Young Consumer Online Shopping
Content
Young consumers online shopping: an empirical study
Dr Syed Shah Alam,
Faculty of Business Management Universiti Teknologi, MARA, 40450 Shah Alam, Selangor, Malahysia. [email protected] Syed Shah Alam is Senior Lecturer in the Faculty of Business Management, University Technology MARA (UiTM), Malaysia. He is a Doctorate in E-commerce. Prior to joining at UiTM he was a coordinator of Postgraduate program and an active member of the faculty research committee in the Faculty of Business and Law at Multimedia University, Malaysia. His teaching and research interest are internet marketing, Ecommerce, mobile E-commerce. His articles on E-commerce have been published in leading international journals.
Zaharah Bakar
Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka, Malaysia. [email protected] Madam Zaharah Bakar is a marketing lecturer in Multimedia University since 1998. She received her Bachelor of Science in Finance and Marketing from Southern Illinois University, Carbondale, Illinois, USA in 1984 and her MBA majoring in Marketing from Saint Louis University, Missouri, USA in 1985. She has more than 20 years of teaching experience at Multimedia University and Universiti Kebangsaan Malaysia. She also has two years of industry experience as Marketing consultant for Noris Architect, handling its clients and customer relations. Madam Zaharah is currently active conducting a variety of research in consumer behaviour and brand management. In brand management, her specific interest includes strategies to build brand equity, measure and manage brand equity and brand trust.
Dr Hishamuddin Bin Ismail
Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka, Malaysia. [email protected]
Hishamuddin Ismail is currently is Dean and a Senior Lecturer at the Faculty of Business and Law at Multimedia University, Melaka Campus. He has published many articles in the area of customer satisfaction, customer loyalty and e-commerce in JTMA, JABC, JSS, JAMS and IIM Journal. His last post prior to being an academician was the product manager where he led a team of professionals to develop data communication related products. During his tenure, he had successfully launched new product where the main feature is to enable the customer to virtually link themselves using the managed point-to-point connection.
Mst. Nilufar Ahsan
Research Fellow, Faculty of Management, Multimedia University, [email protected] Nilufar Ahsan is currently a doctoral candidate in the Faculty of Management, Multimedia University, Cyberjaya Malaysia. Her research interest includes organisational behaviour, and ICT management areas.
Journal of Internet Business
Issue 5 - 2008
Young consumers online shopping: an empirical study
Syed Shah Alam, Faculty of Business Management Universiti Teknologi, MARA, 40450 Shah Alam, Selangor, Malahysia. Zaharah Bakar Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka, Malaysia. Hishamuddin Bin Ismail Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka, Malaysia. Mst. Nilufar Ahsan Research Fellow, Faculty of Management, Multimedia University
Abstract Young consumers are playing an important role in online shopping. The increasing use of Internet by the younger generation in Malaysia provides an emerging prospect for online retailers. If online retailers know the factors affecting Malaysian young consumers’ buying behaviour, and the associations between these factors and type of online buyers, then they can further develop their marketing strategies to convert potential customers into active ones. In this study four key dimensions of online shopping as perceived by young consumers in Malaysia are identified. Besides that this study also examined whether there are any differences in online shopping by different races in Malaysia. It was discovered that website design, website reliability, customer service and privacy are the four key factors which influence young consumers’ perceptions of online shopping. However, there is no significant difference among the various races in terms of online shopping behaviour in Malaysia. Finally, the recommendations are presented in this research may help foster growth of Malaysian online retailing in future.
Keywords: Online Shopping, Young consumers, Malaysia.
81
Journal of Internet Business
Issue 5 - 2008
Introduction Commerce via the Internet, or e-commerce, has experienced rapid growth since the early years. It is well known to most of the Internet researchers that, the volume of online business-toconsumer (B2C) transactions is increasing annually at a very high rate. According to ACNielsen (2007), more than 627 million people in the world have shopped online. Forrester (2006) research estimates e-commerce market will reach $228 billion in 2007, $258 billion in 2008 and $288 billion in 2009. By 2010 e-commerce will have accounted for $316 billion in sales, or 13 percent of overall retail sales. AcNielsen also reported that, across the globe, the most popular items purchased on the Internet are books (34%), followed by videos/DVDs/games (22%), airline tickets/reservations (21%) and clothing/accessories/shoes (20%).Goecart forecasts that US online population will increase nearly 50%, from 1471.5 million in 2001 to 210.8 million by 2006 (Cumulative Annual Growth Rate of 8.2%) and online retail sales will grow from US$47.8 billion in 2002 to $130.3 billion in 2006. Similarly WIPO (2007) cited that about 10% of the world’s population in 2002 was online, representing more than 605 million users.
A mid-2005 survey by the Malaysian Communication and Multimedia Corporation (MCMC), only 9.3% of Internet users had purchased products or services through the Internet during the preceding three months. Among those who did so, airline tickets were the most popular items (43.8%) followed by books (15.6%) and music (6.8%). Amounts spent on these items were small, however, with 57.7% of transactions worth less than M$500. Moreover, it is expected Malaysian online sales will increase every year at a high growth.
Much research has been concentrated on the online shopping in the world. However, there is still a need for closer examination on the online shopping buying behavior in specific countries. While both established and new, large and small scale businesses are now using the Internet as a medium of sales of their products and services (for example Dell computer, Amazon.com, in the world and jobstreet.com, blooming.com in Malaysia). Still there is a huge research gap exists
82
Journal of Internet Business
Issue 5 - 2008
not only between countries, especially between developed and developing countries, which may differ significantly between countries (Stiglitz, 1998; Shore, 1998; Spanos et al., 2002) that limit the generalization of research results from developed countries to developing country contexts (Dewan and Kraemer, 2000; Clarke, 2001). Shore (1998) and Stiglitz (1998) reported that implementation of information system depend on specific social, cultural, economic, legal and political context, which may differ significantly from one country to another country. Dewan and Kraemer (2000) and Clarke (2001) argued in their study that findings from developed countries are not directly transferable to developing countries. Thus, this research is needed for non-transferability of findings from research in developed countries and also for the improvement of understanding of the determinants of online shopping in developing countries.
Online shopping holds a great potential for youth marketers. According to Vrechopoulos et al. (2001) young are the main buyers who used to buy products through online. Dholakia and Uusitalo (2002) study examined the relationship between age and Internet shopping; found that younger consumers reported more linen to the online shopping. Another study by Sorce Sorce et al. (2005) found that younger consumers searched for more products online and they were more likely to agree that online shopping was more convenient.
Objective of the Study
The objective of this study is to identify the key factors influencing young Malaysians’ online shopping behaviour. Malaysia's cultural mosaic is marked by many different races and cultures; which comprises the Malay, and the cultures of Malaysia's two important races --the Chinese, and the Indians. So one of the main objectives of this study is to compare how the young Malaysian of different races buyer perceive web site factors and website elements differently.
83
Journal of Internet Business
Issue 5 - 2008
Factors affecting online shopping
There are a number of streams of research that are relevant to this study. These include those addressing the factors that have significant effect on online shopping (Shergill and Chen, 2005; Phau and Poon, 2002; Jarvenpaa and Todd, 1997; George, 2002a; George, 2004b; Ward and Lee, 2000; Hellier et al., 2003). We identified the factors that were found to be significant in previous research about online shopping (please refer table 1). In this research we utilize the four factors i.e. website design, reliability, customer service and security/privacy are defined by Shergill and Chen (2005) in their empirical study in New Zealand. Web site design of a web page is one of the most important factors that influence online shopping. Shergill and Chen, (2005) identified web site design characteristics as the dominant factor which influences consumer perceptions of online purchasing. By using a sample of 214 online shoppers, Ranganthan and Ganapathy (2002) found four key dimensions of online shopping namely web sites; information content, design, security and privacy. They concluded that, though all these dimensions have an impact on the purchase intention, security and privacy will have greater impact on the purchase intent of online buyers.
Turban et al. (2002) argue that elegant design of web site will serve better to its intended audiences. According to Kin and Lee (2002) the web site design describes the appeal of the user interface design presented to customer and customers are willing to visit more often and stay longer with attractive web sites (Shaw et al., 2000). Following them, Than and Grandon’s (2002) study found that quality web site design is crucial for online shopping.
Reliability is one of the important factors that have the most influential effect on online shopping. Reliability is closely associated with risk since it is a measure of customers’ perceptions about whether or not merchants can be counted on to deliver on their promises (Vijayasarathy and Jones, 2000). According to Jun et al. (2004) online consumers apparently want to receive the right quality and right quantity of items that they have ordered within the
84
Journal of Internet Business
Issue 5 - 2008
time frame, promised by the retailers, and they expect to be billed accurately. Accordingly, to be considered as reliable online service providers, must deliver the promised services within the promised time frame (van Riel et al., 2003).
Studies by Mayer et al., (1995) and Hoffman et al., (1999) reveal that trust and consumer motivation have significant relationships. Other studies found that a high level of trust by buyers stimulate favourable attitudes and behaviour (Anderson and Narus, 1990).
A consumer’s trust in an Internet store can be thought as the consumer’s trust directly in the store. Nevertheless, Hoffman et al (1999) argued that the effectiveness of third-party trust, certification bodies and the public key encryption infrastructure for ensuring financial security, are the central success factors for building consumer trust in Internet shopping. Kini and Choobineh (1998) suggested that trust in the Internet business is necessary, but not sufficient, for an Internet buying behaviour to take place. The consumer must also trust the transaction medium for online shopping.
The review of empirical studies has embodied different factors which influence online purchasers’ behaviour. The antecedents of online purchase include many attitudinal components; for example, attitude towards online shopping and perceived risk of an online purchase. Consumers’ online shopping experiences, website and fulfillment of quality expectations are deemed as the major components to successful online transactions. In essence, our interest is in discovering the factors affecting consumers’ intent to buy online as well as in quantifying their relative importance. Specifically, through surveying consumers based on the literature, we are interested in identifying and rank-ordering factors affecting intent to buy through online in Malaysia.
85
Journal of Internet Business
Issue 5 - 2008
The Research Model
The research model empirically tested in this study contains constructs that have demonstrated literature support, based on a number of research done in this area in different countries, particularly online shopping on end-user perspective (refer to Figure 1). The model examines the factors that affect online. The research model is shown at Figure 1.
Website design
Reliability
Customer service
Online Shopping
Trust
Figure 1. A Schematic diagram of the research model
The schematic diagram of the research model above shows the relationship between the dependent and independent variables. Essentially, the theoretical framework shows above is the foundation on which the entire research is based upon.
Online shopping is the dependent variable in this research. The dependent variable is analyzed in this research in order to find out the answers or solution to the problem. Meanwhile, the independent variables in this research are website design, reliability, customer service and trust. The independent variables are believed to be the variables that influence the dependent variable (online shopping intent) in either a positive or a negative way.
86
Journal of Internet Business
Issue 5 - 2008
Hypotheses:
A series of testable hypotheses were developed from the proposed research model, as shown below:
Hypothesis 1: There is a significant relationship between web site design and online shopping Hypothesis 2: There is a significant relationship between reliability and online shopping Hypothesis 3: There is a significant relationship between customer service and online shopping Hypothesis 4: There is a significant relationship between trust and online shopping Hypothesis 5: There is a significant difference among different races and online shopping.
In general, base on the hypotheses, the research framework will be focusing on four factors as independent variables and propensity to shop online will be the dependent variable. Looking at previous discussions on the similar topic, this research will further hypothesize the following i.e. for the hypothesis 1, 2 and 3 which are focusing on Web Site Design, Reliability, Customer Service, and Trust, it is hypothesize that there should be a positive relationship that would likely to influence the online shopping.
Research Methods
Sample and Data Collection
Data for this study was gathered by primary data collection method through consumer survey administered among undergraduate students from two private universities in Malaysia. An indepth interview was conducted with ten lecturers from one university before the final survey was conducted in order to identify the key elements to be asked in the questionnaire. A total of 550 respondents were approached but only 496 were found to be usable for data analysis. Most of the rejected questionnaires are found to be incomplete especially if they did not answered
87
Journal of Internet Business
Issue 5 - 2008
questions pertaining to the variables of interest. In this study, students were selected as the population in view of the experience that they have in using the Internet and to the fact that they will be the future users and buyers for this online shopping. This will greatly supports the objectives of the research. In addition, some studies did suggest that students are the most suitable group to be considered as young consumers (Sorce, et al., 2005).
In general, the majority of the respondents were female (53.8 percent), more than half (60.9 percent) were between the age of 17 and 21. Chinese group was the highest contributors contributors of the total respondents (48.0 percent) and the second highest group is represented by Malays with (37.7 percent). These descriptions are somewhat similar with the current population of ‘Young Malaysian Consumer.’
Data collection instrument
The data for the study was gathered through a structured questionnaire. All variables were operationalised using the literature on online shopping (Shergill and Chen, 2005; Jarvenpaa and Todd, 1997; Mayer et al., 1995; Hoffman et al., 1999; Kini and Choobineh, 1998; Kim and Lee, 2002; Than and Grandon, 2002; Jun et. al., 2004; van Riel et al., 2003). The first part of the questionnaire included questions about Internet usage habits of the respondents such as where do they access the Internet, how frequent they browse Internet, how much time they spent, purposes for Internet use and how frequent the respondents buy products through online. The second part consisted of questions measuring all the variables including two questions which are used to measure the online shopping. All the questions were utilizing on a Likert scale ranging from 1= strongly disagree to 6 = strongly agree.
The questionnaire was pre-tested within the faculty and was send to three academics who are found to be expert in the field for the purpose of establishing face validity of the items. The aim of the pretest was to prevent any vagueness and misunderstanding with minor adjustment to the
88
Journal of Internet Business
Issue 5 - 2008
wording and sequence of the questions. The revised questionnaire was then administered to respondents with a cover letter explaining the academic purpose of the study. The third part consisted of questions regarding the demographic characteristics of the respondents such as age, gender, and race.
Measures
The reliability reported by Moore and Benbasat (1991) for the scale and Cronbach’s alpha for scale reliability obtained for our sample. The Cronbach alpha estimated for trust scale was 0.887, reliability scale was 0.800, website design scale was 0.724, and customer service scale was 0.797. Reliability from our sample showed a reasonable level of reliability ( α>0.70). Factor analysis also confirmed that the construct validity of the scales could be performed adequately. The factor loadings for all items exceeded the minimum value of 0.4 considered for this study. Table 1 shows the number of items comprising each factor loading value.
Factor 1
2
3 4 trust2 .1 4 7 .171 .1 0 6 .810 trust3 .2 0 9 .136 .0 9 8 .777 trust1 .2 0 9 .118 .1 2 1 .776 trust4 .2 4 5 .222 .1 4 8 .600 relifac2 .172 .220 .069 .594 relifac3 .208 .140 .115 .574 relifac5 .171 .151 .237 .571 relifac4 .130 .217 .176 .550 relifac1 .179 .201 .099 .506 webfac3 .2 1 3 .2 4 5 .070 .622 webfac5 .1 2 7 .0 9 2 .141 .604 webfac4 .2 0 1 .0 9 8 .127 .600 webfac2 .0 9 6 .2 7 2 .102 .485 webfac1 .0 4 2 .3 0 6 .169 .442 custserv2 .1 46 .2 1 9 .2 5 5 .750 custserv1 .1 68 .3 0 0 .2 8 7 .574 custserv3 .2 68 .2 4 6 .2 5 8 .488 Extraction Method: Principal Axis Factoring. Rotation Method: Varimax with Kaiser Normalization. Table 1: Rotated Factor Matrix(a)
89
Journal of Internet Business
Issue 5 - 2008
Data Analysis Bivariate frequency distribution of the respondents were done according to age, gender, race and average family monthly income and other questions related to Internet browsing. To test the hypotheses of this study, regression and ANOVA were used. The analysis enabled us to examine the individual impact of the independent variables on online shopping.
General usage of Internet 1. Internet access
One of the important indications of internet experience is the pattern of Internet access by the consumer. In this situation, the Internet access could be assessed by looking from two different aspects i.e. where and how long. Table II illustrates this pattern. It clearly shows that the majority of the respondents (66.7%) used the Internet at home followed by 17.8% at university and 10.1% at cyber café. Majority Maj ority of the users spent 1 to 2 hours everyday for Internet browsing (36.5%), more than 4 hours (31.5%), 3 to 4 hours (23.2%), and only 8.9% spent less than 1 hour. In conclusion, the results show a general pattern of Internet usage of young consumers in Malaysia whereby it could be concluded that they are having their own Internet connection at home which lead to the active usage of Internet whereby the average time spend is more than 2 hours.
2. Use of the Internet
Among the seven popular usage of Internet, searching for information on the Web was the most frequently adopted activity for Internet users (51.8%). The second category of usage is communication purposes (45.0%), followed by entertainment (43.1%), education (31.5%), pleasure (15.7%), work (15.1%), online shopping (8.3%) and others (1.8%). From the data it was found that more than 60% never bought any product through online (62.3%). On the other hand only 4.2% of the respondents regularly buy through online. Out of 496 respondents 105
90
Journal of Internet Business
Issue 5 - 2008
respondents occasionally buy products through online.
Frequency
Per cent
Place of Internet Access Home At university Cyber café Missing
331 88 51 26
66.7 17.8 10.1 5.4
Purpose of Internet usage Work Entertainment Online shopping Communication Seeking information Education Pleasure Other
75 214 41 223 257 156 78 9
15.1 43.1 8.3 45.0 51.8 31.5 15.7 1.8
Online buying Never buy online Buy on the web Occasionally
309 21 105
62.3 4.2 21.16
Household monthly income Below RM1000 RM1001- RM3000 RM3001-RM5000 RM5001-RM10000 Above RM10000
77 372 26 11 10
15.5 75.0 5.2 2.3 2.0
Table 2: General usage of Internet
Hypotheses Testing The strength of the proposed relationship was assessed using the respective statistical analyses summarized in Tables 3 and 4.
Variables Website Design Reliability Customer Service Trust
Beta .073 .239 .252 .161
t-value 1.589 4.863 5.230 3.647
p-value .113 .000 .000 .000
Table 3: Regression Results Hypothesis 1: There is a significant relationship between web site design and online shopping
91
Journal of Internet Business
Issue 5 - 2008
The results of this study show that the association between web site design and online shopping is not significant. The multiple regression result shows website design have beta = .073; p-value = .113. The results prove that, the null hypothesis that there is no relationship between web site design and online shopping could not be rejected. Even though the web site is perceived to be one of the important factors in previous study, in this study it proved otherwise. From the analysis, we found that Malaysian young consumers who are browsing Internet perceived web site design as less important factor that would likely to influence their online buying behaviour. This may be due to the low level of involvement of the young consumers whom have experience in online shopping (only 4.2% buy through online regularly). However, we can expect to get stronger association towards the perception on web-site design if the level of involvement is high. Similarly, further analysis on those youngsters, we found that they considered that their online purchasing will be influenced by good web site design. Therefore, it is believed that website design does help in enhancing the young consumers to buy online.
Hypothesis 2: There is a significant relationship between reliability and online shopping
Reliability is the important factor that affects online buying and most of the consumers are concerned about on-time delivery of their products (Shergill and Chen, 2005). The results of this study (please refer Table III) show that there is a significant association between reliability and online shopping. It is significant at 0.01 level. Accordingly, the hypothesis 2 could not be rejected. In addition, the direction of the associations is positive in which it indicates that the higher the reliability of the web site of e-retailers, the higher will be online buying. As such, there is a need for the e-retailers to ensure all aspects the reliability especially in term of product delivery should be guaranteed. This will enhance the acceptability of young consumers to participate more in an online buying experience.
Hypothesis 3: There is a significant relationship between customer service and online shopping
Ainscough (1996) found that most of the companies in his study used online as a way to provide help and service to their customers. The online customer service factor is another important
92
Journal of Internet Business
Issue 5 - 2008
factor that has positive effects on online shopping. Referring to Table III, the third hypothesis tested the relationship between customer service and online shopping. The regression result (beta = .252, t-value = 5.230, p-value = 0.001) indicates that the association between customer service and online is significant at 0.01 level (p = 0.000). In term of direction, the result shows that there is a positive direction between the two constructs. This study also confirmed the findings of another recent study in New Zealand by Shergill and Zhaobin (2005). Furthermore, it was found that the beta value of 0.252 is the highest when compared to other variables. This result indicates that customer services could be considered as the most important variable that may influence the online purchasing. In this situation, there is a need for the online companies to improve their online customer services if they would like to have more young consumers to involve in online purchasing.
Hypothesis 4: There is a significant relationship between trust and online shopping
Table III shows that the association between trust and online shopping is significant at 0.01 level whereby the analysis result showed the beta = 0.161 and t-value = 3.647 (p=0.000). The support for hypothesis 4 reflects similar arguments in previous studies (Shergill and Zhaobin, 2005; Gefen, 2002; Jarvenpaa et al., 1999, 2000; Koufaris and Hampton-Sosa, 2004; Koufaris and Hampton-Sosa, 2002). Similarly, it demonstrates that trust is also playing an important role in an online buying situation. As such, it is i s recommended that the online companies to build this t his kind of trusting relationship by developing strategy that could instil sense of belongingness between them and the young consumers.
Hypothesis 5: There is significant difference in online shopping among different races in Malaysia
To test this hypothesis, one-way ANOVA was used. The purpose of testing this hypothesis is to assess any perceived differences among the races and recommend suitable promotional strategy for the company to increase the marketability of their online product or services. The analysis in table IV displays the results where F value (1.169) was found to be insignificant. The result indicates that there was no significant difference in online shopping among different races
93
Journal of Internet Business
Issue 5 - 2008
(Malay, Chinese, Indian and others) in Malaysia. Thus the null hypothesis was sustained and the alternate hypothesis was rejected. The result provides very significant outcome for the company. It could be argued that, the company should not develop different marketing strategy for different races especially in the context of Malaysian young consumers. This will definitely give great saving not only in term of their operating cost but also to the overall planning of the strategy.
Between Groups Within Groups Total
Sum of Squares 1.352 189.613 190.965
df 3 492 495
Mean Square .451 .385
F 1.169
Sig. .321
Table 4: ANOVA- Difference in Online shopping among different races in Malaysia
Conclusion The analytical results of our investigation indicate relationships between young consumers’ perceptions of the factors that influence their intention to buy through online. More specifically, consumers’ perceptions of the customer service, reliability and trust of online purchasing exhibit significant relationships with their online buying intention. The analytical results are generally consistent with previous. Trust has received the most consistent support as factors that influence online buying (Gefen, 2002; Jarvenpaa et al., 1999, 2000; Koufaris and Hampton-Sosa, 2004; Koufaris and Hampton-Sosa, 2002). Marketers need to realize that the online marketing environment affects the way consumers view and develop relationships. In this context, to add value to the online shopping experience and to build relationships, trust is everything.
Notably, examination of the relative strengths of the associations between the individual independent variables and online buying intention clearly indicate that Customer Service, Trust and Reliability can explain much of the variation in online buying intention (Shergil & Chen, 2005; Gefen, 2002; Jarvenpaa et al., 1999, 2000; Koufaris and Hampton-Sosa, 2004). Furthermore, it was also found that, for online buyers, the good perception on the customer
94
Journal of Internet Business
Issue 5 - 2008
service is considered as the best predictor when compared to other constructs.
When individuals have more experience with online buying, the impact of perceived factors on intentions to buy online is different from that of inexperienced online buyers. Information obtained from experience over a period of time undoubtedly has the potential to modify future intentions of online buying. Therefore, experience gained over time has potential implications for the other buying behavior model and future research should be conducted in this area. This will serve as a platform that will lead to the sustained confidence of the consumers in online purchasing.
In this study, study, it was found found that few consumers consumers were buying buying through online
regularly, although 72.4 percent of the respondents browsed the Internet everyday.
Limitations and Future Direction It is necessary to recognize the limitations of the current study. Firstly, since the survey was conducted among a group of students from two private universities, the results should be interpreted with caution, particularly with respect to the generalization of research findings of Malaysian consumers as a whole. Next, the sample size itself is relatively small. To accurately evaluate Malaysian consumers’ perceptions of online shopping, a larger sample size is desirable.
Future research needs to focus on a larger cross section of Internet users and more diversified random samples to verify the findings of the current study. Moreover, to further studies clarity of the factors influence on online shopping, Technology Acceptance Model (TAM) or behavioral model could be used. Future inquiries could also examine the causal relationships between factors and how consumers’ perceive overall online shopping by employing a structural equation modeling technique. In addition, future research needs to examine businessto-business purchase in the context of cross-national and cross cultural differences.
Reference
95
Journal of Internet Business
Issue 5 - 2008
Ainscough, T.L. (1996) ‘The Internet for the rest of us: marketing on the World Wide Web’, Journal of Consumer Marketing, Vol. 13, No. 2, pp. 36-47. AcNielsen. (2007) ‘Seek and You Shall Buy. Entertainment Entertainment and Travel’, viewed 18 January 2007 <http://www2.acnielsen.com/news/20051019.shtml> Anderson, J.C. and Narus, J.A. (1990) ‘A model of distributor firm and manufacturer firm working relationships’, Journal of Marketing, Vol. 54, No. 1, pp. 42-58. Cockburn, C. and Wilson, T.D. (1996) ‘Business of the World-Wide Web’, International Journal of Information Management , Vol. 16, No. 2.
Dholakia, R., Uusitalo, O. (2002) ‘Switching to electronic stores: consumer characteristics and the perception of shopping benefits", International Journal of Retail & Distribution Management, Vol. 30, No. 10, pp. 459-69.
E-commerce On the Rise, available at:
http://www.goecart.com/enewsletter/sep05/index.htm Forrester. (2006) ‘Online Retail: Strong, Broad Growth’, viewed 18 January 2007 <http://www.forrester.com/Research/Document/Excerpt/0,7211,39915,00.html Gefen, D. (2002) Reflections on the Dimensions of Trust and Trustworthiness among Online Consumers, The DATA BASE for Advances in information Systems, 333, pp.38-53. George, J.F. (2002a) ‘Influences on the intent to make Internet purchase’, Internet Research: Electronic Networking Applications and Policy, Vol. 12, No. 2, pp. 165-180.
George, J.F. (2004) ‘The theory of planned behavior and Internet purchasing’, Internet Research, Vol. 14, No. 3, pp. 198-212.
Hellier, P.K, Geursen, G.M., Carr, R.A., and Rickard, J.A. (2003) ‘Customer repurchase intention: A general structural equation model’, European Journal of Marketing, Vol. 37, No. 11/12, pp. 1762-1800. Hoffman, D.L., Novak, T.P. and Peralta, M. (1999) ‘Building consumer trust online’, Communications of the ACM , Vol. 42, No. 4, pp. 80-85.
Jarvenpaa, S.L, Todd, P.A. (1997) ‘Consumer reactions to electronic shopping on the World Wide Web’, International Journal of Electronic Commerce, Vol. 1, No. 2, pp. 59-88. Jarvenpaa, S.L., Tractinsky, N. and Vitale, M., (2000) ‘Consumer Trust in and Internet store’, Information Technology Management , Vol. 112, pp.45-71.
Jun, M., Yang, Z. and Kim, D.S. (2004) ‘Customers’ perceptions of online retailing service quality and their satisfaction’, International Journal of Quality & Reliability Management , Vol. 21, No. 8, pp. 817-840.
Kim, J. and Lee, J. (2002) ‘Critical design factors for successful e-commerce systems’, Behaviour and Information Technology, Vol. 21, No. 3, pp. 185-189.
96
Journal of Internet Business
Issue 5 - 2008
Kini, A. and Choobineh, J. (1998) ‘Trust in electronic commerce: definition and theoretical considerations’, Paper presented at 31st Hawaii International Conference on System Sciences, pp. 51-61. Koufaris, M. and LBarbera, P.A. (2002) ‘Consumer Behavior in Web-Based Commerce: An empirical study’, International Journal of Electronic Commerce, Vol. 62, pp. 131154. Koufaris, M. and Hampton-Sosa, W. (2004) ‘The development of initial trust in an online company by new customers’, Information and Management , Vol. 413, pp. 377-397. Mayer, R.c., Davis, J.H. and Schoorman, F.D. (1995) ‘An integrative model of organization trust’, Academy of Management Review, Vol, 20, No. 3, pp. 709-734. Moore, G.C. and Benbasat, I. (1991) ‘Development of an instrument to measure the perceptions of adopting an information technology innovation’, Information Systems, Vol. 2, No. 3, pp. 192-222. Passachon, L. and Speece, M. W. (2003, January), ‘The Effect of Perceived Characteristics of Innovation on E-Commerce Adoption by SMEs in Thailand’, The Seventh International Conference on Global Business and
Economic
Development,
January, 8-11, 2003, Thailand. pp.1573-1585. Phau, I., and Poon, S.M. (2000) ‘Factors influencing the types of products and services purchased’, Internet Research: Electronic Networking Applications and Policy, Vol. 10, No. 2, pp. 102-113.
Ranganthan, C. and Ganapathy, S. (2002) ‘Key dimensions of business-to-consumer business-to-con sumer Web sites’, Information and Management , Vol. 39, pp. 457-465. Shaw, M., Blanning, R., Strader, T., and Whinston, A. (2000) ‘Handbook of Electronic Commerce’, Springer-Verlag Berlin, Heidelberg, 106-217. Shergil, G.S., and Chen, Z. (2005) ‘Web-based shopping: consumers’ attitudes towards online shopping in New Zealand’, Journal of Electronic Commerce Research, Vol. 6, No. 2, pp. 79-94. Sorce, P., Perotti, V. and Widrick, S. (2005) ‘Attitude and age differences in online buying’, International Journal of Retail & Distribution Management , Vol. 33, No. 2, pp. 122-
132. Than, C.R., and Grandon, E. (2002) ‘An exploratory examination of factors affecting online sales’, Journal of Computer Information Systems, Vol. 42, No. 3, pp. 87-93. The Malaysian Communications and Multimedia Commission (MCMC) (2006), Overview of ecommerce in Malaysia, viewed 18 January 2007 <http://globaltechforum.eiu.com/index.asp?layout=printer_friendly&doc_id=8706> Turban, E., Lee, J., King, D. and Chung, H.M. (2002) ‘Electronic Commerce: A Managerial Perspective’, Prentice-Hall, Inc.
97
Journal of Internet Business
Issue 5 - 2008
Van Riel, A.C.R., Semeijin, J. and Janssen, W. (2003) ‘E-service quality expectations: a case study’, Total Quality Management , Vol. 14, No. 4, pp. 437-450. Vijayasarathy, L. and Jones, J.M. (2000) ‘Print and Internet catalog shopping: assessing attitudes and intentions’, Internet Research: Electronic Networking Applications and Policy, Vol. 10, No. 3, pp. 191-202.
Vrechopoulos, A.P. Siomkos, G.f and Doukindis, G.I. (2001) ‘Internet shopping adoption by Greek consumers’, European Journal of Innovation Management , Vol. 4, No. 3, pp. 142-152. Ward, M.R., and Lee, M.J. (2000) ‘Internet Shopping, consumers search and product branding’, The Journal of Product & Brand Management , Vol. 9, No. 1, pp. 6-20.
World Intellectual Property Organization (WIPO) (2007), World Online Population,
http://www.wipo.int/copyright/ecommerce/en/ip_survey/chap1.html
98
Dr Syed Shah Alam,
Faculty of Business Management Universiti Teknologi, MARA, 40450 Shah Alam, Selangor, Malahysia. [email protected] Syed Shah Alam is Senior Lecturer in the Faculty of Business Management, University Technology MARA (UiTM), Malaysia. He is a Doctorate in E-commerce. Prior to joining at UiTM he was a coordinator of Postgraduate program and an active member of the faculty research committee in the Faculty of Business and Law at Multimedia University, Malaysia. His teaching and research interest are internet marketing, Ecommerce, mobile E-commerce. His articles on E-commerce have been published in leading international journals.
Zaharah Bakar
Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka, Malaysia. [email protected] Madam Zaharah Bakar is a marketing lecturer in Multimedia University since 1998. She received her Bachelor of Science in Finance and Marketing from Southern Illinois University, Carbondale, Illinois, USA in 1984 and her MBA majoring in Marketing from Saint Louis University, Missouri, USA in 1985. She has more than 20 years of teaching experience at Multimedia University and Universiti Kebangsaan Malaysia. She also has two years of industry experience as Marketing consultant for Noris Architect, handling its clients and customer relations. Madam Zaharah is currently active conducting a variety of research in consumer behaviour and brand management. In brand management, her specific interest includes strategies to build brand equity, measure and manage brand equity and brand trust.
Dr Hishamuddin Bin Ismail
Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka, Malaysia. [email protected]
Hishamuddin Ismail is currently is Dean and a Senior Lecturer at the Faculty of Business and Law at Multimedia University, Melaka Campus. He has published many articles in the area of customer satisfaction, customer loyalty and e-commerce in JTMA, JABC, JSS, JAMS and IIM Journal. His last post prior to being an academician was the product manager where he led a team of professionals to develop data communication related products. During his tenure, he had successfully launched new product where the main feature is to enable the customer to virtually link themselves using the managed point-to-point connection.
Mst. Nilufar Ahsan
Research Fellow, Faculty of Management, Multimedia University, [email protected] Nilufar Ahsan is currently a doctoral candidate in the Faculty of Management, Multimedia University, Cyberjaya Malaysia. Her research interest includes organisational behaviour, and ICT management areas.
Journal of Internet Business
Issue 5 - 2008
Young consumers online shopping: an empirical study
Syed Shah Alam, Faculty of Business Management Universiti Teknologi, MARA, 40450 Shah Alam, Selangor, Malahysia. Zaharah Bakar Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka, Malaysia. Hishamuddin Bin Ismail Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka, Malaysia. Mst. Nilufar Ahsan Research Fellow, Faculty of Management, Multimedia University
Abstract Young consumers are playing an important role in online shopping. The increasing use of Internet by the younger generation in Malaysia provides an emerging prospect for online retailers. If online retailers know the factors affecting Malaysian young consumers’ buying behaviour, and the associations between these factors and type of online buyers, then they can further develop their marketing strategies to convert potential customers into active ones. In this study four key dimensions of online shopping as perceived by young consumers in Malaysia are identified. Besides that this study also examined whether there are any differences in online shopping by different races in Malaysia. It was discovered that website design, website reliability, customer service and privacy are the four key factors which influence young consumers’ perceptions of online shopping. However, there is no significant difference among the various races in terms of online shopping behaviour in Malaysia. Finally, the recommendations are presented in this research may help foster growth of Malaysian online retailing in future.
Keywords: Online Shopping, Young consumers, Malaysia.
81
Journal of Internet Business
Issue 5 - 2008
Introduction Commerce via the Internet, or e-commerce, has experienced rapid growth since the early years. It is well known to most of the Internet researchers that, the volume of online business-toconsumer (B2C) transactions is increasing annually at a very high rate. According to ACNielsen (2007), more than 627 million people in the world have shopped online. Forrester (2006) research estimates e-commerce market will reach $228 billion in 2007, $258 billion in 2008 and $288 billion in 2009. By 2010 e-commerce will have accounted for $316 billion in sales, or 13 percent of overall retail sales. AcNielsen also reported that, across the globe, the most popular items purchased on the Internet are books (34%), followed by videos/DVDs/games (22%), airline tickets/reservations (21%) and clothing/accessories/shoes (20%).Goecart forecasts that US online population will increase nearly 50%, from 1471.5 million in 2001 to 210.8 million by 2006 (Cumulative Annual Growth Rate of 8.2%) and online retail sales will grow from US$47.8 billion in 2002 to $130.3 billion in 2006. Similarly WIPO (2007) cited that about 10% of the world’s population in 2002 was online, representing more than 605 million users.
A mid-2005 survey by the Malaysian Communication and Multimedia Corporation (MCMC), only 9.3% of Internet users had purchased products or services through the Internet during the preceding three months. Among those who did so, airline tickets were the most popular items (43.8%) followed by books (15.6%) and music (6.8%). Amounts spent on these items were small, however, with 57.7% of transactions worth less than M$500. Moreover, it is expected Malaysian online sales will increase every year at a high growth.
Much research has been concentrated on the online shopping in the world. However, there is still a need for closer examination on the online shopping buying behavior in specific countries. While both established and new, large and small scale businesses are now using the Internet as a medium of sales of their products and services (for example Dell computer, Amazon.com, in the world and jobstreet.com, blooming.com in Malaysia). Still there is a huge research gap exists
82
Journal of Internet Business
Issue 5 - 2008
not only between countries, especially between developed and developing countries, which may differ significantly between countries (Stiglitz, 1998; Shore, 1998; Spanos et al., 2002) that limit the generalization of research results from developed countries to developing country contexts (Dewan and Kraemer, 2000; Clarke, 2001). Shore (1998) and Stiglitz (1998) reported that implementation of information system depend on specific social, cultural, economic, legal and political context, which may differ significantly from one country to another country. Dewan and Kraemer (2000) and Clarke (2001) argued in their study that findings from developed countries are not directly transferable to developing countries. Thus, this research is needed for non-transferability of findings from research in developed countries and also for the improvement of understanding of the determinants of online shopping in developing countries.
Online shopping holds a great potential for youth marketers. According to Vrechopoulos et al. (2001) young are the main buyers who used to buy products through online. Dholakia and Uusitalo (2002) study examined the relationship between age and Internet shopping; found that younger consumers reported more linen to the online shopping. Another study by Sorce Sorce et al. (2005) found that younger consumers searched for more products online and they were more likely to agree that online shopping was more convenient.
Objective of the Study
The objective of this study is to identify the key factors influencing young Malaysians’ online shopping behaviour. Malaysia's cultural mosaic is marked by many different races and cultures; which comprises the Malay, and the cultures of Malaysia's two important races --the Chinese, and the Indians. So one of the main objectives of this study is to compare how the young Malaysian of different races buyer perceive web site factors and website elements differently.
83
Journal of Internet Business
Issue 5 - 2008
Factors affecting online shopping
There are a number of streams of research that are relevant to this study. These include those addressing the factors that have significant effect on online shopping (Shergill and Chen, 2005; Phau and Poon, 2002; Jarvenpaa and Todd, 1997; George, 2002a; George, 2004b; Ward and Lee, 2000; Hellier et al., 2003). We identified the factors that were found to be significant in previous research about online shopping (please refer table 1). In this research we utilize the four factors i.e. website design, reliability, customer service and security/privacy are defined by Shergill and Chen (2005) in their empirical study in New Zealand. Web site design of a web page is one of the most important factors that influence online shopping. Shergill and Chen, (2005) identified web site design characteristics as the dominant factor which influences consumer perceptions of online purchasing. By using a sample of 214 online shoppers, Ranganthan and Ganapathy (2002) found four key dimensions of online shopping namely web sites; information content, design, security and privacy. They concluded that, though all these dimensions have an impact on the purchase intention, security and privacy will have greater impact on the purchase intent of online buyers.
Turban et al. (2002) argue that elegant design of web site will serve better to its intended audiences. According to Kin and Lee (2002) the web site design describes the appeal of the user interface design presented to customer and customers are willing to visit more often and stay longer with attractive web sites (Shaw et al., 2000). Following them, Than and Grandon’s (2002) study found that quality web site design is crucial for online shopping.
Reliability is one of the important factors that have the most influential effect on online shopping. Reliability is closely associated with risk since it is a measure of customers’ perceptions about whether or not merchants can be counted on to deliver on their promises (Vijayasarathy and Jones, 2000). According to Jun et al. (2004) online consumers apparently want to receive the right quality and right quantity of items that they have ordered within the
84
Journal of Internet Business
Issue 5 - 2008
time frame, promised by the retailers, and they expect to be billed accurately. Accordingly, to be considered as reliable online service providers, must deliver the promised services within the promised time frame (van Riel et al., 2003).
Studies by Mayer et al., (1995) and Hoffman et al., (1999) reveal that trust and consumer motivation have significant relationships. Other studies found that a high level of trust by buyers stimulate favourable attitudes and behaviour (Anderson and Narus, 1990).
A consumer’s trust in an Internet store can be thought as the consumer’s trust directly in the store. Nevertheless, Hoffman et al (1999) argued that the effectiveness of third-party trust, certification bodies and the public key encryption infrastructure for ensuring financial security, are the central success factors for building consumer trust in Internet shopping. Kini and Choobineh (1998) suggested that trust in the Internet business is necessary, but not sufficient, for an Internet buying behaviour to take place. The consumer must also trust the transaction medium for online shopping.
The review of empirical studies has embodied different factors which influence online purchasers’ behaviour. The antecedents of online purchase include many attitudinal components; for example, attitude towards online shopping and perceived risk of an online purchase. Consumers’ online shopping experiences, website and fulfillment of quality expectations are deemed as the major components to successful online transactions. In essence, our interest is in discovering the factors affecting consumers’ intent to buy online as well as in quantifying their relative importance. Specifically, through surveying consumers based on the literature, we are interested in identifying and rank-ordering factors affecting intent to buy through online in Malaysia.
85
Journal of Internet Business
Issue 5 - 2008
The Research Model
The research model empirically tested in this study contains constructs that have demonstrated literature support, based on a number of research done in this area in different countries, particularly online shopping on end-user perspective (refer to Figure 1). The model examines the factors that affect online. The research model is shown at Figure 1.
Website design
Reliability
Customer service
Online Shopping
Trust
Figure 1. A Schematic diagram of the research model
The schematic diagram of the research model above shows the relationship between the dependent and independent variables. Essentially, the theoretical framework shows above is the foundation on which the entire research is based upon.
Online shopping is the dependent variable in this research. The dependent variable is analyzed in this research in order to find out the answers or solution to the problem. Meanwhile, the independent variables in this research are website design, reliability, customer service and trust. The independent variables are believed to be the variables that influence the dependent variable (online shopping intent) in either a positive or a negative way.
86
Journal of Internet Business
Issue 5 - 2008
Hypotheses:
A series of testable hypotheses were developed from the proposed research model, as shown below:
Hypothesis 1: There is a significant relationship between web site design and online shopping Hypothesis 2: There is a significant relationship between reliability and online shopping Hypothesis 3: There is a significant relationship between customer service and online shopping Hypothesis 4: There is a significant relationship between trust and online shopping Hypothesis 5: There is a significant difference among different races and online shopping.
In general, base on the hypotheses, the research framework will be focusing on four factors as independent variables and propensity to shop online will be the dependent variable. Looking at previous discussions on the similar topic, this research will further hypothesize the following i.e. for the hypothesis 1, 2 and 3 which are focusing on Web Site Design, Reliability, Customer Service, and Trust, it is hypothesize that there should be a positive relationship that would likely to influence the online shopping.
Research Methods
Sample and Data Collection
Data for this study was gathered by primary data collection method through consumer survey administered among undergraduate students from two private universities in Malaysia. An indepth interview was conducted with ten lecturers from one university before the final survey was conducted in order to identify the key elements to be asked in the questionnaire. A total of 550 respondents were approached but only 496 were found to be usable for data analysis. Most of the rejected questionnaires are found to be incomplete especially if they did not answered
87
Journal of Internet Business
Issue 5 - 2008
questions pertaining to the variables of interest. In this study, students were selected as the population in view of the experience that they have in using the Internet and to the fact that they will be the future users and buyers for this online shopping. This will greatly supports the objectives of the research. In addition, some studies did suggest that students are the most suitable group to be considered as young consumers (Sorce, et al., 2005).
In general, the majority of the respondents were female (53.8 percent), more than half (60.9 percent) were between the age of 17 and 21. Chinese group was the highest contributors contributors of the total respondents (48.0 percent) and the second highest group is represented by Malays with (37.7 percent). These descriptions are somewhat similar with the current population of ‘Young Malaysian Consumer.’
Data collection instrument
The data for the study was gathered through a structured questionnaire. All variables were operationalised using the literature on online shopping (Shergill and Chen, 2005; Jarvenpaa and Todd, 1997; Mayer et al., 1995; Hoffman et al., 1999; Kini and Choobineh, 1998; Kim and Lee, 2002; Than and Grandon, 2002; Jun et. al., 2004; van Riel et al., 2003). The first part of the questionnaire included questions about Internet usage habits of the respondents such as where do they access the Internet, how frequent they browse Internet, how much time they spent, purposes for Internet use and how frequent the respondents buy products through online. The second part consisted of questions measuring all the variables including two questions which are used to measure the online shopping. All the questions were utilizing on a Likert scale ranging from 1= strongly disagree to 6 = strongly agree.
The questionnaire was pre-tested within the faculty and was send to three academics who are found to be expert in the field for the purpose of establishing face validity of the items. The aim of the pretest was to prevent any vagueness and misunderstanding with minor adjustment to the
88
Journal of Internet Business
Issue 5 - 2008
wording and sequence of the questions. The revised questionnaire was then administered to respondents with a cover letter explaining the academic purpose of the study. The third part consisted of questions regarding the demographic characteristics of the respondents such as age, gender, and race.
Measures
The reliability reported by Moore and Benbasat (1991) for the scale and Cronbach’s alpha for scale reliability obtained for our sample. The Cronbach alpha estimated for trust scale was 0.887, reliability scale was 0.800, website design scale was 0.724, and customer service scale was 0.797. Reliability from our sample showed a reasonable level of reliability ( α>0.70). Factor analysis also confirmed that the construct validity of the scales could be performed adequately. The factor loadings for all items exceeded the minimum value of 0.4 considered for this study. Table 1 shows the number of items comprising each factor loading value.
Factor 1
2
3 4 trust2 .1 4 7 .171 .1 0 6 .810 trust3 .2 0 9 .136 .0 9 8 .777 trust1 .2 0 9 .118 .1 2 1 .776 trust4 .2 4 5 .222 .1 4 8 .600 relifac2 .172 .220 .069 .594 relifac3 .208 .140 .115 .574 relifac5 .171 .151 .237 .571 relifac4 .130 .217 .176 .550 relifac1 .179 .201 .099 .506 webfac3 .2 1 3 .2 4 5 .070 .622 webfac5 .1 2 7 .0 9 2 .141 .604 webfac4 .2 0 1 .0 9 8 .127 .600 webfac2 .0 9 6 .2 7 2 .102 .485 webfac1 .0 4 2 .3 0 6 .169 .442 custserv2 .1 46 .2 1 9 .2 5 5 .750 custserv1 .1 68 .3 0 0 .2 8 7 .574 custserv3 .2 68 .2 4 6 .2 5 8 .488 Extraction Method: Principal Axis Factoring. Rotation Method: Varimax with Kaiser Normalization. Table 1: Rotated Factor Matrix(a)
89
Journal of Internet Business
Issue 5 - 2008
Data Analysis Bivariate frequency distribution of the respondents were done according to age, gender, race and average family monthly income and other questions related to Internet browsing. To test the hypotheses of this study, regression and ANOVA were used. The analysis enabled us to examine the individual impact of the independent variables on online shopping.
General usage of Internet 1. Internet access
One of the important indications of internet experience is the pattern of Internet access by the consumer. In this situation, the Internet access could be assessed by looking from two different aspects i.e. where and how long. Table II illustrates this pattern. It clearly shows that the majority of the respondents (66.7%) used the Internet at home followed by 17.8% at university and 10.1% at cyber café. Majority Maj ority of the users spent 1 to 2 hours everyday for Internet browsing (36.5%), more than 4 hours (31.5%), 3 to 4 hours (23.2%), and only 8.9% spent less than 1 hour. In conclusion, the results show a general pattern of Internet usage of young consumers in Malaysia whereby it could be concluded that they are having their own Internet connection at home which lead to the active usage of Internet whereby the average time spend is more than 2 hours.
2. Use of the Internet
Among the seven popular usage of Internet, searching for information on the Web was the most frequently adopted activity for Internet users (51.8%). The second category of usage is communication purposes (45.0%), followed by entertainment (43.1%), education (31.5%), pleasure (15.7%), work (15.1%), online shopping (8.3%) and others (1.8%). From the data it was found that more than 60% never bought any product through online (62.3%). On the other hand only 4.2% of the respondents regularly buy through online. Out of 496 respondents 105
90
Journal of Internet Business
Issue 5 - 2008
respondents occasionally buy products through online.
Frequency
Per cent
Place of Internet Access Home At university Cyber café Missing
331 88 51 26
66.7 17.8 10.1 5.4
Purpose of Internet usage Work Entertainment Online shopping Communication Seeking information Education Pleasure Other
75 214 41 223 257 156 78 9
15.1 43.1 8.3 45.0 51.8 31.5 15.7 1.8
Online buying Never buy online Buy on the web Occasionally
309 21 105
62.3 4.2 21.16
Household monthly income Below RM1000 RM1001- RM3000 RM3001-RM5000 RM5001-RM10000 Above RM10000
77 372 26 11 10
15.5 75.0 5.2 2.3 2.0
Table 2: General usage of Internet
Hypotheses Testing The strength of the proposed relationship was assessed using the respective statistical analyses summarized in Tables 3 and 4.
Variables Website Design Reliability Customer Service Trust
Beta .073 .239 .252 .161
t-value 1.589 4.863 5.230 3.647
p-value .113 .000 .000 .000
Table 3: Regression Results Hypothesis 1: There is a significant relationship between web site design and online shopping
91
Journal of Internet Business
Issue 5 - 2008
The results of this study show that the association between web site design and online shopping is not significant. The multiple regression result shows website design have beta = .073; p-value = .113. The results prove that, the null hypothesis that there is no relationship between web site design and online shopping could not be rejected. Even though the web site is perceived to be one of the important factors in previous study, in this study it proved otherwise. From the analysis, we found that Malaysian young consumers who are browsing Internet perceived web site design as less important factor that would likely to influence their online buying behaviour. This may be due to the low level of involvement of the young consumers whom have experience in online shopping (only 4.2% buy through online regularly). However, we can expect to get stronger association towards the perception on web-site design if the level of involvement is high. Similarly, further analysis on those youngsters, we found that they considered that their online purchasing will be influenced by good web site design. Therefore, it is believed that website design does help in enhancing the young consumers to buy online.
Hypothesis 2: There is a significant relationship between reliability and online shopping
Reliability is the important factor that affects online buying and most of the consumers are concerned about on-time delivery of their products (Shergill and Chen, 2005). The results of this study (please refer Table III) show that there is a significant association between reliability and online shopping. It is significant at 0.01 level. Accordingly, the hypothesis 2 could not be rejected. In addition, the direction of the associations is positive in which it indicates that the higher the reliability of the web site of e-retailers, the higher will be online buying. As such, there is a need for the e-retailers to ensure all aspects the reliability especially in term of product delivery should be guaranteed. This will enhance the acceptability of young consumers to participate more in an online buying experience.
Hypothesis 3: There is a significant relationship between customer service and online shopping
Ainscough (1996) found that most of the companies in his study used online as a way to provide help and service to their customers. The online customer service factor is another important
92
Journal of Internet Business
Issue 5 - 2008
factor that has positive effects on online shopping. Referring to Table III, the third hypothesis tested the relationship between customer service and online shopping. The regression result (beta = .252, t-value = 5.230, p-value = 0.001) indicates that the association between customer service and online is significant at 0.01 level (p = 0.000). In term of direction, the result shows that there is a positive direction between the two constructs. This study also confirmed the findings of another recent study in New Zealand by Shergill and Zhaobin (2005). Furthermore, it was found that the beta value of 0.252 is the highest when compared to other variables. This result indicates that customer services could be considered as the most important variable that may influence the online purchasing. In this situation, there is a need for the online companies to improve their online customer services if they would like to have more young consumers to involve in online purchasing.
Hypothesis 4: There is a significant relationship between trust and online shopping
Table III shows that the association between trust and online shopping is significant at 0.01 level whereby the analysis result showed the beta = 0.161 and t-value = 3.647 (p=0.000). The support for hypothesis 4 reflects similar arguments in previous studies (Shergill and Zhaobin, 2005; Gefen, 2002; Jarvenpaa et al., 1999, 2000; Koufaris and Hampton-Sosa, 2004; Koufaris and Hampton-Sosa, 2002). Similarly, it demonstrates that trust is also playing an important role in an online buying situation. As such, it is i s recommended that the online companies to build this t his kind of trusting relationship by developing strategy that could instil sense of belongingness between them and the young consumers.
Hypothesis 5: There is significant difference in online shopping among different races in Malaysia
To test this hypothesis, one-way ANOVA was used. The purpose of testing this hypothesis is to assess any perceived differences among the races and recommend suitable promotional strategy for the company to increase the marketability of their online product or services. The analysis in table IV displays the results where F value (1.169) was found to be insignificant. The result indicates that there was no significant difference in online shopping among different races
93
Journal of Internet Business
Issue 5 - 2008
(Malay, Chinese, Indian and others) in Malaysia. Thus the null hypothesis was sustained and the alternate hypothesis was rejected. The result provides very significant outcome for the company. It could be argued that, the company should not develop different marketing strategy for different races especially in the context of Malaysian young consumers. This will definitely give great saving not only in term of their operating cost but also to the overall planning of the strategy.
Between Groups Within Groups Total
Sum of Squares 1.352 189.613 190.965
df 3 492 495
Mean Square .451 .385
F 1.169
Sig. .321
Table 4: ANOVA- Difference in Online shopping among different races in Malaysia
Conclusion The analytical results of our investigation indicate relationships between young consumers’ perceptions of the factors that influence their intention to buy through online. More specifically, consumers’ perceptions of the customer service, reliability and trust of online purchasing exhibit significant relationships with their online buying intention. The analytical results are generally consistent with previous. Trust has received the most consistent support as factors that influence online buying (Gefen, 2002; Jarvenpaa et al., 1999, 2000; Koufaris and Hampton-Sosa, 2004; Koufaris and Hampton-Sosa, 2002). Marketers need to realize that the online marketing environment affects the way consumers view and develop relationships. In this context, to add value to the online shopping experience and to build relationships, trust is everything.
Notably, examination of the relative strengths of the associations between the individual independent variables and online buying intention clearly indicate that Customer Service, Trust and Reliability can explain much of the variation in online buying intention (Shergil & Chen, 2005; Gefen, 2002; Jarvenpaa et al., 1999, 2000; Koufaris and Hampton-Sosa, 2004). Furthermore, it was also found that, for online buyers, the good perception on the customer
94
Journal of Internet Business
Issue 5 - 2008
service is considered as the best predictor when compared to other constructs.
When individuals have more experience with online buying, the impact of perceived factors on intentions to buy online is different from that of inexperienced online buyers. Information obtained from experience over a period of time undoubtedly has the potential to modify future intentions of online buying. Therefore, experience gained over time has potential implications for the other buying behavior model and future research should be conducted in this area. This will serve as a platform that will lead to the sustained confidence of the consumers in online purchasing.
In this study, study, it was found found that few consumers consumers were buying buying through online
regularly, although 72.4 percent of the respondents browsed the Internet everyday.
Limitations and Future Direction It is necessary to recognize the limitations of the current study. Firstly, since the survey was conducted among a group of students from two private universities, the results should be interpreted with caution, particularly with respect to the generalization of research findings of Malaysian consumers as a whole. Next, the sample size itself is relatively small. To accurately evaluate Malaysian consumers’ perceptions of online shopping, a larger sample size is desirable.
Future research needs to focus on a larger cross section of Internet users and more diversified random samples to verify the findings of the current study. Moreover, to further studies clarity of the factors influence on online shopping, Technology Acceptance Model (TAM) or behavioral model could be used. Future inquiries could also examine the causal relationships between factors and how consumers’ perceive overall online shopping by employing a structural equation modeling technique. In addition, future research needs to examine businessto-business purchase in the context of cross-national and cross cultural differences.
Reference
95
Journal of Internet Business
Issue 5 - 2008
Ainscough, T.L. (1996) ‘The Internet for the rest of us: marketing on the World Wide Web’, Journal of Consumer Marketing, Vol. 13, No. 2, pp. 36-47. AcNielsen. (2007) ‘Seek and You Shall Buy. Entertainment Entertainment and Travel’, viewed 18 January 2007 <http://www2.acnielsen.com/news/20051019.shtml> Anderson, J.C. and Narus, J.A. (1990) ‘A model of distributor firm and manufacturer firm working relationships’, Journal of Marketing, Vol. 54, No. 1, pp. 42-58. Cockburn, C. and Wilson, T.D. (1996) ‘Business of the World-Wide Web’, International Journal of Information Management , Vol. 16, No. 2.
Dholakia, R., Uusitalo, O. (2002) ‘Switching to electronic stores: consumer characteristics and the perception of shopping benefits", International Journal of Retail & Distribution Management, Vol. 30, No. 10, pp. 459-69.
E-commerce On the Rise, available at:
http://www.goecart.com/enewsletter/sep05/index.htm Forrester. (2006) ‘Online Retail: Strong, Broad Growth’, viewed 18 January 2007 <http://www.forrester.com/Research/Document/Excerpt/0,7211,39915,00.html Gefen, D. (2002) Reflections on the Dimensions of Trust and Trustworthiness among Online Consumers, The DATA BASE for Advances in information Systems, 333, pp.38-53. George, J.F. (2002a) ‘Influences on the intent to make Internet purchase’, Internet Research: Electronic Networking Applications and Policy, Vol. 12, No. 2, pp. 165-180.
George, J.F. (2004) ‘The theory of planned behavior and Internet purchasing’, Internet Research, Vol. 14, No. 3, pp. 198-212.
Hellier, P.K, Geursen, G.M., Carr, R.A., and Rickard, J.A. (2003) ‘Customer repurchase intention: A general structural equation model’, European Journal of Marketing, Vol. 37, No. 11/12, pp. 1762-1800. Hoffman, D.L., Novak, T.P. and Peralta, M. (1999) ‘Building consumer trust online’, Communications of the ACM , Vol. 42, No. 4, pp. 80-85.
Jarvenpaa, S.L, Todd, P.A. (1997) ‘Consumer reactions to electronic shopping on the World Wide Web’, International Journal of Electronic Commerce, Vol. 1, No. 2, pp. 59-88. Jarvenpaa, S.L., Tractinsky, N. and Vitale, M., (2000) ‘Consumer Trust in and Internet store’, Information Technology Management , Vol. 112, pp.45-71.
Jun, M., Yang, Z. and Kim, D.S. (2004) ‘Customers’ perceptions of online retailing service quality and their satisfaction’, International Journal of Quality & Reliability Management , Vol. 21, No. 8, pp. 817-840.
Kim, J. and Lee, J. (2002) ‘Critical design factors for successful e-commerce systems’, Behaviour and Information Technology, Vol. 21, No. 3, pp. 185-189.
96
Journal of Internet Business
Issue 5 - 2008
Kini, A. and Choobineh, J. (1998) ‘Trust in electronic commerce: definition and theoretical considerations’, Paper presented at 31st Hawaii International Conference on System Sciences, pp. 51-61. Koufaris, M. and LBarbera, P.A. (2002) ‘Consumer Behavior in Web-Based Commerce: An empirical study’, International Journal of Electronic Commerce, Vol. 62, pp. 131154. Koufaris, M. and Hampton-Sosa, W. (2004) ‘The development of initial trust in an online company by new customers’, Information and Management , Vol. 413, pp. 377-397. Mayer, R.c., Davis, J.H. and Schoorman, F.D. (1995) ‘An integrative model of organization trust’, Academy of Management Review, Vol, 20, No. 3, pp. 709-734. Moore, G.C. and Benbasat, I. (1991) ‘Development of an instrument to measure the perceptions of adopting an information technology innovation’, Information Systems, Vol. 2, No. 3, pp. 192-222. Passachon, L. and Speece, M. W. (2003, January), ‘The Effect of Perceived Characteristics of Innovation on E-Commerce Adoption by SMEs in Thailand’, The Seventh International Conference on Global Business and
Economic
Development,
January, 8-11, 2003, Thailand. pp.1573-1585. Phau, I., and Poon, S.M. (2000) ‘Factors influencing the types of products and services purchased’, Internet Research: Electronic Networking Applications and Policy, Vol. 10, No. 2, pp. 102-113.
Ranganthan, C. and Ganapathy, S. (2002) ‘Key dimensions of business-to-consumer business-to-con sumer Web sites’, Information and Management , Vol. 39, pp. 457-465. Shaw, M., Blanning, R., Strader, T., and Whinston, A. (2000) ‘Handbook of Electronic Commerce’, Springer-Verlag Berlin, Heidelberg, 106-217. Shergil, G.S., and Chen, Z. (2005) ‘Web-based shopping: consumers’ attitudes towards online shopping in New Zealand’, Journal of Electronic Commerce Research, Vol. 6, No. 2, pp. 79-94. Sorce, P., Perotti, V. and Widrick, S. (2005) ‘Attitude and age differences in online buying’, International Journal of Retail & Distribution Management , Vol. 33, No. 2, pp. 122-
132. Than, C.R., and Grandon, E. (2002) ‘An exploratory examination of factors affecting online sales’, Journal of Computer Information Systems, Vol. 42, No. 3, pp. 87-93. The Malaysian Communications and Multimedia Commission (MCMC) (2006), Overview of ecommerce in Malaysia, viewed 18 January 2007 <http://globaltechforum.eiu.com/index.asp?layout=printer_friendly&doc_id=8706> Turban, E., Lee, J., King, D. and Chung, H.M. (2002) ‘Electronic Commerce: A Managerial Perspective’, Prentice-Hall, Inc.
97
Journal of Internet Business
Issue 5 - 2008
Van Riel, A.C.R., Semeijin, J. and Janssen, W. (2003) ‘E-service quality expectations: a case study’, Total Quality Management , Vol. 14, No. 4, pp. 437-450. Vijayasarathy, L. and Jones, J.M. (2000) ‘Print and Internet catalog shopping: assessing attitudes and intentions’, Internet Research: Electronic Networking Applications and Policy, Vol. 10, No. 3, pp. 191-202.
Vrechopoulos, A.P. Siomkos, G.f and Doukindis, G.I. (2001) ‘Internet shopping adoption by Greek consumers’, European Journal of Innovation Management , Vol. 4, No. 3, pp. 142-152. Ward, M.R., and Lee, M.J. (2000) ‘Internet Shopping, consumers search and product branding’, The Journal of Product & Brand Management , Vol. 9, No. 1, pp. 6-20.
World Intellectual Property Organization (WIPO) (2007), World Online Population,
http://www.wipo.int/copyright/ecommerce/en/ip_survey/chap1.html
98
