The Chinese and the UK Online Shopping Markets - Thesis Proposal Example

Section 1. Aim, objectives and feasibility of the dissertation

The rocketing scientific and technological advancement have vested the virtual dimension to participate in the global business race on the equal conditions, as the Internet and electronic devices have become the important tool in the habitual everyday activity. The shopping has taken the form of mobile and remote process and the IT revolution has brought along the features of the new business ecosystem, where the supporting mechanisms fulfil the crucial executive mission. Modern technologies, will add even more new features, which will shape the overall business environment. Thus, it should be emphasized that IT revolution is the important part of the business environment, since it is the best way to reach the modern customers. Furthermore, there are many customers who reluctant to use the old business means, such as brick-and-mortar stores, thus, they need a new solution that will provide them the ability to purchase products without actual visiting the shop.

The online shopping market is intrinsically developing in the parallel with the economic, legal, socio-cultural and technological dimension in particular, which enable the necessary infrastructure premise. The scope of the topic raises the necessity of the active discussions, arguments and investigations, which are increasing simultaneously with the new online markets development. Leaning on the studies used in the course of the dissertation, the work will disclose the underlying cornerstones of the online shopping industry that motivate or stagnate the sales rates (Heinemann and Schwarzl, 2010). The study aims to provide the comparative analysis of the Chinese and the UK’s markets, as the prominent players within the virtual environment. Comparing these two large markets with great businesses can help to reveal more factors, which influence the effectiveness of e-marketing strategies, application of new e-shopping business models, etc. It is useful, since all modern businesses should be oriented on the application of internet and all opportunities, which internet can offer. It is vital to understand that UK and Chinese markets are the main innovators, hence they have substantial resources and tracking their activities can help to define the possible course of development of online markets. Qualitative research that will be done will be aimed on the multiple authors and statistic data, which will aid understanding of main concepts of the online markets and their main driving factors.

Occupying the first positions within the global arena, the Chinese and the UK’s electronic retail or ‘e-tail’ markets have reached the scale, where the brick-and-mortar leaders of the global retail industry become threatened. The increased efficiency, facilitation and enhanced accessibility do not enlarge the void between the store-based and online business but emphasize the importance of coherent omnichannel mechanism creation, blurring the frontiers between the two dimensions.

There are many reasons, which caused such changes in the market environment, the main change factor that is emphasized by Boudreaux, is globalization. Businesses strive to expand their operations throughout the world, however, for many companies, which offer particular services or products it is not necessary to build usual stores, they can maintain e-shop that will serve as the main business opportunity, since it can work as fully-functional shop with all marketing features and advertising efforts. Thus, globalization is one of the driving factors, which make usual markets to integrate into online environment. Furthermore, with the development of new customers’ trend to make easier purchases and the process of choice of product, companies understood that new business model should be built on the basis of the previous. Therefore, more resources were invested in the e-shopping that provides the example for all other companies throughout the world to use in their business models. All these things resulted in high level of adoption of e-technologies.

The controversial nature of the topic will also be elaborated in the literature review, as the question of discrepancy in terms of developing and developed economies and their online markets bears certain dependencies to be investigated. The Chinese and UK’s online shopping markets will be taken through the theoretic and empirical analysis, which would define the particular component combination, enabling the growth of the virtual empires. It is done to examine their efforts and main external factors, which can impact the development of e-commerce and overall IT technologies in the business operations.

The research question of the dissertation are as follows:

1. What is the overall picture of the Chinese and UK’s online shopping markets, in the context of the dynamics, tendencies and perspectives?

2. What factors are at the core of the common traits and the distinctions of the two markets?

Focusing on the research questions, posed by the study, the author will apply the relevant data and appropriate methodology to tackle the objectives, which are as follows:

Research Objectives:

1. To provide the multidimensional critical analysis of the Chinese and the UK’s online shopping markets, taking into account the economic, regulative, socio-cultural and technological standpoints.

2. To generate the appropriate research methodology for the dissertation, basing upon the character of the topic and the information diversity

3. To conduct the empirical estimations towards the two environments, which would provide the reliable and accurate sources of input data.

The dissertation research is considered feasible, and the justification of the assessment will be reflected in the research methodology section of the study. The topic investigation will be performed on the basis of quantitative and qualitative data, presented by the primary and secondary accumulation. Considering the peculiarities of the online shopping market, the dimension provides the opportunity of conducting surveys, interviews and questionnaires with no time and location frames. From this perspective, the social media will maintain its firm position as the effective tool for the research input data and also as prominent communication and promotion channel. Furthermore, considering the variety of means, which can be used in the process of promotion of the particular brand or products, there is no limitations in the material that can be processed to answer the research questions and arrive to conclusion. Furthermore, there are many reports, which emphasize the online markets peculiarities and their effectiveness in the business models of leading companies of UK and China.

Section 2. Literature Review

The study of Heinemann and Schwarzl (2010) managed to combine the most comprehensive piece of research, disclosing the global development of the online shopping markets. The dichotomy of the size and real potential of the e-commerce turns out to be in the centre of scholars’ attention, as the indexes outline China and the United Kingdom among the world’s leaders. These two countries managed to maintain the effective e-shopping business models for their companies to rule the e-environment and to offer customers unexampled experience.

Figure 1. The Tendencies And Predictions For UK Market Digital Shopping (Statista, 2016)

As pointed out by the authors, the overwhelming consumerist society increasingly imposes the must of the certain orientation of the country towards the technological and scientific research. Over the past century, the trade ethos has been drastically transformed by the globalization processes, gradually eliminating the boundaries between the countries, nations and businesses. It provides the necessity in new measures to reach the customers from any regions of the world. Most companies, which work in the global market choose the strategy to promote and expand their operations through building of their shops around the world, however, there are companies, which can utilize the IT for their business activities and increasing of sales. As an example of UK company that successfully uses the e-commerce is Tesco, it has many stores around the world, however, increasing number of customers prefer to order products from its e-store, since they have either no time or no wish to visit the brick-and-mortar store.

Figure 2. The Largest Sectors In UK’s Online Shopping Market

On the one hand, China remains to be the developing economy for a number of reasons, however, Heinemann and Schwarzl point out the dramatic rise within the last two decades. Regarding, the e-commerce is predominantly cradled by the IT focus of the economy. The giant leap in the infrastructure and the robust technological concentration has provided China with the largest number of the Internet users and the largest ratio of smartphone users. To face the massive growth of smartphone users and new market requirements, country decided to increase investments in the e-commerce, since it can provide local businesses more opportunities to sell their products and even expand to other countries.

Figure 3. Largest Online Retail Segments In The Chinese Market (McKinsey, 2015)

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On the other hand, the United Kingdom is on the opposite side of the gap, being a developed economy presents the largest online market on the European continent. The degree of the Internet influence in the UK is reflected in 8.3 percent, which is annually contributed to the economy. The market is homogenous and is dominated by the online versions of the retail giants, such as Tesco (Heinemann and Schwarzl, 2010) Considering the example of Tesco, this company maintained its activities through the usual stores, which customers prefer to use and with the rise of demand for IT solutions, company created multiple versions of the store in the internet to provide them functionality to use the products of Tesco staying at home. The success of Amazon with the British buyers raises doubts as the company has been regularly receiving bad press coverage due to counterfeit, and the issue still remains unaddressed. Moreover, the counterfeit is a challenge for the Chinese online market, and the famous online shops such as Taobao has had numerous cases of forged products. Thus new option for sales should be controlled, since companies can use it to sell the counterfeit products, which cannot be checked before the check-out and actual delivery. Using the concept that company is not responsible for sellers, who work using the company’s functionalities, they can manage to avoid all responsibility for forged production.

The Chinese online shopping market represents the dynamic ecosystem which is the fusion of social and cultural impacts, financial framework, policies, logistics, regulations and the buyers. The sensible movements towards the mass effect have led to the $301 billion online sales in 2013. Basically, the e-tailing in China is deemed as an oligopolistic environment, where the undisputable dominance belongs to Alibaba group, which can be compared to Amazon or Ebay. In fact, the scope of Alibaba group is attributable to the traits mixture, successfully borrowed from amazon, Ebay, Google, and PayPal.

Figure 4. UK Online Market Tendencies

It is also revealed from the work of Heinemann and Schwarzl (2010), that the Chinese online shopping market can be aligned with the overall business environment: the potential is high, and the predictions for the next 3 years are positive, however, the insufficient infrastructure is putting spokes into the wheels of further development and expansion. As long as the online shopping market is dependable on the delivery service level, the logistics are an important integral part. The Chinese express delivery seems to be lagging behind the market growth, and still this aspect is attributed to as the weak point. The UK’s logistics problem is implied by the costly shipping, which significantly impedes the British online retail business from expansion. Therefore, the UK’s online market participants are increasingly refusing to collaborate with the prominent delivery companies and indicate the tendency of building own logistics systems or establishing relations with private entities.

According to the study of Heinemann and Schwarzl (2010), the external factors participate in shaping the online buyer’s image, which in its turn influences the external factors, the degree of the interdependency is high. The socio-cultural dimension plays one of the crucial roles in formulating the online market tendencies, and the UK and China exemplify the critical distinction of the Eastern and Western paradigm, which nonetheless strive for collaboration. Thus, these cultural and social peculiarities will be further investigated to find out main factors, which can somehow impact the customers’ behaviour and the necessity in broader introduction of online markets in UK and China.

The Chinese online buyer is characterized by impulsivity, and the selection process is predominantly motivated by the low price, which is the major cause for the low brand loyalty. Over the years, the online shopping has acquired the traits of a national phenomenon. The collectivist society of China has made a transition into the virtual space, and a vast array of social media sites fulfil the role of the major information source. The 40 percent of online customer’s decision to buy a product is dependant on the reviews, ratings and advice provided by social media. That is the wide-spread practice, since misuse of the advertising that emphasizes the positive features of the products is not truthful. Customers decided that the only option to get some information regarding the products are the reviews from other customers who have already purchased the product. Thus, the change in the customers’ decision process can be observed.

On the contrast, the technological outburst in the face of tablets, smartphones, and other electronic devices do not seem to have impressed the British online shopper, and the desktop computer was slightly overshadowed by the mobile phone. Modern studies shows that desktop computers are still effective and cannot be substituted by smartphones and other associated devices. Furthermore, even with the adoption of internet and internet versions of stores, most customers prefer to visit the stores to see the product and decide whether to buy it or not. It is mainly the result of the counterfeit or even fake products, which provided by disreputable companies. In fact, about 14 percent of online sales made by the UK’s shoppers are attributed to the mobile phones. The similar behavioural patterns are related to the social media, which low-interest level among the British Internet users in comparison to the other European countries. However the progress in smartphones and in site creation will provide more opportunities to customers to use the online shops through their mobile devices that will increase the amount of mobile purchases. During the period of 2011-2016 the growth tendencies have touched upon the male and female consumer groups equally, thus, the gap between the active female shoppers and passive male shoppers is gradually disappearing. The major cause of the tendency might be implied by the enhanced security and privacy aspect, and the masculine pragmatism has undergone some extent of relaxation. In average, the British online shopper spends over £2,000 on the e-tailing purchases, as the home shopping experience cannot be underestimated. Thus, there are perspectives for effective introduction of e-commerce in the UK, however, since the customers are reluctant to use mobile devices in this process, proper e-commerce can be hindered.

The historical predisposition of the UK’s society has had a positive impact on the online shopping market, as the British catalogue purchases were deemed a habitual activity, which nowadays has found its virtual embodiment. Furthermore, the reliance on the postal service cradled for centuries, and the credit card active use are also perceived as the push factors for the online retail industry development. To the contrast, the 70 percent of the Chinese online customers pay in cash for their online purchases, and unlike the British counterparts, and the high-priced electronics, music or games would not be bought online. Additionally, the distinctive feature of the Chinese shoppers is that they are predominantly located in rural areas, and over 40 percent of their income is intended for shopping and entertainment, due being high indulgence society. Thus, Chinese market has more challenges to solve than the British market, since latter has already adopted the features, which positively influence the development of e-sales.

Derived from the study of Heinemann and Schwarzl (2010), the online shopping market in the UK represent the serious threat for the brick-and-mortar retailers, which are nowadays suffering dramatic sales decline across the country, exceeding 2.9 percent. Ironically, the Chinese online giant Alibaba is undertaking expansion to the UK’s market, which can become the source of the serious problems. Previously, the Alibaba group experienced difficulties in internationalization due to insufficient management, therefore, the expansion to Britain is being performed on behalf of the British executive, who used to belong to the Tesco team. Perceived as a benefit before, Alibaba is viewed as a challenge to the homogenous UK online market, as more concerted and intense push is expected. However, this challenge can increase the paces of internal development e-market and the introduction of new features to face the competition and to encourage customers to use the new technologies. Chinese culture is penetrated with the technologies and call to use them, thus, they succeed in their quick adoption and application in all their operations.

Section 3. Proposed Research Methodology

For the purpose of the comprehensive and accurate research, the author has thoroughly accumulated and analysed the available literature concerning the Chinese and UK’s online shopping markets. In the view of the information heterogeneity, the decision was made to apply both primary and secondary research methods in order to receive the full picture of the markets. The investigation implies regarding the topic from the different perspectives, tracing the dynamics, trends, and changes. In the context of online shopping industry of the both countries, the study involves comparative analysis, defining and establishing the interdependencies and positive or negative correlation. In circumstances of the IT advancement, the primary research conduct presents the most relevant and accurate data source, and existing social media provide an opportunity for facilitated data collection. Moreover, the secondary information is necessary for terms of the topic research, as it enables to determine the tackled and the untouched aspects. It is important to study the issue from all sides to avoid missing of something important that can provide more insights towards the paper’s objectives.

The input data collected by the author of the research was characterized by the descriptive and numerical information, describing the market growth tendency. In this case, the online market state analysis by its nature implies the equal importance of qualitative and quantitative approach.