Essay: Online retail systems

The globe that people live in today based upon economical, technological and social grounds with revolutionary changes mainly featuring technological advancements. Since mid-1980s the global change enabled a new settlement that allows having economic competitive structure in the commercial markets, production concepts centered with competition, qualified flexible production of goods providing immediate fulfillment of customer needs, use of technologic advancements, an integrated use of communication, transportation and financial technologies empowering new discoveries and generating solutions to existing problems. This settlement, in general terms, known as knowledge era and information society. Main philosophy lying under the concept of information society is to process information in effective, efficient and qualified manner and today, such information can be easily accessed through internet (Tüzün, 1998).
Internet platform is a computer networking system that changes the structure of societies by creating an environment where organizations can execute their marketing activities, facilitates communication and interaction of users. Other than its communicative and explorative benefits, the platform itself enables forming virtual touch points for the users, namely possible customers or business owners; an unconventional marketplace concept is formed with online business activities majorly including marketing of products or services, making sales and trading (Özyücel, 1998). Thus, it has achieved a significant breakthrough in business world as well.
The platform has been used for three main purposes to simplify online retail marketing, namely cyber retailing (Hart, 2000). Firstly, it provides a basis for an organization to communicate who they are or to promote its products or services (Bruno, 1997). It is also utilized as proactive marketing tool allowing consumers to have an easy access to organization’ s web page and user generated platforms to get information and insights on product or service which could influence their decision-making process for a particular product or service (Hazel, 1996). Besides, organizations can simply gather consumer information and preferences enabling them to target consumers in a best possible way. US vendors consider the Internet as a communicative tool for enticing new customers, new market penetration, promoting the company as a brand and improving customer loyalty (Ernst and Young, 1999). Last and most importantly, the Internet provides retailers an online marketplace which they can trade and sell their products or services physically to the customers via this alternative channel (Hoffman et al., 1996). These implications are significant, the Internet could basically change the way that customers shopping preferences and therefore transform the existing retail environment (Hart, 2000).
Being a bridge between Eastern and Western countries, Turkey best fits to Mediterranean culture in terms of its characteristics and Turkish customers’ features are differing from western and eastern cultures regarding demographics such as age and cultural values. With having a population mostly consisted of Islamic norms, since the 1960s, the country has been attempting to be a part of the European Union and meanwhile Turkey strives to fit into European economic system, norms and values. To satisfy European requirements, Turkey needs to achieve extensive cultural, economic and social modifications. Exploring opportunities in the field of technology and its implementations of this emerging country could be valuable for both academics and practitioners (Turan, 2012).
During the process of EU compliance, Turkey’s financial situation is developed expeditiously after encountering 2001 economic crisis. Turkey is one of the largest middle-income countries of the world and 17th largest economy in the globe with a gross domestic product (GDP) of $ 822.1 billion (World Bank, 2016). Having a glance at developed countries for instance, Western culture; financial standings of the countries are significantly developed and it is not a coincidence that they offer higher standards for the quality of living. This fact can be also derived from to western communities’ flexibility and adaptability of newly released technological improvements. Considering the circumstances of Turkey and its growing economy, Turkish customers promise a high potential and willingness to adopt to new developments like retail innovations as it is proposed in this research.
As of 2016, 46 million Turkish people are identified as internet users and regarding Turkey has population of 79.6 million; it can be concluded that the internet penetration rate of the nation is approximately 58%. The penetration rate of the internet is comparatively low when comparing to other Western cultures like United States, Germany, France, U.K., and Canada. These countries have the highest rates for internet penetration; almost more than 80% of the population has internet access (internetlivestats.com, 2016). However, for Turkey, the internet usage and facilities provided by the platform are expected to expand remarkably in time. The number of internet users were 25 million in 2008 according to BBC Monitoring with the penetration rate of 34.4%; compared to the recent figures, Turkey promises an excessive growth in the cyberspace in the near future.
The trends are changing rapidly among Turkish citizens; even though online shopping concept is not as diffused as it is in Western cultures yet, the number of internet users in the country has been increased significantly. According to the research conducted with the age group of 16-74, computer and internet usage among Turkish people resulted as 54.8% and 55.9% respectively (TUIK, 2015). These figures ensure online retailing companies that they will have the ability to reach more than half of the population through internet to promote their brands and serve their products online.
Online retailing is a concept where the retailer and customers interact via electronic networking and this model facilitates customers’ accessibility to the information and variety of goods and services (Levy & Weitz, 2001:79–80). Compared to the traditional retailing, online retailing concept poses a threat in terms of market competitiveness as technology and new applications are released to the market (Kalakota & Whinston, 1997: 221).
The role of the internet is now tailored to bring retailers and customers all together to generate an interactive communication in-between them and as a consequence, both retailers and customers gain significant leverage than they ever had before. Retailers access to the global markets are significantly facilitated; they can easily reach broad spectrum of consumers. Besides, the new communication opportunities that arise from the existence internet networking allow retailers to position their brands clearly and have product diversification at the same time (Doherty, Chadwick & Hart, 1999: 23). Furthermore, this platform offers customers a great chance to buy products of their choice, provides detailed information on any product or service and allow them to compare similar products prior to their purchase decision. Accordingly, cost of decision making process for online shoppers are remarkably reduced (Park & Kim, 2003: 18).
Turkish customers more often use internet for information search (Ventura, 2002), staying connected with their communities, playing games, downloading documents and lastly for shopping (Aydin, 2001). Young generation and more educated portion of the population purchase goods online relatively more than the other classes. Still, they perceive some risks associated with security and privacy issues (Saydan, 2008). Another risk associated with online shopping is unpleasant experience caused by the delivery of the service; every one of four online shoppers encountered various problems with their shopping experience; 47% of them complaint about delivery delays, of these Turkish customers almost half of them received wrong or damaged products or undesirable service (TUIK, 2015).
Regarding the behavioral patterns that are evolved by cultural norms, a former study on the subject examined Turkish and Jordanian customers. Internet users in Turkey show less favorable approach to shop online and have less enthusiasm to purchase things online compared to the Jordanian (Stafford, 2004) consisted of a population of 6.6 million of which 86.1% of the people are internet users (internetworldstats.com, 2015). Contradicting to prior studies, it is empirically proved that Jordanian customers’ behavioral intentions to shop online is not affected by perceived risks at all (Faqih, 2011).
In another study, Turkish and American customers are compared in the subject, there are some significant differences in online shopping habits and preferences of both cultures. Turkish customers are more likely to be anxious about security and privacy that are associated with technology issues. Yet, infrastructure of technology in the country is insufficient in contrast to those in Western nations (Lighter et al, 2002). Thus, it is no coincidence that Turkish internet users stated their concerns about privacy and security at the platform which might limit the faster growth and penetration rate of the internet. Turkish people are more risk intimidated (Hofstede, 1980) since the online shopping concept is a new phenomenon for many of them.
Kücük and Arslan (2000) previously employed technology acceptance model framework in order to identify and compare socio-psychological influences of Turkish, Danish and British customers within the online shopping context. As an outcome of the study, it is discovered that there are significant differences among these three cultures; similar to Lighter’s conclusion, technology infrastructure is found underdeveloped in Turkey and accordingly, online shopping activity is not that appealing to Turkish consumers as compared to all other benchmarks studied. Besides, among 30 OECD member countries, Turkey has the highest internet subscription fees for megabit per second (OECD, 2010). Therefore, due to the insufficient infrastructure for technology and the highest fees paid for internet access made Turkish customers perceive technological innovations less satisfactory. Still, contrary to British and Danish, Turkish people did not agree that the internet is a way to save money and time. Consequently, online shopping culture is not as spread as conventional retail stores in the country (Kucuk and Arslan, 2000). Yet, Turkish online shoppers are rapidly increasing in the last couple of years; in 2009, only 11.8% of the population went online to order goods (TUIK, 2009) and today, 33.1% of the population click and get their orders online (TUIK, 2015).
Self-service technologies are defined as technological interface enabling individuals to utilize a service independently from a direct service provided by an employee (Meuter et al., 2000). Enhancing customers’ experience, reducing operational costs arising from employee related expenses and keeping up with the technological advancements are essential features that encouraging retailers to employ self-service technologies (Orel and Kara, 2014). Self-service technologies have been used worldwide to provide a range of services including online shopping, ATMs, hotel checkout kiosks, grocery self-checkout tills and at gas stations in some countries. Yet in Turkey, it has been dominantly used at banking services(ATMs) and for online meal ordering (yemeksepeti.com).
Self service technologies allow retailers to have interaction with their customers in a standardized way (Hsieh et al., 2004) and therefore, increased productivity and efficiency are targeted to be achieved by companies (Walker et al., 2002). Also, consumers are being offered to access to services via new and convenient channels (Meuter et al., 2003). Furthermore, by allowing companies to handle customer demands promptly owing to speed of service delivery and customers’ contribution as co-creation of the transaction process (Curran, 2003).
The technology requires active participation of customers in the creation process of the services by it’s nature. In other terms, the system allows customers to be a part of co-creation of a service with minimum or no interaction with retailer’s employees (Meuter et al., 2000). Customer engagement, knowledge, skills and behavior have a massive effect on the success of the service delivery. The literature clearly indicates that the success of a service is directly linked with customer satisfaction (Brady and Robertson, 2001; Akbar and Parvez, 2009) and customer loyalty (Cronin and Taylor, 1992; Orel and Kaya, 2014). For instance, long waiting times may affect customers’ satisfaction in an adverse way; consequently, this condition weakens customer loyalty and the organization may end up with losing existing customers. Therefore, companies may fail to provide a satisfactory service in the long term.
Enhanced service perception can be generated through retail innovations; a customer can easily complete the transaction in a quicker and more convenient way (Anitsal and Flint, 2006; Lin and Hsieh, 2006). In the retailing industry, self-checkout systems offer reduced employee and training costs for companies (Dabholkar et al., 2003). Usually, one employee can assist four to six self-checkout lanes and as a consequence, retailer can gain competitive advantage by improving its use of labor. Furthermore, customers are assumed to be benefited from the reduced checkout times and quick service with a privacy due to the elimination of retail assistants (Hsieh, 2005).
On the other hand, it is also argued by some researchers that self-service concept with no or minimal personal interaction may have an adverse impact on customer’s loyalty since the essential social bonding is uninvolved during the transaction; supporters of this opposing view suggests that customer loyalty is maintained by generating personal relationships between customers and employees (Selnes and Hansen, 2001). Paralleling to the finding, Beatson et al. (2007) claim that self scanning may cause a potential negative effect on customer satisfaction which possibly causes lack in customer commitment. Due to the issue, some grocery retailers such like Albertson’s in the US removed the existing self-service checkouts in stores in order to enhance personal interaction with customers (Gasparro, 2011; kioskmarketplace.com, 2014).
Superiority of a service that are accompanied with the offerings provided by a particular company to its customers determines the customer perceived service quality (Parasuraman et al., 1988). Up until now, academics have been conducting numerous studies in order to establish specific metrics to identify service quality of enterprises perceived by consumers (Gronroos, 1983; Parasuraman et al., 1985;). Among all the research, Yang et al., (2004) proposed several scales to measure the quality of service provided by self-service technologies. Reliability, responsiveness, competence, ease of use, security, and product portfolio are the specific dimensions identifying the perceived service quality (Yang et al., 2004).
The “reliability” concept is build upon four factors; accuracy of online transactions, accurate records, correct performance and fulfillment of promises. Quick response to customer requests, resolving customer problems in a best possible way and providing prompt services are drivers associated with “responsiveness”. Employee ability to respond customer requests, their problem solving abilities and compliance with customers need refers to “competence” (Yang et al., 2004). Well-organized online catalogs, brief contents, and convenience to complete a transaction that requires a moderate effort defines “ease of use” (Jun et al., 2004). “Security” incorporates with the degree of the risk perceived when being served, protection of personal information and customers’ secure feelings during online transactions. Last but not least, variety of product and service offerings, diverse features and most importantly, online service functions provided by a company signifies “product portfolio” (Yang et al., 2004). These dimensions have a massive impact on customer’s willingness to utilize self checkout technologies which may also cause a negative effect on customer loyalty when there exists a lack in any of the six factors mentioned above(?).
Founded in 1954, Migros Ticaret A.S. is one of the leading retailer among all grocery chains in Turkey. As of 2009, the company released a breakthrough technology called “Migros Jet” to 12 stores at which customers can scan, pack and pay for their baskets on their own. The company claims that this self-service technology is implemented after having in depth analysis of banking systems(ATMs) interface and patterns of Turkish customers’ behavior. The intention for the practice is claimed as “pushing the bar beyond customers’ expectations and ease their lives with newest technologies” by the top management of the company (hurriyet.com.tr, 2009).
The self-service machines known as Migros Jet had governed 15% of all transactions when it was first released. Having a look at company’s reports after implementation, it can be also concluded that this system reduces waiting time spent at checkout tills by 35% and accordingly, the company decided to increase the number of stores with self checkout technology and now, Migros Jet operates in 154 stores spread all over the country (migroskurumsal.com, 2009). Unfortunately, one can observe that customers still queue in front of the conventional tills and wait to get their transaction done while there are couple of self checkout machines available to use; therefore, it can be concluded that this application has not bring a complete success to the company yet (Bekoglu and Ergen, 2016).
Migros Jet’s attempt showed that customers usually prefer using self checkout services when the cashier desks are overcrowded. On the other hand, according to the interview conducted with a single sample during the same research implies that difficulty of use, possible tardiness of the system, high risk of making a mistake and lack of service attendants at self checkouts as customer struggles to execute scanning or making their payments build up the reasons why customers beware of using these machines. Nonetheless, it is mentioned that if a customer holds few items in the basket, he or she would prefer to use this service to prevent long waiting times (migroskurumsal.com, 2009).
Elliot et al. (2008) examined the technology readiness and the likelihood to use self-service technology of Chinese and American customers. Remarkable findings are obtained by comparing both cultures’ attitudes towards the self-service concept; American customers appear to have higher degree of willingness to use self-service technologies at retail environments where the Chinese have concerns about their identity protection associated with discomfort and insecurity factors (Hofstede, 2001). Alternatively, potential benefits of technology such as saving time, access to information, reducing transaction costs could encourage the Chinese to consider employing the latest technology (Elliot et al., 2008). On the other hand, the Americans appear to trust in technology since they believe that technology can give them more control over their lives (Parasuraman, 2000). It is also asserted that the hedonic aspects in technology-integrated retail settings are significantly important; it is regarded as another potential benefit derived from pleasant feeling (Bauer et al., 2006). Regarding the fact that both Turkey and China is classified as non-Western and traditional cultures, customers in both nations are expected to have some specific similarities (usa.chinadaily.com.cn, 2012).
It is essential to have a solid foundation on retail innovations and understanding of the Turkish in order to build future research. In this study, based upon the literature reviewed and the previous discussions brought, the six service quality identifiers proposed by Yang et al. (2004) are employed to determine the factors that are influencing Turkish customers’ adaptation of retail innovations.