Trend Analysis

Trend analysis Student’s Name：Han Jia

1

Introduction

In the stakeholder analysis the selected topic is online shopping. Online shopping has been a practice 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. The online shopping practice is affected by various trends that are discussed below. The trends include favorable laws and political environment, increased online buying habits, use of electronic and online transactions that make online shopping favorable for the customers. Without some of these trends online shopping would not be possible, for instance through electronic payments clients are able to pay for their goods and services remotely. Also, without favorable laws it would have been hard to sell goods across borders. This report will look at the trend analysis by looking at political, economic, social, and technological factors (PEST analysis).

Trend analysis of online shopping

The following is a trend analysis of the enabling trends of online shopping.

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.

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

(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 243 million by the end of 2025. The use ofsocial 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 focus on United States is due to the increased costs of living in the US and the need to pay off student loans and mortgages more people will be opting to work several shifts. Most people in the United States have so much bills to pay off which means that when they are not making enough funds then they will not be able to reach as many people. The specific focus on the United States is because the costs of living are high and are expected to continue rising calling for people to take extra shifts and jobs to afford what they need. 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.

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 cybercrime could lead to the information shared during transactions being used for a purpose other than the intended one.

Counter trends and implications

There are various counter trends that are not in support of the online shopping that could result into more people moving away from online buying to other alternatives. One of the counter trends is cyber-crimes and fraud. If the trend continues into the future, then more people will be discouraged from purchasing online because of the fear that their personal information can be used for malicious reasons and fraudulent activities that could get them into trouble (Rita et al., 2019). As discussed, trade liberation is the cause of increased online shopping and trade barriers and disagreements could result into a decreased online shopping. Trade barriers can come up when countries end up disagreeing and cut trade ties preventing the members of the countries from purchasing items from each other.

Healthy lifestyle changes and choices are a potential threat to online shopping in various ways. Online shopping is supported so much through the trend of remote working and working from home where most people spend almost the entire day working on their computers around their homes. If more people become health conscious then it means that more people will focus on finding activities that make them more active and these activities could entail shopping (Chetioui et al., 2020). Additionally, any future adverse laws on taxation and operation of online businesses could affect how much people shop online. If the government increases taxes on online retail stores the implication could be closure of some of the online businesses and hence decreased online shopping.

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

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.

Online shopping

Technological.

Online and electronic transactions.

Smartphones and other devices.

Political.

Favorable laws and government restrictions.

Political stability.

Economic.

High income of buyers

Trade liberization.

Social

Increased consumer buying habits.

Increased consumption of social media.

Busy schedules for employees