By Chu Junhong

THE Business Times reported that according to a MasterCard Worldwide survey, Singaporeans, relative to Australians, Japanese and Chinese, are less predisposed to online shopping despite the high Internet penetration. The main reason appears to be cultural - traditional shopping is perceived to offer more convenience and ease than online shopping. However, Singaporeans tend to gravitate towards impulse shopping more so than their Asian counterparts.

What other insights from studies on online shopping can retailers use to enhance their marketability? I studied online shopping and in particular, online grocery shopping. Grocery shopping is an interesting phenomenon because it is a frequent and repetitive activity and, therefore, can be somewhat burdensome to many individuals. Therefore, investigating how online shopping may serve to alleviate such possible burden is useful. Further, online competition tends to be localised for groceries but less so for non-groceries like PCs, books, and CDs. More local grocery companies can engage in online marketing compared to other products.

In Singapore, there are a handful of online grocery sites. Some are offered by supermarket chains such as NTUC FairPrice and Cold Storage, both of which have physical (offline) and online stores, while others have only online stores (eg, onlinegrocery and yumtrade).

Especially when there are health concerns about going out to buy groceries during the H1N1 flu or SARS infection, online grocery shopping may see a rise in demand.

Our study revealed interesting findings regarding how people shop groceries online in terms of when they shop, what they shop, and why they shop.

When they shop

Consumers are less likely to shop in an online store than in a physical grocery store on weekends than on weekdays. This is because weekends offer consumers more time. They are less time-constrained and can afford to engage in physical shopping. Also, consumers may see physical store shopping as an alternative way to spend their weekend.

Weather also influences online shopping. On days of bad weather, consumers are more likely to shop online. Although there are delivery fees associated with online purchases, they are less concerned about such fees during bad weather.

What they shop

The items bought online and offline vary. Our study showed that when consumers run short of high-expenditure grocery items, it drives them to shop online. In contrast, when consumers run short of low-expenditure grocery items, it drives them to shop at physical stores.

This is possibly because running out of less essential items is more unexpected and occurs less often. But when it does occur, consumers will usually not wait until they make a major online trip. They simply go to a nearby grocery store to refill it. Thus, consumers make large-basket 'stock-up' trips to the online store and small-basket 'fill-in' trips to the offline stores.

Perishables such as fruits, produce, and meat/fish are more likely to be bought at physical grocery stores than the online ones because freshness and physical appearance are important considerations during purchases. Consumers still want to touch, feel, and be assured that they made the right purchase when it comes to perishables. On the other hand, heavy/bulky items such as cooking oil, milk and toilet paper are more likely to be bought online than at physical stores because online shopping eliminates the burden of putting these items into the shopping cart and carrying them home.

We also observed that the shopping list for online shopping tends to be similar across visits while the list for shopping physically tends to vary from visit to visit. Possibly to facilitate online shopping, online stores offer the previous shopping list as a guide and hence, consumers seldom deviate from that list. Consumers can buy the whole basket from the previous shopping list by a simple mouse click. Hence, online shopping lists tend not to differ as much compared to physical-store shopping lists.

Why they shop

Our findings indicated that retailer promotion activities encourage store visit and increase probability of shopping, more so for physical shopping than online shopping. Promotions tend to draw consumers into physical stores to shop. However, promotions online tend to have less influence. Physical promotions seem to be more eye-catching and hence draws consumers to the stores. In contrast, online promotions are noted only when a consumer logs online. Hence, the impact of drawing consumers into a store that they would otherwise not have shopped at is more evident for physical than virtual stores. We also found that promotions of heavy/bulky items draw consumers to physical stores but do not make them spend more within the store. This is likely because physically, consumers cannot afford to buy more because of the bulk of such products. On the other hand, promotions of perishables make consumers spend more in physical stores.

Singapore is a highly-connected country. Its citizens are no stranger to technology or online games. As business costs escalate and businesses become more competitive, online shopping is likely to become more pervasive.

Dr Chu Junhong is with Department of Marketing, NUS Business School

This article was first published in The Business Times.