Trend Analysis

1

Trend analysis

Student’s Name：Han Jia

Introduction

2

In the stakeholder analysis the selected topic is online shopping. Online shopping has

been a trend for the last few years and continues to grow because of the need for convenience

by customers and the change of the business model by most retail stores and businesses. Most

customers do not want the hustle of going to shop physically for the products they want or

some are too busy to get time to shop. Through online shopping the customers get the

convenience of being able to purchase the products they want and have them delivered to

them at the comfort of their homes. For the companies and the businesses online selling is a

good option when they need to cut on costs and this is because the use of online selling

minimizes the number of staff needed to run the business and cuts on costs such as rent. This

report will look at the trend analysis by looking at political, economic, social, and

technological factors (PEST analysis).

Political

There are various political factors that have a bearing on the online shopping habits.

One of the factors affecting the habits is the European Union which has been targeting most

of the tech giants such as Amazon affecting their performance across the globe. Political

stability is important when it comes to online shopping and the performance of e commerce

businesses. When a country has political stability more people will shop and when the

stability is threatened then more people will hold funds instead of spending them because of

the uncertainty of the future. Issues that might bring up instability include general elections.

During general elections there are a lot of conflicts which take place among people and

sometimes things might escalate and even result into huge fights and cause deaths. This could

disrupt the economy and the online shopping trend and habits among people.

3

Unfavorable international trade laws have the potential to negatively affect the

performance of the e commerce business and affect online shopping as well. International

trade laws which ban the US from trading with a country like Canada for instance it will

mean that customers in Canada that want to buy products which are sold in the US will have

a challenge. The presence of trade barriers will reduce online shopping. The government is

responsible for imposing some laws which affect commerce. One of the laws is taxation

which influences how the amount of tax paid by businesses (Rita et al., 2019). The tax rates

are increasing and this is affecting performance of online businesses and even resulting into

the closure of some of them.

Another political factor that could affect the online shopping habits is unfavorable

laws governing the use of social media. One of the laws which affect the performance of the

online businesses is strict privacy laws. The strict privacy laws urge sellers to be very

cautious of how they use the data which they obtain from their customers. This could be a

threat because dealing with customers online brings up a lot of information security issues

which could discourage more buyers from purchasing products online. Most of the online

businesses lack documentation because of scale and if taxation laws become strict then some

of the vendors will end up being closed down.

Economic factors

When the economy is doing well, the people shop more because of the increased

revenue and income level. In the last two years there has been a decline in the economy

because of the measures which have been put in place to contain the spread of the corona

virus and deal with the losses most companies made during the period. Some of the negative

effects included some people losing their jobs and others having their salaries reduced.

Things are now getting better in most parts of the world and the economy is opening up

4

(Izogo & Jayawardhena, 2018). For this reason, the rate of employment is set to increase

because of companies becoming more profitable and new companies being opened up. This

will enhance the buying habits of the customers. When customers have more than enough

income, they will buy what they wish to have as opposed to only purchasing what they need.

This means that impulse buying will increase and the online shopping habits will increase.

Trade liberalization is one of the factors that supports online shopping greatly.

Through trade liberalization, there are minimal or no barriers to countries trading with each

other which means that e commerce businesses are able to ship their products beyond their

countries. For instance, Alibaba ships products all over the world due to the lack of trade

barriers. If the trend continues it means that people will be encouraged to shop online because

they will be able to order products from businesses all over the world. The increasing interest

rates poses as a threat to online shopping habits (Rita et al., 2018). Interest rates refer to the

cost which lenders charge on the loans. Most banks and online lending platforms have been

increasing the interest rates and this means that customers will not have a backup plan to get

loans when they run of money and hence will not have enough to spend on online shopping.

Social factors

The increased consumer online buying habits facilitate online shopping. Online

shopping is increasing because of the trend of more customers being able to access

smartphones. The customers who have access to phones use it for social media where the

people create connections and interact with friends online. Social media has been a trend for

many years now and the trend is increasing because of the many new social media platforms

which are easy to use and accessible for free.

The current number of people that are using social media in the United states is 225

million and the number is forecasted to increase to 243million by the end of 2025. The use of

5

social media increases online shopping because more businesses through marketing research

understand that the best way to increase sales is to sell on social media. Also, when using

social media, there are various ads which will pop up of different products and this is mostly

based on the search history of the users online (Rita et al., 2018). Another factor that increases

the online shopping is the trend of people taking multiple jobs. In an attempt to increase their

earnings, most people are taking multiple jobs so that they can earn more.

In the US, there are many people working extra shifts and working for more than one

employer. This trend is set to continue because of the increased costs of living and the need to

pay off student loans and mortgages more people will be opting to work several shifts. This

will mean that people do not have adequate time to go around shopping making online

shopping a good choice for them (Izogo & Jayawardhena, 2018). Looking at the health of

customers, the healthy lifestyle trend could be a threat to the online shopping behaviors. Most

people are becoming healthy conscious and are preferring physical activities to help keep

them fit. If the trend continues more people might reduce their consumption of the internet

and be more active lowering the rates of online shopping.

Technological factors

One of the things that has supported the trend and continues to support online

shopping is the advancement in technology. One of the technological factors that increases

the trend is the use of smartphones and digitalization which has led to most people spending

so much of their time online on their phones (Zhao et al., 2019). According to a recent survey

around 85% of the US population have an access to smartphones and this is expected to

increase even further in the coming years because of the pricing of smartphones which makes

them affordable to more individuals.

6

With increased use of smartphones, the rate of online shopping is set to increase

because more people have access to websites and social media pages where the companies

sell their products. Another factor which is enabling the online shopping trend is electronic

and online transactions. Before the introduction of these transactions it would have been

harder for the online businesses to sell online (Tarhini et al., 2018). Online and electronic

transactions enable the shoppers to pay their bills and orders online, this increases

convenience for the buyer. 80% of the US population says that the use of online transactions

is their preferred payment method and this is because of the convenience.

Although the online transactions are slightly expensive compared to transacting

physically, the benefits outweigh the cost. One of the technological trends that is a potential

threat to online shopping is the increase in cyber crimes and hacking. During online shopping

the buyers and sellers exchange information including locations and sometimes the home

address of the buyer needs to be shared to facilitate deliveries (Chetioui et al., 2020). The

increased rate of hackers and cyber crime could lead to the information shared during

transactions being used for a purpose other than the intended one.

Conclusion

Online shopping is becoming a trend with more people developing the habit of

shopping online because it is more convenient and they are able to access a variety of

products from different platforms and companies. Online shopping is affected by political,

economic, social and technological factors differently. The technological advancement is one

of the factors that will enable the transactions done online to be easier. Consumer spending

habits are controlled by their income and a potential increase in the income of the customers

because of the opening up of the economy could increase online shopping.

7

References

Chetioui, Y., Lebdaoui, H., & Chetioui, H. (2020). Factors influencing consumer attitudes

toward online shopping: the mediating effect of trust. EuroMed Journal of Business.

Izogo, E. E., & Jayawardhena, C. (2018). Online shopping experience in an emerging e-

retailing market. Journal of Research in Interactive Marketing.

Rita, P., Oliveira, T., & Farisa, A. (2019). The impact of e-service quality and customer

satisfaction on customer behavior in online shopping. Heliyon, 5(10), e02690.

Tarhini, A., Alalwan, A. A., Al-Qirim, N., & Algharabat, R. (2018). An analysis of the

factors influencing the adoption of online shopping. International Journal of

Technology Diffusion (IJTD), 9(3), 68-87.

Zhao, J., Liu, H., & Xue, W. (2019). Pest embedded swot analysis on china's e-commerce

industry development strategy. Journal of Electronic Commerce in Organizations

(JECO), 17(2), 55-68.