How is Tech Shaping Our Shopping?

By streamlining shipping.

Dr. Gregory Heim
Blue Bell Creameries Chair in Business
Department of Information and Operations Management

When you place an order online, you begin a chain reaction as impressive as any Rube Goldberg machine as people work to pull the product from a warehouse, package it, ship it and deliver it to your door. In his 30 years studying e-commerce, Dr. Gregory Heim has seen average delivery time drop from two weeks to two or three days thanks to companies like Amazon, but as these times shorten, customers’ expectations rise.

“The holy grail is almost immediate delivery,” Heim said. “The story of e-commerce is that you can have what you want, when you want it. And if it’s possible at one retailer, people expect it everywhere else.”

So how do companies keep up with the need for speed? One solution could come in a new microfulfillment system model some retailers are examining. Historically, companies have operated huge warehouse fulfillment centers located in rural areas where orders are packaged and then delivered to customers living in nearby cities. But under a microfulfillment system, a company could create a small-scale version of these warehouses in unused downtown spaces in major cities, bringing items much closer to customers and cutting delivery time.

“Companies are experimenting with many new technologies to find answers,” Heim said. “It’s a very risk-filled time because these are major investments, but eventually, they’ll find a solution.”
 

By changing how we pay.

Dr. Amalesh Sharma
Carol and G. David Van Houten, Jr. ’71 Professor
Department of Marketing

In 1994, an electronic funds transfer made history as the first payment completed online. Since then, the digital payment world has exploded as the developing e-commerce industry’s need to digitally complete purchases gave rise to faster and easier buying methods both online and in-store, including online credit card transactions, cryptocurrency, and mobile methods and digital wallets like PayPal, Venmo and Apple Pay.

“Payment technology is an integral part of current e-commerce trends,” explained Dr. Amalesh Sharma. As research director for the Center for Retailing Studies, Sharma has studied how retailers are implementing digital payment methods in brick-and-mortar stores and how these methods affect businesses, particularly in emerging markets like India. “Because consumers desire flexibility in payment methods, retailers want to accept as many forms as possible,” he said. “But many of these methods are costly, especially for small mom-and-pop stores that can’t keep pace with how e-commerce is growing.”

The ease of digital payments also presents a tradeoff to shoppers, like increased security concerns or additional fees. When paying for something digitally, Sharma recommends only inputting information that’s needed for legitimate reasons. In addition, consumers should compare online and in-store prices to ensure they’re getting a fair deal and consider benefits like points or loyalty rewards when deciding the right method for them. “Customers should seek the best benefit out of whatever payment method they use,” he said.
 

By personalizing our options.

Dr. Manjit Yadav
JCPenney Chair in Marketing and Retailing Studies
Department Head of Marketing

Before the internet, if someone wanted to learn more about the best car or appliance to purchase, their options were largely limited to asking salespeople or collecting opinions from friends and family. Then computers opened up a whole new world by putting information at shoppers’ fingertips.

“The internet empowered consumers to search for price information and availability of products,” said Dr. Manjit Yadav. “This information increases consumer welfare by letting them make better decisions and negotiate better prices.”

But there’s only so much information even the most research-dedicated shopper can sort through. Some sites help cut down the search by recommending products similar to ones you’ve viewed, but Yadav believes these will pale in comparison to a future where artificial intelligence could take what it knows about you and your preferences and scour thousands of sites to suggest products you’ll like.

But before companies embrace these technologies wholeheartedly, said Yadav, they need to consider whether customers will feel comfortable adopting these innovations. “Consumers will need to trust that companies won’t misuse their information,” he explained. “As businesses embrace these new technologies, it’s important that they pair these innovations with a deep understanding of what it means to serve customers.” If that’s done right, online shoppers can enjoy the personalized care one might expect from a friendly neighborhood shopkeeper while browsing the wide offering of information, products and pricing made possible in a connected digital world.

Shape the future of e-commerce by supporting the Center for Retailing Studies and its faculty with an endowment in their mission to train the next generation of business leaders. Contact Cassie Mahoney ’15 with Mays Business School at the bottom of this page to learn more.