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CUSTOMER TRUST IN ONLINE SHOPPING
CUSTOMER TRUST IN ONLINE SHOPPING
TABLE OF CONTENTS
EXECUTIVE SUMMARY ………………………………………………………….….. 2
INTRODUCTION ……………………………………………………………….……. 2-3
RESEARCH OBJECTIVE ……………………………………………………………… 3
METHODOLOGY …………………………………………………….……………...….3
POPULATION …………………………………………………………….…......4
SAMPLE PLAN …………………………………………………………….…... 4
SAMPLE SIZE ………………………………………………………………..… 4
DEVELOPMENT OF THE QUESTIONNAIRE …………………………..…… 4
LIMITATION OF THE STUDY ………………………………………………………... 4
LITERATURE REVIEW ……………………………………………………………... 5-8
DEFINATION OF TRUST ………………………………………………………
5
TRUST AND ONLINE SHOPPING …………………………………………. 5-6
STUDIES RELATED TO ONLINE SHOPPING…………………….…….…..6-8
ANALYSIS AND RESULTS …………………………..…………………………… 8-16
CONCLUSION ……………………………………………………………………...… 17
RECOMMENDATIONS ………………………………………………………………. 17
REFERENCE ………………………………………………………………………….. 18
APPENDIX ……………………………………………………………………………. 19
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CUSTOMER TRUST IN ONLINE SHOPPING
EXECUTIVE SUMMARY
Online business has become one of the most important trades nowadays, different
from traditional trade and characterized with uncertainty, anonymity, and lack of control
and potential opportunism. Therefore, trust is an important factor to facilitate online
transactions. The purpose of this study is to find out the role of trust in online business
and the factor that followed by customer when they buying online. Also we focused on
the threats that face trust online that could influence attitude towards online purchase.
INTRODUCTION
Retailers find it increasingly important to represent themselves on the Internet to
get more customers, increase the public’s awareness of the company and its products and
– last but not least – to sell more of its products (Sonja G.K., 2002). Today most of
customer looks for fast and easy way to buy their product with high quality and less price
and they find that online shopping is the best way to get their want. Therefore, trust play
a an important role in facilitating the purchasing process that are traded over the Internet.
It helps ensure that one party will not take advantage of the vulnerability of the other
during or after a transaction. Trust is quite challenging to define because it manifests
itself in many different forms (A. Josang, R. Ismail, and C. Boyd).So, online stores must
effectively manage the processes which promote online consumer trust. Trust can be
defined as “the willingness of a party to be vulnerable to the actions of another party
based on the expectation that the other will perform a particular action important to the
trust or, irrespective of the ability to monitor or control that other party” (Mayer, Davis &
Schoorman, 1995, p. 712). Traders should consider this definition to gain consumer
confidence and knowledge of the concerns that they may have.
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CUSTOMER TRUST IN ONLINE SHOPPING
On the other hand, Lack of customer trust is a critical obstacle to the success of
transactions (A. F. Salam, L. Iyer, P. Palvia, and R. Singh). This is influenced by several
factors. Lack of face-to-face interaction, the virtual nature of a web store, and often the
lack of physical stores, customer trust is difficult to establish (M. Koufaris &W. H.Sosa).
There are also many new threats that jeopardize trust online, including privacy invasion,
identity theft, spam and phishing. For example on-line consumers are required to share
personal detail (such as mailing address, telephone number), financial information (such
as credit card numbers), and suffer from the risk of products or services not matching the
description on the website, and the risk of damage during the delivery process, etc. There
seems little assurance that customers will receive the products or services comparable to
the ones they ordered according to the description and image on the computer screen
(T.W. Tang, W.H.Chi)
RESEARCH OBJECTIVE
The purpose of our study is to find out the role of trust in online shopping and the
procedures that followed by customer when buying online. Also we focused on the
threats that face trust online that could influence attitude towards online purchase. The
survey that we prepared will help us to know more about how customer trust on online
shopping, So we can prepare suitable advices and the right recommendations for
companies that will spread their business to online market.
METHODOLOGY
One way of our plan to achieve the objective of the study is to follow many steps. Firstly,
choose the right type of research which was exploratory research the reason behind
choosing this type is because it collects information in an unstructured and informal
manner. Secondly, we chose the sample size to collect the data and the information.
Thirdly, both primary and secondary data were used but we used primary data as the
main source of information. Finally, we distribute the questionnaire as an ending step for
collecting primary data and solving the problem.
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CUSTOMER TRUST IN ONLINE SHOPPING
POPULATION
The population was all ‘females’ as they are more shopaholic and more curious about
new and unique products and interest in online shopping in any country and those who
regularly shop online were considered as a representative sample (or subset) of that
population.
SAMPLE PLAN
The sample plan that has been used to select the sample from the population was
randomly because the questionnaire was distributed in the UAE university for the
students, some female instructors and managing stuff.
SAMPLE SIZE
Our sample size was around 100 respondents which are as it is required in the guideline
step and we think is enough to measure customer’s trust and attitude toward online
shopping.
DEVELOPMENT OF THE QUESTIONNAIRE
To get the primary information a questionnaire must be conducted in a clear way
with understandable questions that will help to have the right information about
what it’s required to be found. The questionnaire mustn’t be very long so that the
respondents will not get bored.
LIMITATION OF THE STUDY
When we have done the study we faced several problems disallowed us from
establishing a well-marketing research. Lake of time, lack of experience and resources
were the main problems we faced. On the other hand we recognize that some of the
respondents didn’t take the questionnaire seriously, they answered unreasonably. One
other problem was that even though we distributed our questionnaire in many other
places but we got very few responds, so most of our respondents were university students
who are similar in age, income occupation. And this affected the results we got. Also the
number of the responses was big and it took time to enter the data in to the SPSS .
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CUSTOMER TRUST IN ONLINE SHOPPING
LITERATURE REVIEW
- DEFINATION OF TRUS
The basis of trust comes from a branch of philosophy called ethics in the context
of social and democratic process. (Roger Clarke, 2001).
Trust is quite challenging to define because it manifests itself in many different
forms [A. Jøsang, R. Ismail, and C. Boyd, 2007]. Mayer, Davis, and Schoolman defined
trust as “the willingness of a party to be vulnerable to the actions of another party based
on the expectation that the other will perform a particular action important to the trustors,
irrespective of the trustors’ ability to monitor or control that other party” [R. C. Mayer, J.
H. Davis, and F. D. Schoorman,1995]. Trust is an especially important factor under
conditions of uncertainty and risk. It helps ensure that one party will not take advantage
of the vulnerability of the other during or after a transaction .
- TRUST AND ONLINE SHOPPING
Online world is quite different from the real world. Not only in how people operate
there, but also how they perceive it. Through the internet, it is impossible to touch, smell
or use a tangible product, so customer has to make his or her decisions, based solely on
the information he or she read (which may not be 100% correct and honest, too). Thus,
one of the most important things customer needs to feel before making a decision to buy
something online is whether he or she trust the seller or not. On the other hand, even the
‘consumer trust’ differs from online shopping to the traditional one especially in terms of
relationship. Internet shopping involves more uncertainty and risk than traditional
shopping in which trust is based on a combination of judgment or opinion based on face
to face meetings, or recommendations of colleagues, friends and business parties. While
internet based shopping generally does not involve human interaction and therefore, this
new context requires a new understanding of trust. Lack of trust from potential customers
was one of the reasons cited for slower-than-expected adoption in the early days of online
business. Today, a majority of consumers have tried online shopping and “lack of trust”
is no longer a barrier to transacting online. Trust, however, matters now more than ever .
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CUSTOMER TRUST IN ONLINE SHOPPING
- STUDIES RELATED TO ONLINE SHOPPING
Studies showed that even though acceptance of the Internet as a marketplace has
increased, trust in individual brands is decreasing. And that here are also many new
threats that jeopardize trust online, as well as privacy attack, identity stealing, spam and
phishing. So, trust still plays a major role across digital channels, but rather than being a
barrier to use, it has now become a key differentiator. (Jens Riegelsberger, 2005).
A survey related to Online Shopping resulted in the following outcome, 76 percent
of respondents referred to insufficient product information as a reason not to purchase, 79
percent rarely or never purchase with incomplete information, and 72 percent will dump a
site for a competitor or further research, usually finding the product elsewhere.
(WebProNews, 2009).
Moreover, in a clear relationship of consumer trust and the internet shopping a
research showed that 35 percent of non-buyers (i.e. those who have never bought any
products online) in North America surveyed recently by Forrester Research Inc. had
abandoned a shopping cart while shopping online because they were concerned about
providing their personal information, and 24 percent had done so due to fears about credit
card fraud (Kelley, Rhinelander, and DeMoulin, 2001). A recent Gallup research survey
provided additional evidence when it found that more than 40 percent of Canadian
Internet users would complete more online purchases if they could trust that a store
would respect their privacy (Shaw, 2001). Similarly, various academic studies have
suggested that trust has a positive influence on purchase intentions (Jarvenpaa,
Tractinsky, and Vitale, 2000, Lim, Sia, Lee, and Benbasat, 2001, Wetsch and
Cunningham, 1999) and actual buying decisions (Lim et al., 2001). Although the overall
volume of B2C (business-to-consumer) commerce has been growing rapidly, its full
potential will not be realized unless trust-related concerns are alleviated (Cheskin
Research and Studio Archetype/Sapient, 1999). Lack of trust seems to be one of the key
barriers to online shopping; hence examining how to imp rove consumer trust may be
beneficial to both consumers and Internet stores.
With the most mature of the Internet technique environment, the concept of trust
has been the core of the matter when people interactions with e-commerce web portals. A
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CUSTOMER TRUST IN ONLINE SHOPPING
previous survey showed that over (80%) say that being able to trust a web site is very
important for them in making a decision to interact with that site (Princeton Survey
Research Associates, 2002).
A study of online shopping reveals that difficulty in finding product and delivery
information fuels consumer frustration and leads to shopping cart abandonment. The
survey, conducted by YouGov Plc and commissioned by RightNow® Technologies,
polled nearly 2,000* regular internet users across Britain and found that of those that did
Christmas shopping online, nearly one fifth (19%) of online shoppers abandoned a
purchase either because they could not find specific product information or could not ask
questions about a product. 16% abandoned a purchase because they couldn't find
information about delivery charges and times prior to checkout.
The findings cover a period during which time several top supermarkets made seasonal
increases to their delivery charges and when understanding details about an intended
purchase, and whether it will be delivered by Christmas, escalates in importance.
"Industry pundits continue to be bullish about online shopping; some even predict that
internet shopping could account for half of Britain's £300 billion-a-year retail market by
as early as 2018. To capitalise on this burgeoning market a retail website should be as
sticky as possible by being properly organised and consumer-centric – that means
providing consumers with purchase decision-making information at the right place and at
the right time. By designing a site with the consumer shopping experience in mind,
retailers can reduce consumer frustration and increase sales. This survey reveals what
consumers want and when – retailers should take heed of it rather than just guessing at
what's needed," commented Joe Brown, General Manager EMEA, RightNow.
Better accessibility to current and relevant information during the customer journey
should help bolster satisfaction levels around customer experiences. During the 2007
Christmas buying season, 14% of those that did their Christmas shopping online
indicated that they had a negative experience that will prevent them from doing any
future business with the online retailer at fault. The importance of providing a good
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CUSTOMER TRUST IN ONLINE SHOPPING
customer experience is borne out with 24% of consumers citing it as a top factor when
shopping online.
The survey's findings add to the argument that retailers need to focus on the following
areas to improve the online shopping experience provided to customers: Clarify essential
information, present dynamic content in context, offer multi-channel choice, make it easy
for customer to do business and drive towards repeat business. (Maidenhead, 2008).
ANALYSIS AND RESULTS
In the questionnaire that was distributed to the respondents, we concentrated on
having questions that are related to what we like to know about and find out also the
questions were selected carefully to measure customer’s trust and attitude toward online
shopping. Our questions were a door to determine type of products, reasons, threats and
the most important factors affecting customer’s online purchase decision.
The following graphs and tables are representing the results of the collected data
from questionnaire.
The questionnaire contained two parts the first part was about the respondent’s
demographics such as age, nationality, occupation, education level and income. And the
second part contained six questions related to type of products, reasons, threats and the
most important factors affecting customer’s online purchase decision.
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CUSTOMER TRUST IN ONLINE SHOPPING
The figure shows number of purchases by respondents, we find out that about
more than half or most of respondents ‘61%’ used to purchase online ‘every 6
months or more’ and the rest vary as the follow, 13% every 4-5 months, 12%
every 2-3 months, 9% every month and only 5% more than once a month!
This means that still online shopping is not that common or it might have some
threats which we are going to mention later on.
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CUSTOMER TRUST IN ONLINE SHOPPING
This figure shows the types of products usually purchased online, we can see here
again a significant result that is almost half of respondents buy clothing, shoes &
jewelries, 15% electronics, 14% movies, music and games, only 5% for cosmetics
and 23% other things.
As girls have a craze of looking beautiful and fashionable they did not leave even
the internet to shop and find the latest fashion dresses or jewelries. I think the
reason they do not buy cosmetics online is that usually women are sensitive and
cautious in using makeup they do not trust without checking on their skins.
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CUSTOMER TRUST IN ONLINE SHOPPING
We wanted to know reasons that push people to buy online as it is one of the most
important factors affecting their purchase decision. We found out that reasons
differ for people. 37% of respondents which indicates the largest number of them
buy online to save time!! Maybe they do not have time to go for shopping due to
their responsibilities and tasks. Whereas 28% of respondents go to online
shopping because of lack of the product, as some products may not be available or
are so unique to be available in the market. Only 18% shop online for saving
money which might mean that many people consider online shopping as
expensive one, then finally 17% for saving effort.
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CUSTOMER TRUST IN ONLINE SHOPPING
What are the threats you face?
Frequency Percent Valid Percent
Cumulative Percent
Valid Credit card stealing 31 31.0 31.0 31.0
Hackers 18 18.0 18.0 49.0
Doubtful website 12 12.0 12.0 61.0
Product not as ordered 39 39.0 39.0 100.0
Total 100 100.0 100.0
Threats have a great impact in people’s decision as well. It can change their
buying behavior. This figure and the table above show some reasons which make
people anxious about buying online. We see here that ‘product is not as ordered’
‘39%’ is the main threat facing people. They order one thing but get something
else or different from what they desired or demanded. ‘Credit card stealing’ is
another threat ‘31%’ they do not want to take a risk for their credit cards which
might b stolen in seconds. Hackers might make people hesitated from buying
online-18%- and sometimes doubtful website which are uncertain-12%-.
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CUSTOMER TRUST IN ONLINE SHOPPING
What is the most important factor when buying online?
Frequency Percent Valid Percent Cumulative Percent
Valid Price 35 35.0 35.0 35.0
Free shipping 18 18.0 18.0 53.0
Special promotion 22 22.0 22.0 75.0
Speed/ efficiency of check out
25 25.0 25.0 100.0
Total 100 100.0 100.0
This question was about the most important factor people take in account when
they buy online and we here is what we got, as you can see above in the table and
figure, most of respondent’s buying decision ‘35%’ depends on the price as it has
always been the most important factor for most customers. Then quarter of the
people we asked depends mostly on speed and efficiency of check out which is
also a very important factor as life is so fast everything is running so fast, so many
people really hate standing hours in line while cashing or the long procedures
while checking out and wasting their expensive time. 22% are attracted by
special promotion and 18% care about ‘free shipping’.
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CUSTOMER TRUST IN ONLINE SHOPPING
Online shopping is the best way to shop
Frequency Percent Valid Percent Cumulative Percent
Valid
Strongly Agree 19 19.0 19.0 19.0
Agree 42 42.0 42.0 61.0
Undecided 17 17.0 17.0 78.0
Disagree 19 19.0 19.0 97.0
Strongly Disagree 3 3.0 3.0 100.0
Total 100 100.0 100.0
Our last question was a statement as u can see above ‘Online shopping is the best way to
shop’ by this question we wanted to know the level to which people today trust or like
online shopping. And we got the answer that not only most of people ‘42%’ do agree
with this statement but some people strongly agree with that ‘19%’. Well this is a good
indicator that yes people somehow trust online shopping. On the other hand, there are
also some people who disagree ‘19%’, even there is few people who strongly disagree,
they prefer traditional shopping on online which they think is complicated, boring or
distrustful.
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Ag e
31-4020-30less t han 20
Co
un
t
40
30
20
10
0
Ty p e o f p ro d u c t y o u
Cosmet ics
Clot hing, shoes & je
welry
Elct ronics
Movies, Music & G ame
s
O t her
16
6
12
2
11
4
35
75
Tabl e1: Cross t ab bet w een age and t ype of product you usual l y purchase i t onl i ne
Count
7 4 2 6 19
5 35 11 12 16 79
1 1 2
5 43 15 14 23 100
less t han 20
20- 30
31- 40
Age
Tot al
Cosm et ics
Clot hing,shoes &jewelr y Elct r onics
M ovies, M usic& G am es O t her
Type of pr oduct you usually pur chase it online
Tot al
CUSTOMER TRUST IN ONLINE SHOPPING
Graph 1: Relation between age and type of product.
The table shows the relationship between the age and the type of product bought through
internet. By these results we can notice that the majority of our customers are between the
age of 20-30 and they usually buy clothing, shoes & jewelry. So we notice here that most
of them are young and in this age usually women have a craze to have a beautiful and a
fashionable look, so they look for latest fashion dresses or jewelries through the internet.
This information will help online shopping marketers to focus on specific segment to
serve. Graph 1 illustrates the results in a clearer way.
15
Tabl e 2: Rel at i onshi p bet w een i ncom e and how of t en t hey pur chase onl i ne per m ont h
Count
2 8 9 11 60 90
2 1 2 1 6
1 2 3
1 1
5 9 12 13 61 100
Less t han 20, 000 Dhs
20, 000- 35, 000 Dhs
35, 000- 50, 000 Dhs
50, 000- 65, 000 Dhs
I ncom e
Tot al
M or e t hanonce a m ont hEver y m ont h
Ever y 2- 3m ont hs
Ever y 4- 5m ont hs
Ever y 6m ont hs
or m or e
How of t en do you pur chase online?
Tot al
In c o me
50, 000-65, 000 Dhs
35, 000-50, 000 Dhs
20, 000-35, 000 Dhs
Less t han 20, 000 Dhs
Co
un
t
70
60
50
40
30
20
10
0
Ho w o fte n d o y o u p u r
More t han once a mon
t h
Every mont h
Every 2-3 mont hs
Every 4-5 mont hs
Every 6 mont hs or mo
re
60
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CUSTOMER TRUST IN ONLINE SHOPPING
Graph 2: Relation between income and number of purchase online per month
Table 2 describes the relationship between the incomes and how often they purchasing
per month, the results show that as the income decreases, the number of purchases
decrease per month, as it is shown in this figure, 60% of the respondents whose income is
less than 20,000 Dhs buy online every six months or more. This information might help
online shopping marketers have to adjust the prices and to make the products and services
affordable for customers; also promotions can be useful and support purchasing decision .
CONCLUSION
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CUSTOMER TRUST IN ONLINE SHOPPING
By this study, we found out that most of our respondents were Emirates female;
their ages were between 20-30 years old. They were students and their income was less
than $20,000 per month. Also, most of the respondents purchase online every 6 months
or more, which means that still online shopping is not that common or it might have some
threats. The preferred products they purchase were clothing, shoes & jewelries with 43%.
Moreover, the most important reason we noticed was saving time. The main two threats
affecting buying decisions are the fear that product may not be as ordered and credit card
stealing. Finally, the factor considered the most while buying online differs between
respondents as they have different personalities and purchasing attitudes, so we got no
‘one’ significant factor considered the most. However, price is the most important one
with ‘35%’ as it has always been the most important factor for most customers.
In the end, we would like to say that by this study, we have learned how to make a
questionnaire, how to conduct a survey and what are the steps that followed. We’ve also
learned how to use SPSS which was very helpful in finding our analysis. At last, we
really want to thank our instructor for giving us a chance to have an idea about doing a
survey and analyzing the data which will help us more in our projects in future. Also, we
appreciate him for all his efforts and for being so helpful and patient with us.
RECOMMENDATIONS
Trust in online shopping is difficult and challenging to achieve, so marketers should be
aware of how to gain customer’s trust, here are some recommendation that we realized
from the graphs and tables and we advise marketers to:
Online shopping marketers have to adjust the prices and to make the products and
services affordable for customers.
Promotions can be useful and supportive in purchasing decision.
Online shopping marketers have to focus on the market segments with their
appropriate products and services which they are interested in.
REFRENCES
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CUSTOMER TRUST IN ONLINE SHOPPING
[Sonja G.K., 2002, p. 2] Sonja G. K., 2002, “The Role of Consumers’ Trust in
Online-Shopping,” Journal of Business Ethics, 39: 43–50
[A. Jøsang, R. Ismail, and C. Boyd], “A Survey of Trust and Reputation Systems
for Online Service Provision”, Decision Support Systems, 43(2), pp. 618-644,
2007
[A. F. Salam, L. Iyer, P. Palvia, and R. Singh], “Trust in Ecommerce”,
Communication of ACM, 48(2), pp. 73-77, 2005.
[Mayer, R. C., Davis, J. H, & Schoorman, F.D], (1995) “An integrative model of
organizational trust”. Academy of Management Review, 20(3), 709-734.
[M. Koufaris &W. H.Sosa], (2002) “Customer trust online: examining the role of
the experience with the website”. Zicklin School of Business, p.2
[T.W. Tang, W.H.Chi), (2002) “The Role of Trust in Customer Online Shopping
Behavior”Perspective of Technology Acceptance Model, 331, 1–11.
www.rogerclarke.com/SOS/Asimov.html
www.rightnow.com/crm-news-565.php
www.msnbc.msn.com/id/20321999/
C:\TeMp\Rar$EX08.469\building-customer-trust.htm
C:\TeMp\Rar$EX00.641\build trust in online shop.htm
C:\TeMp\Rar$EX14.235\trust-as-the-most-important-online-value.htm
Other(Please specify)
SyriaPalestineSaudi Arabia
EmiratesNationality
More than 51
41-5031-4020-30Less than 20Age
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CUSTOMER TRUST IN ONLINE SHOPPING
otherEmployeehousewifestudentOccupation (current or most recent)
Over $65,000
$50,000- $65,000
$35,000- $50,000
$20,000- $35,000
Less than $20,000
income
Master degree
Bachelor degree
Diploma High school or less
Education level
How often do you purchase onlin More than once a month Every month Every 2-3 months Every 4-5 months Every 6 months or more
Type of product you usually purchase it online Cosmetics Clothing, Shoes & Jewelry Electronics Movies, Music & Games Other
The reason you shop online Saving time Saving money Saving effort Lack of product
What are the threats you face? Credit card stealing Hackers Doubtful website Product is not as ordered
What is the most important factor when buying online? Price. Free shipping. Special promotion. Speed / efficiency of check out.
Online shopping is the best way to shop Strongly agree Agree Undecided Disagree Strongly Disagree
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