Title Factors that influence consumers to purchase on untrusted websites on Malaysia

Muhamad Firdaus bin Minhad 2009516833

Faculty of Business Management Bachelor (Hons) in International Business Universiti Teknologi Mara (UiTM)

Table of contents Chapters 1.0 Introduction 1.1 Background of study 1.2 Problem Statement 1.3 Objectives of study 1.4 Research Question 1.5 Significance of study Page 1-7 3-4 5 6 6 7

2.0 Literature review

8 11

3.0 Research Methodology 3.1 Data collections 3.2 Sampling 3.3 Sample design 3.4 Sample size 3.5 Questionnaire design

12 - 16 12 13 - 14 14 14 15 16

4.0 Theoretical framework

17

Factor influences consumer to purchase on untrusted websites Abstract: Online shopping is a process in which buy goods or services through the Internet. With large of consumer using Internet for online shopping, it is not clear what drives them to shopping online on entrusted websites. Thus, this study is to identify factors influence consumer to shop on untrusted websites rather than trusted websites.

1.0 Introduction The internet is named after the Internet Protocol, the standard communication protocols used by every computer on the net. The internet can leverage consumer on ability to find, manage and share information faster and better. This is the first time in human history where information can be available to everyone around the world at the same time. Since its creation in 1950, internet has become one of the most important communications around the world. It can carried thousand and billion of information across the network in a matter of second. According to Internet World Statistics (2011), in December 2011, internet has more than 2 billion internet user around the world. From this, 44 percent of internet user comes from Asia. Nowadays, internet is not just medium of communications but it also become one of the bigger market ever available in human history. Billion of people from different background, culture, country and different need gather in one place. This has opened other possibilities for marketers to market their product through internet. Electronic commerce has become one of the essential characteristics in the internet era. According to UCLA center for Communication Policy (2001), online

shopping has become the third most popular internet activity, immediately following email, instant messaging and web browsing. It is even more popular than seeking out entertainment, information and news. Out of 2 billion internet users, 48.9 percent made online purchase in 2001, with three-quarters of purchasers indicating that they make 1-10 purchase per year (2001, p.38), When segmented into very versus less experienced internet. According to U.S Commerce Department, Sales from e-commerce totaled $194.3 billion in 2011, up 16.1 percent from $167.3 billion in 2010. This sales is not adjusted for seasonality, show that e-commerce is taking bigger portion of overall retail sales. There is an increasing awareness of technology in Malaysia, with the Multimedia Super Corridor (MSC) Project and the governments commitment to a technological society, a large number of high tech companies from around the world have started to set up in Malaysia. But efforts at encouraging the wider community to embrace technology have so far not been totally successful. Dial-up Internet access is growing steadily, but there has been very little interest in broadband Internet. And e-commerce activity can only be described as sluggish. In Malaysia, majority of consumer still used traditional method for shopping. That is, consumer has to go to retail store for shopping physically. However, lately there is significance increasing on consumer who shopping online. This is only limited to stuff like clothes, electronics and accessories for women. Internet users on Malaysia has increased from 16 million in 2008 to 17.5 million in 2010, from this number only 8.9 million users have experience in shopping online.

The literature review is interdisciplinary, and comprehensive. This study is complementary to other studies in e-commerce and strives to achieve both theoretical and practical meanings. From a theoretical perspective, the study advances our current understanding of factor influence consumer in e-commerce by proposing a theoretical model and providing evidence for the major elements contributing to the formation of this construct. From a managerial perspective, the study provides practitioners with useful information on how to design Internet marketing strategies that will initiate, develop, and maintain consumer that can ultimately enhance purchase.

1.1 Background of study Online shopping refers to the process of purchasing product or services via the internet. Online shopping or online retailing is a form of electronic commerce whereby consumers directly buy goods or services from a seller over the Internet without an intermediary service. An online shop, e-shop, e-store, Internet shop, web shop, web store, online store, or virtual store evokes the physical analogy of buying products or services at a bricks-and-mortar retailer or shopping centre. The process is called business-toconsumer (B2C) online shopping. When a business buys from another business it is called business-to-business (B2B) online shopping. The largest online retailing corporations are E-Bay and Amazon.com both are US-based. There have been intensive studies of online shopping attitudes and behavior in recent years. Most of them attempted to identify factor influencing or contributing

consumer to purchase online. The researchers seem to take different perspectives and focus on different factor in different ways. For example, Case, Burns, and Dick (2001) suggest that knowledge, income, and education level are especially powerful predictors of internet purchase among university students. In spite of all that above, there is still lack of research in certain area. Most of the past research, conclude that consumer only purchase on sites where its most trusted by other user. In recent years, the trend has changed, where many new blog has the ability to sell consumer product even though it doesnt have physical store or carried well-known brand name. These studies have all made important contributions to our understanding of the dynamics of online shopping field. However, there is a lack of coherent understanding of the impact of relevant factors on online shopping and an inconsistent identification of relevant independent and dependent variables. This makes comparisons of different studies difficult, applications of research findings limited, and integrating the empirical literature in this area elusive. Most of this blogger usually more to consumer-to-consumer concept (C2C), where as consumer sell their product to another consumer. Thus, this research aims to find out what motivates consumers to purchase in this kind of websites. What influences consumer to purchase on untrusted websites or unpopular websites? Several models are revised again in this research. Therefore, the main objective of this study was identifying significant factors that can influence the consumer to in an online site. This study is one of the first studies focused on factors influence consumer to purchase online on untrusted websites.

1.2 Problem Statement According to Malaysian Multimedia and Communication Commissions (2005) found out that only 9.5 percent of all internet user in Malaysia have been shopping online for the last 3 month. Amount spent on these items were small with 57.7 percent spending less than RM500.00. Issues such as privacy, unsolicited e-mail, transaction security continue to be hotly debated. With the increasing number of internet user in Malaysia, there should be increasing number of consumers who are interested in shopping online. There are several factor influence consumer to shopping online. According to Kahtibi, Paim, and Delafrooz (2006), demographic and consumer characteristics play a major role on influence consumer to purchase online. However, most of the past researches are more focusing on well known brand name, security issues and other. However, in the recent years, there are many increasing in store that only exists virtually. Thus, it created a question, how consumer influenced to shopping from this websites? What is the main factor contributing to this phenomenon? Thus this research aim is to find out what factor influences consumer to purchase on untrusted websites in Malaysia. With this research, it will help other researchers who are interested in this area to find out more detail.

1.3 Objectives of Study The main objectives of this study are to identify factor influence consumer to purchase online on untrusted websites. There are several factor involved influence consumer to purchase through this websites. These factors will be then be examined. The objectives of this research are: I. To examine if shopping convenience influence consumer to purchase on untrusted websites II. To determine whether better price and services influence consumer to purchase on untrusted websites III. To investigate whether better product selection influence consumer to purchase on untrusted websites

1.4 Research Question In the previous section, the issues of online shopping were demonstrated. As the whole process of online purchase through internet, in the virtual environment, there are many uncertain factors that are difficult for online consumer to control, such as online security, privacy protection and after-sales services. Moreover, fraud has also become serious issues that have beset consumers. Thus, the research questions of this study are shown as follow:

I.

How shopping convenience influence consumer to shopping online through untrusted website?

II.

How better price and convenience influence consumer to shopping online through untrusted website?

III.

How better product selection influence consumer to shopping online through untrusted website?

IV.

What is the main factor influence consumer to purchase through untrusted websites?

1.5 Significance of Study The significance of this study will give impact towards consumer, retailers and researchers. The significance of this study is shown as below: I. Improved public attitude and understandings towards online shopping on untrusted websites II. Increased consumer awareness toward online shopping and created relationship between consumer and retailers. III. Created better platform for other researchers who are interested to study more depth into this issued IV. Improved and strengthen retailers sales and marketing instruments to attract more consumer to purchase through untrusted websites

2.0 Literature Review

Internet was first found by American Defense Department Network through the Advanced Research Project Agency (ARPANET) at 1969. Early target ARPANET was to develop educated information for the army forces of US. Most creative technology that has reached a big impact at all of us is Internet innovation. Yu and Abdulai (2000) mentioned that the most significant result of rapid innovations in information and communication technology is electronic commerce. What is e-commerce? E-commerce basically refer to trade that takes place over th internet where buyer visit a sellers website, order and make payment of the product over the internet finally, goods are delivered physically to consumers. The total number of internet user worldwide passed 1 billion in 2005, up from 45 million in 1995 and 420 million in 2000 (New Media Age, 2006). Accordingly, dozens of internet-only companies have surfaced in many industries and numerous conventionally operated companies have adopted the internet (Yang et al. 2004). Nevertheless, recent studies pointed out; whether internet retailing will remain a stagnant business with negligible market share. Such as TV home shopping, or whether it will become as ubiquities and enduring as the department store, remains to be seen (Grewart et al. 2004). Issues such as privacy, unsolicited e-mail, transaction security continue to be hotly debated in the academic and practitioner literature.

Monsuwe et al. (2004) stated that large numbers of consumers in US and Europe use the internet for shopping purposed; it is not cleared what drive them to shop online. Meanwhile, in Malaysia, Haque and Khatibi, (2006) stated that, the studies regarding consumer behavior towards online shopping in the Malaysian environment is still limited in number. In this research, several studies in this area by other researchers were revised again so it can increase it reliability towards this research. What is untrusted websites? untrusted websites is websites where every transaction or activity consumer doing inside the sites is not fully protected, other forces from outside for example viruses, hackers have the ability to stole information about credit card, consumer background and so forth. Security is a critical issue that almost every one of us deals with. Most people surf the internet for several uses, like getting information about a topic, checking email, shopping, reading, or even selling goods. The internet has made all of these activities easier and faster to achieve with less time and effort. Internet security is a concern for everyone who uses the internet. How can consumers be sure that their identity, passwords, personal information, shopping information and credit card numbers, etc are all protected and that they are not available for hackers and malicious users. Shopping convenience is the primary motivation for online shoppers. Price is secondary. According to Jeremy Scholosberg (2000) , 97 percent of online shoppers are motivated primarily by saving time and simplifying their lives and of this 97 percent, only 36 percent are additionally motivated by saving money. Money is not an issue for

the rest of them. Even among the more price-conscious shoppers its worth reiterating that price is not their primary motivation. They tend to shop for prices only after they have decided on a particular product or service. Online shoppers place a much higher value on time than money. Shopping convenience can be time saving because consumer does not need to find parking space, ability to avoiding crowd, and the shop is available 24-hours online compared to traditional shopping, time of retailers taken to reply to consumer is much more shorter because It is in small size compared to full-grown company like e-bay or Amazon.com Better price and services also one of the factor influence consumer to shopping online on untrusted websites. Another thing which influences consumer is the cheap deals and better prices consumer can get from online stores because products come to consumer usually are direct from the manufacturer or seller without middlemen involved. Many online shops offer discount coupons and rebates. Prices for goods on the internet may be relatively low for various reasons. For example, overhead cost of maintaining websites is much less than that of a regular retail outlet, yielding a cost saving which may be passed on to the consumer (Abramson and Hollingshead, 1999). Prices are driven down by a larger number of competing stores, since the internet closes the geographical distance of physical stores (strauss et al. 2003) According to Evans and Wurster (1999), millions of people exchange massive amounts of information directly, quickly and for free. This search for information is one of the fundamental steps in the consumer dinstinctive decision making process (Hoyer

10

and MacInnis, 2001). Consumers can search much more comprehensively and at negligible cost. Furthermore, Abramson and Hollingshead (1999) indicate that consumers will benefit from the internet by having access to a broader and deeper product selection and to a greater variety of stores.

11

3.0 Research Methodology

Our research regarding factor influence consumer towards online shopping on untrusted websites is a descriptive research because we just want to draw a picture of our topic as what are the factors that influence consumers to shop online. In general, there are two types of research method are being used, quantitative and qualitative. We would like to go for quantitative method in our research as it is a precise way. According to Cresswell (1994), time is vital attribute for decision making while selecting research method. Saunders, Lewis, and Thornhill (2000) suggests that quantitative research can be faster as compared to qualitative as it is possible to forecast the time schedule, whereas qualitative can be relatively long in duration. Research project normally done for academic reasons are limited to time as our research is also being done for academic purpose and is time limited so that is why we are prefer quantitative approach.

3.1 Data Collection There are two methods generally used by researchers to collect data, primary and secondary data. Primary data includes observation method, interview, case study, projective techniques, and questionnaire. Whereas secondary data is which data is already collected by other researchers not for the reason for particular research or study?

12

In this study, we would go for primary method that will include questionnaire from consumers as what are factor that influence consumer to shopping online on untrusted websites. As our study covers Malaysia onsline shoppers so we feel it would be easier for us to distribute the questionnaire and then analyze the situation the situation. As our respondents are geographically scattered, Kumar (1996) suggests that use of questionnaire may be the only method of data collection available if respondents are geographically scattered.

3.2 Sampling In general there are two types of sampling techniques, probability sampling and nonprobability sampling. In probability sampling there is a non-zero equal chance for each population element to be selected. According Bryman and Bell (2007), there are four types of probability sampling such as simple random sample, systematic sample, stratified random sampling and multi stage cluster sampling. Meanwhile, there are three types of non-probability sampling such as convenience sampling, snowball sampling and quota sampling. Convenience sampling is one that is conveniently available to the researchers with its goodness of accessibility. The problematic facet of this types is that it is impracticable to generalize the results but at the same time. However, this technique is more worthy as compared to sample on probability sampling. By keeping in view the limitation of time, resources, and population, we have decided to apply convenience sampling technique for the purpose of collecting empirical material.

13

As time and resources are constraints faced by the researches, convenience sampling is helpful and it seemed suitable for our research purpose as I am unaware of the online shoppers in Malaysia. Convenience sampling would be helpful for us to approach the respondents and collect the data on time. At the same time, we also want to avoid low response rate, as we are expecting at least 100 percent response rate.

3.3 Sample Design As mention by Uma Sekaran (2007), in particular research a procedure that is being followed for selecting a sampling unit is called sample design. We are selecting sampling units as mixed process. A mixed process means distributing survey online as well as in person to online shoppers.

3.4 Sample size The population for the research is workers and students around Malaysia. Because this survey is distributed using internet, thus most of the respondents are scattered in Malaysia. Keeping in view the limitation of time and resources we have decided to take sample of 50 respondents. Questionnaire will be distributed both by online and by hand. Enough time are given to respondents to fill in the questionnaire to reduce sampling error. Questionnaire is constructed in simple language in order to reduce the risk of ambiguity.

14

3.5 Questionnaire design The questionnaire is carefully designed to meet the requirements of the research. The questions are taken from previous literature with a view to validate the research and some of the questionnaire are self structured to cover diversify of research problems. Te questionnaire consists of two main parts. First part mainly focused on questions pertaining to factors that influence consumer to shopping online on untrusted websites. Second part of the questionnaire will cover demographic and consumer background.

Part A: Factor influence consumer to shopping online on untrusted websites First part of the questionnaire will cover the questions relating to the factor influence consumer to shopping online on untrusted websites. These factors are shopping convenience, better price and services and better product selection. Questions are selected from previous literature review and some of them are self structured. There are total 10 questions covering for convenience shopping, 10 questions covering for better price and services, and 10 questions for better product selection.

Part B: Demographic This is final section of questionnaire. As the respondents can lose interest after answering 30 questions in the first section, are the reasons why we have decided to put easy questions at the end of survey. As this section includes personal and sensitive questions

15

regarding income so as there is risk that respondent can terminate the survey at the early stage. This sections includes questions pertaining to gender, age, income and level of education

16

4.0 Theoretical Framework

Shopping convenience Factor that influence consumer to purchases on untrusted websites

Better price and services

Better product selection

The relationships between independent variable and dependent variable The above model shows relationships between dependent variable (DV) and independent variable (IDV). Factor influence consumer to purchase on untrusted websites such as shopping convenience, better price and services and better product selection are perceived as independent variable. The research model was revised after TAM Model develops by Amoroso and Hunsinger (2009).

17