Introduction
As the Internet matures, researchers have attempted to grasp its complexities and study its impact on consumer behavior. The supposedly revolutionary nature of the Internet gave rise to many hypotheses and presumptions regarding its impact on commerce. As with any new technology, the early years of the Internet have been a learning process—and, perhaps, it has been more experienced more than understood.
The objective of this paper is to examine some of the assumptions regarding consumer behavior that were made during the early days of internet commerce and, in the light of recent studies and statistics, proffer a number of considerations that will help put that experience in better perspective and summarize the lessons learned.
The Internet Revolution: Substance and Myth
As the nascent technology and the medium of the Internet developed, researchers noted that there existed several differences between the Internet and traditional media (Hoffman & Novak, 1994; Forrest, Kinney, & Chamberlain, 1996; Peppers & Rogers, 1996; Pavlik, 1998). Prominent among these differences was the fact that while previously existing media enabled a one-to-many transfer of meaning, the Internet could be characterized as simultaneously performing one-to-one and many-to-many communications. While the one-to-one communication allowed for individual addressability and customization (Blattberg and Deighton 1991; Peppers and Roger 1993), the many-to-many nature of communications implied the commingling of these communications and therefore an influence of different streams of communication on one another:
… This means that consumers can interact not only with firms and other consumers, but also with the tools themselves; that is, they interact with computers and related devices that mediate the commercial environment. In a radical departure from traditional media, consumers can also provide content, often outside the firm's control, to the medium. (Novak, Hoffman and Yung, 2000, p.14)
Other differences observed were the availability of means to search and organize information, both for communicators and audiences, and the ability to conduct transactions (Peterson, Balasubramanian and Bronnenberg 1997). Given the essential differences between hypermedia-based computer-mediated environments and prior media, it was argued that the new medium was revolutionary, with a substantial discontinuity from the past rather than an evolutionary step forward from other media (Forrest, Wotring and James 1995).
The confluence of the rapid emergence of the new interactive communication technologies, with the attendant boom in businesses-- seeking to develop and exploit these technologies—and a seizing of the popular imagination led to expectations of revolutionary changes in consumer behavior. Thus:
… The need to understand consumer behavior in an environment in which the rules of consumer engagement may very likely be different. Indeed, the Internet is best thought of not as a simulation of the "real world," in which case parallels are easily drawn from existing marketing paradigms … but as an alternative real, yet computer-mediated, environment in which the online customer experience becomes paramount. (Novak, Hoffman and Yung, 2000, ibid.)
These expectations served as the foundations for numerous business plans and subsequent business ventures. However, events of the recent past would seem to indicate that a good portion of such of expectations were ill-founded or just did not materialize, thereby engendering the collapse of many a dot.com superstructure.
Critical Considerations
In order to accurately assess the current, and future state of e-commerce, it is necessary that one draw a number of critical distinctions. Distinctions that will enable one to more clearly discern the nature and scope of online consumer behavior and better understand the evolving commercial role of the Internet.
First of all, y, one must consider that any and every evaluation of the e-commerce has a very limited half-life in so much as we are in the embryonic stages of the Internet’s development. Finally, it would appear that much of the confusion over the viability of e-commerce stems from the fact that its very strengths are also its most prominent weaknesses.
When evaluating the promise or performance of e-commerce, one must consider various economic sectors/industries independently.
The Internet was expected to have an amazing impact on the nature of communications, creating a new paradigm in communications, and being a medium of dreams for marketers. Indeed, it was described as the ‘Super Media’ [sic] (Haylock and Muscarella 1999). Communications on the Internet had many of the characteristics of traditional media; in addition, it had features such as addressability, interactivity, customization to the context of exposure and target individual, an elastic, self-paced duration, and even global reach (Haylock and Muscarella 1999). Based on the assumption that there would be near universal accessibility to the Internet, it was expected that the Internet would have the most success as a communications channel that tied in seamlessly with the transactional channel (Peterson, Balasubramanian and Bronnenberg, 1997). Indeed, this has proved to be the case. As noted by Mandel and Hof (2000): “at bottom, the Internet is a tool that dramatically lowers the cost of communication… it can radically alter any industry or activity that depends heavily on the flow of information.” Accordingly, information-intensive industries are, and will remain, the best candidates to be transformed by the Web:
FINANCIAL SERVICES-Most financial services can potentially be handled electronically.
ENTERTAINMENT-Much of entertainment can easily be digitized.
HEALTH CARE-The benefits of shifting health-care transactions to the Web could be enormous.
EDUCATION-E-learning could cut the costs and increase the accessibility) of education.
GOVERNMENT-Delivering information to citizens electronically has enormous appeal, but requires massive investments. (Mandel and Hof, 2000)
3) We are in the embryonic stage of Internet development.
As delineated above, the Internet’s promise and performance varies across economic sectors and industries. Yet, independent of its area of application, it remains that the technology is still evolving. In the near future, the widespread availability and adoption of broadband and wireless will provide the Internet consumer with a far more powerful platform for searching and shopping. What the exact implications such advancements have on consumer behavior remains to be seen. As an anonymous sage once observed, "forecasting is hard, particularly the future." Despite our apparent inability to plot the e-commerce sales curve, there are some safe predictions that can be made regarding the near future of the Internet. The first concerns itself with the fact that for the next few years the Internet will continue to be subjected to the phenomenon termed media-myopia -- defined as a unique combination of short-sightedness when it comes to estimating the public's desire for any given technological advance AND rear-sightedness when it comes to ascertaining its ultimate utility (Forrest, Wotring and James 1995). The concept of "media -myopia" is derived from the clearest lesson to be learned from the history of media evolution, that being-- that at the outset, both in conception and application the content and aesthetic of each new medium is directly derived and/or crudely concocted from the existing media it is to replace. As Marshall McLuhan so aptly noted decades ago, "It is instructive to follow the embryonic stages of any new growth for during this period of development it is much misunderstood, whether it be printing or the motorcar or TV, Just because people are at first oblivious of its nature, the new form deals some revealing blows to the zombie-eyed spectators."
From the consumers’ perspective, the proven advantages and disadvantages of Internet shopping are at least fivefold: convenience, access, information, selection, freedom and personalization.
Convenience--instant and 24/7 access—
Being able to shop for anything ay anytime from the comfort of one’s own chair is a near universal draw for online consumers. “Ninety-five percent of the AOL shoppers asked by The Internet Research Group cited the convenience of having a store that is always open as a reason to shop online” (CyberAtlas, Dec 23, 1998).
Information on demand – regarding product specifications and prices for evaluative and comparative purposes
As the very essence of the Internet is a global information dispenser with “virtually” limitless capacity, it is not surprising that a primary advantage of online shopping is the availability of information on product specifications and prices. As Wolfinberger and Gilly, 2001 observed: “The Internet as a medium facilitates researching product specifications and prices quite well… and price was often compared between multiple web sites. Many online buyers revel in the fact that they can get information directly without having to go through a salesperson (who is largely perceived to have limited information compared to a web site.”
…the most important of the information benefits to consumers. is simply the availability of information that previous to the Internet was either effortful or impossible to find. On the web, search costs are dramatically reduced. Improvements include the reduction of irrelevant information, improved information organization and better information processing aids. (Wolfinberger and Gilly, 2001)
Selection—
Online shoppers frequently offer product selection as a goal-directed reason to shop online (Wolfinberger and Gilly, 2001). The array of products offered globally increases daily. Consumers are no longer limited to the narrow confines of their local designated marketing area. Moreover, the Internet enables consumers to acquire specialty items that otherwise would be impossible to obtain through a local outlet.
Freedom--from social interaction and obligations
Online consumers attach great importance to the ability to avoid “people” of all varieties--- other shoppers (traffic, crowds), salespeople, spouses and children.
Salespeople are often perceived to be unhelpful or uninformed and they pressure or obligate buyers…. From the youngest member of our focus groups to grandmothers, online buyers revel in the fact that they can avoid sales workers online…
Spouses interfere either by purchasing too much during a shopping trip or by pressuring their mate to finish their shopping more quickly. (Wolfinberger and Gilly, 2001)
Lessons Learned
The Internet was foreseen to be a revolutionary change in the way business would be conducted and humanity would behave as consumers in markets. We are still in the early stages of development and trying to discern the full nature and magnitude of e-commerce is just a best guesstimate. However, the successes and failures of the early days of the Internet have provided an opportunity to examine the soundness of some of the initial assumptions made regarding consumer behavior. Such an examination allows both academic researchers and business practitioners a chance to reassess present and future business strategies.
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