Consumer Shopping Preferences: A Taiwanese Perception
Chuleeporn Changchit
Texas A&M University – Corpus Christi,
Tzong-Ru Lee (Jiun-Shen)
National Chung Hsing University,
ABSTRACT
Increasing numbers of people are gravitating towards more intensive use of the Internet as the accessibility of technology, the availability of information, and the ability to interact through the Internet increase and evolve. Obvious capabilities of the Internet include avenues for gathering information, purchasing a product, or rendering a service. These advances in Internet technology allow for the expansion of shopping options beyond traditional methods that may be more time consuming. Issues with having to physically gather information with offline shopping methods are alleviated, and customers are better able to efficiently use their time. For instance, instead of having to physically visit different stores to compare prices or rely on circular pamphlets in newspapers, a consumer is able to search and retrieve needed information through the Internet.
INTRODUCTION AND BACKGROUND OVERVIEW
As Internet usage is increasing, so is online shopping, especially in those countries whose marketing infrastructures are well developed. Consumers can shop at any time and have access to products not available in their geographic region. Furthermore, they are now able to access the Internet, not only from their personal computers, but from advanced electronic devices such as iPads and mobile phones. In addition, due to an increase in high-speed Internet access connections, lower connection costs, and increasing consumer competence, e-commerce activity will continue to grow as the availability and ease with which the Internet provides consumers the ability to handle needed tasks increasingly develops.
The explosive growth and popularity of social media like Facebook and MySpace coupled with applications offered with mobile smart phones has allowed for the increased popularity and purchase of virtual goods which has been a boom for ecommerce sites and mobile commerce (Thompson, 2010). Social media works in tandem with trust perception as online consumers are more willing to purchase goods and services via word of mouth recommendation from someone they know through a social media website or a recommendation from an online stranger (Hird, 2009). Fueling the online consumer social media explosion is the increased power of cell phone applications. Between 2008 and 2009 mobile payments leaped from $1 million dollars to $24.8 million dollars due to new options to purchase virtual items and products ranging from software games and music to online books from cell phones as opposed to being in front of a desktop pc or laptop (Thompson, 2010).
The Internet explosion has opened the doors to a new electronic world. Consumers are now able to use the Internet for a variety of purposes such as research, communication, online banking, and even shopping. With such advantages, the Internet is rapidly becoming the main method of communication and of conducting business conveniently. With a growing number of households turning towards the Internet and the world of e-commerce to shop, invest, make payments, and do online banking, new technological advancements will have to come about to make these transactions secure.
However, not all consumers are participating in online transactions as part of the Internet boom. As more and more businesses continue to establish an online presence, they are finding that some consumers are still reluctant to shift in that same direction. For various consumers there are still concerns with security and passing personal data over the Internet. There is a disparity between the number of consumers who visit a site and the number of actual purchases being made. Despite the millions of people who use the Internet every day and visit various shopping sites, the number of consumers who do not abandon their shopping carts but actually complete a purchase averages to only about three percent. This leaves a large portion of the Internet population as non-participants in online transactions as compared to those who fully complete transactions online and make purchases. Instead, these non-participants may abandon the purchase completely or fulfill the transaction in an offline setting. As such, it is important for online businesses or offline businesses interested in venturing into the online market to understand their consumers’ perceptions, online and offline, and what factors influence their shopping decisions. With better understanding of what factors play into consumer decision making in making transactions online or offline, retailers and businesses can be better gear themselves to serving their customers in either of the shopping venues.
Many brick and mortar companies have decided to enter e-commerce markets. However, the effects of e-commerce on individual business are varied based on several conditions. The ability to attract and retain customers is important to the success of online businesses. This study examines how consumers in Taiwan perceive online shopping and which factors are perceived differently between consumers who prefer online shopping and consumers who prefer offline (physical store) shopping. The better an online business understands the perceptions of these shoppers, the higher the chance that they can attract and retain customers.
This study intends to explore which factors are perceived as important to online customers in Taiwan when shopping on the Internet. Survey questions for this empirical research were compiled from previous studies on electronic commerce shopping behaviors (Alomaim, Tunca, & Zairi, 2003; Changchit, 2006; Joines, Scherer, & Scheufele, 2003; Kohli, Devaraj, & Mahmood, 2004; Koivumaki, 2001; Koyuncu & Lien, 2003; Lin, 2003; Posnock, 2004). There were additional questions related to target demographics. The survey questions based on previous studies represented five factors which are discussed below.
1. Perceived Benefits of Online Shopping
In this study, consumers’ perceptions of benefits were measured by four survey items. We hypothesize that consumers will prefer online shopping if they perceive it to have the following advantages over traditional store (offline) shopping: less time-consuming, lower prices, more convenient, and offering the capability to find rare items generally unavailable in offline stores. Many research studies use the Technology Acceptance Model (TAM) (Davis, 1989) with some extensions as their theoretical basis to study online shopping (Monsuwe et al., 2004; Shang et al., 2005; McCloskey, 2006). For comparison purposes, it might be noted that these studies employ the factor, “Perceived Usefulness” instead of the factor “Perceived Benefits” in this study. “Usefulness” refers to consumers’ perception that Internet shopping enhances the outcome of their shopping experience.
2. Perceived Ease of Use of Online Shopping
In this study, consumers’ perceptions of ease of use were measured. “Ease of Use” refers to consumers’ perceptions that Internet shopping facilitates the process of shopping i.e. reduces the effort and makes it easy to shop (Davis, 1989). We measure consumers’ perceived ease of use by four survey items. We hypothesize that consumers will prefer online shopping if they perceive it to have the following advantages over offline shopping: easier to compare products and prices, easier to find the right product, easier to pay, and ability to avoid the hassles of traffic, long lines etc.
3. Past Experience with Online Shopping
Research indicates that consumers evaluate their online shopping experiences in terms of perceptions regarding product information, payment, delivery, service, privacy and other such factors (Burke, 2002; Parasuraman & ZInkhan, 2002; Mathwick et al., 2001). Consumers will or will not continue future online purchasing based on whether or not their past experience was positive (Shim et al., 2001). In this study we measure consumers’ past experience with online shopping by four survey items. We hypothesize that consumers will prefer online shopping if they perceive it to have the following advantages over offline shopping: receiving the right product, receiving the product in a timely manner, satisfaction with the product, and good shopping experience overall.
4. Perceived Security of Online Shopping
Security has been a central concern for customers and retailers. It involves the ability to keep financial and proprietary information secure as it is transmitted over the Internet, as well as authentication of sender identity and status (Rowley, 1996). In this study we measure consumers’ perceived security of online shopping by four survey items. We hypothesize that consumers will prefer online shopping if they perceive it to have the following advantages over offline shopping: they are comfortable using credit cards, they feel safe about identity protection, they consider online companies trustworthy, and they feel that credit card companies will protect them from unauthorized charges.
5. Perceived Uncertainty of Online Shopping
Some research uses a dimension of overall “perceived risk” by potential online consumers’ which is called, “product risk” (Bhatnagar & Ghose, 2004) or “product performance risk” (Forsythe & Shi, 2003). In this study we used a more general term, “perceived uncertainty of online shopping” and measure it by four survey items. We hypothesize that consumers will not prefer online shopping if they perceive it to have the following disadvantages compared to offline shopping: they may not receive the ordered item, the product may not arrive on time, the product may not be in good condition or the product may not be the right one ordered.
METHODOLOGY
Data for this study was collected from a direct survey administered to consumer in Taiwan. Survey questions were compiled from previous studies mentioned above. They were designed to gather data on the subjects’ perceptions toward online shopping as well as their demographics. To validate the clarity of these survey questions, three professors and three researchers were asked to review them. The survey questions were then revised based on the feedback received.
The survey consisted of 32 questions. The first 20 questions were designed to examine subjects’ perceptions of online shopping. Question No. 21 was asked to distinguish subjects who prefer shopping online from those who prefer shopping at a physical store. These questions were rated on a 5-point scale ranging from 1 meaning “strongly disagree” to 5 meaning “strongly agree”. The last 11 questions obtained subjects’ demographics data.
Three hundred and twenty-nine (329) individuals, both males and females of all ages and incomes, provided responses to the survey. However, fifteen (15) responses were not completed, and thus were excluded from the result. The majority of the subjects (62.42%) were in the age range of 18-24 years. Details on the subjects’ demographics are provided in Table 1 below.
GenderMale: 119 (37.90%) / Female: 193 (61.46%) / No Answer: 2(0.64%)
Age (in years)
Under 18 / 18-24 / 25-34 / 35-44 / 45 and over / No Answer
0 (0%) / 196 (62.42%) / 94 (29.94%) / 18 (5.73%) / 4 (1.27%) / 2(0.64%)
Internet Access at Home
Yes: 313 (99.68%) / No: 1(0.32%)
Credit Card or Debit Card
Yes: 139(44.27%) / No: 172(54.78%) / No Answer: 3(0.96%)
Type of Card
Visa / MasterCard / American Express / Discover / No Answer
103(33.01%) / 22(7.05%) / 0(0%) / 0(0%) / 187(59.94%)
Online Purchase or Payment
Yes: 239(76.60%) / No: 68(21.79%) / No Answer: 5(1.60%)
Returned Products Purchased online
Yes: 82(26.28%) / No: 228(73.08%) / No Answer: 2(0.64%)
Highest Education
Less than High School / High School / Bachelors / Master’s & up / No Answer
2 (0.64%) / 8(2.55%) / 243(77.39%) / 59(18.79%) / 2(0.64%)
Employment
Yes: 193(61.86%) / No: 118(37.82%) / No Answer: 1(0.32%)
Student
Undergraduate: 215(68.91%) / Graduate: 93(29.81%) / No: 0(0%) / No Answer: 4(1.28%)
Annual Income (US$)
<20K / 20K-40K / 40K-60K / >60K / No Answer
44(14.10%) / 108(34.62%) / 39(12.50%) / 14(4.49%) / 205(34.29%)
Table 1: Subjects’ demographics
ANALYSIS AND DISCUSSION
The subjects were first divided into two groups based on their responses to survey item Q21 – “Overall, I prefer to shop online than in the physical store”. Subjects who responded with a 4 or a 5 were considered to prefer shopping online, and were placed in the “online group.” Those who responded with a 1 or a 2 were considered to prefer shopping at a physical store, and were placed in the “offline group.” Subjects who responded with a 3 were considered uncertain on this issue, and were excluded from further tests. Statistical t-tests on the means were conducted on subjects’ responses to the first 20 questions. The mean responses in Table 2 show the factors exhibiting a significant difference between the two groups at a p-value < 0.01 and < 0.05.
Factors / Mean: Online Group / Mean: Offline Group / p-valuePerceived Benefits of Online Shopping / 3.98 / 3.47 / 0.000004 **
Perceived Ease of Use of Online Shopping / 2.82 / 2.31 / 0.000343 **
Past Experience with Online Shopping / 3.59 / 3.11 / 0.000031**
Perceived Security of Online Shopping / 3.98 / 3.47 / 0.000003 **
Perceived Uncertainty of Online Shopping / 3.86 / 4.11 / 0.030335 *
** indicates p-value < 0.01
* indicates p-value < 0.05
Table 2: Consumers’ perceptions
Results of the t-tests revealed a significant difference between the two groups on all the five factors. Four factors were rated higher by the online group: perceived benefits, perceived ease of use, past experience with online shopping, and perceived security. These results indicate that subjects would prefer to shop online (rather than offline) if they perceived more benefits of online shopping, perceived online shopping to be easier, had positive past experiences with online shopping, and perceived security to exist in online shopping, One factor, perceived uncertainty of online shopping, was rated lower by the online group. This result, as hypothesized, indicates that subjects who perceive higher uncertainty are less likely to shop online.
DISCUSSION AND CONCLUSION
The results of this study indicate five factors that were perceived differently by consumers in Taiwan who prefer online shopping and those who prefer offline shopping. These factors were (1) perceived benefits of online shopping, (2) perceived ease of use of online shopping, (3) past experience with online shopping, (4) perceived security of online shopping, and (5) perceived uncertainty of online shopping. Determining such factors may provide businesses with a base level awareness of consumers’ perceptions and preferences for online or offline shopping avenues. This awareness could provide insights into what needs to be done to attract and retain more customers. Based on these findings, online businesses could make several adjustments and enhancements to their online presence to conform to the perceptions of potential customers. Online retailers need to acknowledge that there are diverse groups of Internet users driven by different motivations and perceptions. They can adjust their marketing strategies to meet the needs of each group. For example the website design might be enhanced so that price sensitive consumers have the ability to compare product prices and features.