Factors that affect consumer intention to online shopping

This research proposal is to investigate the factors that affect consumer intention to online shopping. The hypothesized variables are including ease of use, website design, security or privacy, price and convenience.

2.0 Objective :

To analyses how ease of use affect consumers intention to online shopping.

To investigate how website design affect consumers intention to online shopping.

To investigate how security or privacy affect consumers intention to online shopping.

To determine how price affect consumers intention to online shopping.

To analyses how convenience affect consumers intention to online shopping.

3.0 Research Question :

How ease of use affect consumers intention to online shopping?

How website designs affect consumers intention to online shopping?

How security or privacy affect consumers intention to online shopping?

How price affect consumers intention to online shopping?

How conveniences affect consumers intention to online shopping?

4.0 Introduction :

Internet has become an increasingly popular and multipurpose tool for marketing. It has publicized as an innovatory force for business and rapidly become an elementary vehicle for communications and transactions between marketers and consumers, and between businesses. The Internet represents an incredible-opportunity. For customers, it gives a much wider choice of products, services and prices from different suppliers and the means to select and purchase items more steadily (Dave, et al., 2003).

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Since about 1990, online shopping has emerged into every corner of life, connecting people to the culture of capitalism in frequent and daily ways. Internet lets us buying goods and services from merchants who sell on the Internet. Merchants have sought to sell their products to people who visit the Internet. Shoppers can visit web stores from the comfort of their homes and shop as they sit in front of the computer (Majak, 2008).

Airasia.com. The customers may easy to notice the advertisement and click on the advertisement to find out what is on promotion. Customers may be attracted by the advertisement and book the air ticket to go on the holidays. There are also some other services in the Airasia.com. Such customers also can book the hotel with together the air ticket, product and shopping service, travel service and others (Anon, 2009).

For example, Airasia provide online servicing. With the corporate website, the customers can straight away booking air ticket through online from Airasia website. Without the website, it is time consuming for the customers to buy airlines tickets from the counter. It is very convenient and save time to book the air ticket online (AirAsia.com, 2010). With the corporate website of Airasia, it can promote on the ticket fare. It is the easier way to promoting the air tickets. The customers only use finger the click on corporate website and it can find out the promotion advertisement. With the promotion, it will be attracted more customers to buy air tickets for the trips. Besides that, Airasia corporate website also provided other service to customers such as booking hotel, shopping service, travel service and another (Anon 2009)

Nowadays, the amount of consumers’ purchase online is gradually increased in the entire world. The total amount of internet users in Malaysia since year 2000 to 2008 has a huge increasing with total number of 3,700,000 users in 2000 to 14,094,000 users in 2008 (Miniwatts Marketing Group, 2009) (Table 1.1).

Table 1.1: Internet Usage and Population Growth

YEAR

Users

Population

% Pen.

Usage Source

2000

3,700,000

24,645,600

15.00%

ITU

2005

10,040,000

26,500,699

37.90%

C.I.Almanac

2006

11,016,000

28,294,120

38.90%

ITU

2007

13,528,200

28,294,120

47.80%

MCMC

2008

14,904,000

25,274,133

59.00%

MCMC

(Source: Miniwatts Marketing Group, 2009)

Online shopping became a trendy activity in life that enables consumers to enjoy their most preferable lifestyle. Online shopping is a type of electronic commerce used for business-to-business (B2B) and business-to-consumer (B2C) transactions which is the process consumers go through to purchase products and services over the Internet (KM Visually United, 2008). In particular, the spread of electronic commerce (e-commerce) have really influence the behavior of both retailers and consumers.

B2C remains important for its potential impacts on consumers’ shopping behavior although the B2B segment dominates e-commerce in terms of the dollar value of transactions made (Cao and Mokhtarian, 2005). With the flexible and interactive online shopping(e-shopping), it become substitute for traditional shopping media. Expected that e-shopping may well dominate the exchange of certain products and services in the future.

In short, before marketers start conducts the types of products or services, they should first understand the target market, target customers and more importantly, the online customer behavior. This is the first and foremost step to tackle different stage of customers to ensure that the offered products and services are benefits to them.

5.0 Significance of study:

Our study was based solely on the factors that affect consumer intention to online shopping. The findings of the research will add value to strategies designed to argument e-satisfaction and guarantee that e-customers will be satisfied. The results of the research will help online retailers to understand customer’s purchase behavior and to improve service quality and customer retention. Besides that, this study can be of benefit to online retailers focus on customer satisfaction to increase sales, attract more customers and retain customers (Wang & Huarng, 2004). In order to build successful business retailers need to be able to develop the appropriate culture, build proper service programs, and successfully execute these tasks simultaneously.

6.0 Literature review:

Ease of use

The widely used technology acceptance model (Davis 1989) argues that the perceived usefulness and ease-of-use are key factors in the user’s acceptance of e-commerce. Perceived usefulness has been defined as a user’s subjective perception of the ability of a computer to increase job performance when completing a task. Perceived ease-of-use is a person’s subjective perception of the effortlessness of a computer system, which affects the perceived usefulness, thus having an indirect effect on a user’s e-commerce acceptance.

The usefulness and ease-of-use have a vital impact on a person’s shopping channel preference and satisfaction (Devaraj et al. 2002). When compared to the traditional channels (physical store or agency and telephone), the Internet is useful primarily as a superior information source. The easily interpretable information reduces the perceived complexity of products. In addition to the ease-of-use of a Web shop application, accessibility of the Internet from home or workplace facilitates online shopping, and therefore the perceived ease of use may be higher than with the traditional channels.

Website design

Website design is concerned with how information is put up on the website. It is primarily concerned with the information that is put up on the site, the art beauty of the website, the ease of navigation through the site and the time taken for navigation for improving availability. The quality of website design is very important for any online store to attract customers. Cho and Park (2001) have found in their study that customer satisfaction in e-commerce is related to the quality of website design.

Design characteristics of a web page were found to affect consumers’ online buying decision. Ho and Wu (1999) found that homepage presentation is a major precedent of customer satisfaction. Moreover, satisfaction significantly affected customer’s attitudes and their intention to purchase. Wolfinbarger and Gilly (2003) argued that when customers interact with an online store they prefer to do so via a technical interface and not through any employee. Therefore the design of the website, which acts as the interface, would play an important role in influencing customer satisfaction. Assuming web design as an important issue in web shopping.

Security or privacy

Privacy of personal information is a significant issue for some consumers. Potential consumers are often prevented from shopping online by their concern for security (Han et al. 2001). Many consumers wish to avoid spam and telemarketing which could result from supplying contact information to an online merchant. In response, many merchants promise not to use consumer information for these purposes, or provide a mechanism to opt-out of such contacts. However, perceived risk can be reduced by knowledge, skill, and experience on the Internet, computer, and online shopping (Han et al. 2001).

However, consumers trust in the stores can reduce perceived risk. In addition, perceived control/users’ empowerment, enjoyment/playfulness, and perceived real added-value from membership have also been shown to be important dimensions of consumer attitudes towards online shopping (Koufaris, 2002).

Price

Price is an important factor of customer satisfaction. It is because consumers usually think of the price while they evaluate the value of an acquired product or service. Research on the role and importance of the online price contradicts the predominant belief that price is the main motivator for consumers when choosing a particular Web site. And while most online consumers would insist that low price is their major motive to buy online products.(Anon, 2004) For example, Amazon.com began trading in 1994, it emphasized low prices as the primary reason why customers should support it.(Karlsson, 2005) Another example, AirAsia was the first successful low price airline in the Southeast Asian region with providing online ticketing (AirAsia.com, 2010).

In other hand, shipping costs will reduce the price advantage of online merchandise, though depending on the jurisdiction, a lack of sales tax may compensate for this. Shipping a small number of items, especially from another country, is much more expensive than offline retailers order. Some retailers especially those selling small, high-value items like electronics, offer free shipping on sufficiently large orders (Anon, 2004).

Convenience

With the E-commerce, it provide convenient avenue shopping. The buyer can use internet for online store at home because it usually available in 24hours a day. Even the buyers do not have internet network at home, they can go for nearest cyber cafes, schools or working place. It is save a lot of time for the buyer by using E-commerce because travel to the retail store need to take for a long time. With the online shopping, it can making easy to locate merchants, search for the items and procure offering. The customer do not have

Consumers do not have to leave their home or go outside to find and obtain item by online. They can also search for items by category or online store. These time and searching benefits of online shopping are likely to be show in more positive perceptions of convenience and e-satisfaction. (Anand, 2007) Kaufman-Scarborough and Lindquist (2002) suggested that frequent online shoppers consider online shopping to be convenient by providing place convenience since they can shop without leaving their location and allow them to take advantage of time-convenience. Childers et al. (2001) found convenience was a significant predicator of usefulness, ease of use, and enjoyment of online shopping.

7.0 Methodology:

A theoretical framework is a collection of interrelated concepts, like a theory but not necessarily so well worked-out. A theoretical framework guides your research, determining what things you will measure, and what statistical relationships you will look for (Borgatti, 1999). This study mainly examined the influence of five significant independent variables such as ease of use, convenience, price, website design and security or privacy. Meanwhile, there is only one dependent variable, which is the factors that affect consumers intention to online shopping.

Theoretical framework for this study is:

Ease of use

Convenience

Factors that affect consumers intention to online shopping.

Price

Website design

Security or privacy

Independent variable Dependent variable

This study will focus on the factors that determined consumer intention to online shopping. The study aims is to identify the factors that verify their intention towards Internet shopping (e-shopping) among the respondents of consumers. The needed data and information are collected from primary data (data questionnaire) and secondary data (books, journals and Internet). Primary data is the data which collected by the researcher himself in order to achieve the study. The technique used in collecting primary data usually through mail survey, questionnaire, and also interview. In this study, the technique used to collect data is via questionnaire distribution. It is a versatile and a practical tool to collect various types of information in the most economical way. A set of question comprising of 30 questions which involved the variables tested in the hypothesis is going to be handed to a target of 100 education students.