The two distinct forms of e-commerce—business-to-business (B2B) and business-to-consumer (B2C)—have emerged as an important way of doing business that will surely grow in years to come. According to some recent forecasts, total Web sales will reach 1.4 trillion dollars in 2004. Most of the growth, however, is expected to be in B2B, with projected B2C barely constituting 21% of Web sales in 2004 [3]. With the exception of software, hardware, travel services, and a few other niche areas, shopping on the Internet is far from universal, even among people who spend long hours online. While B2C has not yet attained widespread acceptance in the overall scheme of e-commerce, the potential is definitely there. Indeed, there is substantial room for the growth of B2C once the major obstacles are overcome.
Although some of the hurdles to the growth of B2C e-commerce have been discussed in the literature, we still lack a good understanding of consumer behavior on the Internet and how new technologies challenge the traditional assumptions underlying conventional theories and models. Butler and Peppard [1], for example, explain the failure of IBM-sponsored Web shopping malls on a lack of understanding of the true nature of consumer behavior on the Internet. A critical understanding of this behavior in cyberspace, as in the physical world, cannot be achieved without a good appreciation of the factors affecting the purchase decision. If cybermarketers know how consumers make these decisions, they can adjust their marketing strategies to fit this new way of selling so that they can convert potential customers to real ones and retain them. Similarly, Web site designers, who are faced with the difficult question of how to design pages to make them not only popular but also effective in increasing sales, can benefit from such an understanding.
In this research we applied well-established behavioral theories to explain Internet consumer behavior. We then conducted a longitudinal survey study to identify key factors influencing purchasing on the Web and to examine their relative importance. The results of this study enhance our understanding of consumer behavior on the Web and lead to valuable implications for marketers and managers on how to develop effective strategies to win the battles of cyber competition. The findings of this study should also help Web designers in their difficult task of designing sites that must compete with millions of other sites on the Web.
Explaining Internet Consumer Behavior
Studies that investigated consumers’ perceptions of obstacles hindering the development of Internet shopping have reported several concerns, for example, security, trust, bandwidth, legal framework. These concerns, however, will soon become irrelevant. The rapid development of e-commerce technology will alleviate the security and bandwidth problems. Several governments have realized the strategic importance of e-commerce and are rapidly developing appropriate legal frameworks. Perceptions will also change as more and more people adopt Internet shopping. As these concerns are being addressed, other factors, such as the convenience of the entire shopping cycle (ordering, payment, delivery, and support), product quality and variety, and customer service, become more salient. Although most of these factors have been discussed in the e-commerce literature, their effects and their relative importance are still not well understood. This lack of understanding is causing a wide confusion regarding what is really happening, how much potential there is, and what companies should be doing to take advantage of Internet shopping.
This study sheds light on Internet consumer behavior through the application and empirical testing of a comprehensive behavioral model. Based on a thorough literature review and focus group meetings with 177 Internet consumers, we identified important factors affecting the adoption of Internet shopping and the level of its use. The elicitation of these factors was based on a well-accepted behavioral model proposed by Triandis [4]. According to this model, behavior is preceded by intentions and is affected by facilitating conditions. Intentions are in turn determined by social influences, attitude towards the behavior, and perceived consequences of the behavior among other factors. Seven perceived consequences were identified as particularly influential. The participants in the focus groups perceived that their Internet shopping behavior was motivated by cheaper prices, convenience, saving time, improved customer service, and their ability to do comparative shopping. They also thought that they would shop on the Internet more frequently if they did not have concerns regarding risks of security breach and privacy violation. On the social side, the influences of the family, media, and friends were perceived to be important. The participants also identified five conditions for facilitating Internet shopping. These included transaction efficiency, navigation efficiency, product description, site accessibility, and Web page loading speed.
Internet Shopping Surveys
Following the elicitation of the beliefs of Internet shoppers regarding the various factors affecting their intentions and behavior, we conducted a longitudinal study consisting of two online surveys. The first survey was aimed at assessing the intentions of Internet shoppers regarding their future behavior (shopping frequency) and exploring the determinants of these intentions, such as attitude, perceived consequences, and social influences. A total of 6110 consumers were chosen randomly from 4 Internet-based directories and were solicited by email to complete the first online questionnaire. The respondents were told that they would be asked to answer a second questionnaire in three months and that, in order to match the first questionnaire with the second one, they had to specify the last five digits of their phone number. This method allowed us to keep the survey anonymous while enabling us to match the answers of the two questionnaires to the same individual. A total of 1410 responded to the first survey. The second survey, on the other hand, focused on investigating the effects of intentions (assessed in the first survey) and facilitating conditions on actual Internet shopping behavior. Only 705 of those who responded in the first round answered the second questionnaire. Table 1 describes the demographic profile of the respondents.
Results and Discussion
The analysis of the data was done in a holistic manner using Partial Least Squares (PLS), a procedure that tests both the structural model (hypothesized relationships between factors) and the measurement models (items measuring each factor) simultaneously (see [2]). The results of the analysis are presented in Figure 1. The significant effects (significant path coefficients for constructs and weights for measurements items, as indicated by t-statistics) are indicated with solid lines with the most important ones (highest coefficients & weights) in double lines. Both intentions and facilitating conditions are found to affect Internet shopping behavior (that is, frequency of shopping) significantly. Facilitating conditions, however, have a more important effect. It is not enough to form an intention to shop online; such an intention will not translate into action if the appropriate conditions are not present. All facilitating conditions, identified through the literature review and the belief-elicitation process, are significant. These findings highlight the importance of transaction efficiency, product description, navigation efficiency, Web-page loading speed, and site accessibility in assisting the Internet consumers to act on their intentions.
Although all significant, two out of the five facilitating conditions emerged as the most important ones, specifically, site accessibility and transaction efficiency. To enhance the accessibility of an Internet shop, one has to make sure that the site is always up and running (available) and that it can be easily located. Choosing the appropriate domain name, registering the site with important search engines and optimizing its ranking, reminding visitors to bookmark the site address, and establishing a presence in popular cybermalls are all techniques that can enhance the accessibility of Internet shops. Improving the transaction efficiency, on the other hand, requires the optimization of the cycle times associated with product identification and selection, ordering, delivery, and after-sale service. While some aspects of transaction efficiency are associated with the user-interface design (for example, number of clicks required), others are associated with the reengineering of the order taking and fulfillment processes.
Although not as important as accessibility and transaction efficiency, the other facilitating conditions—product description, navigation efficiency, and Web page loading speed—are nevertheless significant and should not be neglected. To improve loading speed, the literature provides a number of guidelines for Web designers, such as keeping graphics simple and meaningful, limiting the use of unnecessary animation and multimedia plug-in requirements, using thumbnails, providing a “text-only” option, continuously monitoring the server and the Internet routes, and allowing text to load first, followed by graphics. To improve navigation efficiency, Web designers should carefully think of their online store layout. Some online stores keep a similar layout to that of the physical stores with which customers are already familiar. Other useful guidelines for navigation design include creating intuitive/meaningful hyperlinks and labeling them properly, providing a site map, and developing an effective search engine. It is important to note that navigation efficiency affects transaction efficiency (discussed previously), an important facilitating condition of online shopping. Finally, providing a good product description is a significant facilitating condition that can minimize an important drawback of online shopping: the inability of the customer to physically feel and examine the product. Enhancing the information content of the product is often cited in the literature as one of the critical success factors of online shopping. While in a physical store customers may complain about information shortage, in an online store they may be overwhelmed by information. The main challenges of Web designers are therefore to decide on the appropriate amount of information, to organize it, and to present it properly.
The results also indicate that the intentions of Internet consumers are significantly affected by the perceived consequences of online shopping, the consumers’ attitudes towards it, and social influences. Perceived consequences of online shopping, however, have the most important effect. Out of the hypothesized seven consequences, five are perceived to matter. The insignificant two are privacy violation and convenience. Surprisingly, our respondents did not give much importance to the convenience (anywhere and anytime) and privacy factors in forming their intention to shop on the Internet. Instead, they were enticed by cheaper prices, saving time, improved customer service, and the ability to do comparative shopping while they were discouraged by security concerns. There is a clear indication that security remains a big hurdle for the growth of B2C despite the important improvements in the technical solutions. Therefore, Internet retailers should work on their consumers’ perceptions in addition to implementing effective security measures. The results also indicated that the possibility of saving time is an important perceived consequence of online shopping. This is a confirmation of the significance of transaction efficiency and represents an important guideline for Web designers. Improved customer service is also found to be a significant perceived consequence of online shopping. Preferably, customer service and support should cover pre-purchase interactions, purchase, and post-purchase activities. According to the literature, one of the main advantages of Internet shopping is the improvement of information content, customization, and speed of customer service. In addition to improving customer satisfaction, online support can also reduce the operational costs of businesses. For example, adding a frequently asked questions (FAQ) section about the company and its products/services can significantly reduce customer requests and can alleviate the burden on call centers. Another perceived consequence that is found to be significant in this study is comparative shopping. Supporting the search-and-comparison activities of shopping helps the consumer to make a more informed decision. Finally, out of all perceived consequences, cheaper prices emerge as having the most important influence on intention formation. The bottom line for Internet consumers is saving money. This is an important factor for Internet retailers to take into consideration in formulating their business strategies in general and their marketing strategies in particular.
Other significant factors affecting intention formation for online shopping are social influences. The literature indicates that individuals use the Internet more frequently if they have a more socially supportive environment, including friends and relatives who are also Internet users. Our results indicate that online shoppers are significantly influenced by family members and the media rather than by friends. What is new in this study is that the media turned out to have the most important social influence on forming intentions to shop online. These days, one can hardly read a newspaper or watch TV without coming across some e-commerce news or commercials. The media can therefore play a very important role in the development of B2C. Although online advertising presents several advantages, it is not supposed to completely replace, but rather supplement, the traditional advertising channels. The importance of media influence indicated by the results of our study implies that online businesses should promote their sites in the media—radio, TV, newspapers, and trade journals.
Conclusion
The purpose of this study was to gain a better understanding of online consumer behavior through an investigation of factors affecting online shopping intentions and behavior. This was done based on a well-established behavioral model. Coupling belief elicitation through focus groups with a review of prior research allowed us to obtain a salient set of measures that resulted in interesting practical implications for Web designers and marketers about the critical drivers of facilitating conditions, social factors, and perceived consequences of online shopping. The use of a longitudinal approach for data collection provided a causal understanding of the factors affecting online shopping intentions and behavior. Nevertheless, this study, like all others, is not without limitations. It is important to recognize that online shopping behavior was self-reported and was assessed only once, three months from the time intentions were measured. Moreover, we did not evaluate the breadth of this behavior (that is, the variety of products bought) or its change over time. We realize that it is important for businesses to sell, but what is probably more important is to retain their customers for repeated purchases. Future research should use a wider variety of measures of online shopping and track the shopping behavior over a longer period of time.
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