The rapid progression of the internet as a well-developed global network has enabled the advent of online shopping. The emergence of the internet has allowed for a paradigm shift in how people shop traditionally. Resultantly, given physical inspection is impossible, the potential of online is greatly dependant on interaction issues with computers (Hoque and Lohse, 1999; Griffith et al., 2001). The initial adopter of online shopping could well be categorised as being the young generation (Sorce, 2005; Perotti, 2005). However, this category of people is being extended to include the general population with internet being more accessible and more people being computer literate.
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A study in the year 2000 in the USA showed 60 percent of the online shoppers were women (Sorce, 2005; Perotti 2005). More and more women are working and becoming independent nowadays and the responsibility of a household being mostly on their shoulders, they are turning to electronic commerce to do grocery shopping and other purchases. Moreover, a report by Jupiter Media Metrix showed consumers age 50 and above consisted of 16 percent of new online shoppers in the USA (Tedeschi, 2002). This shows more people are computer literate these days. Mauritius is slowly approaching the same situation as USA with woman emancipation increasing and more people being computer literate. Moreover, Mauritius currently has an ageing population and it will be of a great help to old people if they learn to use online shopping.
The Online Shopping Process
The process of online shopping may be defined as when consumers decide to use the internet to shop. Hollensen (2004) alleges that the internet has developed into the “new” distribution channel. Using the internet to shop online has become one of the primary reasons to use the Internet, combined with searching for products and finding information about them (Joines et al., 2003).
The figure below shows a ten-step model to describe a consumer online shopping behavior and process:
Searching for web sites
Browsing web sites
Searching for products
Evaluating and comparing
Receiving and checking
Products accepted or returned
Figure 2.0: Ten-step Business-to-consumer consumer behavior model
Figure adapted from: Hui-Ming Kuo, Sheue-Ling Hwan and Eric Min-Yang Wang, (2004),”Evaluation research of information and supporting interface in electronic commerce web sites”, Industrial Management & Data Systems, Vol. 104 No.9.
The process of online shopping may be initiated by a consumer’s need for a particular product. The consumer searches for online stores websites and browses the different websites until an appropriate website is found. The consumer then navigates through the website, searches, examines, evaluates and compares the products. If the consumer encounters any kind of problem or difficulty during these steps, he can always leave the website and restart the process as from the “searching for websites” step.
Once the specific product is found, the consumer will put it into a shopping cart. This step is referred to as the “temporary purchase”. From there on, the online shopper can either decide to search for another product or move forward to the next step. After the purchase is done, there is the “payment process”. A payment method and delivery site is chosen during this step. However, if there is any kind of limitations or the payment procedures are too complicated, the consumer can search for another product within the same website or choose to leave the shopping store for another website. The next steps involve waiting for the products and checking them before acceptance.
Why consumers shop online
Convenience of online shopping
A customer is not bound to specific locations or opening times anymore. He can shop for products or services at any time and place given he has connection to the internet. Certain characteristics are making online shopping handier for the consumer, as compared to the traditional way of shopping, such as the ability to at any time view and purchase of products, visualising their needs with products, and discuss products with other consumers (Joines et al., 2003). As contested by Oppenheim and Ward (2006), the current primary reason people shop over the internet is the convenience. Furthermore, Alreck and Settle (2002) established that compared to traditional modes of shopping, considerable time was saved through internet shopping.
Information and reviews on the internet
Internet allows quick and easy access to large volume of information. The customer can go on sites where previous customers have rated, reviewed and commented on a product to get a clear idea about it. Moreover, online stores now provide 360 degrees view or through virtual 3-Dimension simulation compared to earlier on when flat pictures and standard feature specifications were considered to be one of the most relevant sources of information obtained on the web when purchasing online (Jiyeon K., and Forsythe S. (2010). Currently consumers have the possibility to examine the products inside out hence increasing the positive experience brought by online shopping.
Better price and selection on the internet
A wide selection of products and services are provided on the internet. Internet allows the possibility to deal with many different vendors simultaneously and rapidly switch vendors and suppliers without causing much disturbance. The customer can easily compare prices on the different online stores, hence, getting competitive pricing with minimum search costs and time (Rowley, 1996). This will interest price sensitive consumers/shoppers. Price sensitive shoppers are mainly concerned with getting products at the lowest price or gaining the best value for the money they spend (Bellenger, 1980).
Why consumers refrain from shopping online
Fraud and security concerns on the internet
Monsuwe et al. (2004) argue that because the internet is a comparatively new way of shopping, it is challenging for the consumers and therefore it is perceived by the consumer as being risky. It is difficult to recognize an honest trader from a fraudulent one on the internet. There are some people who can buy malwares, install them on online stores and then use them to steal banking credentials of customers. They have the ability to attack specific accounts and transfer stolen funds to their accounts. There are some scammers who often sell products at a very low price just so that they can get the credit card information or bank account details of a person. They may then indulge in fraudulent activities, taking the money and sending worthless or faulty items or sometimes not even anything.
Privacy concerns on the internet
The consumer is not able to monitor the level of security when he is revealing personal data on the internet. Many websites do not ensure data protection and sell or supply customers’ contact information to an online merchant. They use tracking devices and allow advertisers to build personal profiles of the consumer’s shopping habits and sell the information to other companies who market or produce similar products. The customers are then bombarded with spam mails and advertising. Furthermore, every time a person uses his credit card on the internet, there is an identity theft risk associated with it. Thus, in order to shop online, consumers have to take a risk with their privacy (Atkinson et al., 2007).
Inspection of products on the internet
The consumer is unable to check the quality of the product online. It cannot be tasted, smelled or touched. The customer can only rely on feedbacks by previous users or the pictures and descriptions provided. Shopping online means you have to wait to receive the product(s) whereas traditional shopping implies that you get your purchase right away. The consumer does not get the opportunity to inspect the product personally or try it until it arrives by post. Misunderstanding and misinterpretation of some items bought on the internet is a common issue. Exchanging or returning faulty items can prove to be difficult when they were shopped online. Hence, since physical inspection is not possible with online shopping, the online shoppers only have to trust what is being shown on their computers (Hoque and Lohse, 1999; Griffith et al., 2001).
Determinants of Online Purchase
Technology Acceptance Model (TAM)
Examining the different factors that affect technology acceptance generally, will help to better understand the acceptance of online shopping. Many studies have been carried out to decipher the mental processes that lead to human decision-making. In the past, The Theory of Reasoned Action (TRA) and The Theory of Planned Behaviour (TPB) have been used excessively to predict the different types of behavior. However, these theories have had little success where prediction of technology acceptance is concerned. This situation eventually led to the development of the Technology Acceptance Model (TAM).
TRA is used to understand the determinants of intentional behavior. It alleges that intentional behavior is primarily determined by both the attitudes adopted by potential customers toward performing the act and what people will think about them (social norms/subjective norms). TPB is an extension of TRA where perceptions of external and internal constraints on behavior are included. Davis (1989) then extended the TPB to propose the TAM. The new TAM (Venkatesh and Davis, 2000) alleged that users make the decision to adopt a behavior/technology (online shopping) based on the result of their evaluation of the level of difficulty while using the technology (perceived ease of use), their perception that the technology will enhance their job performance (perceived usefulness), and the power people near them exert on them (subjective norm).
TAM helps explain determinants of computer acceptance and can illuminate user behaviours across a broad range of computing technologies and populations; it also is parsimonious and theoretically justified (Davis et al., 1989). Research predicting intentions to use online shopping behaviour has frequently used TAM (Vijayasarathy, 2004).
This model has been studied and tested with a variety of technologies and populations and it has turned up to be one of the most robust theories of behavior. Consequently, for the sake of this project, the TAM amongst others has been adopted to assess the online shopping behavior of customers in Mauritius.
Perceived Ease of Use
Actual use of internet to shop online
Intention to use internet to shop online
Figure 2.0: Technology Acceptance Model of online shopping
Perceived usefulness and behavioral intention to shop online
Perceived usefulness is defined as the extent to which a consumer firmly believes that online shopping will help to improve his or her transaction performance (Chiu et al., 2009). According to Burke (1996), perceived usefulness is the primary prerequisite for mass market technology acceptance, which depends on consumers’ expectations about how technology can improve and simplify their lives (Peterson et al., 1997). A web site is useful if it delivers services to a customer but not if the customers’ delivery expectations are not met (Barnes and Vidgen, 2000). In a robust TAM, perceived usefulness predicts IT use and intention to use (e.g. Adams et al., 1992; Agarwal and Prasad, 1999; Gefen and Keil, 1998; Gefen and Straub, 1997; Hendrickson et al., 1993; Igbaria et al., 1995; Subramanian, 1994), including e-commerce adoption (Gefen and Straub, 2000).
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The accuracy and usefulness of an online store site also influence customer attitudes. Users may continue using e-commerce service if they consider it useful, even if they may be dissatisfied with their prior use (Bhattacherjee, 2001b). Moreover, it is argued that very often a useful product or service provided online makes people likely to use it and then recommend it to their friends and family. Therefore, usefulness usually acts as a persuasive tool that increases social influences on intention to continue using the technology.
Customers who have completed the shopping task of product acquisition efficiently, will be more likely to exhibit stronger repurchase intentions (Babin and Babin, 2001). Chiu et al. (2009) proposes that an individual is more likely to assume continued usage when he realizes such usage is useful. Successful acquisition of product and efficient accomplishment of the shopping task leads to customers exhibiting stronger repurchase and adoption intentions (Babin and Babin, 2001).
Perceived ease of use and behavioral intention to shop online
Perceived ease of use in the context of this research refers to the extent to which a consumer believes that online shopping will be free of effort (Chiu et al., 2009). If a user finds a site difficult to use, cannot find the desired product on a business-to consumer (B2C) web site, or is not clear on what a site offers, the user will typically leave that site (Pearson et al., 2007). Web site design quality is crucial for online stores (Lee and Lin, 2005) and has strong impact on user perception of ease of use. Web site design describes the appeal that user interface design presents to customers (Lee and Lin, 2005). If a system or technology is very difficult or complex to use, it will not be likely be used if an alternative method already exists.
The TAM suggests that, all the other factors being equal, it is possible that an online shopping store which is deemed to be easier to navigate and use, provoke a perception of usefulness. Ease of use has a direct effect on perceived usefulness and behavioural intention (Venkatesh and Davis, 2000), that is, perceived ease of use directly affects intent of Mauritians to use internet to shop online.
Subjective Norms and behavioral intention to shop online
Subjective norm is “a person’s perception that most people who are important to him think he should or should not perform the behavior in question” (Ajzen and Fishbein, 1975). Also, subjective norm (which will also be called social pressure in this research) is “the social pressure to commit or not to commit to a certain behaviour” (Ajzen, 2006). Social pressure has the possibility to have an impact on the behavior of people to shop online or not.
Potential online shoppers are likely to look among their opinion leaders, with initial experience for evaluative information and cues, within their social environment to increase their familiarity with the online shopping site (Venkatesh and Davis, 2000). Therefore, if online shopping is a socially desirable behaviour, a person is more likely to shop electronically (George, 2002). Positive or negative social pressures, such as media, online social groups or word-of-mouth, influence customers to increase or decrease their intention to shop online.
Shim et al. (2001) consider social pressure only marginally significant for online shopping intentions, whereas Foucault et al. (2005) confirm a significant link between talking about online shopping with friends and intention to shop online. Furthermore, Yu and Wu’s (2007) study found that “subjective norm is positively related to the intention to shop online.”
Situational factors are described as temporary conditions which affect how consumers behave, in this case, if they will adopt online shopping. They may also be defined as things that are outside a person’s immediate control. They could include a consumer’s preference for personal contact, lack of mobility or need for special items.
Some people prefer to shop online especially because it removes the need for personal contact and interaction with salesperson and other customers (Curran et al., 2003; Dabholkar and Bagozzi, 2002; Polatoglu and Ekin, 2001; Sathye, 1999; Davis et al., 1992). On the other hand, others prefer to interact or deal with people instead of machines, which are perceived to be impersonal and unable to provide personalized service (Dabholkar and Bagozzi, 2002; Walker et al., 2002; Dabholkar, 1996; Prendergast and Marr, 1994; Cowles and Crosby, 1990).
The location of a store also is a determinant. If a store is within walking distance, many people will prefer to go shopping the traditional way. Moreover, some consumers, who cannot shop in traditional stores due to an illness or any other immobilizing factors, can resort to online shopping to meet their shopping goals.
Furthermore, the reason behind the consumer’s purchase also is important. If a consumer is in need for a special item which is not available in traditional stores and markets, he can consider online shopping as a way to fulfill his needs (Wolfinbarger and Gilly, 2001).
Demographics of Consumer
Mahmood et al. (2004) suggested that demographics and lifestyle characteristics also play an important role in customer buying behavior. The demographic variables such as income, education, gender and age were found to have an impact on the decision of whether to buy online in a study conducted by Bellman et al. (1999).
Kim et al. (2000) found that customer lifestyles directly and indirectly affect the customers’ buying behavior on the internet. From an economic point of view, lifestyle indicates how individuals assign their income and expenditures. Consumers with high incomes tend to shop online more than lower income households. High income households are associated with a lavish lifestyle. They are usually computer literate, own computers and have internet connections.
Highly educated people are more comfortable using the electronic medium to shop (Burke, 2002). It is understood that higher educated consumers are also the ones with higher income. Therefore, higher educated persons are more likely to shop online than less educated people.
Men and women approach online shopping from a different point of view. A study in the year 2000 in the USA showed 60 percent of the online shoppers were women (Sorce, 2005; Perotti 2005). Nowadays, many women are working and managing household chores and shopping is becoming a bit of a challenge. Therefore, more and more women are turning to online shopping. Moreover, shopping is more of a woman forte than a man.
Donthu and Garcia’s (1999) found that older internet users were more likely to buy online when compared to younger users, even though the younger users had more positive attitudes towards internet shopping. Age has been seen to reduce the perception of the risk factor. Therefore, the online purchase intention is higher in mature consumers as they find fewer risks associated with online shopping. However, Wood (2002) refute this statement by alleging that compared to older consumers, younger customers are more interested in trying and using new technologies, like online shopping, to gain information about new products, to compare and assess alternatives.
Perceived risks of online shopping
Trustworthiness of online vendors
According to Pavlou and Fygenson (2006), trust is defined as the buyer’s belief that the seller will behave benevolently, capably and ethically. Since the customer only has limited information and contact about the vendor and there is no proven guarantees that the vendor will not indulge in undesirable opportunistic behaviors, trust is a critical aspect of online shopping (Gefen et al., 2003). Such behaviors include fake photos and misleading descriptions, sale of fake or defective products, failure of the vendor to deliver merchandise or even failure to deliver in a timely manner and sending something of less economic worth than advertised. When consumers initially trust their online vendors and have perception that adopting online shopping is beneficial to shopping performance and effectiveness, they will eventually come to believe that online shopping is useful (Gefen et al., 2003).
Privacy of online shoppers
Privacy refers to the extent to which the electronic commerce web site is safe and protects the customers’ information (Chiu et al., 2009). Hoffman et al. (1999) suggested that the main reason why many people still have to shop online or provide personal information to online vendors is due to a lack of trust, which is manifested in their concern that online vendors will sell their personal information to third parties without their knowledge or permission. Consumers will refrain from shopping online if they do not get the assurance that their credit card information is secure and protected from potential hackers (Collier and Bienstock, 2006).
Past related online shopping experience and future behavioural intention
Experience refers to how much the user has been exposed to a given technology. This factor is important while studying the online shopping behavior because many people rely on the knowledge acquired from past experiences to develop behavioural intentions for the future. Enjoyment in using a web site (online store) significantly affects intentions to use (Davis et al., 1992; Igbaria et al., 1995; Teo et al., 1999; Venkatesh et al., 2002). Shopping enjoyment (Koufaris, 2002), perceived entertainment value of the process (O’Keefe et al., 1998), and perceived visual attractiveness of the online stores websites have positive impacts on perceived enjoyment and online shopping continuance intentions (Van der Heijden, 2003).
Customer satisfaction is regarded as being important for the success of internet stores as it is considered to be a major driver of adoption of online shopping. The satisfaction gained after the first time experience with online shopping is positively associated with intentions to adopt the technology, both directly and indirectly, by way of its impact on attitude (Oliver, 1980; Oliver and Swan, 1989a).
Online shopping can be perceived as a two-sided coin. On one side, it is seen as a beneficial means to shop and on the other side, there are the risks associated with it. A thorough study of the benefits and drawbacks of online shopping is necessary. Oppenheim and Ward (2006) brought forward the notion that the convenience benefit is the current primary reason people shop electronically. Another advantage of online shopping is the abundance of information and reviews on products which are available on the internet. Internet also offers a wide variety of products and competitive prices. As stated by Bellenger (1980), price sensitive shoppers view low prices as a very big incentive. On the other hand, fraud and security concerns and privacy concerns are drawbacks of the online shopping channel. Internet being a new and challenging way of shopping, it is perceived by many consumers as being risky (Monsuwe et al., 2004).
The factors determining acceptance of online shopping are related to the TAM model and some other elements. Burke (1996) alleged that perceived usefulness is the primary condition which triggers technology acceptance, while Pearson et al. (2007) argued that if the online shopping process is not perceived to be easy to use, the consumer will leave the online store. However, Venkatesh and Davis (2000) associated the above two factors of TAM and concluded that ease of use has a direct effect on perceived usefulness and behavioural intention. Additionally, George (2002) contends that an individual is more likely to adopt online shopping if it is a socially accepted behavior, that is subjective norms also play an important role in the acceptance of online shopping.
Situational factors, demographics, perceived risks and previous online shopping experience constitute the other determinants of online shopping. Demographic characteristics like income, education, gender and age have been known to affect intention to shop online (Bellman et al., 1999). Trust is a critical aspect of online shopping (Gefen et al., 2003) and consumers will refrain from shopping online if they feel that privacy is not protected (Collier and Bienstock, 2006). Furthermore, if a previous online shopping experience was not satisfactory, it has a negative impact on the acceptance of online shopping (Oliver, 1980; Oliver and Swan, 1989a).
The dissertation topic is, understanding online shopping behavior of customers in Mauritius. The literature provides background information about how to go about the research. Understanding the benefits and drawbacks of online shopping along with the factors affecting acceptance of online shopping gives a general idea about the situation and behavior of Mauritians.
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