Analysing Online Consumer Shopping Motivations For luxury Product
20th century is the era of rapid technological development, scientific and technological progress and development has brought great innovation to people’s daily life. The most significant change is the development of Internet technology. This essay will look at online retailing and consumer motivation for luxury products on online shopping literature and review existing work by other authors on this subject area in order to provide guidance for further research. With the development of Internet technology, people’s way of shopping has undergone tremendous changes, more and more people began to prefer shopping online. This promoted the rapid development of online shopping. And the development of e-commerce also attract all levels of commodity rushing forward, even luxury gradually occupy the market. Taobao, As China’s largest online shopping site, issued the first ” luxury products online shopping industry analysis report” in 2013.
The report shows that overseas purchasing has been achieved from a luxury to a comprehensive expansion of health care and beauty products. The turnover of luxury products increases 100% per year, in 2012 the market has reached 15 billion yuan. It is expected that in 2013 nationwide luxury e-commerce market turnover will exceed 20 billion yuan.(Taobao,2013). This dramatic change again proved the vigorous development of Internet shopping.
There are two main concepts need to be defined. The first one is E-commerce . E-commerce is the process of buying, selling, transferring, or exchanging products, services and or information via computer networks, including the internet(McGoldrick,2002;).It is generally subdivided into three categories: business-to business or B2B(e.g.Cisco); business–to-consumer or B2C(e.g.Next Directory), and consumer-to-consumer or C2C(e.g. ebay), and is descriptively termed as electronic commerce(Whinston,2000) While the definition of Shopping motivations are “ the drivers of behavior that bring consumers to the marketplace to satisfy their internal needs.’(Jin and Kim,2003,p.339) motivating them to consume a product or service via a shopping channel. Retailers who attempt to fully understand the multiplicity of shopping motivations give themselves the best potential to creat added value for their customers, by identifying the source of their motivation to both shop and consume(Rintamaki,Kuusela and Mitronen,2006)
3 Motivations to shop for luxury products online
According to the author Natasha Sian hanswell(2010) the motivation of shopping online can be summarized at three points
3.1 Time saving and convenience
The internet and its facilitation of online retailing provides consumers with a 24 hour, 7 days a week non-stop service, irrespective of time, or space and weather (Rohm and Swaminathan,2004). It provides a service that has been argued to reduce time costs spent on shopping (Bhatnagar et al.2000) and is non-time restrictive,entertaining activity(Jones,1999); Hence time is a key online shopping motivation. Convenience is a determinant of the internet as a shopping channel(Rohm and swaminathan,2004);The presence of convenience as a basic but significant online shopping motivation is reflected in the relatively unvarying similarities of the variables used to measure it. To et al.(2007) for example, utilized the Eastlick and Feinberg(1999) convenience variables:’ whenever I want’; ‘without going out’; ‘fits in with my schedule’; and ‘convenient to me’. Online shopping has changed the traditional way of shopping, it makes shopping more efficient and convenient. people no longer need to visit the shop for maybe whole day only to find the product they want, instead they just need to enter the keyword of their desired product?network will list a series of related products. Furthermore the online shopping industry keeps growing and more products are made available online. You can now find all kinds of goods on the internet and you can purchase the items you want just with few clicks.
3.2 Cheaper price
Price and financial considerations have always been a shopping motivation(Tatzel,1982) Rintamaki also mentioned that “Saving money is a primarily utilitarian dimension of online shopping motivations” (Rintamaki et al. 2006) The online shopping channel allows retailers to save on output costs(Miller,2000) and reduce their product prices so as to be competitive when compared quickly and easily online( Forsythe and Shi,2003) online shopping is different from the traditional shopping mall, it does not require stores, traditional retail stores need to rent stores to display goods, and also need to hire salesmen and store managers to sell the goods and manage the store. retail stores are generally selected location near the city center where the rent is more expensive, especially for luxury stores. The decoration of luxury stores are very luxurious, and the wages of its staff and managers is higher than ordinary industry salesman, which virtually increase the cost of the product . In some developing countries luxury goods price is higher than other countries, this make luxury products overseas purchasing become a popular trend. For example, according to a Chinese person who specializing in luxury goods purchasing abroad, said “a chanel bag, in the foreign counter price is 24000 yuan, it generally has 30 percent or 20 percent off, after the discount the price range from 15000 yuan to 20000 yuan, while in chinese counter the price is in commonly 30000 yuan. And I usually sell 25000 yuan. According to the purchasing professionals, she can earn at least 5000 yuan by selling one luxury bag .wool interest rate is up to 50%. The gross profit rate up to 50%( HaiNan journal 2012.6.22 15) In the view of purchasing buyer, the biggest factors to the formation of the price difference is customs and government tax. People who often buy luxury products in foreign countries also cited examples. Jewelry products, footwear, the tariff is 10%. Clothing, watches and other the tariff is 20%, tariff on cosmetics, liquor are as high as 50%. In addition to the tariff, luxury products should pay 17% of the value-added tax for the import sales. Therefore, the luxury products price will at least increase 27% in China, while some developed countries are mutual exemption of tariffs. Therefore, the luxury products online shopping is much cheaper than the local counter. This accelerate the development of luxury products online shopping. ( Stock market trend analysis weekly wangyaning 2011(31))
3.3 A wide variety of commodities
Variety has always been a key fashion innovation influence, as consumers seek new stimulations ( Workman and Johnson, 1993). Hence, although a dimension of selection and a predominantly utilitarian value, variety adds enjoyment to fashion consumption(Otieno et al.2005) Thus variety becomes an advantage of online shopping. Traditional retail stores need space to display items, because of the limited space, retailers can not display all the commodities in the shop, which limited the categories of the commodities. Therefore, the product which consumers need may not be purchased in local shop. However, online shopping solved this problem, consumers can purchase products which they want from the bigger stores in other regions through internet.
4 Disadvantages of online shopping
Online shopping symbolizes the progress and development of the times, there is no denying that it brings great convenience to people’s lives, but online shopping is still in the stage of development, it still exists some loopholes and defects. YuYongjiang and ZhangJunfeng put forward three disadvantages of online shopping in the book Market modernization (2009) and Modern commerce industry(2009)
4.1 he product quality can not be guarantee
The product itself is a key dimension of selection as shopping motivation. Quality is a direct reflection of a product’s outcome or performance(Tellis and Gaeth,1990)and has a significant impact on the consumer’s perception of a retailer(Dodds et al. 1991) Online shopping can only see the pictures of goods, when customers receive the products online they may feel it is different from the one online ,or the product is not as good as they thought. Because people cant try them on, and without trying, the commodity quality is difficult to guarantee. Online shipping can just give customer brief introduction of items, however, if people want to buy some products like clothes and shoes, they are hardly to know if the clothes or shoes suit them without trying them on. This will bring customer a lot of trouble during shopping online. Also, there are fake products online, Therefore, customers should pay more attention to choose online shops. Especially for the luxury products, they charge much higher price than usual products. But consumers in the purchase of luxury goods are very difficult to distinguish the true and fake. If consumers chose the wrong place to buy the luxury products, they will suffer heavy losses.
4.2 Online payment is not secure
YuYongjiang stated that Online shopping exist password theft and integrity issues. People need to use the bank account when they are shopping online, However, Sometimes the Trojan virus may be hidden in customers’ computers, this will cause the loss of account and some serious problems. Therefore customers are suggested not pay online when they are at the internet cafes or public places. And they also need to ensure the normal installation to antivirus software for network transaction.
4.3 ustomer legitimate rights hard to safeguard ZhangJunfeng mentioned this disadvantage of online shopping. He thinks online shopping is still in the development stage, and its integrity and payment system is not perfect. The lack of supervision, laws and regulations, resulting in credit crisis, damaging the lawful rights and interests of consumers. It is understood that in recent years, the disputes triggered by online shopping show an upward trend. The main issues which reflected by consumers focused on product quality problems, the order does not match with the real product, refuses to perform the after sale service agreement, exaggerate the efficacy of products, false propaganda. What’s more, some of the company’s name, address, telephone number, are all false. Which bring difficulties to relevant departments to solve the problem and recover the loss of consumers. Therefore consumers should keep the electronic transaction document intact, and check the guarantee of quality, warranty certificates, to facilitate future rights.
5 UK online retailing market
In 2009, the UK online retailing market was worth£49.8 billion (IMRG,2010)having doubled in size since 2005(Mintel,2009) and now accounts for 6.7% of retail sales(Mintel,2010). Despite the impact of the current economic recession on retailing as a whole, UK online retailing has maintained its consistent year-on-year growth (Keynote,2010); up from£43.8 billion in 2008(IMRG,2010). Nowadays more and more retailers have seen the prospects and future of online shopping, and they are aslo trying to transform the traditional mode of shopping. Take the UK luxury brand burberry as an example, it is said that burberry once again won the champion of the fourth annual Digital IQ Index selection among all kinds of fashion and luxury brands which was held in the New York Universtiy’s luxury lab. It was awarded the most influential brand in the electronic network field. Luxury brands like Gucci, Coach, Louis Vuitton and Ralph Lauren are also on the list. This selection survey shows that the competition seems very fierce on the platform of Facebook, Twitter, Instagram, and Pinterest among various fashion brands. However, electronic website contest has also quietly carried out. Electronic commerce website is an integral part of each brand. Websites of brands like burberry, ralph lauren and tory burch separately increased 30%, 23%, 90% during the year 2010to 2011, showed an astonishing speed growth. It is predicted that the speed will still increase in the future. 20th century is the era of the Internet, For retailers the only way to get further development is better adaptation and innovation.
This literature review has shown that there are three different motivations that drive consumers to purchase luxury products online instead of shopping in a traditional way. It also analysed the loopholes and defects of online shopping and UK online retailing market. Though Many researchers have done lots of research about online shopping motivations or analyzing luxury products, and they have provided us with much enlightenment. However, they either focus on online shopping or luxury products. Up to now, there are only few studies about motivations of luxury products shopping online. Under these circumstances, there is still some room for further probe in this field.
Minrel(2009)Home shoping-UK,Retail Intelligence,July 2009,Mintel Publication Limited. Mintel(2010)Fashion Online,Retail Intelligence,April 2010,Mintel Publication Limited. IMRG(2010)E-Retail Industry Report 2010, Interactive Media in Retail Group(IMRG),London. Rintamaki,T,Kuusela,H.andMitronen,L.(2006) Identifying competitive customer value propositions in retailing’,Managing Service Quality,vol.17(6),pp.621-634 Mcgoldrick,P.(2002)RetailMarketing,2ndEdition,McGraw-Hill,Berkshire. Key Note(2010) Home Shopping, Key Note Market Report, Key Note Ltd.2010 Whinston,A.B.,(2000)’ The Future of E-Commerce’,IEEE Computer,vol.33(10),pp.30-31. Jin,B and Kim,J.O.(2003) ‘A typology of Korean discout shoppers: shopping motives,store attributes,and outcomes’,International Journal of Service Industry Management,vol.14(4),pp.396-419. Rohm,A.J.and Swaminathan,V.(2004)’Marketing on the web-behavioural,strategy and practices and public policy’,JournalofBusinessResearch,vol.57(7),pp.748-757. Bhatnagar, A., Misra, S and Rao,H.R.(2000) ‘On risk, convenience and internet shopping behavior’, Communications of the ACM,vol.43(11),pp.98-105. Johns,M.A.(1999)’ Entertaintaining Shopping Expericence: An Exploratory Investigation’,Journal of Retailing and Consumer Services,vol.6(3),pp.129-139 Eastlick,M.and Feinberg,R.A.(1999) ‘Shopping motives for mail catalog shopping’, Journal of Buisness Research,vol.45,(3),pp.281-90. Tatzl,M.(1982)’ Skill and motivation in clothes shopping: fashion conscious, independent,anxious,and apathetic consumers’,Journal of Retailing,vol.58,pp.90-7. Miller,J.Y.(2000) ‘The web grows up’, Atlanta Journal Constitution,14 August,p.1. Forsythe,S.M. and Shi,B.(2003) ‘Consumer patronage and risk perceptions’ Journal of Business Research,vol.56(11),pp.867-875
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