A Critical Literate Concerning Consumer Perception of Privacy and Security Risks for Online Shopping - Literature review Example

? A Critical Literate Review Concerning Consumer Perception of Privacy and Security Risks for Online Shopping Details: Institutional Affiliation: Date of Submission A Critical Literate Review Concerning Consumer Perception of Privacy and Security Risks for Online Shopping 1.0 Introduction The emergence of the worldwide web has no doubt provided producers and customers a great opportunity of doing business in real time and directly without the involvement of third parties. The information provided by the New Media Age (2006) indicates that the total number of internet users worldwide had long surpassed the 1 billion mark by the year 2005; a number that was only 45 million a decade earlier. Accordingly, dozens of internet-based ventures have surfaced in record numbers, forcing the hitherto conventionally operated enterprises to turn digital in order to remain relevant (Yang, 2005). By definition, electronic commerce [often called e-commerce or e-shopping] refers to buying and paying for commodities (goods and services) from the comfort of a computer connection to the worldwide web. A number of recent studies points to a largely stagnating market share of transactions over the internet with scholars questioning whether the predicted enduring ubiquity will ever become a reality (Grewal et al. 2004). The brave five-year forecasts of consulting agencies in the mid 90’s came to pass with comparatively negligible enthusiasm over the internet than earlier envisaged. Similarly, many visions of total transformation of the world to a digital village, from Being Digital to The Third Wave, all became somewhat more remote than originally planned. Nonetheless, there still exists the momentum of integrating new information and communication technology as a modern way of life across the globe, either in private life or into the business practices. Laroche, Zhilin, McDougall, and Jasmin, (2005) mentions in their piece that consumers’ adoption of online shopping would be shaped by an inevitable future demand; a transformative process that has kicked-off, but yet to pick up substantially. In as much as e-shopping offers people the convenience of real-time completion of transaction from mobile locations, internet security is no longer guaranteed (Zhou, Dai and Zhang, 2007). Scholars in the computing sphere are fully aware of the ever-emerging challenges that they need to address by offering dynamic solutions. Central to the current concerns is the ever growing creativity among the technology savvy criminals skillfully breaking the privacy codes to access clients’ information deemed confidential. Issues of privacy and security risks emanating from unsolicited e-mails to security threats of point- transactions continue to generate contentious debates in the realms of academia as well as policy conferences (Meinert et al. 2006). As the literature on online shopping experience expands, there is need to identify with the underpinnings of the shopping phenomenon and why then new experience seems sluggish in picking up in an era of pervasive technology. This paper endeavors to analyze decisively the current literature on online shopping with regard to consumer perception of privacy and security risks associated with the new trend. 2.0 Insights from the Current literature A large body of researchers has emerged communicating the criteria that consumers adopt when choosing to either to shop online or not. Lee and Tan (2003) hypothesized that consumers do choose to shop online or physically in a store depending on their perception of utility afforded from the purchases while minimizing their exposure to risks. Alba, et al. (1997) argues that consumers’ attraction to the alternative retail arrangements is largely determined by the number of existing alternatives, their [consumers’] capacity to scrutinize the alternatives, the availability and authenticity of information availed for a convincing comparison, credentials of the organizations involved and the external [the extra] benefits attached. According to Ward (2001), the key component of a consumer’s final decisions regarding online shopping falls back to the expected transaction costs: whichever is minimal. Ward’s observation is echoed by Kaufman and Lindquist (2002) noting that while the perceive convenience afforded by the new transaction mode is clearly an intrinsic motivator for online shoppers, the associated costs [security risks and privacy inclusive] remain indispensable in their decision to go online. To be sure, getting to understand the key factors in customer satisfaction and the subsequent purchase intentions for e-shopping is vital to ensuring the success of online marketing, particular for the online mall managers. Researchers in this field argue that e-shopping is but a complex, sub-process undertaking that not only involves cross navigation for credible information, but also one incorporating virtual customer interactions before a final transaction occurs (Van Riel et al.2001). However, it is rather unlikely that customers do a detailed assessment while visiting the online malls, and that e-services are better perceived on an overall basis as a one-off outcome [a package]. Palmer (2000) goes ahead to enumerate a number key drivers that determines the decision to shop online such as a newly found systems of delivery, time spent shopping, product displays, and retail price information at a glance, but never fails to mention security risks involved as a major factor. As new technologies continue to revolutionize access to information and interactions around the world, quite a number of informed consumers are warming up towards intensive use of the worldwide web to cut down on costs and effectively manage time available to them (McNeill and Chapman, 2005). Indeed, the internet is offering obvious capabilities, which not only include fast information gathering and the subsequent product purchasing, but also does help in rendering very sophisticated but essential services such as medical treatments available in real time of need. That the advanced usage of the internet and the associated technology has taken off in earnest beyond the old-fashioned methods of doing business for the 21st century consumer is but a foregone conclusion. Indeed, the traditional offline shopping methods such as the physical search of information are fast being alleviated, thus untying a considerable amount of time hitherto used for shopping alone to other valuable programs (Cheung, Chan, and Limayem, 2005). Perfect information about product prices, which has long been an issue in economics, is almost getting resolved. Diverse physical visits to the numerous stores, reliance on pamphlets, magazines, and newspapers for product information is becoming outdated as shoppers are able to retrieve and explore information availed to them through the internet within seconds (Hoffman, and Novak, 2005). Though the allure of the intrinsic value in e-shopping seems overwhelming, the burden of perceived risks is unshakable in the understanding of the consumer e-shopping behavior (Akour, et al. 2006). In particular, two types of associated risks have been identified in the domain of internet shopping namely: product or service quality risk and financial risk. Product quality risk on one hand focuses on the nature of the product itself, which ultimately influences the customers’ belief about the product usability in relation to the expectations. Financial risk on the other hand concentrates majorly on the safety of the Internet as a purchasing medium for online shoppers (Zviran, 2008). These financial concerns involve the safety of transactions as to whether there are credible reasons to believe that the risks of losing huge sums of cash being lost through credit card fraud is real (Whitten and Bentley, 2007). Bakke, Faley, Brandyberry, and Troutt, (2005) contextualizes the above mentioned risks into four dimensions. First, financial risks include the loss of funds related either to poor buying decisions, the possibility of non-receipt of products fully or as ordered and the near impossibility of returning products should they be found defective in terms of quality. Secondly, there is the possibility of a personal risk where the consumers may get harmed either by a product substitute contrary to the customers’ wishful thoughts or by the online shopping process itself [through code breakage into personal accounts]. Weinberg, Parise, and Guinan (2007) concurs that individuals tend to shy away from online purchases because of the perceived payment risks involved in e-shopping. Thirdly, there is privacy risk, related to the degree to which consumers sacrifice their confidential information to seal the transactions processes. Finally, there is the performance risk pertaining to the perception of the consumer regarding a product or service failing to meet the expectations as well as the fear of getting wrong specifications. Generally, these issues relating to security, privacy, as well as a wide array of risk perceptions are important factors that genuinely combine to influence consumer e-shopping decisions (Teo and Liu, 2007). Irrespective of the safety concerns, the internet communication effect of slowly opening doors to a new era of e-world is no longer in doubt. As retailers’ incorporation of the internet into modern advertising momentum catches on, a considerable number of consumers have fallen to the persuasion and now use the internet for a number of activities that include but not limited to carrying out personal research, doing online banking, communicating directly to sources of interest for additional information and such like stuffs over the internet. Indeed, the additive benefit of convenience with regard to time and access to a variety of products not obtainable within the consumers’ geographic reach is another motivational effect that adds the impetus to internet usage (Cheung and Lee, 2006). Furthermore, consumers are now more able to access their products selection points not only from their stationary computers, but also from advanced electronic gadgets such as mobile phones (Hair, et al., 2006). It is estimated that approximately over 50 percent of internet users the world over have made an online purchase at least once (George, 2004). Nevertheless, consumers are seizing the foregoing advantages but with a rare caution never witnessed in the history of shopping (Guriting, and Ndubisi, 2006). MasterCard security codes and other banking codes used in online purchases are much more guarded that the traditional money purses that are easily openable in physical stores without the preoccupation of losing personal hard earned cash. Whereas the number of clients who have made their purchases via the worldwide web at some point may be more than 50 percent, there does exist to a great disparity between the recorded number of website visits and the actual number of people making purchases online. Indeed, various organisations have achieved the rare objective of attracting traffic [in millions] to their well fashioned websites. However, only a handful (about 3 percent) of the visits does materialize into actual online purchases (MIAC, 2006). Forsythe and Shi (2003) point out that majority of the visitors are just but window-shoppers with an unsubstitutable preference for the traditional, offline shopping channel. Noteworthy, it is critical for businesses with the intentions to venture into the online market to broadly understand their consumers’ perceptive factors that govern shopping decisions online. Through such understanding, retailers can better equip themselves with useful information geared towards serving their patrons in either of the shopping avenues. 3.0 Reasons for the Preference of the Traditional Shopping channel 3.1 Sensory Needs Quite a number of reasons stand out as to why the new e-shopping experience has massively failed to dislodge the traditional physical shopping model. Product tangibility and ability to verify specifications beyond doubt remains a key factor in consumer shopping decisions (Cho, 2004). More importantly, shoppers are more persuaded to buy through the certainty of sensory needs of touch, smell, or taste before making up their minds to seal a purchase transaction. Even though the visual-imaging of products online are extensively persuasive, customers’ sight needs and curiosity often remain oddly unfulfilled. In spite of the precautionary exploration into the quality of goods or services offered online as well as the vending companies involved, a minimum level of risk attached to the genuineness of the goods/services on offer cannot just be wished away very easily. Hacking into personal, confidential information hugely weighs in to the final consumer decision to shop online (Huang, Schrank, and Dubinsky, 2004). As with every rational decision maker, consumers are much better off with offline transactions, particularly those that involve higher level of commitments and huge monetary figures. For motor vehicles, houses, computer orders and services with intangible sensory needs, unless the veracity of organizations involved are authenticated, dealing in them online is still a risky affair as ever. 3.2 Privacy spillover Approximately 59 percent of online companies report at least one case of security breach each year (Atchariyachanvanich and Okada, 2006). It is not lost to any curious observer, keen or not, that with a percentage of 59 recording breach of confidentiality ethics, at least a quarter of that number [may be less, may be more-whichever inclination] get away with valuable information. No wonder therefore that consumers put very little trust in online merchants. An online survey of 9700 conducted by Belanger, Hiller, and Smith (2002) confirms the above position; 40 percent of the respondents in the survey disapproved of online transactions on security grounds. It has been shown beyond reasonable that e-shoppers are primarily concerned about possible threats from credit card hackers. Seemingly, the current systems designed to protect online transactions from attacks is not sufficiently satisfying. 3.3 Product Delivery Concerns A critical examination risk perceptions further indicates that consumers are very much wary of certain undesirable outcomes and uncertainty that surrounds the delivery of their purchases (Choi and Lee, 2003). Consumers are therefore, less likely to use online shopping channel to make their purchases if they perceive a higher percentage of risks of delivery, which in itself constitutes a legitimate precautionary measure especially when large sums of money is involved. Physical traditional shopping, herein referred to as offline shopping, are not hindered by the huge online perceptions of delivery risks. Indeed, offline shopping settings are better placed to provide some of the immediate fulfillments and sensory perceptions lacking in online shopping experiences. Retailers are finding out that some consumers preference of the offline shopping setting is still dictated very much by the ability to feel the immediate benefits of purchases rather than having to agonize about the quality of a product or service as they wait for satisfaction through delivery by mail. Indeed, the wait can be long; an additive that increases the level of perceived risks involved in an online transaction and consequently affects a consumer’s decision to use the process once again (Cho, 2004). 3.4 Technical Assistance Assistance provided when doing personal physical shopping by the ever-available personnel together with immediate switching of rights to a product or service lowers the risks of fraud and theft, thus making the offline setting absolutely desirable. Personal interaction with the business personnel to tackle immediate consumer concerns is often limited in e-shopping experiences. 3.5 Past Experiences The perceived risk associated with buying a company’s product online can be influenced by previous encounters. Past personal experiences have the capacity to shift radically a customers’ decisions to complete purchases online (Dillon and Reif, 2004). Negative online purchasing experiences often amplify the level of risk perceptions by consumers and can consequently hinder not only a business’s prospects of retaining its esteemed customers but can also make it more difficult for other upcoming online businesses to gain initial customers (Boyer and Hult, 2005). 4.0 Conclusion The foregoing facts calls for a concerted legislative effort targeted at electronic commerce to effectively shield consumers from fraudsters posing as retailers while actually selling nothing. 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