In a world engulfed in consumerism fuelled by capitalistic social and economic policies, the act of overbuying is not something quaint. Instead, a person who has never heard of it or of mediums that usually perpetuate such lavishness, an example being festive sales, is the real odd one out. In face of an ever-changing world, the expectation for humans to adapt to the current environment is evident. Adjustments and thus subsequent applications in better technologies, mechanics, education, policies, mediums and even ideologies that align with the current trend or better, upcoming trend, is the only way to survive. In the context of a modern global retail industry aiming to attract customers who are now exposed to more advancements in technology than ever before since the start of the 21st century, establishing a successful online platform for facilitating business is the key to monopolizing the competitive commerce sector. The foundation of a legitimately feasible online shopping website (or e-commerce website) includes the ability to redefine the virtuality of online shopping into attributes akin to brick-and-mortar shopping. One of the most prominent examples is online festive sales, in which its aim is no different from physical festive sales organised by retailers themselves: to stimulate limitless amounts of consumer spending. This article aims to provide an in-depth perspective of firms and consumers towards online festive sales, hence the actions of both entities amidst the event in the name of profit and consumerism will be explained. That being said, it is also important to define certain terminologies used in this article and understand the differences between both physical and online shopping beforehand, in the context of a user’s perception.   

Physical vs Online

Merriam-Webster defines e-commerce as “commerce conducted via the Internet”. Popular e-commerce platforms include giants such as Amazon, Taobao, eBay as well as Malaysia’s local platform, Mudah. When it comes to e-commerce, there are a lot of misconceptions towards the popularity among consumers and the blanket viability for businesses. In this section, we will assess the common notion that online shopping, or e-commerce, is widely preferred by consumers.

With the boom that we are seeing in the business of online shopping platforms, it is not surprising that some people assume online platforms are favoured by consumers. However, this is not necessarily the case. A survey conducted by TimeTrade with a sample size of more than 1000 consumers resulted in some interesting findings. It is discovered that 70% of consumers are more willing to shop at a brick-and-mortar Amazon store rather than on Amazon.com. Why might this be? A number of factors can contribute to this specific consumer preference and one of them could be that customers want to have assurance of the goods’ physical quality. Besides that, receiving assistance from well-informed sales representatives can also be a contributing element. The survey had also revealed that 90% of consumers are more likely to buy a product when they are attended to by a knowledgeable sales associate and this supports the second possible contributing factor.

There is a general mistrust by the public towards online platforms as online shopping possesses a higher risk in comparison to traditional shopping. The risks that exist in online shopping are definitely not absent in regular shopping but the element of risk is still greater. When shopping online, consumers may be skeptical of the quality of goods, thus resulting in a higher percentage of low end goods purchases made online rather than offline. In addition, another concern that should be taken into account is the span of accountability of the seller. As an example, there is a common perception that if there are complications with the use of a product or service acquired at a regular store, one can simply return to the store and request the seller for a refund or an exchange right there and then. Additionally, there are also risks associated with product shipments. Goods transported by all means could suffer physical damage or go missing during their shipment period. On top of the additional risks faced by consumers when shopping online, there is a higher amount of cost involved as well which includes shipping fees, transaction fees for online payment and opportunity cost. All the expenditures incurred are then totalled up into one large sum of money.

Considering what had been described about consumer preferences and behaviors towards online and offline shopping, one should not have an unreasonably negative perception of online shopping. Online shopping platforms do have more to offer in variety compared to traditional shopping and it is clear that there is an opportunity to shop from millions of stores worldwide while only lying in bed. However, it all comes down to the shopping preference of each and every customer. No matter where people choose to shop for their needs and wants, everyone loves a good old shopping session, especially during the sales season. In accordance to that, it is also beneficial to explore the psychological factors contributing to consumer behavior during a sales event.

Sellers’ Perspective

With the advancement of Internet technology since the last decade, E-commerce had gained tremendous popularity across the globe and thus led to numerous companies venturing their business towards the online platform. As mentioned earlier, online festival sales and also physical festive sales are nothing more than a strategy to entice consumers into spending limitless amounts of money on items during that period. “Cyber Monday” and “11.11” are among the popular online festivals that were created as part of a marketing technique by e-commerce companies to boost online sales by giving consumers tempting and irresistible spending incentives. Among the approaches taken by these companies which influences consumers to spend money during the sales period include offering mass discounts, making announcements of the promotional period via advertisements as well as giving out free gifts upon achieving certain spending targets. The methods of approach taken by the e-commerce companies during the online festive sales are basically well-designed marketing strategies formed based on statistical data collected throughout a specific period. Information collected usually comes in distinct forms such as product recommendations according to customers’ preference and current level of price competition in the market. The approaches taken in order to make products appealing to consumers can clearly be seen in large established e-commerce companies such as Taobao, Tmall, Amazon and eBay, where their principal aim towards online festive sales is to maximize profit as well as to prolong their market standing by ensuring customer loyalty towards their product or service.

Although maximizing profit may seem to be the main objective for most companies during online festive sales, other companies of different industries or smaller-sized companies may not have a similar ways of approach or objective as to that of large established companies. A smaller-sized company such as a startup company may view the online festive sales period as a golden opportunity for them to promote their product or brand and to raise their position in the market. For example, Lazada Group – a privately-owned German e-commerce company founded in 2011 with their e-commerce business mainly focusing on Southeast Asia – has been able to establish itself as one of the largest e-commerce businesses in Southeast Asia today. Lazada Group’s secret to success is by offering competitive prices for its products throughout the years, especially during the season of online festive sales in which the company have been actively participating in. Just by forming partnerships with various companies in their respective regions, Lazada is able to secure the lowest possible cost and subsequently, the prices of the products they offer. Lazada Group’s marketing strategy for business expansion proved to be a success due to its tremendous growth over the years, overtaking local leading online retailers such as Lelong. The company’s impressive market performance as of year 2017 had even influenced the world’s leading online retailer, Alibaba to increase its investment in Lazada Group totaling up to $2 billion to aid in its future growth and further development.   

Buyers’ Perspective

Next, we shall now delve into the perspective of consumers towards spending amidst online festive sales. At this current modern age of time, it is not surprising that most people are willing to spend a significant portion of their hard-earned income for such occasions. This fact is especially proven during the 11.11 global shopping festival launched by Alibaba Group in 2017 through the e-commerce website TaoBao, where it is reported that Alibaba had earned an approximate 25.3 billion USD in gross market value on that single day alone, with a record of 325,000 transaction orders per second at peak (Alizila, 2017). Further data on this event indicated that consumers do not fundamentally care about the shopping service’s origins but rather the resulting shopping satisfaction, as stated that the shopping festival has provided service spanning across 225 countries, with countries like Japan, United States, Australia, Germany, Russia, Hong Kong and South Korea as the festival’s biggest buyers and sellers (Alizila, 2017). Within our national borders, Lazada Malaysia has broken a new sales record on 11.11 amidst its one month-long Online Revolution campaign, with sales generating more than RM100 million of gross merchandise value (The Star Online, 2017). The supposed epitome of the campaign’s 11.11 success was later exceeded by its 12.12 grand finale sale, with sales of over RM 1 billion (Bernama, 2017). Its Chief Executive Officer, Hans-Peter Ressel (2017) said that such record-breaking performances showcase “the growing trust and relevancy of e-commerce in Malaysia.”

Though it is evident that online festive sales drive the consumerism craze out of customers, it is also imperative to know why and how such special occasions are highly effective in doing so. One big key to the answers lies within the psychology of consumers themselves. Most consumers will always have the “I must get something but at the least cost because I deserve it” mindset that when conceptualised in the context of e-shopping, results in people rushing into e-commerce websites securing endless transactions of goods during festive sales because again, why not? It is very hard to negate the alluring bargain that one could get the same product or service at half or even less than the price than it is supposedly valued to be. Consumers are also inevitably the subjects of the illusion that the more undervalued goods they buy, the more worthy their actions are without realising that they never needed them in the first place. Social psychology also plays a significant role in the craze of overspending, where one follows the actions of a crowd upon listening to friends, relatives and even parents echoing just how well-off they were from buying undervalued goods. This social phenomenon creates an environmental cue that makes consumers feel that they are getting a good deal out of it (Pappas, 2010).

Speaking of environmental cues, it is important to understand that consumers are significantly vulnerable to its manipulation and how it influences the perception of attractiveness towards online festive sales. One example being the physical attractiveness of e-commerce websites at first glance. By nature, online shopping environments have vast exploration potential with interactive, vivid and large amounts of information provided in both verbal and sensory form (Demangeot & Broderick, 2007). This is displayed through the visual attractiveness of website pages such as icons, festive oriented layouts as well as high definition photos and videos of products which convey the true feeling of shopping. Moreover, most customers are engrossed in exploring the interesting and “feel good” features of e-commerce websites like user-generated reviews, special offers, free giveaways, frequently asked questions, advanced payment options, hyperlinks to additional product information, etc. This creates a sense of shopping satisfaction among consumers because there is the perceived ability of e-commerce websites in facilitating consumer orientation, navigation and task accomplishment. (Demangeot & Broderick, 2007) Another environmental cue is the “limited-time-only” or discount quota nature of online-shopping websites that triggers an innate fear of scarcity which further drives people to keep buying (Pappas, 2010). Under such conditions, it is difficult to not buy a single thing before finally exiting a website ahead of coming across another website that having its own festive sale.

Conclusion

There are various factors influencing both sellers’ and buyers’ behavior during festive sales events be it online or offline. Sellers can view festive sales as an opportunity to offload the maximum amount goods and/or view them as an opportunity for rebranding. Consumers, in this scenario, are the less informed ones, the victims of market targeting. They are subject to carefully devised psychological cues that trigger unreasonable shopping behavior. Often, consumers are driven by fear of losing out on the opportunity of shopping during sales, resulting in them buying goods they do not necessarily need in the first place. However, this does not mean that participating in festive sales is bad for you and that you should avoid them at all costs. It simply means that you should hold on to your main objective during sales. The key to refrain yourself from being highly influenced by marketing strategies is to first be aware of them. Ask yourself if you really need a particular product and if you would really buy it even if it is not on sale. Happy shopping!

 

References

Demangeot, C and Broderick, A J (2007) “Conceptualising Consumer Behaviour in Online Shopping Environments”, International Journal of Retail & Distribution Management , Vol.35 No 11, pp. 878-894

ALIZILIA. (2017). BY THE NUMBERS: 2017 11.11 GLOBAL SHOPPING FESTIVAL. [online] Available at:

http://www.alizila.com/infographic-2017-11-11-global-shopping-festival-numbers/ [Accessed 14 Jan. 2018].

Mahpar, H. (2017). Lazada Malaysia smashes sales record on Nov 11. [online] The Star Online. Available at:

https://www.thestar.com.my/business/business-news/2017/11/13/lazada-malaysia-smashes-sales-record-on-nov-11/ [Accessed 14 Jan. 2018].

NST Online. (2017). Lazada’s 12.12 sales rakes in US$250m. [online] Available at:

https://www.nst.com.my/business/2017/12/316142/lazadas-1212-sales-rakes-us250m [Accessed 14 Jan. 2018].

Pappas, S. (2010). Black Friday Psychology: Why We Go Mad for Deals. [online] LIVE SCIENCE. Available at:

https://www.livescience.com/10290-black-friday-psychology-mad-deals.html [Accessed 14 Jan. 2018].

Timetrade (2017). Study: 85% of Consumers Prefer to Shop at Physical Stores vs. Online. [online]. Available at:

https://www.timetrade.com/about/news-events/news-item/study-85-of-consumers-prefer-to-shop-at-physical-stores-vs-online/Contributors: