Young Consumer Online Shopping
Transcript of Young Consumer Online Shopping
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Young consumers online shopping: an empirical study
Dr Syed Shah Alam,
Faculty of Business Management Universiti Teknologi, MARA, 40450 Shah Alam,
Selangor, Malahysia.
Syed Shah Alam is Senior Lecturer in the Faculty of Business Management, University
Technology MARA (UiTM), Malaysia. He is a Doctorate in E-commerce. Prior to
joining at UiTM he was a coordinator of Postgraduate program and an active member of
the faculty research committee in the Faculty of Business and Law at Multimedia
University, Malaysia. His teaching and research interest are internet marketing, E-
commerce, mobile E-commerce. His articles on E-commerce have been published in
leading international journals.
Zaharah Bakar
Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka,
Malaysia.
Madam Zaharah Bakar is a marketing lecturer in Multimedia University since 1998.
She received her Bachelor of Science in Finance and Marketing from Southern Illinois
University, Carbondale, Illinois, USA in 1984 and her MBA majoring in Marketing
from Saint Louis University, Missouri, USA in 1985. She has more than 20 years of
teaching experience at Multimedia University and Universiti Kebangsaan Malaysia. She
also has two years of industry experience as Marketing consultant for Noris Architect,
handling its clients and customer relations. Madam Zaharah is currently activeconducting a variety of research in consumer behaviour and brand management. In
brand management, her specific interest includes strategies to build brand equity,
measure and manage brand equity and brand trust.
Dr Hishamuddin Bin Ismail
Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka,
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Hishamuddin Ismail is currently is Dean and a Senior Lecturer at the Faculty of
Business and Law at Multimedia University, Melaka Campus. He has published many
articles in the area of customer satisfaction, customer loyalty and e-commerce in JTMA,
JABC, JSS, JAMS and IIM Journal. His last post prior to being an academician was the
product manager where he led a team of professionals to develop data communication
related products. During his tenure, he had successfully launched new product where the
main feature is to enable the customer to virtually link themselves using the managed
point-to-point connection.
Mst. Nilufar Ahsan
Research Fellow, Faculty of Management, Multimedia University,
Nilufar Ahsan is currently a doctoral candidate in the Faculty of Management,
Multimedia University, Cyberjaya Malaysia. Her research interest includes
organisational behaviour, and ICT management areas.
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Young consumers online shopping: an empirical study
Syed Shah Alam,
Faculty of Business Management Universiti Teknologi, MARA, 40450 Shah Alam, Selangor,
Malahysia.
Zaharah Bakar
Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka, Malaysia.
Hishamuddin Bin Ismail
Faculty of Business & Law, Multimedia University, 75450 Bukit Beruang, Melaka, Malaysia.
Mst. Nilufar Ahsan
Research Fellow, Faculty of Management, Multimedia University
Abstract
Young consumers are playing an important role in online shopping. The increasing use of
Internet by the younger generation in Malaysia provides an emerging prospect for online
retailers. If online retailers know the factors affecting Malaysian young consumers buying
behaviour, and the associations between these factors and type of online buyers, then they can
further develop their marketing strategies to convert potential customers into active ones. In this
study four key dimensions of online shopping as perceived by young consumers in Malaysia are
identified. Besides that this study also examined whether there are any differences in online
shopping by different races in Malaysia. It was discovered that website design, website
reliability, customer service and privacy are the four key factors which influence young
consumers perceptions of online shopping. However, there is no significant difference among
the various races in terms of online shopping behaviour in Malaysia. Finally, the
recommendations are presented in this research may help foster growth of Malaysian online
retailing in future.
Keywords: Online Shopping, Young consumers, Malaysia.
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Introduction
Commerce via the Internet, or e-commerce, has experienced rapid growth since the early years.
It is well known to most of the Internet researchers that, the volume of online business-to-
consumer (B2C) transactions is increasing annually at a very high rate. According to ACNielsen
(2007), more than 627 million people in the world have shopped online. Forrester (2006)
research estimates e-commerce market will reach $228 billion in 2007, $258 billion in 2008 and
$288 billion in 2009. By 2010 e-commerce will have accounted for $316 billion in sales, or 13
percent of overall retail sales. AcNielsen also reported that, across the globe, the most popular
items purchased on the Internet are books (34%), followed by videos/DVDs/games (22%),
airline tickets/reservations (21%) and clothing/accessories/shoes (20%).Goecart forecasts that
US online population will increase nearly 50%, from 1471.5 million in 2001 to 210.8 million
by 2006 (Cumulative Annual Growth Rate of 8.2%) and online retail sales will grow from
US$47.8 billion in 2002 to $130.3 billion in 2006. Similarly WIPO (2007) cited that about 10%
of the worlds population in 2002 was online, representing more than 605 million users.
A mid-2005 survey by the Malaysian Communication and Multimedia Corporation (MCMC),
only 9.3% of Internet users had purchased products or services through the Internet during the
preceding three months. Among those who did so, airline tickets were the most popular items
(43.8%) followed by books (15.6%) and music (6.8%). Amounts spent on these items were
small, however, with 57.7% of transactions worth less than M$500. Moreover, it is expected
Malaysian online sales will increase every year at a high growth.
Much research has been concentrated on the online shopping in the world. However, there is
still a need for closer examination on the online shopping buying behavior in specific countries.
While both established and new, large and small scale businesses are now using the Internet as a
medium of sales of their products and services (for example Dell computer, Amazon.com, in the
world and jobstreet.com, blooming.com in Malaysia). Still there is a huge research gap exists
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not only between countries, especially between developed and developing countries, which may
differ significantly between countries (Stiglitz, 1998; Shore, 1998; Spanos et al., 2002) that limit
the generalization of research results from developed countries to developing country contexts
(Dewan and Kraemer, 2000; Clarke, 2001). Shore (1998) and Stiglitz (1998) reported that
implementation of information system depend on specific social, cultural, economic, legal and
political context, which may differ significantly from one country to another country. Dewan
and Kraemer (2000) and Clarke (2001) argued in their study that findings from developed
countries are not directly transferable to developing countries. Thus, this research is needed for
non-transferability of findings from research in developed countries and also for the
improvement of understanding of the determinants of online shopping in developing countries.
Online shopping holds a great potential for youth marketers. According to Vrechopoulos et al.
(2001) young are the main buyers who used to buy products through online. Dholakia and
Uusitalo (2002) study examined the relationship between age and Internet shopping; found that
younger consumers reported more linen to the online shopping. Another study by Sorce et al.
(2005) found that younger consumers searched for more products online and they were more
likely to agree that online shopping was more convenient.
Objective of the Study
The objective of this study is to identify the key factors influencing young Malaysians online
shopping behaviour. Malaysia's cultural mosaic is marked by many different races and cultures;
which comprises the Malay, and the cultures of Malaysia's two important races --the Chinese,
and the Indians. So one of the main objectives of this study is to compare how the young
Malaysian of different races buyer perceive web site factors and website elements differently.
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Factors affecting online shopping
There are a number of streams of research that are relevant to this study. These include those
addressing the factors that have significant effect on online shopping (Shergill and Chen, 2005;
Phau and Poon, 2002; Jarvenpaa and Todd, 1997; George, 2002a; George, 2004b; Ward and
Lee, 2000; Hellier et al., 2003). We identified the factors that were found to be significant in
previous research about online shopping (please refer table 1). In this research we utilize the
four factors i.e. website design, reliability, customer service and security/privacy are defined by
Shergill and Chen (2005) in their empirical study in New Zealand. Web site design of a web
page is one of the most important factors that influence online shopping. Shergill and Chen,
(2005) identified web site design characteristics as the dominant factor which influences
consumer perceptions of online purchasing. By using a sample of 214 online shoppers,
Ranganthan and Ganapathy (2002) found four key dimensions of online shopping namely web
sites; information content, design, security and privacy. They concluded that, though all these
dimensions have an impact on the purchase intention, security and privacy will have greater
impact on the purchase intent of online buyers.
Turban et al. (2002) argue that elegant design of web site will serve better to its intended
audiences. According to Kin and Lee (2002) the web site design describes the appeal of the user
interface design presented to customer and customers are willing to visit more often and stay
longer with attractive web sites (Shaw et al., 2000). Following them, Than and Grandons
(2002) study found that quality web site design is crucial for online shopping.
Reliability is one of the important factors that have the most influential effect on online
shopping. Reliability is closely associated with risk since it is a measure of customers
perceptions about whether or not merchants can be counted on to deliver on their promises
(Vijayasarathy and Jones, 2000). According to Jun et al. (2004) online consumers apparently
want to receive the right quality and right quantity of items that they have ordered within the
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time frame, promised by the retailers, and they expect to be billed accurately. Accordingly, to be
considered as reliable online service providers, must deliver the promised services within the
promised time frame (van Riel et al., 2003).
Studies by Mayer et al., (1995) and Hoffman et al., (1999) reveal that trust and consumer
motivation have significant relationships. Other studies found that a high level of trust by buyers
stimulate favourable attitudes and behaviour (Anderson and Narus, 1990).
A consumers trust in an Internet store can be thought as the consumers trust directly in the
store. Nevertheless, Hoffman et al (1999) argued that the effectiveness of third-party trust,
certification bodies and the public key encryption infrastructure for ensuring financial security,
are the central success factors for building consumer trust in Internet shopping. Kini and
Choobineh (1998) suggested that trust in the Internet business is necessary, but not sufficient,
for an Internet buying behaviour to take place. The consumer must also trust the transaction
medium for online shopping.
The review of empirical studies has embodied different factors which influence online
purchasers behaviour. The antecedents of online purchase include many attitudinal
components; for example, attitude towards online shopping and perceived risk of an online
purchase. Consumers online shopping experiences, website and fulfillment of quality
expectations are deemed as the major components to successful online transactions. In essence,
our interest is in discovering the factors affecting consumers intent to buy online as well as in
quantifying their relative importance. Specifically, through surveying consumers based on the
literature, we are interested in identifying and rank-ordering factors affecting intent to buy
through online in Malaysia.
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The Research Model
The research model empirically tested in this study contains constructs that have demonstrated
literature support, based on a number of research done in this area in different countries,
particularly online shopping on end-user perspective (refer to Figure 1). The model examines
the factors that affect online. The research model is shown at Figure 1.
Figure 1. A Schematic diagram of the research model
The schematic diagram of the research model above shows the relationship between the
dependent and independent variables. Essentially, the theoretical framework shows above is the
foundation on which the entire research is based upon.
Online shopping is the dependent variable in this research. The dependent variable is analyzed
in this research in order to find out the answers or solution to the problem. Meanwhile, the
independent variables in this research are website design, reliability, customer service and trust.
The independent variables are believed to be the variables that influence the dependent variable
(online shopping intent) in either a positive or a negative way.
OnlineShopping
Reliability
Customer service
Trust
Website design
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Hypotheses:
A series of testable hypotheses were developed from the proposed research model, as shown
below:
Hypothesis 1: There is a significant relationship between web site design and online shopping
Hypothesis 2: There is a significant relationship between reliability and online shopping
Hypothesis 3: There is a significant relationship between customer service and online shopping
Hypothesis 4: There is a significant relationship between trust and online shopping
Hypothesis 5: There is a significant difference among different races and online shopping.
In general, base on the hypotheses, the research framework will be focusing on four factors as
independent variables and propensity to shop online will be the dependent variable. Looking at
previous discussions on the similar topic, this research will further hypothesize the following
i.e. for the hypothesis 1, 2 and 3 which are focusing on Web Site Design, Reliability, Customer
Service, and Trust, it is hypothesize that there should be a positive relationship that would likely
to influence the online shopping.
Research Methods
Sample and Data Collection
Data for this study was gathered by primary data collection method through consumer survey
administered among undergraduate students from two private universities in Malaysia. An in-
depth interview was conducted with ten lecturers from one university before the final survey
was conducted in order to identify the key elements to be asked in the questionnaire. A total of
550 respondents were approached but only 496 were found to be usable for data analysis. Most
of the rejected questionnaires are found to be incomplete especially if they did not answered
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wording and sequence of the questions. The revised questionnaire was then administered to
respondents with a cover letter explaining the academic purpose of the study. The third part
consisted of questions regarding the demographic characteristics of the respondents such as age,
gender, and race.
Measures
The reliability reported by Moore and Benbasat (1991) for the scale and Cronbachs alpha for
scale reliability obtained for our sample. The Cronbach alpha estimated for trust scale was
0.887, reliability scale was 0.800, website design scale was 0.724, and customer service scale
was 0.797. Reliability from our sample showed a reasonable level of reliability (>0.70). Factor
analysis also confirmed that the construct validity of the scales could be performed adequately.
The factor loadings for all items exceeded the minimum value of 0.4 considered for this study.
Table 1 shows the number of items comprising each factor loading value.
Factor1 2 3 4
trust2 .810 .147 .171 .106trust3 .777 .209 .136 .098trust1 .776 .209 .118 .121trust4 .600 .245 .222 .148relifac2 .172 .594 .220 .069relifac3 .208 .574 .140 .115relifac5 .171 .571 .151 .237relifac4 .130 .550 .217 .176relifac1 .179 .506 .201 .099
webfac3 .213 .245 .622 .070webfac5 .127 .092 .604 .141webfac4 .201 .098 .600 .127webfac2 .096 .272 .485 .102webfac1 .042 .306 .442 .169custserv2 .146 .219 .255 .750custserv1 .168 .300 .287 .574custserv3 .268 .246 .258 .488
Extraction Method: Principal Axis Factoring. Rotation Method: Varimax with KaiserNormalization.
Table 1: Rotated Factor Matrix(a)
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Data Analysis
Bivariate frequency distribution of the respondents were done according to age, gender, race
and average family monthly income and other questions related to Internet browsing.
To test the hypotheses of this study, regression and ANOVA were used. The analysis enabled us
to examine the individual impact of the independent variables on online shopping.
General usage of Internet
1. Internet access
One of the important indications of internet experience is the pattern of Internet access by the
consumer. In this situation, the Internet access could be assessed by looking from two different
aspects i.e. where and how long. Table II illustrates this pattern. It clearly shows that the
majority of the respondents (66.7%) used the Internet at home followed by 17.8% at university
and 10.1% at cyber caf. Majority of the users spent 1 to 2 hours everyday for Internet browsing
(36.5%), more than 4 hours (31.5%), 3 to 4 hours (23.2%), and only 8.9% spent less than 1
hour. In conclusion, the results show a general pattern of Internet usage of young consumers in
Malaysia whereby it could be concluded that they are having their own Internet connection at
home which lead to the active usage of Internet whereby the average time spend is more than 2
hours.
2. Use of the Internet
Among the seven popular usage of Internet, searching for information on the Web was the most
frequently adopted activity for Internet users (51.8%). The second category of usage is
communication purposes (45.0%), followed by entertainment (43.1%), education (31.5%),
pleasure (15.7%), work (15.1%), online shopping (8.3%) and others (1.8%). From the data it
was found that more than 60% never bought any product through online (62.3%). On the other
hand only 4.2% of the respondents regularly buy through online. Out of 496 respondents 105
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respondents occasionally buy products through online.
Frequency Per cent
Place of Internet Access
HomeAt universityCyber cafMissing
331885126
66.717.810.15.4
Purpose of Internet usage
WorkEntertainmentOnline shoppingCommunicationSeeking information
EducationPleasureOther
7521441223257
156789
15.143.18.345.051.8
31.515.71.8
Online buying
Never buy onlineBuy on the webOccasionally
30921105
62.34.221.16
Household monthly income
Below RM1000
RM1001- RM3000RM3001-RM5000RM5001-RM10000Above RM10000
77
372261110
15.5
75.05.22.32.0
Table 2: General usage of Internet
Hypotheses Testing
The strength of the proposed relationship was assessed using the respective statistical analyses
summarized in Tables 3 and 4.
Variables Beta t-value p-value
Website Design .073 1.589 .113
Reliability .239 4.863 .000
Customer Service .252 5.230 .000
Trust .161 3.647 .000
Table 3: Regression Results
Hypothesis 1:There is a significant relationship between web site design and online shopping
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factor that has positive effects on online shopping. Referring to Table III, the third hypothesis
tested the relationship between customer service and online shopping. The regression result
(beta = .252, t-value = 5.230, p-value = 0.001) indicates that the association between customer
service and online is significant at 0.01 level (p = 0.000). In term of direction, the result shows
that there is a positive direction between the two constructs. This study also confirmed the
findings of another recent study in New Zealand by Shergill and Zhaobin (2005). Furthermore,
it was found that the beta value of 0.252 is the highest when compared to other variables. This
result indicates that customer services could be considered as the most important variable that
may influence the online purchasing. In this situation, there is a need for the online companies
to improve their online customer services if they would like to have more young consumers to
involve in online purchasing.
Hypothesis 4:There is a significant relationship between trust and online shopping
Table III shows that the association between trust and online shopping is significant at 0.01
level whereby the analysis result showed the beta = 0.161 and t-value = 3.647 (p=0.000). The
support for hypothesis 4 reflects similar arguments in previous studies (Shergill and Zhaobin,
2005; Gefen, 2002; Jarvenpaa et al., 1999, 2000; Koufaris and Hampton-Sosa, 2004; Koufaris
and Hampton-Sosa, 2002). Similarly, it demonstrates that trust is also playing an important role
in an online buying situation. As such, it is recommended that the online companies to build this
kind of trusting relationship by developing strategy that could instil sense of belongingness
between them and the young consumers.
Hypothesis 5: There is significant difference in online shopping among different races inMalaysia
To test this hypothesis, one-way ANOVA was used. The purpose of testing this hypothesis is to
assess any perceived differences among the races and recommend suitable promotional strategy
for the company to increase the marketability of their online product or services. The analysis in
table IV displays the results where F value (1.169) was found to be insignificant. The result
indicates that there was no significant difference in online shopping among different races
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(Malay, Chinese, Indian and others) in Malaysia. Thus the null hypothesis was sustained and the
alternate hypothesis was rejected. The result provides very significant outcome for the company.
It could be argued that, the company should not develop different marketing strategy for
different races especially in the context of Malaysian young consumers. This will definitely give
great saving not only in term of their operating cost but also to the overall planning of the
strategy.
Sum of Squares df Mean Square F Sig.
Between Groups 1.352 3 .451 1.169 .321
Within Groups 189.613 492 .385
Total 190.965 495
Table 4: ANOVA- Difference in Online shopping among different races in Malaysia
Conclusion
The analytical results of our investigation indicate relationships between young consumers
perceptions of the factors that influence their intention to buy through online. More specifically,
consumers perceptions of the customer service, reliability and trust of online purchasing exhibit
significant relationships with their online buying intention. The analytical results are generally
consistent with previous. Trust has received the most consistent support as factors that influence
online buying (Gefen, 2002; Jarvenpaa et al., 1999, 2000; Koufaris and Hampton-Sosa, 2004;
Koufaris and Hampton-Sosa, 2002). Marketers need to realize that the online marketing
environment affects the way consumers view and develop relationships. In this context, to add
value to the online shopping experience and to build relationships, trust is everything.
Notably, examination of the relative strengths of the associations between the individual
independent variables and online buying intention clearly indicate that Customer Service, Trust
and Reliability can explain much of the variation in online buying intention (Shergil & Chen,
2005; Gefen, 2002; Jarvenpaa et al., 1999, 2000; Koufaris and Hampton-Sosa, 2004).
Furthermore, it was also found that, for online buyers, the good perception on the customer
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service is considered as the best predictor when compared to other constructs.
When individuals have more experience with online buying, the impact of perceived factors on
intentions to buy online is different from that of inexperienced online buyers. Information
obtained from experience over a period of time undoubtedly has the potential to modify future
intentions of online buying. Therefore, experience gained over time has potential implications
for the other buying behavior model and future research should be conducted in this area. This
will serve as a platform that will lead to the sustained confidence of the consumers in online
purchasing. In this study, it was found that few consumers were buying through online
regularly, although 72.4 percent of the respondents browsed the Internet everyday.
Limitations and Future Direction
It is necessary to recognize the limitations of the current study. Firstly, since the survey was
conducted among a group of students from two private universities, the results should be
interpreted with caution, particularly with respect to the generalization of research findings of
Malaysian consumers as a whole. Next, the sample size itself is relatively small. To accurately
evaluate Malaysian consumers perceptions of online shopping, a larger sample size is desirable.
Future research needs to focus on a larger cross section of Internet users and more diversified
random samples to verify the findings of the current study. Moreover, to further studies clarity
of the factors influence on online shopping, Technology Acceptance Model (TAM) or
behavioral model could be used. Future inquiries could also examine the causal relationships
between factors and how consumers perceive overall online shopping by employing a
structural equation modeling technique. In addition, future research needs to examine business-
to-business purchase in the context of cross-national and cross cultural differences.
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