The Internet has created a completely new way of interacting and transacting with consumers. Customers are also adopting Web technologies and the Internet at an unprecedented rate. In order to garner a share of the online marketplace, both traditional retail firms as well as pure Internet firms are rapidly implementing a diverse set of strategies to capture the attention of online consumers. The growth of online commerce is simply astonishing. The Census Bureau of the Department of Commerce (2003) reported an increase of over 27.8% in retail e-commerce sales in the second quarter of 2003 from the second quarter of 2002 and an increase of 11.2 % in total retail e-commerce sales from the prior quarter of 2003. An estimate by Forrester Research (2003) expects online retail sales to grow at a steady 19% year-over-year rate from 2003 to 2008. It also predicts that nearly 5 million new US households will shop online in each of the next five years, totaling 63 million US online shopping households in 2008.
In addition to businesses, there has been a rapid adoption of the Internet by consumers for various purposes. For example, a study by the Georgia Institute of Technology (Kehoe et al., 1998) reported that about 40% of the respondents indicated shopping as their primary use of the Web. Another study by Ernst & Young (1998) found that over 39 million individuals shopped online in 1998, with more than 50% of them spending US$500 or more on their online purchases. A more recent study by eMarketer (2002) stated that online shopping expenditures in the USA are going to increase 15% from 2002 to 2003 and 12% from 2003 to 2004.
In an effort to garner a share of this growing online market, many traditional firms as well as dot.com firms are evaluating different ways to improve their Web presence and succeed in their online initiatives. However, despite their efforts, online sales still represent only a tiny fraction of total retail sales. The Census Bureau of the Department of E-commerce (2003) reported that e-commerce retail sales accounted for only 1.5% of total sales in the first and second quarter of 2003. Surveys have identified significant hurdles in luring consumers to make online purchases. For example, a study by Creative Good, Inc. found that 43% of online purchase attempts failed because consumers either had trouble finding products in the firm’s Web site, or the electronic checkout process made the purchase too difficult to complete (Verton, 2000). Moreover, in another survey conducted by AT Kearney, 52% of survey respondents reported that they did not complete an online purchase due to the huge amount of information they were asked to provide. In addition, it was found that four of five consumers abandon attempts to purchase products online due to poor Web site design and functionality (Calkins et al., 2000).
The success of companies such as Dell computers, Amazon.com and Ebay, and failure of many others in online commerce serves as a wake-up call for other firms trying to engage in online retailing. How to win consumers online is a question weighing heavily in the minds of several executives today. Since the Web site forms the primary medium for interacting with consumers and enacting all marketing and selling transactions, effective Web site design has come to the forefront of attention. In this chapter, we focus on the key features that potentially differentiate effective, winning Web sites from ineffective ones.
In order to understand the issues involved in designing effective Web sites, we take a dual approach. First, taking a consumer perspective, we examine what consumers look for in online retail sites and what features they feel are important in retail sites. Second, taking a business viewpoint, we examine the best selling Web sites and investigate the key features they have incorporated in their Web sites. The collective wisdom gained from these two approaches should provide some insights into effective retail Web site design for other businesses as well as for scholars.
In subsequent sections, we summarize the results from two independent research studies that have focused on Web site design from consumer and business perspectives. The first study examines the key characteristics of business-to-consumer (B2C) Web sites as perceived by online consumers. The second one explores the top retail Web sites and identifies the more influencing characteristics of the Web sites on online retail sales. From these two studies, we analyze the common features that make a successful Web site as well as their relative importance as perceived by online consumers and as shown by their impact on online sales. Along with this, we examine the gaps between current Web site practices and the online consumer expectations. Based on these analyses, we conclude the chapter by providing some prescriptive suggestions for designing an effective online B2C Web site.