Consumer Attitudes towards Online Shopping - Research Paper Example

 Consumer attitudes towards online shopping Table of Contents 1.0 Introduction……………………………………………………………………………………3 2.0 Theoretical Background……………………………………………………………………….4 3.0 Literature Review………………………………………………………………………….…..4 4.0 Methodology…………………………………………………………………………………..7 5.0 Model Used……………………………………………………………………………………7 6.0 Main Discussion…………………………………………………………………………….…8 6.1 Domain specific Innovativeness………………………………………………….……9 6.2 External Environment…………………………………………………………………9 6.3 Demographics……………………………………………………………………..…10 6.4 Personal Characteristics…………………………………………………………….10 6.5 Vender/Product characteristics………………………………………………………11 6.6 Website Quality…………………………………………………………………….…13 6.7 Consumer attitudes towards internet based shopping……………………………….14 6.8 The Intention to Shop Online…………………………………………………...…….14 6.9 Decision Making on Online Shopping………………………………………..………15 7.0 Managerial Implications…………………………………………………………………..…15 8.0 Conclusion………………………………………………………………………...…………17 9.0 Reference List……………………………………………………………….……………….18 1.0 Introduction With the onset of the internet era, electronic commerce has become a very common mode of doing business. Shopping on-line has turned out to become one of the most popular internet activities after usage of e-mail services and general web browsing. E-commerce is thought to be much more popular than browsing for entertainment activity and celebrities. Online shopping attitudes or behavior refers to the whole process of buying services or products over the internet. Almost 50% of online users have made purchases using e-commerce with almost 75% of these purchasers making almost 10 purchase items annually. The more experienced users make almost twenty purchases annually while the less experienced make almost five annual purchases. The normal process of buying goods online normally consists of five common steps. When the internet user is need of a particular good or service, they go online and search for the relevant information related to this good or service. Sometimes however, the prospective buyer is attracted to information on services or products that are related to their need. They subsequently do an evaluation of the available alternatives and make a choice the item that will best serve their need. The last step is the conducting of the transaction and the offering of after sales services by the online vendor. One can say that online shopping attitude or behavior refers to the consumer’s state psychologically while conducting the process of making an online purchase. Online shopping started becoming popular in the 1990s with the onset of the World Wide Web (WWW).The following years also witnessed an increase in studies that aim to understand the behavior of online consumers. 2.0 Theoretical Background Known theories have been used in the past in several studies to try and explain online consumer shopping attitude and behavior. Previous research has shown that there exists several factors that influence online shopping behavior but it is almost impossible to completely cover all these factors in a single research model. A majority of studies tended to focus a few main factors e.g. the technology acceptance model tested the various factors that come due to information systems, some attempted to look at the relationships between trust and perceived ease of use and consumer acceptance, Fygenson and Pavlou (2006) looked at consumer adoption of electronic commerce with the planned behavior theory. In several research models, online consumer behavior was examined with the aim of unraveling purchasing behavior and information behavior, both of which are almost entirely influenced by perceived risk and trust, social influence, consumer’s attitude, technology-oriented factors as well as personal online skills. Other researchers have found out that online consumer behavior is influenced by channel knowledge, demographics, shopping orientations as well as perceived channel utility (Weiss, 2001). Several researches have indicated that when compared to conventional shoppers, online shoppers tend t9o be much older, higher educated, have a better income and much more technologically savvy (Strahilevitz & Garbarino, 2004). Many opt for online shopping due its time efficiency, crowd avoidance as well as the advantage of being available for 24 hours. 3.0 Literature Review In the study “Purchase behavior in virtual worlds: An empirical investigation in second Life”, Guo and Barnes (20110, came up with and tested a model of consumer purchasing behavior in the online sphere by making use of a combination of new as well as existing constructs. The study looked at a specific shopping behavior whereby consumers tend to spend certain amount while doing online shopping. The key factors in this model consisted of mainly external motivators like instinct motivators like consumers’ habits, social factors happiness as well as their perceived value. The study’s result was that the shopper’s habits, as well as instinct and external motivators play a significant role in molding online shopping behavior amongst consumers. The study, “Age, gender and income: do they really moderate online shopping behavior?” by Herna’ndez (2011), seeks to analyze whether a person’s socioeconomic characteristics i.e. income age and gender, plays a significant role in influencing the person’s shopping behavior. The study analyzed experienced online shoppers that often make their purchases through e-commerce. These results concluded that these factors do not condition the shopping behavior of these experienced online shoppers. In a dissertation named “Online consumer behavior: an empirical study based on theory of planned behavior” by Chen (2009), the author the theory of planned behavior by adding onto it ten more antecedents that act as external beliefs on e-shoppers’ behavior. The data was analyzed and came to the conclusion that perceived ease of use as well as trust are important antecedents that determine online shoppers’ behavior via perceived behavioral control as well as behavioral attitude. In the research titled, “Conceptualizing consumer behavior in online shopping environments” by Broderick and Demangeot (2007), they adopted a holistic approaching in considering how shoppers often perceive online the online shopping environment. The model proposed that most shoppers end to perceive these environments according to their exploratory and sense making potential. In the study, “Essay on modeling consumer behavior in online shopping environments” by Ying (2006) looked at online shopping behavior over several shopping sessions. It stated that the issue of abandoning of shopping carts is the most common problem facing electronic commerce websites. Mr. Ying examined various abandoned shopping carts of a web based grocery store. He came up with model for the purchase, order and cart decisions. The relationship between these decisions is viewed in the correlation between their error terms. Subsequent empirical analysis managed to show that not every discarded shopping cart leads to sales losses. This is because other customers tend to take the abandoned carts and complete their own orders. Several factors such as shopping time and the amount of items that are left in the discarded cart influence the customer’s decision to pick up the cart. The study offers a unique perspective into online shopping behavior. In the research paper, “Drivers of internet shopping” by Limayen and Khalifa (2003) used several behavioral theories in explaining online consumer behavior. The authors did a survey in trying to identify the main factors that influence the making of purchases on the internet as well as examining their importance. The concluded results showed that the intentions of online shoppers are greatly influenced by their own attitude towards the platform, social influence as well as the perceived consequences of internet based shopping. In the research, “Identifying Key factors affecting consumer purchase behavior in an online shopping context” by Park and Kim (2003) examined the relationship that exists between the characteristics of internet based shopping and the purchasing behavior of consumers. This was an online survey of about 602 customers in of internet based bookstores that indicated that user interface quality, quality of information and perceived security tends to affect relational benefit and information satisfaction that are important in relating to each customer’ actual purchasing behavior as well as site commitment. 4.0 Methodology The main purpose of this research is to examine the main factors that affect online consumer behavior. This will be done through examining the effects of service and infrastructural variables return policy and perceived risks towards online shopping. The independent variables in the study are as follows; financial risks, Product Risks, Convenience risks, Non-delivery risk, infrastructural risk, return policy, subjective norms, perceived behavioral norms as well as Domain specific innovativeness. The dependent variables are only two i.e. Attitude and Online Shopping behavior. 5.0 Model Used I have decided to use the conceptual model. It examines the following; The existing relationship between return policy, service, perceived risks, infrastructural variables as well as attitudes towards internet based shopping. The influence due to a shopper’s domain specific innovativeness , subjective norm, planned behavior as well as attitude towards internet based shopping 6.0 Main Discussion Online stores have some advantages when compared with physical stores: They are time saving and convenient; the stores provide their consumers with free information on their products and services; the stores have free online tools that are used in comparison of various products and services. Nowadays, online consumers possess much more control as well as bargaining power than the conventional physical consumer due to the fact that the internet provides a better platform for the prospective buyer to access more information on the goods and services and even check on the reviews and experiences with the product from other previous consumers. Due to the fact that these stores have less running costs, they pass on the advantage to their customers through reduced prices (Romm-Livermore & Sudweeks, 1998). Online customers however also have some perceived risks in making purchases online (Rich &Cox, 1964). These risks are often considered in great detail before making a purchase. These risks can be categorized as anticipated or perceived risks. Several researchers have discovered that most consumers opt to make use of e-commerce to when buying goods that do not necessarily need physical inspection. If the perceived risk is deemed high, the prospective buyer will opt to use the more traditional brick and mortar stores. While when the risk is deemed quite low, the customer will more often than not opt for the much more convenient online purchase (Manzoor, 2010). These risks, whether real or perceived tend to exist because of technology failure that can lead to system breaches or human errors like mistakes in data entry. The risk that is most common and deters most shoppers is financial risk like theft of credit card information, product quality risk as well as non-delivery risk due to either incorrect address or loss of mail if done via post. According to the attitude change and behavior model, intention tends to affect consumer attitudes. The concept of attitude is quite multi-dimensional. One of this being the final acceptance of the web as viable shopping channel. Attitude towards making internet based purchases plays a key role in making of online purchases (Thanasankit, 2002). 6.1 Domain specific Innovativeness This refers to the degree to which a person earlier on adopts a new innovation ahead of other fellow members of his own system. (Shoemaker& Rogers, 1971) Most people in society like some degree of continuity in their day to day lives and this include their shopping routine. The internet provides to the consumers a wide variety and breadth of goods but at the same time also pushes them to deviate from their normal shopping behavior or routine. These consumers have to familiarize themselves with new the latest technological skills to make them able to search, assess as well as purchase the products online (I-Safe, 2010). Innovativeness in online shopping is as a result of personal characteristics as well as attitude towards the specific online environment. Consumers that are innovative in nature have a tendency to experiment with new activities on the internet. A person’s attitude towards a certain technology plays a crucial role in his adoption of the new technology (Becker, 2008). 6.2 External Environment This refers to the contextual that influence a consumer’s online shopping behavior and attitude. This normally has three dimensions;- The available legal framework that will protect the consumer against any type of loss when he engages in an online transaction. The existing mechanism of third party recognition like the certification of web based vendors in accordance with their effectiveness and trustworthiness. The number of available stores on the internet that have the same goods and services that the customer wants. The first two of these dimensions are normally associated with the consumers’ attitude and trust towards the online vendor. The lesser the number of similar stores that offer the same items the more the probability that the already existing store will take part in opportunistic practices in order to rake in maximum profits. This will hence tend to increase the costs of transaction to the shopper thus significantly reducing their future intention to return to the same sight for his or her online shopping (Jansson, 2010). 6.3 Demographics Several internet surveys tend to agree that the population of consumers online is relatively getting younger, wealthier and more educated. These studies suggest that demographics seems to play a key role in determining whether people make use of the web, however once they get online, this does not seem to play a key role in determining the purchasing decisions of the online shopper. To summarize this, the perceived impact of demographics on online purchasing behavior is not very strong (Steinfield, 2003). 6.4 Personal Characteristics This is defined as a group of certain shopper features that plays a part in influencing the customer’s internet shopping behavior and attitudes like their need specificity, cultural environment as well as internet knowledge. Individuals who purchase from online stores are found to be more oriented towards convenience and less oriented towards experience (Li, 1999). This means that they regard convenience as the most significant factor when making a purchasing decision since they tend to be busy. Many potential clients are often discouraged from making online purchases by their own security concerns (Han, 2001). This perceived risk can however be significantly reduced by skill, experience and knowledge of the internet as well as online shopping. It has also been discovered that individuals that tend to live a lifestyle that is wired tend to frequent online stores randomly. This is because these individuals us the internet often to work, send emails, access news as well as searching for information. This internet based routine for most of their daily activities will make them to naturally deviate towards making their daily purchases online as well (International Conference on E-Business, E-services and E-society & Wang, 2007). 6.5 Vender/Product characteristics Grazioli and Wang (2001) as well as Lowengart and Tractinskky (2001) have examined the existing relationship between vender/product characteristics and several other factors. Vender or product characteristics is used to refer to the key features of the online stores, the products on offer as well the services provided to support the online transactions. All of these factors have been seen to greatly influence shoppers’ internet based shopping behavior and attitudes. Measures that have been used to value the vender characteristics;- Real existence of the said vendor or store. A good reputation The size of the store Mechanisms that build assurance like seals, news clips as well as warranties. The use of testimonials from previous customers. Several product features also impact positively on a potential customer’s online shopping attitude and behavior;- A wide variety of goods and services Certainty of product quality or performance Availability of the listed products Competitively priced products on the website The product’s dependability Existing of ability to customize the said products. Researchers have also examined the various aspects of services provided by the online vendors via the internet based shopping process. These factors include;- Availability of channels for customer communication Fast response to customer queries and needs Ease of accessibility to the sales people Reliability and credibility of the buying process Implementing a reliable and timely waiting period Personalization of the available services Ease of refunds as well as returns Availability of fraud curbing mechanisms An efficient delivery process that is fast and has the option of tracking and tracing Reasonable transaction costs 6.6 Website Quality Perceived ease of use (PEOU) of the vendor’s website as well as its perceived usefulness (PU) can influence an online shopper’s preference for a specific vendor. Research has shown that while perceived usefulness can affect the intended use when a site is utilized for an online purchase, perceived ease of use tends to only have an indirect impact on web based shopping behavior by directly affecting perceived usefulness (Gefen and Straub, 2000). Website quality elements are classified into five main categories depending on their purpose; for service, promotion, self-efficacy, resource facilitation as well as informational influence. Each of these five element categories significantly reinforces the online consumers’ general perceptions which lead to a positive influence on consumer online shopping behavior and attitude. Website design and features can be used as motivator and hygiene factors that tend to positively contribute to the users’ satisfaction or dissatisfaction with the said website. Hygiene factors are defined as those whose presence make site serviceable and functional whose absence leads user dissatisfaction. Examples of categories of hygiene factors include: Security and privacy, technical aspect, impartiality, Navigation as well as information content. That said, the most important website quality factor is the hygiene factor (Von Dran and Zhang, 2001). The website quality factors that that influence online buying behavior are divided into three broad groups. The first two are hygiene and motivational factors while the third is the media richness factor (Lai and Liang, 2000). The motivational factors are those factors that directly support the transaction process while the hygiene factors are those factors that shield the online shopper from risks or unforeseen negative events in the course of the transaction. Media richness refers to factors that add to the richness in the website’s information presentation about the company as well as its products. 6.7 Consumer attitudes towards internet based shopping The shoppers’ attitude towards making online purchases has gained a lot of attention in most of the empirical literature. According to Fishben and Ajzen (1975), the general consumer’s attitudes will have a bearing on affect his intention on whether the said customer will eventually make a transaction whether online on physically. It is a multidimensional construct. First it refers to the shoppers’ personal acceptance of the web as a viable shopping channel. It also refers to the shoppers’ attitudes towards specific online store i.e. to what degree they think that shopping in that particular store is appealing. 6.8 The Intention to Shop Online This refers to the consumers’ willingness to make their purchases from an internet based store or vendor. This factor is most commonly measured by the willingness of the consumer to purchase as well as return for a second time to make a purchase. This will contribute to the customer’s loyalty. One can gauge the likelihood of the customers to return for a second time to the store by asking several questions during the process of making a purchase as well as making payment. However this has to be carefully done to avoid crowding the customer’s shopping experience with too many queries and in the process reducing his likelihood of returning to the online store in future. 6.9 Decision Making on Online Shopping This includes online comparison of alternative stores as well as seeking additional information. The conclusion that the customer will draw after doing all this will significantly influence his online purchasing behavior. Many potential shoppers normally make use of a two-step process before reaching their final purchasing decision (Trifts and Haubl, 2000). They initially screen a wide set of online products so as to identify a set of alternatives that may meet their immediate need. They afterwards keenly examine the shortlisted set conducting relative comparisons between the products based on their own personal preferences and the products’ attributes before making the final purchasing decision. The interactive tools that have been developed to aid the consumers in the initial screening of the alternatives available and to help in the subsequent detailed comparison amongst the shortlisted products tend to have a very significant effect on the efficiency and quality of the final purchase decisions (Trifts and Haubl, 2000). 7.0 Managerial Implications Based on these findings and results, online retail stores should begin implementing measures that aim at eliminating the risk factor and build trust in their potential customers. The respective sales and retail managers should make a point of swaying these customers via various platforms like advertisements, online only discounts, social networking sites as well as regular promotions to entice people into increasingly adopting an online method of making purchases. This is because a large segment of the population is still stuck in its comfort zone of making purchases mainly at brick and mortar stores. In addition to all these, they need to develop user friendly websites that are much less intriguing. This will encourage the potential customers to explore the sites more in the process making online price comparisons, checking out detailed information on the products and available member discounts. The management should also make sure that after sale services like dispute resolutions and product delivery, should be done more promptly to enable the customers build faith in the website and the store. In the process of making a purchase, the store’s online staff can assist the customers in simplifying their purchasing procedure so as to give the customers a sense of friendliness (IFIP TC8/WG8.4 Working conference on E-business &Andersen, 2003). In order to tackle the financial risk aspect that is associated with there being an insecure channel to transmit credit card information, the vendors may think of introducing a much more secure channel that will ensure client privacy so as to encourage more people to come on board. They can incorporate the Secure Sockets Layer (SSL) protocol in the site’s payment pages that will better secure the clients’ information. (Oz, 2009) The online store can afterwards pursue security certification from relevant organizations and display this information on their home page to better assure the customers and have an edge over their immediate competitors (Khosrowpour, 2008). The effect of subjective norms on internet based shopping attitude and behavior suggests that online stores should make use of word of mouth marketing in order to get their sites known to its potential customers. This could be one of the most effective methods of advertising since it comes with reference from satisfied clients which adds to the trust factor and credibility (Liu, 2004). On the issue of the non-delivery risk, the internet based retailers could make an effort of providing insurance for clients that have placed orders for items and go out of their way in making sure that they have been delivered to the respective shopper. This goal can be achieved by gaining the customer’s trust through posting the previous financial period’s delivery record on the website that has been audited for authenticity (Hawkins, Mothersbaugh & Mookerjee, 2008). 8.0 Conclusion This paper examined some factors that affect online purchasing behavior by consumers. In the discussion it was seen that non-delivery and financial risks were the highest ranking deterrents of making online purchases. It was also discovered that domain specific innovativeness has a positive impact on online customer shopping behavior. This therefore means that the marketing department of these retail stores should specifically target this segment in rolling out the store’s marketing strategy to ensure a much more effective marketing campaign. The diverse measures that have been used by the various studies show that online purchasing has several different dimensions. Therefore the different studies made use of different methods of analyzing the same constructs. This issue has to be adequately addressed in future in order for a validated method to be designed that will be used in the measuring of online consumer shopping behavior and attitudes. Another issue is that there is a lack of a clear theoretical model that can predict online shopping behavior and attitudes. One of the limitations of this paper is the utilization of existing studies. 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