How Online Shopping Affect Retail Industry

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Believe it or not, “…more than 75 percent of Americans now state that they online shop” (Chadwick). The trend is continuing to rise, causing a majority of people to think shopping is a normal part of the online experience. Online shopping is becoming so prevalent in our society that we are even “expecting to see 20 to 25 percent of malls in the US close by 2020.” (Hart 246). This method of shopping was previously mostly used by a small group of internet-savvy users but with the explosion of technology it has become useful for all ages as seen by the millions of different websites one can shop on.

One of the many reasons online shopping is so appealing to the consumer is the effective ways online retailers design and maintain their websites. In an article written by three professors by the name of Jifeng Luo, Sulin Ba and Han Zhang it is discussed how high product certainty and high retailer visibility have a favorable impact on consumer amusement. The research strategy chosen to test their framework was a field study using data collected from attested sources. The data for this research was obtained mainly from BizRate.com and Alexa.com over a single month period.

BizRate.com collects retailer appraisal by asking customers to evaluate their encounter with their purchase on a 1 to 10 scale. Each consumer transaction provides 15 ratings. Eight ratings are acquired at ‘check-out,’ while the remaining seven ratings are obtained through a follow-up questionnaire after delivery. Seen in a quote from said article, “…an online retailer with high visibility is likely to be considered as capable, credible, and trustworthy, because maintaining high visibility entails an expensive investment of time, money, and effort.” (Luo 1133).

However, a retailers service quality, website arrangement, and cost play just as important of a role. The retailers that do not have high visibility must come up with effective ways to attract customers and alleviate the psychological distance between them and the consumers. Because the internet is so complex it allows consumers to leave comments and reviews, sort for products, compare retailers prices, and most importantly be able do all of this without having to move an inch. Another point that proves online shopping’s overthrow is the term “Amazon Proof”.

Surprisingly, Amazon has become so powerful that a growing number of companies are no longer “Amazon Proof”. “Nowadays, when we look at companies, the phrase we use is “is this company Amazon proof? It used to be that Home Depot was Amazon proof because we all thought that no one would want a piece of machinery to come through the mail. But we have found across all the funds we manage over the past 10 years, fewer and fewer retailers are Amazon proof.” (Korporaal).

It has become scary how powerful Amazon is now with the continuation of technology improvements. One of the biggest pushes for the online retailers was Amazon’s acquisition of Whole Foods Market. “Amazon’s acquisition of Whole Foods Market will formally close on Monday, Aug. 28, at which point the e-commerce giant will begin integrating the grocery chain into its own image.” (Rash). When Amazon acquired Whole Foods Market they began to offer services through “Prime” in which they were able to now deliver groceries. This is a huge game changer because online shoppers did not previously have many services like this available, leading them to go out and shop even less. This acquisition also has a large impact on those in the meal-kit business.

Companies like Blue Apron have depended greatly on couriers such as FedEx to distribute meal kits and other home meal offerings to customers over the last couple of years. The deal opens up opportunities for Whole Foods to challenge those in the direct-to-consumer delivery area. As it may have its most prompt impact on the retail food business, which is the equivalent of saying Amazon will have its largest impact on book retailing.

That may be where they started but it is not likely where they will end. The Whole Foods deal is huge, the biggest we’ve seen in retail in quite some time but it is likely not the last for Amazon. Some even think they may be targeting other stores such as Target. Younger generations have been adopting online shopping at a greater pace as they seek convenience over value. Particularly, millennials are leaning toward ordering their groceries through online shopping. This generation is starting to get married and have children and will be spending more on groceries over the next decade.

Cite this paper

How Online Shopping Affect Retail Industry. (2021, Nov 16). Retrieved from https://samploon.com/how-online-shopping-affect-retail-industry/

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