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 diagram below shows how online shopping takes place:
Connect to the internet and open online shopping website
Browse the website and choose purchase items
Add the item in the shopping cart
Checkout and submit orders
Login or register on the website
Choose transport mode and delivery speed
Choose payment mode
Enter personal details like shipping address, phone number, email etc
Confirm order(s) and complete the payment
Shopping success and logout
Figure 1.0: How online shopping take place
The consumer connects to the internet and goes to an online store. He may then browse through the product categories. He selects the product and quantity he wants to purchase and add it to his shopping cart/bag. A shopping cart is like a trolley or basket in which the customer “carries” his purchased items. He can add as many items he wants. Putting the product in the cart does not mean he is obliged to buy it and he can remove an item at any time if he has changed his mind about buying it. He can either continue shopping or opt for a secure checkout and submit his order(s).
The customer will be asked to sign in if he is already registered on the website or he will have to sign up. He will be asked to input some personal details like telephone number, shipping address, email address etc. He then chooses a payment mode, credit/debit cards, money transfer, Paypal etc. Furthermore, the customer chooses the delivery mode and speed and he confirms the transaction. He logs out from the website. After the transaction is approved, the customer receives an email stating that the person has successfully bought the following items and the email may be considered as an electronic receipt of the order. The customer usually receives his order in the time frame stated on the website.
Why consumers shop online
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.
Information and reviews
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.
Price and selection
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. 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
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.
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.
Inspection of the product
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.
Determinants of Online Purchase
Technology Acceptance Model (TAM)
By examining the different factors that affect technology acceptance generally, it 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 et al., 1989, then extended the TPB to propose the TAM. This new model 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 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
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 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 in different ways in different societies, depending on the culture.
In a collectivist culture, potential consumers of online shopping 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). According to Venkatesh et al. (2003), social influences result from subjective norms, which relate to individual consumers’ perceptions of the beliefs of other consumers. Therefore, if online shopping is a socially desirable behaviour, a person is more likely to shop electronically (George, 2002). 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. Subjective norm did not form part of the TAM originally, but it was added later.
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, like the environment surrounding him. They include physical factors, the reason for the customer’s purchse, social factors, the buyer’s mood etc.
An example of physical factor will be a store’s layout and design. Some people like to wander in big and sophisticated places while doing their shopping. This is also one of the reasons why so many shopping malls are being built all around Mauritius. 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. However, not all physical factors prevent people from shopping online. An example will be weather. If the weather is bad, it is raining and cold, many people will preferably turn to online shopping instead of traditional shopping.
Furthermore, the reason behind the consumer’s purchase also is important. If a person is buying a gift for another person, he will be more involved and will want to buy it the traditional way instead of ordering on the internet. He would not want to take any risks. In addition, many people enjoy traditional shopping. They view it as entertaining and a way to get rid of stress.
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
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 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).
Previous online shopping experience
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 web site (O’Keefe et al., 1998), and perceived visual attractiveness have positive impacts on perceived enjoyment and 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. Oliver and Swan argue that satisfaction is positively associated with intentions to use technology, both directly and indirectly, by way of its impact on attitude (Oliver, 1980; Oliver and Swan, 1989a).
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