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Investing in Online Retail – Understanding Consumer Trust

There was once a time where, if you wanted to invest in retail, you either bought a physical retail store or funded one. While many consider this to be a pre-internet era, it’s important to note that even as the Internet gained traction and online shopping became popular, it was still a viable option for investment.

The real change in consumer behavior has only occurred recently, where, in the presence of tighter personal budgets, consumers began wavering on their once solid requirement to see and interact with the items they purchase.

Previously, consumers were only content to purchase items on the internet after a visit to a physical store to inspect the goods themselves, or to seek out somebody with the same item for them to interact with.

Consumers have now replaced the necessity to visit a store before purchasing with trust in online retailers that the product will be as described. You only have to browse the Groupon Coupons page for a store like Coldwater Creek to find that their sales are thriving as a result of this consumer confidence. And this is only one example. Many other online-only retailers are seeing significant growth and return on investment in the field.

There’s always a catch, however. Consumer trust doesn’t come easy. When investing in online retail, it’s the customer-facing policies which can determine their success. Limiting refunds, refusing to pay for return shipping, and air-brushed product photos are the easiest ways for an online retail offering to fail.

If customers feel that they will be in a bad position should their items not arrive and match their expectations, they will simply move on. While this may seem unfair to a retailer, it is something which has come to fall under the age-old saying of being ‘the cost of doing business’.

If you are considering an investment in retail, look closely at the day-to-day operations of the intended retailer, and put yourself in the position of an everyday site user. If you wouldn’t feel comfortable purchasing from their site, it’s unlikely that you will feel comfortable investing in their service.

About Stephanie

Stephanie Rosen is a financial market analyst and a blogger. She writes about stock market and investment opportunities around the world. You can find her latest ideas on here. Just signup our news letter today and receive regular updates of Stephanie.