Internet Shopping in Taiwan and U.S. By Chia-Chi Liu, MA Brian F. Blake, Ph.D. Kim Neuendorf, Ph.D. Professional Series

Transcription

1 Internet Shopping in Taiwan and U.S. By Chia-Chi Liu, MA Brian F. Blake, Ph.D. Kim Neuendorf, Ph.D. Professional Series February, 2003 Cleveland State University Jacqueline Kirchner Co-Editor Brian F. Blake, Ph.D. Senior Editor Jillian Hughes Co-Editor RESEARCH REPORTS IN CONSUMER BEHAVIOR

2 1 RESEARCH REPORTS IN CONSUMER BEHAVIOR EDITORIAL DIRECTOR: DR. BRIAN BLAKE Dr. Brian Blake has a wide variety of academic and professional experiences. His early career... academically, rising from Assistant Professor to tenured Professor at Purdue University, his extensive published research spanned the realms of psychology (especially consumer, social, and cross-cultural), marketing, regional science, sociology, community development, applied economics, and even forestry. Professionally, he was a consultant to the U.S. State Department and to the USDA, as well as to private firms. Later on...on the professional front, he co-founded a marketing research firm, Tactical Decisions Group, and turned it into a million dollar organization. After merging it with another firm to form Triad Research Group, it was one of the largest market research organizations based in Ohio. His clients ranged from large national firms (e.g., Merck and Co., Dupont, Land o Lakes) to locally based organizations (e.g., MetroHealth System, American Greetings, Progressive Insurance, Liggett Stachower Advertising). On the academic side, he moved to Cleveland State University and co-founded the Consumer-Industrial Research Program (CIRP). Some of Cleveland s best and brightest young marketing research professionals are CIRP graduates. In the last few years...academically, he is actively focusing upon establishing CIRP as a center for cutting edge consumer research. Professionally, he is market research consultant for a variety of clients. CO EDITOR (2002): JILLIAN HUGHES Currently a CIRP graduate student, she graduated Magna Cum Laude from Mount Union College, where she majored in Psychology, with a focus on Consumer Behavior, and minored in Sociology. Among her many research interests; she focuses on Internet buying behavior, and the effects of Social Desirability Bias on Innovativeness Scales. She had the honor of presenting research concerning age differences in brand labeling at the Ohio Undergraduate Psychology Conference in April of 2001 at Kenyon College. She also presented another piece of original research on Internet buying behavior of college students at the Interdisciplinary Conference for the Behavioral Sciences hosted by Mount Union College in April, CO EDITOR (2002): JACQUELINE KIRCHNER After graduating with honors from Mount Union College, she is currently enrolled in the Consumer-Industrial Research Program at Cleveland State University. She has presented independent research on brand labeling effects at both the Ohio Undergraduate Psychology Conference hosted by Kenyon College, and at the Interdisciplinary Conference for the Behavioral Sciences, hosted by Mount Union College. While an undergraduate she studied abroad at the University of Essex in Colchester, England. Having minored in Business Administration and Information Systems, Jackie s interests lie in Information Technology and its links to commerce and advertising.

3 2 Abstract It is hard to pick up a newspaper or business magazine today without finding articles on how electronic e- commerce (EC) is changing the world. Researchers and marketers have been predicting an earthshaking boom in the adoption of EC and the factors that motivate users to shop. Will this boom be heard around the world? Just in America? The western nations? Unfortunately, current research lacks concern for the cultural/national differences in shopping behavior. Rarely do we consider that shoppers in other cultures can look at the same website we are viewing but perceive it differently. This study is basically exploratory in nature. Small samples of internet users were surveyed in two regions, Taipei, the capital of Taiwan, and Northeast Ohio. The goal is to consider, based on survey results, recommendations about how to structure a website so as to attract shoppers in Taiwan. Among these recommendations are: (1) affiliation of a website with a local retailer, (2) provision of a website in Mandarin Chinese, and (3) emphasis on low prices.

4 3 Objectives The World Wide Web (WWW) is becoming a strategic marketing tool nowadays. Due to the Web, new services and products can be put directly into the hands of consumers all around the world. Since there are many so-called dot-coms, a marketer must do more than simply create a website and wait for business. The success of any marketing initiative depends substantially on how well the product/service meets the needs and expectations of the prospective buyer. Experienced Internet marketers know that if they want their website to generate sales internationally they must be able to answer the following three questions: 1. Which countries do I want to target? 2. How do I design a website so that it works for people in those countries I target? 3. What can I do to turn browsers into buyers? The purpose of this study was to compare Internet usage and online shopping behavior between Taiwan (Taipei) and the US (NE Ohio). After all, the steps a marketer takes for an Asian country may be very different from those taken in the US. Five specific objectives served as a baseline for this study: 1. How many people use the Internet? 2. Who uses the Internet? 3. Who shops on the Internet? 4. What products/services sell on the Internet? 5. What are the site features (attributes) that encourage online shopping?

5 4 Method The research was based on samples recruited in Taipei, Taiwan, and Northeast Ohio. The questionnaire utilized in this study was designed by a research team of Chia-Chi Liu, Ruben Jurik, Colin Valdiserri, and Fariba Arab, under the direction of Professor Brian Blake, of the Consumer - Industrial Research Program. The goal of respondent recruitment was to obtain a sample as diverse as possible in regard to age, income, education, race/ethnicity, and gender; a convenience sample was used to do this. The Taiwanese questionnaires were mainly distributed in Taipei, Taiwan, with the total number of completed questionnaires being 143. The questionnaire for the NE Ohio sample was collected mainly from such cities as Akron, Cleveland, and Alliance with a total of 260 US respondents, bringing the total number of completed questionnaires to 403. For use in Taiwan the English questionnaire was translated into Mandarin Chinese. For validity and reliability reasons, two back-translations were done; the Chinese version of the questionnaire was revised until it mirrored the English version. Overall, it can be said that although the questionnaires were collected via convenience samples in Taiwan and the US, the demographic profile of the Taipei as well as the NE Ohio sample appear to contain the variety of backgrounds found in the total population of those regions.

6 5 1. How many people use the Internet? Findings Based on a variety of secondary sources, it can be said that in Taiwan, the total number of those with Internet access has reached 6.4 million people, one third of the total population of Taiwan. In the US, the total online population is estimated at 130 million people as of Who uses the Internet? In Taiwan: Secondary research sources as of 2002 project that Taiwanese Internet users are younger and have higher levels of education than non-users. Their Internet audience is composed of more males (55%) than females (45%) and most users are expected to be either professionals (45%) or to be students (35%). Still based on secondary research sources, it appears that the average Taiwan Internet user is 28 years old, with 60% of the Internet users in the 15 to 29 year old age range. Where users have access to computers is as follows: 59% have access at home, 21% at the work place, and 17% at school. The top three online activities are browsing, receiving/sending and education/learning. However, searching for information on leisure and entertainment is a growing trend. More people go to Internet Cafe s for access, rising from 7% to 12%. The major activities for Internet Cafe users are online gaming, browsing, and chatting. In the US: Although this is progressively changing, according to secondary research studies Internet users in the US are younger, better educated, affluent and have more experience with the Internet than non-users. The Internet audience is composed of about equal portions of males and females, although males use their browsers more often than women. Users are more innovative and often are members of larger households. The median age of users is 35 years. More then 50% of users have a college degree. In the Northeast Ohio survey, a binary logistic regression, there were two demographic variables (high school education and being under 25 years of age) that were significant at the 95% level of confidence. They were found to be unique predictors that assist us in differentiating between Internet users and nonusers in NE Ohio. To summarize, it was found that having a high school education and being under 25 years of age were the biggest factors in predicting that one will use the Internet. It seems that being younger predicts more use, while having a high school education (rather than a college degree, professional school, etc.) predicts less use. Table 1 shows the percentage of users and non-users in NE Ohio exhibiting each characteristic

7 6 Table 1: Demographic Variables for Internet Use (NE Ohio/US) Education: Employment: High School Some College College Post Graduate Employed Non-employed Age: Under Over 50 Gender: Male Female User 19.3% 29.6% 24.2% 26.9% 89.1% 10.9% 21.2% 15.8% 23.9% 26.1% 13.1% 43.8% 56.3% Non-user 40.0% 37.1% 11.4% 11.4% 85.7% 14.3% 8.6% 22.9% 11.4% 34.3% 22.9% 40.0% 60.0% Unfortunately it was not possible for the analysis to be completed for the Taiwanese sample because there were only 7 participants (4.9% of the Taiwan sample) who did not use the Internet! 3. Who shops on the Internet? In Taiwan: A variety of previous studies have indicated that online shoppers in Taiwan are younger, more educated, and in higher-level professions with more stable incomes than is the rest of the population. Shoppers consist of more males than females. With increased online shopping experience and improved services provided by e-retailers, Taiwan s online shopping market has seen growth since In the US: Previous studies in the US have revealed that shoppers are older than non-shoppers, have a higher level of education, and are composed equally of men and women. Online shoppers are more innovative, less aversive to risk, tend to seek more variety, and are more impulsive than those who do not shop online. Users with four or more years of experience show the highest rates of online shopping. Table 2 indicates the percentages obtained in the present study for the demographic differences between shoppers and non-shoppers in Taiwan. Logistic regression analysis showed that in Taiwan being a full time employee predicted higher rates of shopping, whereas education of less than college predicted less online shopping.

8 7 Table 2: Demographic Variables for Internet Shopping (Taipei/Taiwan) Education: Less than College College/Graduate Employment: Employed full time Student Age: Under Over 40 Gender: Male Female Shoppers 28.6% 71.4% 66.7% 33.3% 35.7% 27.4% 21.4% 15.5% 60.7% 39.3% Non-shoppers 55.6% 44.4% 47.8% 52.2% 50.0% 11.1% 20.4% 18.5% 42.9% 57.1% Next, Table 3 presents the demographic differences between shoppers and non-shoppers in NE Ohio/US. It indicates that shoppers tend to be older and to be better educated. Table 3: Demographic Variables for Internet Shopping (NE Ohio/US) Education: Employment: High School Some College College Post Graduate Employed Non-employed Age: Under Over 50 Gender: Male Female Shoppers 16.2% 25.7% 27.7% 30.4% 89.9% 10.1% 16.2% 18.2% 24.3% 27.0% 14.2% 44.3% 55.7% Non-shoppers 30.0% 37.3% 15.5% 17.3% 87.0% 13.0% 23.9% 14.7% 19.3% 27.5% 14.7% 41.8% 58.2% A binary logistic regression analysis found that the central distinction was in regard to education; being in high school or having only some college education predicted that one would engage in less shopping. 4. What products/services sell better on the Internet? In past surveys for both countries, low touch products, such as books, tickets, and computer accessories are the most popular products that people search for and purchase online. The most common products searched for and/or bought are: books, DVDs/CDs, computer software/hardware, tickets, clothing and travel. Based on data obtained in the recent survey Graph 1 represents the comparison between Taipei/Taiwan

9 8 and NE Ohio/US in the percentage of visits to each type of site. The most popular sites for visiting for the Taipei/Taiwan sample were computer hardware/software, consumer electronics and financial services. Taipei/Taiwan had a higher percentage in every item as compared to the NE Ohio sample. NE Ohio/US visited more for travel, entertainment, books/magazines and consumer electronics. Graph 1 Likelihood of Visits: Taiwan vs. U.S.A. Travel Entertainment Other Books/Magazines Consumer Electronics Financial Services Computer Hardware/Software Health & Medical Clothing/Accessories Home Appliances Food/Beverage Taiwan U.S.A Percent of Internet Shoppers Graph 2 illustrates the percentage of sales in each of these same categories. The top three most popularly purchased items for both the Taipei/Taiwan sample and the NE Ohio/US sample were; books/magazines, entertainment and travel. Besides clothing and travel the Taiwanese purchase more overall than do those in NE Ohio/US. Graph 2 Likelihood of Sales: Taiwan vs. U.S.A. Books/Magazines Entertainment Travel Clothing/Accessories Other Computer Hardware/Software Consumer Electronics Financial Services Health & Medical Food/Beverage Home Appliances Taiwan U.S.A Percent

10 9 5. What are the attributes that encourage/discourage online shopping? In Taiwan: Past studies suggest that the main concerns of online shoppers in Taiwan are credit card safety, price, delivery time and ease of ordering. All of these attributes, if addressed, are anticipated to increase the appeal of a shopping site to customers. In the US: A variety of past investigations have concluded that shoppers in the US sample are concerned about customer service, convenient and easy to use websites, financial security, minimum time and cost of shipping and handling, and an enjoyable online shopping experience. Graph 3 illustrates the importance of specific reasons why online shoppers in the Taipei/Taiwan sample choose a specific website. The most important reason for selecting a site was that it was a good place to find a bargain. The second and third were that the site provides credit card safety and that the company had a good reputation and was credible. Having a language barrier was a also a big concern for the Taiwanese; they prefer to shop on sites written in the Chinese language. One attribute that was not important to the Taiwan sample was that of tax, because sales tax is already included into the purchase prices of their products. Graph 4 represents the NE Ohio/US sample. The most important attribute to this sample was that the site provide credit card safety. The next two most important attributes were that the ordering process was easy to use and that there was no or a low charge for shipping and handling. It is interesting to note that both regions rated credit card safety of being of most importance and both rated whether the site was new/different as being of least importance. How do NE Ohio/US and Taipei/Taiwan differ in their reactions? A discriminant function analysis detected the attributes on which there were major differences. In no case does the Taipei/Taiwanese market judge an attribute as more important to their site selection. However, the following six issues are considered less important by the Taipei/Taiwan shoppers: Fast response time from customer service Reputation and credibility of the company Credit card safety Ordering process is easy to use No tax Low or no charge for shipping and handling

11 Graph 3 Taiwan Market Graph 4 U.S.A. Market Provides credit card safety (68) Good place to find a bargain (70) Low or no charge for Shipping & handling (64) Provides credit card safety (65) Reputation & credibility of the company on the web (61) No language barrier (57) Download speed of the page (57) Delivery time is short (54) Order process is easy to use (54) Low or no charge for Shipping & Handling (53) Provides product information, including FAQ (52) Friends & family were happy shopping at the site (52) Easy to find product (51) Offers good price incentives (51) Fast response time from customer service (48) No Tax (47) Order process is easy to use (61) No Tax (60) Good place to find a bargain (56) Reputation & credibility of the company on the web (55) Delivery time is short (55) Easy to find product (54) No language barrier (54) Offers good price incentives (52) Fast response time from customer service (52) Return policy is easy (50) Download speed of the page (49) Provides customer feedback (45) 35 Provides customer feedback (43) Return policy is easy (42) Wide selection of products (38) I hear about it on radio/television/newspaper (37) Friends & family will like to know my opinion (36) 40 Provides product information, including FAQ (42) Friends & family were happy shopping at the site (42) Wide selection of products (39) Website is new & different (31) Friends & family will like to know my opinion (35) I hear about it on radio/television/newspaper (35) Website is new & different (33) Graph 5 compares the reasons for not shopping online for both regions. Taiwanese prefer to shop at traditional stores, (this was also the number one reason hindering NE Ohio/US shoppers from buying online). One reason for not shopping online that was very high for the Taiwan sample and very low for the US sample was the feelings of confusion and nervousness when online. Not wanting to give out personal information and hassle in returning products were important for the NE Ohio/US sample but not for the Taiwanese sample.

12 11 Graph 5 Reasons For Not Shopping Online Taiwan v s. U.S.A Prefer traditional stores Don't want to give personal info. Hassle in returning a product Need to touch a product Prefer to buy on the spot E-shopping is too new Cannot easily access a computer Prefer to shop by catalogues or TV Don't have credit card Feel confused and nervous Don't know how to do it well People whom I respect,don't like it Taiwan U.S Recommendations Percent of Non-S hoppers In Taiwan: There is great potential in the Taiwan market because they like to visit sites and shop online. Following are recommendation for marketers who want to enter this market: 1. Affiliation with a local retailer A site has to be reputable, perhaps affiliated with a local company that customers can trust. It also needs to provide options for customers to either pay online, to or pay and collect their purchases at the local retailer. Why? Because retailers as well as customers like to use cash, and customers who do not want to wait for delivery will be accommodated. 2. Having web-sites in the Chinese language - Taiwan is a Chinese-speaking country just like mainland China and Hong-Kong. The population for Taiwan is 23 million, China 1.2 billion and Hong Kong 7 million, adding up to over one fifth of the world s population. The Chinese prefer to visit and shop on those sites written in Chinese. 3. Emphasize better prices - Customers are highly price sensitive. The compact island of Taiwan is custom built for offline shopping. Everyone lives so close to the store that it is much easier to go

13 12 shopping in conventional stores. Moreover, shopping is a social activity for the Taiwanese. Most stores do not close until 10 or 11 P.M., and even after that there are still a number of stores still open after midnight. To beat the convenience, variety, and social aspect of shopping at traditional stores in Taiwan, an effective way to appeal to this market is through emphasizing better prices. In the US: 1. Emphasize Credit Card Safety - Credit card security is a big concern for online shoppers in the US. Shoppers will not submit their personal information on the Internet unless they feel safe to do so. Even a small icon that indicates safe shopping can encourage buying. 2. Make sure the ordering process is easy and understandable - If the ordering process if too complicated or takes too long, it will hinder shoppers form buying online. 3. Design websites to be fun and easy to use - The perceived ease of use of a website will enhance online shopping. Marketers also should try to make online shopping a fun experience, perhaps with interactive websites that make online shopping an enjoyable event. 4. Reduce shipping and handling fees - Marketers can offer different options for shipping and also provide programs or discounts to lower shipping and handling fees. For example, on Amazon s super saving shipping, if you purchase $99 or more then shipping is free. For more information about this study contact Professor Brian Blake at (216) , or him at brianblake@csuohio.edu