Guide to Online Shopping

Online Shopping

Online shopping is a form of electronic commerce which allows consumers to directly buy goods or services from a seller. It is performed over the Internet using a web browser. It is also referred by different names, such as e-shop, e-store, Internet shop, web-shop, web-store, online store, and virtual store.

Online Shopping

Online Shopping - Image via Flickr

Electronic commerce (e-commerce)

E-Commerce is often thought simply to refer to buying and selling using the Internet; people immediately think of consumer retail purchases from companies such as Flipkart or EBay. E-commerce should be considered as all electronically mediated transactions between an organization and any third party it deals with. By this definition, non-financial transactions such as customer requests for further information would also be considered to be part of e-commerce.

The UK government used a broad definition when explaining the scope of e-commerce to industry:

E-commerce is the exchange of information across electronic networks, at any stage in the supply chain, whether within an organization, between businesses, between businesses and consumers, or between the public and private sector, whether paid or unpaid.

Consumer models of e-commerce transactions

Commercial transactions between an organization and consumers are Business-to-consumer (B2c). For Example websites like Infibeam and Snapdeal are B2C organizations.

Commercial transactions between an organization and other organizations (Inter-organizational marketing) are Business-to-business (B2B). For Example Ec21 and Emap are B2B organizations.

Informational or financial transactions between consumers, but usually mediated through a business site is Consumer-to-consumer (C2C). For Example Olx and Quikr are C2C organizations.

Payment Method

Online Shoppers has various options of payments which include both online and offline methods:

  • Credit Card
  • Debit Card
  • Internet Banking
  • Cash on delivery (C.O.D.)
  • Cheque/ Demand Draft
  • Gift cards
  • Postal money order

Credit Card

A credit card is a payment card issued to users as a system of payment. It allows the cardholder to pay for goods and services based on the holder's promise to pay for them. Credit cards allow the consumers a continuing balance of debt, subject to interest being charged. A credit card typically involves a third-party entity that pays the seller and is reimbursed by the buyer.

Many credit card companies provide option for EMI with 3 to 6 months term period. Hence credit card payment is one of the most preferred modes of payment.

Credit Card

Credit Cards - Image via Flickr

Debit Card

A debit card is a payment card that provides the cardholder electronic access to his or her bank account(s) at a financial institution. The card, where accepted, can be used instead of cash when making purchases. Payments using a debit card are immediately transferred from the cardholder's designated bank account, instead of them paying the money back at a later date.

Internet Banking

Online banking (or Internet banking or E-banking) allows customers of a financial institution to conduct financial transactions on a secure website operated by the institution.

To access a financial institution's online banking facility, a customer having personal Internet access must register with the institution for the service, and set up some password (under various names) for customer verification.

To access online banking, the customer would go to the financial institution's website, and enter the online banking facility using the customer number and password.

Net Banking

It is used by customers who have accounts enabled with Internet Banking. Instead of entering card details on the purchaser's site, in this system the payment gateway allows one to specify which bank they wish to pay from. Then the user is redirected to the bank's website, where one can authenticate oneself and then approve the payment.

Cash on delivery (COD)

Here the payment of products and/or services received is done at the time of actual delivery rather than paid-for in advance. The term is mainly applied to consumer products purchased from a third party, where payment is made to or collected by the deliverer from the recipient rather than the sender.

Cheque and demand draft

A cheque is a document that orders a payment of money from a bank account. The person writing the cheque, the drawer, usually has an account where their money was previously deposited. The drawer writes the various details including the monetary amount, date, and a payee on the cheque, and signs it, ordering their bank, known as the drawee, to pay that person or company the amount of money stated.

A demand draft is a check created by a merchant with a buyer's checking account number on it, but without the buyer's original signature. A demand draft is typically for deposit only.

Gift Card

A gift card is a restricted monetary equivalent or scrip that is issued by retailers or banks to be used as an alternative to a non-monetary gift. The recipient of the gift card can use it at his or her discretion within the restrictions set by the issuing agency.

A gift card may resemble a credit card or display a specific theme on a plastic card the size of a credit card. The card is identified by a specific number or code, not usually with an individual name, and thus could be used by anybody. They are backed by an on-line electronic system for authorization.

Gift Card

Starbucks Gift Cards - Image via Flickr

Money Order

A money order is a payment order for a pre-specified amount of money. Because it is required that the funds be prepaid for the amount shown on it, it is a more trusted method of payment than a cheque.

A money order is purchased for the amount desired. In this way it is similar to a certified cheque. The main difference is that money orders are usually limited in maximum face value to some specified figure, while certified cheques are not.


PayPal is a global e-commerce business allowing payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders.

PayPal is an acquirer, performing payment processing for online vendors, auction sites, and other commercial users, for which it charges a fee.

EMI (Equated Monthly Instalment)

EMI (Pay-in-Instalments) is a way where user pays in instalments. Buyers can pay using EMI on bank credit cards in specific monthly instalments. Here the borrowers are usually only allowed one fixed payment amount each month.

The benefit of an EMI for borrowers is that they know precisely how much money they will need to pay each month. The best form of the EMI option is where there is no interest charged on the payment. The calculation here is very simple, as the total payment is broken up into the required parts.

Advantages of online shopping


  • Online stores are usually available 24 hours a day, and many consumers have Internet access both at work and at home. In contrast, visiting a conventional retail store requires travel and must take place during business hours.
  • In the event of a problem with the item (e.g., the product was not what the consumer ordered, the product was not satisfactory), consumers are provided with facilities which eases the process of returning an item in exchange for either the correct product or a refund. Some online companies have generous return policies to compensate for the traditional advantage of physical stores.

Information and reviews

  • Online stores describe products for sale with text, photos, and multimedia files, whereas in a physical retail store, the actual product and the manufacturer's packaging will be available for direct inspection.
  • Some online stores provide or link to supplemental product information, such as instructions, safety procedures, demonstrations, or manufacturer specifications. Some provide background information, advice, or how-to guides designed to help consumers decide which product to buy.
  • Some stores even allow customers to comment or rate their items. There are also some dedicated review sites that host user reviews for different products. Reviews and even some blogs give customers the option of shopping for cheaper purchases from all over the world without having to depend on local retailers.
  • In a conventional retail store, clerks are generally available to answer questions. Some online stores have real-time chat features, but most rely on e-mails or phone calls to handle customer questions.

Price and selection

  • Advantage of shopping online is being able to quickly seek out deals for items or services provided by many different vendors.
  • Search engines, online price comparison services and discovery shopping engines can be used to look up sellers of a particular product or service.
  • Shipping costs (if applicable) reduce the price advantage of online merchandise. Majority of retailers offer free shipping on sufficiently large orders.
  • Another major advantage for retailers is the ability to rapidly switch suppliers and vendors without disrupting users' shopping experience.

Disadvantages of online shopping

Disadvantages of online shopping

Disadvantages of online shopping - Image via Flickr

Fraud and security concerns

  • Given the lack of ability to inspect merchandise before purchase, consumers are at higher risk of fraud than face-to-face transactions.
  • Merchants also risk fraudulent purchases using stolen credit cards or fraudulent repudiation of the online purchase. Secure Sockets Layer (SSL) encryption has generally solved the problem of credit card numbers being intercepted in transit between the consumer and the merchant. However, one must still trust the merchant (and employees) not to use the credit card information subsequently for their own purchases, and not to pass the information to others.
  • Also, hackers might break into a merchant's web site and steal names, addresses and credit card numbers, although the Payment Card Industry Data Security Standard is intended to minimize the impact of such breaches. Identity theft is still a concern for consumers.
  • Computer security, Phishing and Denial of service attacks are a risk for merchants, as are server and network outages.
  • Product delivery is also a main concern of online shopping. Most companies offer shipping insurance in case the product is lost or damaged.
Damaged Product

Damaged Product - Image via Flickr

Lack of full cost disclosure

  • The lack of full cost disclosure may also be problematic. While it may be easy to compare the base price of an item online, it may not be easy to see the total cost up front. Additional fees such as shipping are often not be visible until the final step in the checkout process.


  • Privacy of personal information is a significant issue for some consumers. Different legal jurisdictions have different laws concerning consumer privacy, and different levels of enforcement.
  • Many consumers wish to avoid spam and telemarketing which could result from supplying contact information to an online merchant. In response, many merchants promise to not use consumer information for these purposes, or provide a mechanism to opt-out of such contacts.

Hands-on inspection

  • Typically, only simple pictures and/or descriptions of the item are all a customer can rely on when shopping on online stores. If the customer does not have prior exposure to the item's handling qualities, they will not have a full understanding of the item they are buying.
  • However, written and video reviews are readily available from consumers who have purchased similar items in the past. These can be helpful for prospective customers but can also be based on personal preferences. Hence, reviews from other consumers may not reflect end-user satisfaction once the item has been received.

Security measures for online shopping

  • Stick with known stores, or attempt to find independent consumer reviews of their experiences; also ensure that there is comprehensive contact information on the website before using the service, and note if the retailer has enrolled in industry oversight programs such as a trust mark or a trust seal.
  • Before buying from a new company, evaluate the website by considering issues such as: the professionalism and user-friendliness of the site; whether or not the company lists a telephone number and/or street address along with e-contact information; whether a fair and reasonable refund and return policy is clearly stated; and whether there are hidden price inflators, such as excessive shipping and handling charges.
  • Secure Online Shopping

    Secure online shopping - Image via Flickr

  • Ensure that the retailer has an acceptable privacy policy posted. For example note if the retailer does not explicitly state that it will not share private information with others without consent.
  • Ensure that the vendor address is protected with SSL when entering credit card information. If it does the address on the credit card information entry screen will start with "HTTPS".
  • Use strong passwords, without personal information. Another option is a "pass phrase," which might be something along the lines: "I shop 4 good a buy!!" These are difficult to hack, and provides a variety of upper, lower, and special characters and could be site specific and easy to remember.
  • Use latest browsers for online shopping. If you’re using an older browser, you’re putting yourself at greater risk. Shop at home; don’t use public computers to enter personal information.


  • Online shopping. Retrieved from
  • Dave Chaffey (2011). E-Business and E-Commerce Management: Strategy, Implementation and Practice: Pearson

Thank you

Thank You - Image via Flickr