AN EMPIRICAL ANALYSIS OF THE RELATIONSHIP BETWEEN WEBSITE CHARACTERISTICS AND CONSUMER ONLINE BUYING BEHAVIOR

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1 AN EMPIRICAL ANALYSIS OF THE RELATIONSHIP BETWEEN WEBSITE CHARACTERISTICS AND CONSUMER ONLINE BUYING BEHAVIOR Chao Chao Chuang Hsing Wu University, Taiwan 3F-2, No.27, Sec.2, Ren Ai Rd., Taipei 100, Taiwan Dr. Fu-Ling Hu Associate Professor Hsing Wu University, Taiwan 21 Hidden Valley Rd., Pomona, CA91766, U.S.A. Abstract E-commerce has evolved at least more than one decade. The continuous growth of e-commerce has created various opportunities for E-retailers. This research attempts to examine website characteristic that may influence consumer online buying behavior and to investigate different perceptions of website characteristic between four different types of online buyers. The results disclose that website design, website reliability, website security, and website customer service are the four dominant characteristic factors that influence consumer perceptions of online purchasing. Besides, the four types of online buyers; i.e., trial, occasional, frequent and regular online buyers; have different perceptions of these website characteristics. This study adopts a convenient sampling strategy and chooses college students to be subjects because college students represent the majority of online buyers in Taiwan. Research findings are as follows. Online buyers rate website design factor at the highest mean score. This implies they think highly of the feature. But website security factor is rated at the lowest mean score, which implies that the security issue is the essential concern for most online shoppers. Besides, regular web buyers were much more satisfied with all website variables than trial web buyers, who had the poorest viewpoint of website characteristics. Frequent online buyers were not as satisfied with their online shopping as regular web buyers, but had a better viewpoint than the occasional online buyers. Because customers characteristics will influence their attitude and intention toward online shopping, so differential marketing strategy targeted at the appropriate market segmentation should be planned and implemented to increase different customers satisfaction and loyalty. Keywords: Website Characteristics, Online Shopping Behavior 1. Introduction The Internet has become an important channel for information search, advertising, and transaction. A large body of research has focused on the online shopping behavior for Western consumers instead of Asian population (Hu, 2008). According to Internet World Stats (2007), the percentage of world Internet usage in Asia accounts for 38.7 percent which has exceeded the COPY RIGHT 2012 Institute of Interdisciplinary Business Research 286

2 North American s 18 percent. Due to the increasing growth of online shopping in Asian countries, more and more researchers and practitioners of electronic commerce have begun selecting the Asian subjects in order to gain an improved insight into online consumer behavior. The rapid growth of online consumers in Taiwan provides a bright prospect for E-retailers. The purpose of this research is to examine website characteristics that may influence online consumer behavior and to recognize the relationship between different online buyers and their online buying behaviors in Taiwan. Apparently, electronic markets have some economic advantages that include reducing marketing costs, cutting the price of their products and services in which may intensify a company s competitive advantage in the fierce e-market. Companies also use the Internet to convey, communicate and disseminate information, to sell the product, to trace customer attitudes toward the sellers or stores after purchasing. Meanwhile, Internet also provides various functions for consumers. Consumers use the Internet not only to purchase the product but also to compare prices, product features and trace the order condition. If E-retailers understand what website characteristics affect consumers online purchase decisions and how consumers make these buying decisions, they can formulate marketing strategies to convert potential customers into real ones and keep their existing consumers. In this paper, we identify four different types of website characteristics; including website design, website reliability, website security, and website customer service as perceived by online shoppers. We used a factor analysis technique to classify these four characteristic factors which buyers keep in mind while shopping online. We further classified online shoppers into different categories; including trial online buyers, occasional online buyers, frequent online buyers, and regular buyers depending on their purchase frequency. Based on a survey of 165 respondents, we investigated how these various categories of online shoppers perceived these four website characteristics differently. 2. Literature Review For E-retailers, websites provides online customers with information and transaction capabilities. E-retailers present different shopping environments from the traditional shopping because customers interact with a technical interface in a virtual space rather than interacting with a salesperson in a physical store. Thus E-retailer s website quality was found to be an important method in understanding whether the E-retailer is providing the type of information and interaction to consumers (Kim & Stoel, 2003). E-retailer quality in this study is conceptualized as the consumer s evaluation of process and outcome quality of the interaction with an E-retailer, based on the study of Gummerus et al (2004). In the study conducted by Vellido et al. (2000), nine factors connected with users viewpoint of online shopping were extracted. Among those factors the risk perception of users was showed to be the main discriminator between people shopping online and people not shopping online. SITEQUAL (Yoo & Donthu, 2001) used five dimensions including ease of use, aesthetic design, processing speed and security. Etail Q (Wolfinbarger & Gilly, 2003) is composed of four factors such as website design, customer service, fulfillment/reliability, and security/privacy. Shergill & Chen (2005) also COPY RIGHT 2012 Institute of Interdisciplinary Business Research 287

3 measured the quality of e-tail experiences by the same four dimensions. They were website design, customer service, fulfillment/reliability and security/privacy. This study builds upon the scale.comq developed by Wolfinbarger and Gilly (2003), and the scales employed by Shergill & Chen (2005) in their studies to measure the quality of an online retail site Factors influence consumer online buying behavior Website Reliability Factor Reliability occurs when the consumer is aware that there is a high likelihood that the E-retailer will deliver exactly what is being promised. Because customers can t physically inspect goods online prior to purchasing them, online shopping of tangible goods presents distinctive challenges when compared with traditional shopping. Following this, standardized products such as books, CDs and tickets are more likely to be purchased online. Because quality uncertainty in such products is very low, and no physical help is required (Grewal et al., 2002). On the contrary, products that need personal knowledge or experience like cars and computers are improbable to be purchased on the Internet Website Customer Service Factor E-retailers service influences customers purchase decisions in the way that E-retailers reply quickly and effectively to consumers requests. Kim and Stoel (2004) found that response time had an influence on customers e-satisfaction. Through the research of 100 U.S. retailer s websites, Griffith and Krampf (2001) asserted that a lack of immediate response, particularly to enquiries, is the most common negatively noticed phenomenon in online shopping. Yang, Peterson and Huang (2001) also stated that prompt responses to consumers concerns and enquiries are important for e-satisfaction. Urban et al. (2000) proposed that the critical factor resulting in e-trust is fulfillment, which includes delivering the correct product on time. Abundant evidence has showed that customers are particularly concerned about order fulfillment when building trust in the online retailer (Reynolds, 2000). To most customers significant attributes of shopping online are convenience and accessibility (Wolfinbarger and Gilly, 2001). Lohse et al. (2000) found that the normal online customers are characterized by their lifestyle. So they proposed providing personalized information for the repeated online shoppers, let the shoppers get the feeling of more convenience and make the purchase decisions quickly Website Design Factor For e-commerce shopping, another important component is ease of use. It may be described in terms of the time needed to find and buy the products, the convenience of using the shopping engine as part of the purchasing process ( Bhatnagar, Misra, & Rao, 2000). Internet shopping satisfies several customers needs more efficiently than traditional shopping (Grewal et al., 2002). With shopping online, customers can browse good merchandise assortment with minimal effort and more convenience. Product variety is essential to shoppers because it offers them with the chance to contrast product characteristics. In addition, customers can compare and acquire competitive prices easily than conventional shopping. Shankar et al. (2003) stated that more abundant and higher quality information available online results in better purchasing decisions and higher satisfaction. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 288

4 2.1.4.Website Security Factor Security and privacy have a powerful effect on customer trust in online shopping (Lee and Turban, 2001). Privacy risk means a customer may sacrifice their privacy when they are required to provide private information in making e-commerce transaction (Vijayasarathy, 2002). McKnight and Chervany (2002) also noted that if an E-retailer assures consumers that a privacy policy exists on the website by posting a privacy policy or using a third party seal, the consumer is more willing to trust the E-retailer when disclosing private information (Gummerus et al.,2004). This review of empirical studies has contained different factors which influence online purchasers behavior. But the review of previous literature indicated that there has been no systematic research done on examining the relationship between website characteristics and online buying behavior for Asian subjects. Taiwan is chosen as the location for this study because Taiwan is found to be ranked ahead of Korea, Japan and Singapore from the point of view of the Internet penetration rate. Students tend to spend more time and have more access to the Internet than other consumers, and thus more likely to be online shoppers. Therefore, Taiwan college students are selected to be the subjects in the study. 3. Research Objectives E-business is fundamentally changing the way customers buy products and services. A large number of factors need to be verified and understood before developing marketing strategy for online business. For example, what factors of website characteristics will influence online purchasers behavior of technical college students? Is there any different online shopping behavior or perception toward the E-retailer website between different types of online buyers? The aim of this research is to explore online customer behavior, then which will provide E- retailers with a suggestion for making better strategies. Thus we propose the following hypotheses: H1: Based upon the shopping frequency, different types of online shoppers will perceive these characteristics differently. 4. Research Methodology Instrument The study selected the scale developed by Wolfinbarger and Gilly (2003) and the scale employed by Shergill & Chen (2005). Both of these scales are adapted for the present study. The scale.comq developed by Wolfinbarger and Gilly (2003) includes eleven items to measure the quality of an online retail site. To suit our research objectives, we deleted two items. A further six items; which were employed by Shergill & Chen (2005) in their studies; were introduced. The items were rated by using five-point Likert scales. The frequency of online buying was measured by asking how many times the respondent had made purchases on the retailer website within the past year. Customers who shopped online once yearly, 2-4 times yearly, 5-9 times yearly and more than 10 times yearly were classified as trial, occasional, frequent, and regular online purchasers, respectively. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 289

5 5. Data Analysis And Results 5.1. Sample Profile From a marketing point of view, it is important to describe the online college students before we begin to discuss the results of the data analysis, because online buyers demographics are the basis of the market segmentation. This will influence E-retailers to make differential marketing strategy. The sample comprises more female(74.55%) than male. The majority of the respondents (76.97%) are in the years old category Website factors and online shoppers perception of website factors The inter-item consistency reliability of these fifteen variables was tested before factor analysis was executed. The result of Cronbach s Alpha test was Furthermore, the results of both the KMO (0.838) and Bartlett s test of sphericity (0.000), also show that it was suitable to use the factor analysis techniques to this data set. In order to study how the customers perceived website quality; in terms of website design, website reliability, website security and website customer service, the mean scores for all factors have been compared. The findings are presented in table 1. Table 1 Online shoppers Perceptions of the four website factors Factors of Website Characteristics Mean Std. Deviation Website Reliability Factor Website Customer Service Factor Website Design Factor Website Security Factor Overall mean of the four factors 3.55 Firstly, the website customer service factor had a higher mean score of 3.69 than the overall mean score of Responding to customer needs, surfing comfortably and time saving had high mean scores within this factor. Time efficiency means ease of use, coupled with the availability of the expectant products (Bhatnagar, Misra, & Rao, 2000). To most customers important features of online shopping are convenience and accessibility (Wolfinbarger & Gilly, 2001). Because customers can shop online comfortably in their home at any time of the day or night. The level of personalization particularly didn t have a good rating in this factor. This lack of personalization could hold little appeal for repeated online buyers, because they could not easily find what they desired. Secondly, online buyers rated the website design factor the highest mean score. This meant they were relatively satisfied with express checkout processing, competitive prices and good merchandise assortment. Product variety is important to buyers because it offers them with the opportunity to compare and choose from multiple potential solutions that meet their needs. Thirdly, online buyers evaluated the website reliability factor at 3.23, which was slightly lower than the overall mean score of This implied that they were not satisfied with the reliability features of E-retailers. Apparently, online buyers were concerned about precise deliver what is COPY RIGHT 2012 Institute of Interdisciplinary Business Research 290

6 being promised. E-retailers should improve their service to overcome customers lack of physical contact when shopping online. Fourthly, the website security factor was rated at a considerably lower mean score of Lack of trust is one of the most frequently mentioned reasons for customers not shopping online (Lee & Turban, 2001). Customers cannot monitor the security of sending confidential personal and financial information while purchasing online (Lee & Turban, 2001). Thus, trust has an important moderating influence on the relationship between customers attitude and intention toward online shopping Perception of Online Shopping by Four Types of Online Shoppers How different types of online shoppers perceived all fifteen influential website variables is, however, still unclear. The ANOVA test and the comparison of the mean values of the variables were used to explore this topic. In this part, four types of online shoppers perceptions of the website variables were discussed. Table 2 Website Characteristic Variables and Types of Online Shoppers Trial online Occasional Frequent Regular online online online buyers Website Characteristics Variable buyers buyers buyers Mean Rank Mean Rank Mean Rank Mean Rank F value Sig. P - value α = 0.05 It is quick and easy to complete a transaction at this website This website has a good selection This site has competitive prices This site doesn t waste my time I feel comfortable in surfing this site. This website provides in-depth information. The company is willing and ready to respond to customer need. The product is delivered by the time promised by the company. The level of personalization at this site is about right, not too much or too little. The product that came was represented accurately by the website This website understands my need This website has adequate security features. You get what you ordered from this website. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 291

7 I feel that my privacy is protected at this site. I feel safe in my transactions with this website. Average score of different online buyers Table2 shows the average ratings of the fifteen website variables, which measured how different online shoppers perceived their most recently visited websites. Trial online shoppers were defined in this research as those who had bought products or services online once in the last year. Rankings were ordered by the mean scores. Express checkout processing and good merchandise assortment acquired the same scores of The next group of variables had mean scores of 3.75 to These included on-time delivery, surfing comfortably and responding to customer needs. Most of the website variables acquired lower mean scores than the average level. This meant that online buying experience did not meet trial buyers expectations. Occasional online buyers were those respondents who had purchased products or services online two to four times during the last year. According to the ratings provided by occasional online shoppers, competitive prices and good selection were rated above 4.0, on a five-point scale. These 6 variables (responding to customer needs, on-time delivery, providing in-depth information, completing transactions easily and fast, comfort in surfing and time saving) had higher mean scores (from 3.99 to 3.57) than the category average score of It can be found that the number of variables with low ratings decreased along with an increase in online buying frequency. This study has defined frequent online buyers as those who had purchased products or services five to nine times online during the last year. As table 2 shows, eight means were higher than the perceived overall mean score of Three of the variables were rated above 4.0. Good merchandise assortment had the highest mean of Nine out of the fifteen variables had lower means, however, than the category mean (3.62). Frequent online shoppers perception of the website variables was rather high. In this research, regular online buyers were those who had purchased products or services more than ten times online during the last year. Good merchandise assortment, competitive prices, time saving, easy navigation, providing sufficient and useful information, ease of completing transactions, were rated above 4.0. Furthermore, four other variables (responding to customer needs, punctual delivery, appropriate level of personalization, representation of products) were rated higher than the perceived overall average score of Two out of the four had higher mean scores than the category mean (3.72). The findings reveal variable means increase when online shoppers purchase more frequently. It can be concluded that regular web buyers were much more satisfied with all website variables than trial web buyers, who had the poorest viewpoint of website characteristics. Frequent online buyers were not as satisfied with their online shopping as regular web buyers, but had a better viewpoint than the occasional online buyers. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 292

8 6. Conclusion E-commerce has introduced a whole new way of buying that offers timesaving, convenience, and greater selection and comparison options to broader customers. Numerous products from clothing to shoes, and services from e-banking to travel arrangements are available at the click of a mouse. This paper finds that website security, website design, website reliability and website customer service are the four main factors which affect consumer perceptions of their online purchasing experiences. Online buyers have different viewpoints of these four factors. Website design has the highest rating score, followed by website customer service. Website reliability is ranked third, and the lowest is website security. In terms of the consumer buying process, most of the online stores are aware of the importance of information search and information evaluate. Companies provide search engine, detailed product information and endorsement links to attract customers. However, online stores need to improve or incorporate reliability and security related features in their e-commerce efforts. Many online buyers are not satisfied with website security, which was rated the lowest factor mean of Consumers care about online financial security and privacy are closely connected with their viewpoint of how good the technologies for secure payment methods are, and with the reputation of the E-retailers. Therefore, it is important for E-retailers to take advanced encryption technology such as posting a privacy policy and utilizing a third-party seal. This study also indicates that the factor of website design is the most satisfactory attribute when shopping online. The factor scored the highest mean of 4.01 in this survey. With online shopping, consumers can browse the entire product-assortment with competitive prices. In order to consolidate this advantage, E-retailers should choose more famous products or brands to market online. Branded products and services are usually thought by customers as having better qualities. Regular online buyers need to be induced to get online because they shop most frequently. As long as they can find the desired product, make the transaction easily and obtain the competitive prices, they will increase their loyalty. While trial online customers are interested in browsing on the website, maybe they see online shopping as enjoyment and look for the potential entertainment arising from the online shopping experience. The purchase of goods may be incidental to the experience of Internet shopping. If trial online buyers initially have pleasing online shopping experience, they are more likely to continue subsequent shopping behavior: they will browse more, make more unplanned purchasing, and look for more stimulating products. In the face of severe competition and continually increasing customer expectations, e-commerce companies must understand how to identify, help and retain their profitable existing customers. E-retailer should emphasize the enjoyable aspect of online shopping in their promotions for trial online buyers and then create the competitive advantage. Some website attributes not only offer regular online buyers desired functions but also provide trial online buyers with abundant information and novelty. They take the balanced approach in order to simultaneously satisfy different types of customers. Because customers characteristics will influence their attitude and intention toward online shopping, so differential marketing strategy targeted at the appropriate market segmentation should be planned and implemented to increase different customers satisfaction and loyalty. COPY RIGHT 2012 Institute of Interdisciplinary Business Research 293

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