the ease of virtual shopping. History of online shopping by itself represents a change by the people and now has become a service used by the ordinary business and shopping in the world.

(Online blog, http://roomen-online.blogspot.com/2009/08/history-of-online-shopping.html)

3.2 Growth of online shopping

The ability to shop online has transformed the way many consumers go about purchasing a product or service, giving the power to the individual consumer to access information, allowing easy and convenient research and comparison of various factors prior to making a purchase. The growth rate of online commerce is unparalleled in any other industry, growing twenty times faster than the overall UK retail market in 2005. Furthermore, the number of online shoppers grew by 25.5% to 14.6 million; with the number over the age of 55 doubling to 2.7 million. Forrester Research predict that UK shoppers will drive UK e-commerce from €43bn in 2006 to €76bn in 2011, accounting for 29% of total European internet retail. As such, we see the market study as a good opportunity to ‘take stock' of online shopping in the UK, looking at what it has done for UK plc as a whole since its growth through the internet boom of the late nineties to the stable yet competitive market we see today. It is worth noting many of the businesses that lived through the dot-com crash were internet retail sites, a clear indication of the valuable role they play for consumers.

( OFT Market Study on Online Shopping, http://207.45.116.138/ndbs/positiondoc.nsf/1f08ec61711f29768025672a0055f7a8/6174E87FE56AFC3F8025735300568DBA/$file/oftonlineshopping250706.pdf )

3.3 Current trend

As far as online shopping in UK is concerned, there is clear trend that those who resort to this new system of shopping will increase by 30 to 40 per cent in a period of 4 years. Remember, there was a delay of 2 to 6 years for people to shift to online shopping after getting acquainted to the internet. But the online system is gaining momentum in an unprecedented market reaction. In the early years only younger generation was using the online shopping services, but then came a remarkable change in the pattern of users. More and more people from older generation are getting attracted to the online shopping system.

According to reliable projections, by 2050 the retail marketing scene will undergo a thorough change in its form and magnitude, and the shopping in UK will evolve beyond recognition with high street dominating the field. Everyone will be online, every hour every day! It will become an automatic process and convert the high street to something like a gallery style showroom!

If the prediction becomes a reality, the Britons will be spending nearly 63 billion pounds for the online shopping. 860 million parcels will be shipped to the United Kingdom to serve 26 million internet shoppers. Each shopper will spend £ 2400 each on an average. The number of people using online shopping will exceed the predictions and projections, if the present trend is an indication to that. At present, 10 per cent of the total retail selling is through internet. It will go up to 20 percent in 3 years.

There will be a remarkable change in the composition of customers, patronizing online shopping. Men and women of all ages and professions will adopt the new system for the advantages inherent in the online shopping. The older generation, will increasingly use the online shopping, to avoid the ordeals of travelling, searching and bargaining involved in the conventional shopping. It is easier, faster, safer and valuable, according to those who have changed over to the system. No doubt the online shopping will gain popularity and momentum in the coming years.

Globalization of trade has given a new impetus to this new market initiative. The political borders are disappearing as far as trade and commerce are concerned. The online trading and international postal services are giving new thrust to economy. Cross border shopping is flourishing.

The internet has helped to widen the area of information much to the benefits of the customers. More accurate information is available now, about the companies, their products and services. The consumers are able to browse online catalogues and acquire vital information about a variety of goods displayed by several companies in their websites.

Regarding prices there is a distinctively clear advantage for the consumer. The absence of middle men in the online shopping system will permit the dealers to trim their profit margins in favour of the customer. There are many price comparison service providers who serve the consumer by providing product information and price advantages. Retailers also publish their price ranges in such websites. The shopping web portals are more than the online version of yellow pages. The price comparison services search and retrieve data directly from retailers and feed them to the consumers through the internet. A comprehensive list of retailers and detailed list of prices are available with regular updating.

(Future of ONLINE SHOPPING in UK, http://www.edealsuk.com/articles/online-shopping-trend-uk.html)

CHAPTER 4

4. RESEARCH METHODOLOGY

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This research project was conducted with an explanatory research approach as the focus was in discovering ideas and insights into consumer motivations and emerging trends on online shopping (Mariampolski 2001). The research methodology also followed the framework of analysis defined in the previous section which resulted from the literature review.

As the research work was largely qualitative, the exploratory approach and the analysis and results from the primary research provides a good understanding of the consumer motivations for online shopping, and also provides a framework for further analysis if needed by other researchers focusing on greater depth in some areas or expansion of issues not covered in this research project.

The focus of the research project is on consumer motivations on online shopping and will not touch on specific online sites unless these are discussed in the context of increasing online shopping activities and consumer motivations.

4.1 Primary research

The key primary research activities for this project included surveys and in-depth interviews to understand the key consumer motivations for online shopping.

4.1.1 Surveys

The surveys gave a preview of the various factors which were impacting on online shopping. An open-ended survey was conducted to give consumers the opportunity to give factors which they truly feel were their key motivating considerations. The survey was divided into two main sections:

* Open-ended and unprompted - This section was designed to allow the respondents to give answers freely without any prompts. This was to ensure that the consumers' thoughts were captured properly, and that their ideas and key motivations were the ones that were included in their responses.

* Prompted with specific factors - After the unprompted section, the survey had a section which had some of the preliminary findings from the literature review. This was designed to test the literature review findings, and also provide the respondents an opportunity to highlight some factors which may be important but were not mentioned by the respondent during the first part of the survey.

4.1.2 In-depth Interviews

The in-depth interviews were used to get further insight from the consumers on their motivating factors. The surveys and the interviews were designed to complement the overall approach, and provide increased insight from the analysis of the results (Hester 1996). The in-depth interviews followed the survey with two main sections:

* Open-ended - The questions in this section were designed to elicit the unprompted replies from the respondent. Similar to the survey, this was included to give the interviewees the opportunity to give their unbiased and unprompted replies to the consumer motivating factors.

* Prompted and specific - This section of the in-depth interviews was designed to understand in greater depth the key factors highlighted by the interviewees. In addition, this section was also included to capture the replies of the interviewees on some of the factors highlighted in the literature review section, and also the replies from the surveys which were not captured from the literature review.

4.2 Secondary research

Secondary research was conducted to get a good understanding of the current knowledge on consumer motivations and preliminary thoughts on the emerging trends of online shopping. A number of preliminary factors had been identified from the literature review, and these were used as a starting point in understanding the key consumer motivation factors.

Academic journals, industry reports, and other research articles will form the bulk of secondary research.

4.3 Research approach and strategy

A problem-solving approach was used in analysing the outcomes from the primary and secondary research. This was meant to ensure that the results were analysed in depth, and to result in strong insights from the interactions with consumers, i.e. detailed recommendations on actions to pursue to address the research questions for the project (Hester 1996).

The research analysis was based largely on the surveys and interviews of consumers. The secondary research was a complement to the primary research analysis. Various research methods were considered for this project and the described approach in this section was considered the best possible approach in developing a good understanding of consumer motivation on online shopping.

The research project pursued a good mix of desk research and practical, real-life experience based on the input of the online shopping consumers. The respondents to the surveys and in-depth interviews provided good depth and breadth of factors for the consumer motivation considerations. These gave a good understanding of the emerging trends in online shopping activities.

4.4 Sampling strategy

The sampling strategy followed the general steps in determining a sample:

* Define the target population - Given the scope of the research project, the target population actually encompassed everyone in the population as the focus was on online shopping, with an online shopper being just about anyone. I know of some kids as young as six years who are able to browse through the Internet and identify items they are interested in, and point these to their parents. For this exercise, the target population was considered to be anyone that has the capacity to pay for possible online shopping purchases.

* Define the accessible group - The accessible group for this research project comprised of the target population that were ‘free' to participate in the surveys and interviews.

* Define the steps for participation in the primary research methods - The key method utilised in this research project for the survey respondents and interviewees were the referral or ‘snowball' recruitment, and the intercept recruitment. The referral recruitment entailed having people recommend acquaintances and the intercept recruitment involved intercepting potential respondents in public places, e.g. streets, shopping areas, coffee shops (Mariampolski 2001).

4.5 Research review

The last step in the research methodology was to review the results and analysis, and ensure that the conclusions and recommendations were logical and practical. The review was based on input from various people including online shopping consumers. The review was also helpful in determining the additional knowledge that will be considered as research contribution resulting from this project.

4.6 Research limitations

The two key limitations to the research project were time constraint and knowledge constraint. Managing the schedule to keep to the deadlines and finish the project on time ensured good management of the time constraint. For the knowledge constraint, conducting a robust secondary research provided a good foundation for the knowledge required to conduct the research project properly, including the primary research requirements.

4.7 Timetable

Some time upfront were spent in developing the research approach and methodology to ensure that these conformed to the requirements needed to answer the research questions. Work upfront was also done in understanding the existing literature discussing the key issues identified for the research project. The secondary research activities were conducted in the initial few weeks of the research project to provide the preliminary thoughts into the key consumer motivations. Primary research was then conducted over a period of several weeks with survey respondents and interviewees being identified for participation in the surveys and interviews.

4.8 Research resources

The main resources used for the research project were people and research publications. The people who were involved in the project included not only the respondents to the surveys and interviews, but also my adviser and other instructors, and friends (including classmates) and relatives who helped in providing support and guidance throughout the research project. The primary research respondents were particularly helpful in giving their time to provide their thoughts and ideas which formed the key results and analysis of the research project.

The research publications including academic journals, industry reports and press articles were very useful in providing a preliminary understanding of the questions and issues involved in the research project, and also provided excellent guidance in potential areas to pursue and research methods to consider.

4.9 Ethical considerations

Several ethical considerations were adhered to particularly as the research project pursued a qualitative research approach:

* Respect: All respondents were treated and given respect, and I am fully appreciative of the time and effort they gave for the research project.

* Confidentiality and privacy: I did not take the names of the respondents to ensure that their names would not end up with other parties. I did take some information (e.g. age, gender) from the survey respondents and interviewees as this was needed for the analysis of the results but these were taken with their consent.

* Transparency and disclosure: I gave the survey respondents and the interviewees a detailed overview of the research project, and also gave them the opportunity to pose questions before starting the survey and interviews processes. They were also given the opportunity to not proceed with the survey and interview if they felt that they did not want to take part in these.

· Right of refusal: All the respondents were given the option of refusing to provide any answers that they did not wish to provide an answer to.

The ethical considerations mentioned above are not comprehensive but these were the key ones which affected the research, and which I adhered to in order to have a robust and ethically acceptable research approach and methodology.

4.10 Framework of Analysis

As mentioned, literature review was used for building a preliminary understanding of the key motivations of consumers in online shopping activity and also in determining the emerging trends in the online channel. From the literature review in this section, the following framework of analysis was utilised in the surveys and interviews.

4.10.1 Consumer Motivations

The consumer motivating factors mentioned in the literature review was utilised in both the surveys and interviews to prompt respondents and to test the factors. The structure of the factors in the ‘for prompt' section of the surveys and the interviews followed this listing:

* 24-hour access - Respondents were asked if this was one of the factors they considered as a key motivation for online shopping.

* Shopping convenience - While this was included as a factor in the ‘for prompt' section of the surveys and interviews, greater depth was pursued in understanding what the consumer may consider as shopping convenience in relation to online shopping.

* Greater bargains - This was tested to determine if consumers truly saw this factor as an expectation already, and if not having this factor would impact on their use of the online channel for shopping.

* Overall online shopping site experience - This factor was analysed in the context of the overall consumer experience, and was assessed of the importance versus the other factors mentioned by consumers as their key motivating factors for online shopping.

4.10.2 Emerging Trends

For emerging trends, not all the possible trends were included in the framework of analysis. The analysis of the emerging trends was particularly useful in determining the possible increase in online shopping activity of consumers. Thus, with this in mind, only the following factors were included in the ‘for prompt' section of the surveys and interviews:

* Increased efforts in improving online security - A key concern for a large number of consumers and hence was tested on current non-users of online shopping to determine if this would help them in making decisions and eventually make purchases online.

* Potential for an expanded product range and ancillary businesses - Another trend which could possibly entice non-users of online shopping is the potential for a greater product offering online which may not all be seen in retail stores.

* Usability of an online site as an increasing differentiator - This is almost a given but is presented nonetheless to non-users of online shopping to determine if it will impact on their decision to do online shopping.

* Management of Internet product returns - With some consumers wondering about Internet product returns and how these are done, this factor was included to determine if non-users would be affected by resolving the question on Internet product returns.

* Increasing opportunity for organisations to develop consumer relationships - Finally, the factor of potentially having increased consumer relationship with organisations through the online channel was presented for feedback by the non-users to determine if this factor will impact on their online shopping activity.

CHAPTER 5

5. ANALYSIS OF FINDINGS

This section presents the results of this investigations primary research.

Out of 200 questionnaires distributed, 150 respondents completed the questionnaires (82 males/ 68 females). Some of the respondent's qualified for this investigation who buys products online. Therefore the figures are according to gender and occupation. This was taken into account when assessing the findings.

Table1.

Respondent's gender

Respondent's Gender

Respondent's Number

Percentage

Male

82

54.67%

Female

68

45.33%

Figure1.

Graphical presentation of respondent's gender.

Respondent's Gender

Above figure and table tells us the percentage of male and female respondent's.

Table2.

Age of the respondent's

Age range

Male

Female

Number

Percentage

Number

Percentage

Below 20

8

9.75%

5

7.35%

20-30

55

67.07%

47

69.11%

30-40

16

19.51%

12

17.65%

40 Above

3

3.66%

4

5.88%

Figure2.

Graphical presentation of respondent's age range.

Respondent's Age

Table2 and figure2 tells us about the details of respondent's age who are participate into the survey.

Table3.

Respondent's residence

Respondent's residence

Respondent's number

Percentage

Urban area

131

87.33%

Rural area

19

12.67%

Figure3.

Graphical presentation of respondent's residence.

Respondent's Residence

Above table and figure shows us area basis percentage.

Table4.

How often does the consumer shop online?

Period

Respondent's number

percentage

Daily

9

6%

Weekly

15

10%

Monthly

45

30%

Yearly

66

44%

Not at all

15

10%

Figure4.

Graphical presentation of consumer's shop online.

How often consumer's shop online?

Above table4 and figure4 tells us about the how often consumer's shop online.

Table5.

Respondent's occupation

Occupation

Respondent's number

Percentage

Student

121

81%

Service

9

6%

Business

8

5%

Other

12

8%

Figure5.

Graphical presentation of respondent's occupation.

Respondent's occupation

Above table and figure gives us the details about respondent's occupation.

This section presents and discusses the key findings from the research work conducted. The focus of this section is on consumer motivations, emerging trends in online shopping, and also managerial implications resulting from the research findings. In addition to these major parts, this section also discusses the overall timetable, the research resources utilised, ethical considerations, and the contribution to current research knowledge of this research work.

5.1 Consumer motivations

At the start of the research, there were several preliminary motivational factors identified as driving the consumers to make purchases online. The key consumer motivations resulting from the surveys and interviews are discussed next. These motivation factors were the oft-mentioned factors considered by consumers as their key points for making online purchases. A number of the factors relate to shopping convenience and this was largely expected as noted in the literature review. Even the previous research works reviewed noted shopping convenience as a factor, with various definitions for shopping convenience. These were:

24-hour access provided by the online shopping channel.

Figure6.

Access availibility towards online shopping

Shopping convenience with more available information and less need to personally visit the retail stores.

Figure7.

Shopping convinence towards online shopping

Greater bargains seen in online product and service offerings

Figure8.

Greater bargains on online shopping

Overall online shopping site experience

Figure9.

Overall site experience

Some consumers were not directly thinking of making purchases when they considered the online shopping channels. Respondents noted that enticements in the sites such as promotions and games were the key motivations which led the consumer to the site, and then eventually the online purchase. Thus, in these instances, the key consumer motivation for the online shopping activity was the overall online shopping site experience. Part of this experience, of course, includes the customer service and the navigability of the online shopping site.

This consumer motivation would work well in attracting consumers to online shopping sites, or keeping consumers longer in these sites. Attracting consumers is important as this would form the core group from which potential purchases can occur.

Shopping convenience: greater product availability

Figure10.

Product availibility

A number of respondents mentioned greater product availability as the key reason they resorted to online shopping purchases. The online shopping channel provided these consumers the tool to check availability of their product immediately, which then led to the purchase. In contrast, in retail outlets, it would take time to establish the availability of products particularly if sales staff needed to go to the backrooms to check on the products.

Shopping convenience: delivery to other persons

Another consumer motivation factor mentioned by some respondents was the ability to have the product purchased delivered to other persons (i.e. as in a gift). In some retail stores, this option is not available and the consumer would need to arrange for delivery through a third party or the post office. This factor is thus critical as it allows the consumers to have the ability to purchase the product and have this delivered to another person. This makes the online shopping sit potentially a one-stop shopping site.

Shopping convenience: quick comparison between different stores

Figure11.

Quick comparison between different stores

A key benefit and consumer motivation highlighted by many of the respondents is the ability to do quick price and bundle comparisons (e.g. for games such as a Nintendo Wii bundle offer) between different stores. If consumers did this by visiting different retail stores, it would take much longer and would require much effort (i.e. need to jot down the prices and take note of the different prices and items included in the product or bundle).

In some ways, this factor is similar to the extensive information available online that online shopping affords the consumer. However, this factor is worth noting as it was mentioned by a large number of respondents in both the surveys and the interviews.

Manage children's purchases

Some parents (survey respondents and interviewees) mentioned that a key motivating factor for them in using online shopping channels was the ability to manage their children's purchases. Whereas before they would give their children allowances and have the children go off on their own inside shopping malls or retail stores to purchase their own stuff, the advent of the online shopping channel has given the parents the ability to somehow manage these purchases, albeit limited, by making online purchases together with the children.

Referral by other reputable sites

Some of the respondents noted that their key reason for making purchases online was a referral from a reputable or well-known site. This drove some of the consumers into looking at a site further and eventually making an online purchase. This highlights the importance of having a robust strategy for the online channel offering as even the sites with which an organisation's online site is linked into makes a large difference to the consumers venturing into the web.

5.2 Emerging trends in online shopping

The results for the merging trends in online shopping were taken from the surveys and interviews of both the online shoppers and the non-online shoppers as these comprise the current market for online shopping. Similar to the previous part in this section, the most important trends resulting from the surveys and the interviews are highlighted. The primary research resulted in a greater understanding of the non-online shoppers segment. One of these points is that a great part of this segment can be enticed to become online shoppers but this is highly dependent on their issues being resolved. If the trends are an indication, these issues will be resolved in due time as the path of the online shopping trends indicate the resolution of these issues.

Security is still a key issue but organisations are increasingly addressing this

Figure12.

Security as a threat on online shopping

Both online shoppers and non-online shoppers still see security as a threat and a large number of the non-online shoppers are still wary of the current status of security levels. This has deterred them from making any online purchases. While this is still a risk, respondents did note that organisations (both the selling parties and other third parties) are increasingly addressing this and providing greater protection for consumers. The organisations which more than adequately address this and also communicate this properly to the online consumers have a competitive advantage which could prove to be a factor that can make consumers sticky.

For the online shoppers, while security is also a risk for them, it seems this segment has greater sophistication in Internet usage as they are comfortable with their personal approach to the security issue, and have instituted their own security tools to address this. Nevertheless, online shopping sites which have or which comes across as having strong security in their online shopping sites are favoured significantly by all consumers.

Firms offering an expanded product range and more ancillary businesses

Figure13.

The increase in product and ancillary business

Product and service offerings online are increasing and this could potentially bring some of the non-online shoppers to eventually purchase products and services online. Currently, some of these non-online shoppers do not feel the imperative to purchase online as their needs and requirements are met by the retail stores. Alternatively, the online shopping sites still do not have enough pull among these non-online shoppers to entice them in making online purchases. One of these potential value-add is the breadth of product offerings and as these increase, this will create greater incentive to increase the number of online shoppers. The increase in products and ancillary businesses are seen both from the same firms (i.e. increase of product offerings by the same brand) or other organisations building their online offerings (i.e. new firms establishing their online business and putting their products on the Internet).

Usability of an online site as an increasing differentiator

Figure14.

Usability of an online site as an increasing differentiator

The older segment highlighted the requirement for firms with online shopping channels to have user-friendly sites. There was a mix of viewpoints in this trend. On one hand, some firms are pushing to make their sites very user-friendly and have invested in making their sites easily navigable. On the other hand, some firms have turned to being more creative and have made their online shopping sites very flashy, resulting in what seems as a more complicated online shopping site design which deters some of the older shopper segments.

The general viewpoint from consumers though is that the more user-friendly sites seem to work better and are able to attract a greater share of the online consumers. Potentially, a flashier online shopping site can still be user-friendly. However, it seems that this is not the case in terms of perception and hence, indications point to more user-friendly sites as a differentiator for the online consumer, across the different segments.

Internet product returns is a requirement

While the management of Internet product returns was highlighted as an emerging trend, it did not seem from the responses received that this was a particularly important issue for the online consumers. It could be that this is now seen as an expectation as most online shopping sites would have this well-defined already, with those lacking in this particular issue being at a great disadvantage. The online consumers are much savvier now, and online shopping sites which do not have the facilities to allow for product returns will just not be patronised by potential online shoppers.

Firms utilising the online channel to develop consumer relationships

Figure15.

Firms utilising the online channel to develop consumer relationships

As expected, a large number of firms are increasingly using the online channel as an additional interaction point with consumers, and are using this opportunity to develop their relationships with consumers. A large number of respondents highlighted that they are always being enticed to visit sites and then asked to register for different reasons (e.g. more information, product updates, purchases). Following registration, consumers typically continue to receive communication from these firms (or sites) either via email or through post.

These campaigns utilised by firms seem to have mixed success as respondents were split between those seeing value-add in the interaction and the regular communication while some respondents saw the communication as further intrusion into their privacy or just added junk mail or email to their mail boxes.

I think the key in this instance is the type of interaction that the firms have with the consumers. Clearly, if some see this interaction as having benefit, then the challenge for organisations to ensure that their interaction and communication with consumers is providing the consumer some benefit.

5.3 Managerial implications

Based on the findings in the previous part of this section, a number of managerial implications should be noted as these implications impact on the organisations, and the requirements that organisations must fulfil in order to capture the consumer wallet from online shopping. These implications cut across various organisational functions (e.g. marketing, human resources), and also impact on a number of organisational processes.

Understanding the online shopping channel business model

The economics of online shopping and the delivery of the products and services through this channel are different from the typical retail sales outlet channel, and the organisations must have a good understanding of the economics for online shopping. This is important in order for organisations to have a competitive online shopping channel offering which can increase their customer base that complements their ‘bricks-and-mortar' presence, and help build the overall client franchise.

Managing consumer relationships

The online shopping channel is an additional channel that organisations can utilise to build consumer relationships (establish new ones or strengthen existing relationships. The marketing function should capture the necessary consumer information to leverage these for other organisational objectives and businesses. Overall consumer support should be strong as well for the online shopping channel thus requiring the establishment of the necessary support team to manage customer service. As mentioned in the previous section, the key challenge for organisations is to ensure that they are providing the consumer with a benefit (e.g. information that consumers find interesting or helpful).

Marketing across all consumer channels

Marketing should develop their marketing strategy with the online shopping channel as part of the approaches, particularly if an organisation believes that this channel will be an increasingly important one for them. The marketing messages should be consistent across various channels so that consumers are clear about the value and brand of organisations, and are not confused with the messages presented to them.

Developing a user-friendly online shopping site

Clearly highlighted by the consumers was the requirement for an easily navigable online shopping site. Building such a site will help organisations establish their online shopping channel and allow organisations to utilise the site as a channel to build the stickiness of consumers with their brand, products and services. In order to be able to achieve this implication, organisations need to have the marketing team work with the IT development team to create the value-adding online shopping site. This initiative will also need to continue on an ongoing basis and thus human resources will also need to be involved particularly in the potential hiring of staff with required skills and experience.

5.4 Contribution to research work

I believe the results of this research project are important enough to be considered as additional knowledge to the issue of consumer motivations for online shopping. The research project was fairly general in the scope of the work as I deliberately did not focus on specific products or markets, or even consumer segments. The reason for this is that there was a gap in the general knowledge of the key consumer motivations for online shopping, and this research project filled that gap.

With the findings from this research project, other interested parties seeking to focus their research on other markets and segments can utilise this research as a starting point for their analysis and research. Either the framework of analysis, including the surveys and in-depth interviews approach, or the key findings can be utilised for further research.

This research was pursued as an explanatory research project, and the findings show that there is now greater understanding of the key motivations of consumers in online shopping. This sections is structured into consumer motivations, emerging trends, and, finally, the implications for organisations.

CHAPTER 6

6. CONCLUSIONS AND RECOMMENDATIONS

6.1 Consumer motivations

The major consumer motivation in online shopping is that of shopping convenience. This was the clear motivation that respondents generally highlighted, and is reflected across a number of sub-factors, which are:

* Greater product availability - For the most part, online shopping sites offered greater product ranges than their retail store equivalents. The key reason for this, of course, is that in the online channel, one essentially has all the existing stock in store locations and warehouses as effectively available online.

* Delivery to other persons - With the online shopping channel, consumers are not limited to just taking the product with them home. Consumers can opt to have their purchases delivered to other addresses as it would just be a similar process for the firm in delivering the purchased product. This is added flexibility for the online shopper.

* Extensive information availability - Consumers are able to quickly find out more about the product being purchased including basic information and possible reviews by other purchasers.

* Quick comparison between different stores - Expanding the information availability mentioned above, shopping convenience also relates to consumers being able to compare prices of products, and also compare other variations in the offering (i.e. bundle offers) to ensure that they achieve the best offering.

* 24-hour access - Finally, the convenience of being able to shop at own leisure no matter what time it is at the comfort of home or the office.

The other key consumer motivations mentioned by the respondents include:

* Greater bargains - Generally seen in online shopping sites as the cost of bringing the product to the consumer is much less than in the retail store and hence firms are able to offer greater discounts versus that seen in the retail stores.

* Overall online shopping site experience - Consumers also see this as a key motivation as they are brought into the site and they then eventually end up with purchases made possible by the overall shopping site experience.

* Manage children's purchases - This is a key consumer motivation for parents as they are able to monitor their children's purchases and also, in some way, limit the time they spend in the shopping malls and retail stores (hence more productivity or greater time for other activities).

* Referral by other reputable sites - The last, but not the least, of the key consumer motivations in online shopping is a referral by other reputable sites. This is a factor as it addresses the key concern about security that online consumers have. With the referral from a reputable site, then the level of comfort on consumers increases significantly and the potential for making online purchases is greater.

6.2 Emerging trends for online shopping

While a number of emerging trends were discussed throughout this research, there are three key emerging trends which should be noted as these have organisational implications:

· Security is still a key issue but organisations are increasingly addressing this - Both online and non-online consumers see this as a risk and managing this properly can only help increase the online shopping market, which already is growing phenomenally. The organisation which can provide strong comfort to the online and potential online consumer will have a large market to cater to.

· Usability of an online site as an increasing differentiator - Some firms tend to invest in making their sties flashier. However, flashier is not always better as the results of the research indicate. Most consumers prefer easily navigable sites, and this is seen by the consumers as an increasing differentiator when considering various sites to do online shopping.

· Firms utilising the online channel to develop consumer relationships - A large number of firms realise this point and are investing in developing consumer relationships through the online channel. The results of the research, however, indicate that most organisations still fall short of the requirements that consumers have in order to allow firms to build relationships with them. Thus, this seems to be an opportunity for organisations which can imitate or surpass the most successful organisations currently in managing these consumer relationships through the online channel.

6.3 Implications for organisations and consumers

In the analysis of findings, a number of implications for organisations resulting from the results and findings were discussed. The implications mean that the organisations will need to pursue some actions to deliver on the requirements of the consumers. The actions of the organisations can be defined across the key organisational functions that need to drive the changes:

* Marketing: The marketing function will need to pursue these actions:

A. Understand the economics of the online shopping channel business model in order to be able to competitively deliver products and services to the consumers.

B. Develop a comprehensive marketing plan encompassing the messages across the different distribution channels of firms, including the online shopping channel.

C. Establish the customer relationship management (CRM) processes and systems for the online offering to capture the value generated by the interactions with the online consumer.

D. Review consumer requirements regularly to ensure that the product and service offering of the firm delivered through the online channel meet the requirements of the consumer.

* Human Resources: The human resources function will be critical in supporting the overall approach of the firm through the hiring of people with relevant skills and experience to deliver on the requirements defined by the marketing function for the online offering.

* Information Technology: IT will need to be at the centre of the program as they will deliver the interface with the consumer (i.e. the online shopping site), and will also incorporate the systems and applications needed to pursue the CRM program defined by the marketing function.

The research conducted and the resulting findings not only impact on the organisations building their relationships with the online consumers. The results also highlight a number of considerations for the online (or potential online) consumer:

· Demand best pricing and service: The research shows that organisations are catering to the requirements of the consumer in order to capture their online purchases. The current leverage is with the consumer and they should be able to demand the best pricing and service from the firms wishing to take their business.

· Greater input: As the firms try to meet the consumers' desires to capture their business, consumers should maximise the opportunity to provide their feedback and give the firms all the requirements they think are necessary for them to continue shopping online. The current competitive space in online shopping is allowing consumers to have greater input on their key requirements.

6.4 End note

The intention for this research project was to provide a greater understanding the consumer motivations in online shopping. From this explanatory research, the findings discussed and the implications for both organisations and consumers provide a number of other areas for further research to be conducted for those interested in doing so. These include focusing in greater depth the different consumer motivations highlighted or any of the emerging trends discussed.

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