Factors Affecting Online Shopping

Topics: Electronic commerce, Online shopping, Electronic business Pages: 44 (13406 words) Published: November 19, 2010

1.0 Introduction
1.1 Background
Considering how important it is these days, it is impossible to imagine life without the internet. However commercial activity on the internet is not as old as most users may believe. The internet was developed over 34 years ago as a project in the United States Department of Defense Advance Research Project Agency (DARPA).The original aim of this project was to investigate the possibility of connecting several computers together to communicate with one another. In 1969 a network of 4 computers were connected and were called (ARPANET).The year 1972 saw the introduction of email capabilities to the network. ARPANET was decommissioned in 1989 to be replaced by NSFNET which was developed by the National Science Foundation. Over time other smaller regional and local networks from all over the world joined this backbone. The Department of Energy and NASA also added networks and backbones. This led to a growth of about 10 percent per month for this network and the term internet was introduced (Kahn, 1994).

Over the years the internet has gained popularity as a means of connecting people together. The introduction of internet based alternatives to everyday activities has become so common in recent times that it has completely changed the way we live. Previous day to day activities such as communication, socializing and even consultancy which were undertaken face to face have since moved online.

Consequently this has changed the way business transactions are conducted as well. The improvement of technology for internet communications such as the development of widely available broadband services and increasingly fast fiber-optic networks has led to increased download speeds and accessibility of the internet from all parts of the world. Couple this increase in capability with a highly efficient postal and parcel delivery system and the possibility of trade over the internet is endless. This has led to an increase in the reliability of customers on the internet as a communication portal.

Previously inaccessible extremities of the globe such as Asia and Africa have never been easier to connect digitally. This has encouraged trade between areas which would previously have been physically impossible to connect.

This rise in electronic commerce has long been predicted by several researchers. Gasmoni (1995) proposed that electronic commerce system may replace the traditional institutions of today as the preferred medium of commercial transactions by studying the rise in popularity of electronic commerce.While e-commerce is still a long way from achieving this replacement, the government paper on digital Britain released in 2009 states that 90% of high street purchases are transacted by plastic which depends on wired and wireless communication to work. That is in addition to the 50 billion pounds worth of consumer purchases and sales through electronic commerce that takes place wholly online. These figures show the prevalence of internet based commerce in the British economy. This certainly highlights the popularity electronic commerce has gained in recent years with the British public.

1.2 Problem Definition
As is the case with traditional financial transactions, online transactions also run a risk of misappropriation by malevolent parties. To ensure security of online transactions several encryptions and authentication technologies have been developed to minimize the inherent risk of such transactions. These technologies were developed to reinforce the trust that people have in conducting business transactions online from the smallest amount into millions of pounds. This is because if people do not feel safe with the nature of a business model, they will not engage in it. The importance of trust has even led to the development of completely new industries such as Trust merchants that verify the trustworthiness of electronic commerce sites and several...
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