Online Shopping and Auction Sites

Learning Objectives

  • understand how online shopping and auction sites work.

Learning Outcomes

Must – understand how to shop online and how to buy at auction.

Should – recognise the key threats to personal data from online shopping and auctions.

Could – discuss the impact on wider society of the growth of Internet Shopping and the collapse of the High Street.

Online Shopping

Online Shopping is the activity of buying goods on online without the need to physically visit any shops.  People who shop online do so from the comfort on their own home, or on the move at a leisure or social time.  Online Shopping is popular, and sometimes expensive activity.

How does online shopping work?

Online Shopping requires a digital device that can connect to the Internet.  TV’s, Games Consoles, Laptops, Mobile Phones, Tablets and Desktop Computers have web browsers which enable users to connect to eCommerce sites.  Sites can be found using a search engine or a direct URL address.  Websites contain MetaData, which is a series of keywords and phrases which is stored in the HTML set up which is used by search engines to find websites.

The vast majority of retailers have an online part which enables buyers to purchase goods.  The way to find out if the retailer has items for sale is to see if the site has a basket function and a checkout function.  The basket is the place where goods are temporarily placed before the checkout process.  Items can be added or removed from a basket at any time.  Websites also have an opportunity to register.  This feature allows a customer to have more choice and control over their order.  Addresses and Payment Methods can be saved for future purchases, more personalisation allows a customer to set up email preferences and to highlight products and services which they are interested in.   The company can use these details for directed targeted marketing and advertisements such as money off coupons, offers and a first look at new products.

When a customer has finished shopping, they head to the checkout.  The checkout is a secure part of the website.  It is encrypted using HTTPs.  An easy way to check that the payment is secure is to look at the URL bar.  It should contain a Padlock, a Green link on some browsers, and display “HTTPs”.  If the URL contains none of the above a buyer should not purchase as the connection is insecure.  Users get to check their order and place delivery details into the address section.  Once this is complete, the user moves onto the Payment part.

Payments are made via Credit/Debit Card or using a Third Party Payment such as Paypal.  Some websites allow users to pay via Bitcoin (although this is in its infancy at the minute).

When the payment goes through the order moves to processing.  This is a check that the goods are in stock and can be packaged ready for delivery.  The customer usually gets an email confirmation with an order number and estimated delivery date.

Benefits of Online Shopping 

  • Lower costs passed onto customers.  Savings made in not having physical stores can be passed onto customers in lower product charges.
  • Ability to compare prices online, price matching and product price comparison sites.
  • Companies deliver, no need to go out shopping.
  • Greater range of products available.  Small shops cannot stock the range of items that an online site with a warehouse can.

Issues with Online Shopping

  • Physical shops disappear – Internet competition means High Street shops close.  Less selection for customers, and reliance on the Internet.  See Below.
  • Pictures Vs The Real Thing – Because items cannot be viewed in person, the photo online plays a big importance.  When a good arrives in person it often doesn’t look as good as online.
  • Not everyone Online – A percentage of the population is not online.  The elderly and people in remote areas are not online.  They rely on shops and when these disappear they lack choice.
  • Lack of personal service and advice – High Street shops employ specialist employees who can give product advice and customer service.  This isn’t offered online.
  • Delivery expectations – goods need to be delivered, so the customer has to wait in.
  • Security issues are a big part for customers.  Hacking and Fraudsters are a constant worry for online shoppers and potential online shoppers.

Case Study

High Street Music Retailers vs The Online Music Retailers.

Prior to the arrival of the Internet, the Music and Video sales market in the UK were quite profitable and lucrative.  Many famous High Street name chains such as MVC (top left), Our Price (top right) and Andy’s Records (bottom left) traded from towns and cities across the UK.  Since advancements in new technology where people could watch a film in their homes and listen to Music on the move, retailers sold the disks and tapes to allow consumers to entertain themselves without the need to pop to the Cinema or listen to the radio.  These retailers made a good level of profits and all 3 chains expanded rapidly across the UK, to take up quite a proportion of the Entertainment and Music Sales market.  When websites began to sell online, these retailers struggled to compete.  They were unable to match the low prices these sites had for DVDs and CDs.  An online retailer such as Amazon could sell a CD for as low as £1.99, but the High Street retailer could go no lower than £3.99.  The High Street retailer was unable to absorb the loss on each sale into its already high overheads.  Factors such as rent, electricity, business rates, staff and shop refurbishment mean that the High Street retailer is already at a disadvantage compared to the warehouse only business such as Amazon.  Sadly, all 3 chains closed and the only remaining sources for Music on the High Street is the slimmed down HMV chain (which also went through massive closing down sales) and supermarkets.  Some towns have independent music stores but these are a small business and they struggle to compete against the big chains.

Auction Sites

Auction Sites are online types of Online Auctions.  The largest and most well-known auction site is eBay.  Auction Sites allow individuals, groups and business the opportunity to sell new and used goods at Auction scenario prices.

To use an auction site you need to Register.  This involves creating a user id, and a password.  The auction site will require an address as well as a payment method.  PayPal is the payment method linked to eBay.   Once you have registered, you can start searching and bidding for items.  Most auction listings have a set period of time to run, normally 7 days.  If you are selling it is possible to pay extra for shorter or longer listings if you wish.

In order to bid, you need to place a physical bid on the item by inputting the maximum price you are willing to pay.  The auction site will then work out if your bid is higher than the current bid, and if it is you are the highest bidder.  If you aren’t the highest bidder you will be notified that you have been outbid and you need to offer a higher maximum price.

Because other people are looking on auction sites, others can bid on items.  When they place a bid that is higher than the bid that you have offered on an item you will be notified that you have been Outbid.  If there is enough time remaining in the auction you have the opportunity to bid a higher value again.

Auction sites are addictive and occasionally it is easy to be drawn into a bidding war.  This means that you try to outbid the other bidders and sometimes you end up overpaying for an item by exceeding its value or worth.  It is common that an auction winner could end up paying more for an item in an auction than buying it from a shop.

Auction winners have a legally binding agreement and they are required to pay for the item(s) that they win.

Online Auctions are very popular for various reasons, but they have benefits and drawbacks for buyers and sellers.

Benefits of Online Auctions

  • Online Auctions allow buyers to connect with sellers from various parts of the UK, Europe and the World.  Items can be bought and sold at the click of a button.
  • Sellers can make money from selling unwanted items.
  • Buyers can pick up a bargain.  Second hand is often a lot cheaper.
  • Rare and Collectable items can be purchased that are no longer available in the shop.
  • Buyers can pick up bargains on low start price items.

Drawbacks of Online Auctions

  • Scammers and Fraudsters operate on some auction sites.  Sellers go “missing” when money changes hands.
  • Online Descriptions sometimes don’t match the item when it turns up in reality.
  • Postage costs are often expensive.
  • Listing Fees and Final Total fees are expensive and sometimes leave sellers with little in the way of return from a sale.

Task 

Using the Internet to help you, produce a minimum of a 200-word essay explaining how, giving examples throughout, Online Shopping and the Internet lead to the demise of the retailer Blockbuster Video.  Use the terminology that in this section in your answer.