It has been more than 15 years since the Internet became an integral part of daily life. In the early years, it was used as a one-way transfer of static information to consumers. However, since 1995 the Internet has become a mainstream source of business for many companies. For the hospitality industry, this translates into hotel rooms booked and food orders placed online. However, Internet commerce comes with its challenges and requires responsibility on the part of the merchant. One of the biggest challenges is the perceived risks that come with purchasing products and services online.
Researchers from the University of South Florida Sarasota-Manatee and Oklahoma State University conducted a study to identify the main risks related to purchasing online goods and services. A survey was sent to 10,000 randomly selected Americans, of which approximately 700 responded. Among those, 92% indicate that they have used the Internet to search for a product or service. This validates the fact that the Internet has become an integral part of daily life in America. Among those who searched for a product or service on the Internet, 89% made an online purchase. This fact also shows us a shift in customer behavior, as users have switched from just checking the prices of goods and services online, to actually purchasing them online. About half of the respondents purchased something online within a week; the most frequently purchased items were books (20.3%), followed by clothes (19%), computers (16%), airline tickets (12%), hotel rooms (9%), music (8.1%), financial/banking products-services (5.5%), car rentals (3.9%), insurance (2.9%) and vacation packages (2.2%). The total percentage of hospitality-related products among those items was 27.1%.
Risks of purchasing online
Survey results also reveal that privacy of personal information is the most important risk for consumers when purchasing online. The top five risks were related to privacy: 1) “The company can place cookies (an identifier) on my computer;” 2) “The company can track my shopping habits and purchases;” 3) “My personal information can be shared (sold or rented) with third-party companies;” 4) “I may be contacted by the company without providing consent;” and 5) “I fear that unauthorized third-party access to my credit card information can happen.”
There is a clear message in these results for any online merchant: The protection of customers’ personal information is just as important as the protection of payment information. Therefore it is important for merchants to actively protect this information and to act with integrity in the use of such information. If you are going to share customer information with other parties, ask permission first. And finally, communicate how you plan on using the information that you have gathered about them.
The results also reveal that brand loyalty is almost non-existent right now. The price transparency that the Internet has afforded now makes the price of a product one of the most important decision-making factors. A majority of the consumers who searched for a product or service on the Internet indicated that they did not purchase from a particular website because the price was too high. As such, many products, including hospitality products, become a commodity. The solution here is to increase the cost associated with switching to a different merchant. This means that the merchant needs to build a relationship with the customer. This will enable the company, especially hospitality companies, to learn from customers’ past purchases and customize products based on those preferences and past behaviors. This is how value will be created for online shoppers.
Finally a big barrier for purchasing products and services online is the lack of examination of the physical product. This is relatively easy to fix in the hospitality marketplace as hoteliers and restaurateurs can utilize multi-media pictures, videos and 360 degree tours appropriately. However, the key here is that these offerings should be “on-demand.” Customers should have the ultimate control on what they see and when they see it on a website.A new study from the University of South Florida Sarasota-Manatee and Oklahoma State University identifies customers’ top e-commerce concerns, plus how hospitality companies can improve online interactions to boost loyalty.