Memo_Tjmaxx

Memo To: Tj-Maxx Marketing Department From: Date: October 7, 2009 Re: Trends in Online Shopping TRENDS IN ONLINE SHOPPING Tj-Maxx is exploring the advantages and viability of offering an e-commerce website that allows our customers to shop online. The company wants to take advantage of this fast and powerful tool available –The Internet- that will put us in a better position compared to our competitors and will represent additional revenue and will let us compete outside the local markets. To the customer is a very convenient way to engage in business transactions from the comfort of home or the office, avoiding long check up lines and the hassle of parking. In the following paragraphs, the topics to be discussed are: Online Shopping at a glance, benefits of online shopping to the company, what an e-commerce website needs to address, customer’s purchase behavior. ONLINE SHOPPING AT A GLANCE Online shopping has been increasing dramatically in the last few years. According to ClickZ.com, there was a 26% increase in 2007 –measured by shopping dollars spent in online stores-, 15% in 2008 and 19% in the first quarter of 2009. It is also estimated that annual online sales in the previous year amounted $102 Billion. According to Nielsen’s recent report (February, 2008) 85 % of the world’s online population has used the Internet to make a purchase, up 40 % from two years ago, and more than half of Internet users are regular online shoppers, making online purchases at least once a month. This data shows that consumers are looking to the web and online stores as a mean to satisfy some, if not all, of their shopping needs. Factors that have helped the increment in online shopping can be attributed to increased consumer confidence and increased security protocols. If a site is security certified, the customer feels more confident in disclosing his/her credit card information and other relevant data. BENEFITS OF ONLINE SHOPPING FOR THE COMPANY o An e-commerce website brings to the company the possibility of having a 24 hour a day, 7 days a week, year round a virtual online store front that can handle hundreds or thousands of online store customers at the same time. This can exponentially increase sales productivity time compared to offline competitors who can only open for 8 to 16 hours per day. o In terms of staff advantages, an online front gives the company the opportunity to minimize downtime and maximize selling time. o An e-commerce website facilitates communication between the company and the customer. The company can control the message it delivers and the information it gives to potential customers so the company can be certain that information is accurately conveyed, resulting in fewer returns due to confusion or misinterpretation of a product or service and higher customer retention rates and satisfaction levels. o The company gains access to customers that have time constraints, or are physically challenged, or are housebound or in a remote location and are not able to visit the store. WHAT AN E-COMMERCE WEBSITE NEEDS TO ADDRESS In April 2004 survey by AC Nielsen found that the top security concerns of America’s online shoppers were: o Not receiving the items purchased, o Receiving items different from what was described. o Email addresses being sold to third parties. o Fears about personal or financial information being stolen. o E-mail scans known as "phishing" or "spoofing" in which consumers receive messages from dishonest sources disguised as messages from trusted retailers or financial institutions.  CUSTOMER’S PURCHASE BEHAVIOR According to Nielsen, books are still the most popular purchases online, followed by Clothing/Accessories/Shoes, Videos / DVDs / Games, Airline Tickets and Electronic Equipment.Other significant growth categories were cosmetics/nutrition supplies and groceries, which jumped nine and eight percentage points respectively. Relative to the method of payment, credit cards are preferred. It is estimated that 60% of global online consumers used their credit card for a recent online purchase, while one in four online consumers chose PayPal. Of those paying with a credit card, more than half (53%) used Visa. To select a location to buy, consumers tend to stick to what they know when it comes to online shopping, according to Nielsen 60% of online shoppers say they buy mostly from the same site, proving that online shoppers are uniquely loyal. To select the sites on which to shop, one-third used a search engine or just surfed around to find the best online store. One in four relied on personal recommendations. Purchasing Process When searching for products to buy on the Internet, the customer usually likes to shop and compare. Half of the online buying activity occurred in multiple or subsequent Internet sessions, this is known as “latent buying”, customers first research or browse over the internet and at a later date they actually purchase the product online. There are three phases that the average customer go through when buying online. The first phase is called the browsing phase. A person would gather general information about a product or service of his/her interest. The information gathered varies from brands, prices, models, features included, uses of the product, etc. Phase 2 is called the compare phase. Once the customer has all the information about the different features of the brands, then he/she compares the details from brand to brand or from model to model of the product that the customer is thinking about buying. Some of the tools that the customer use in this phase are shopping comparison search engines, comments from other users, related articles, etc. Phase 3 is the buying phase where the customer actually makes the purchase online. Despite that this last phase is the most important for the business, it is necessary to provide assistance to the potential customer in complete all the three phases that will end up in customer satisfaction and sales. To aid the process, a study conducted by the firm WebSide Story, recommends to add a search box to the website, which can increase the sales conversion by 2 and a half times more than the web sites that do not have a search box available. To provide the best experience to the customer, information is important, and the availability of it can be crucial at the moment of the purchasing decision, not to mention that from this decision the company will or will not be benefited. Additional information such as daily or even hourly inventory of the products that are on hand, hours of operation, options offered, in store pick up, to list a few, can make the difference. CONCLUSION Customers are relying more on the internet to obtain information about the products that a company offers in order to make the purchase decision. It is also established that the products that are being purchased online are the categories that Tj-Maxx offers, and the advantages of having a website can offset the cost of building one. It is important for the company to consider take advantage of the multiple benefits that online shopping can offer to our customers.