Norazah Bte Mohd Suki College of Business Management,
Universiti Tenaga Nasional, Wisma Sultan Ahmad Shah,
26700 Bandar Muadzam Shah, Pahang, Malaysia E-mail: [email protected]
ABSTRACT
Electronic commerce (E-Commerce) has pervasively and dramatically affects the way firms think, operate, and compete in the market and also has already improved business value by fundamentally changing the way products are conceived, marketed, delivered, and supported in order to capture consumers awareness and interest. Understanding online consumers (i.e. the secondary stakeholder of an online firm) has become the focus of attention in the electronic business (e-business) world due to the fact that the prosperity of online companies and its survival is heavily dependent on satisfying online customers and keeping them loyal. The E- Commerce offers online consumers a wider range of benefits that cannot be underestimated, such as finding the products which are not available locally and reducing Internet users' search time for products and services. These factors have an impact on emerging trends of Electronic Commerce in Malaysia. This study focuses on providing a deeper insight into the factors that may motivate Malaysian Internet users' browsing or purchasing habits with respect to products and services. Factor analysis was performed to examine the reliability and validity of the variables relevant to Internet users’ e-buying motivational factors. The implication of the study is then discussed.
INTRODUCTION
The world is moving rapidly towards Electronic Business (E-Business) and Electronic Commerce (E- Commerce) activities. It was predicted that e-commerce would generate the worldwide revenue as high as 6.9 trillion dollar in 2004, and the number of Internet users would grow as high as 765 million users in 2005 (CommerceNet, 2003). Malaysia needs to take cognisance of these trends and react quickly in order to be an active participant in the emerging electronic world and to reap the benefits of E-Commerce. However, little information is known about Malaysian Internet users' motivational factors with respect to e-buying or also known as online shopping. The study specifically focuses on Malaysian Internet users' e-buying behaviour with regards to motivational factors that supports their e-buying behaviour. Thus, this study concentrates on Business to Consumer (B2C) market.
LITERATURE REVIEW
The number of consumers buying online and the amount being spent by online buyers recorded an unprecedented global growth. It has been reported that online spending in 2002 has increased tremendously around the globe, especially during the holiday seasons. Some countries recorded positive growth of online users, with more consumer products having been purchased through the Internet. In 2002, the US Consumers spent nearly USD13.7 billion online during the holiday seasons up from USD11 billion in 2001, according to Goldman Sachs, Harris Interactive and Nielsen-Netratings. The research indicated that consumers spent more than 16 percent of their holiday budgets on online purchases in 2002, compared to 14 percent in 2001 (cited in http://www.matrade.gov.my/ecommerce/news-archive/2003/ecom-012003.htm).
The similar study found that the best performing category was books, music, and video/DVD with consumers spending more than USD3.1 billion, up 40 percent on the preceding year. Apparel spending rose 20 percent to USD2.7 billion, while consumers spent nearly USD2 billion on travel. The figures also revealed that women comprised 51 percent of the total online shopping population during the 2002 holiday season, as compared to 49 percent of males, while shoppers aged 18-24 years accounted for 17 percent of the online shopping population (cited in http://www.matrade.gov.my/ecommerce/news-archive/2003/ecom-012003.htm).
Norazah, (2001) conducted study on Malaysian Internet users adoption and behaviour on shopping online in 2001 found that there were 579 randomly selected respondents in the study, out of which 229 were Internet Shoppers; that is those who have purchased products or services through the Internet, and the dominant party were "Male" respondents. The study indicate that Internet Shoppers who own a credit card enjoyed purchasing
books/journals/magazines through the Internet, especially books at the price of less than RM 100 per item and at the similar time perceive that their level of satisfaction is higher for the item purchased through online. In most of the cases, the delivery is also made within seven days from the date of order and settled their online payments using credit card. Also, they intended to conduct repeat purchases in the near future and with a maximum amount of money expenditure is also less than RM 500 per transaction. They also reported they enjoyed browsing the Internet for "less than three hours a day" for personal purchasing reasons.
Interestingly, findings by Taylor Nelson Sofres, (2002) revealed that the penetration of Malaysians shopping online, i.e. people who bought or ordered goods and services online in 2002, was 1% of the total adult population in Malaysia. This corresponded to 3% of the Internet users in the country. Specifically, 21% of the total adult population in Malaysia are Internet users in 2002 (Please refer Figure 1). Males were the dominant Internet users, i.e. 28% of the total population, while 15% were females. The proportion of adult population that used Internet was the highest amongst the group of less than 20 years old (37%) followed by the group of 20 to 29 years olds (34%). The study found that 7% of Malaysian Internet users planned to buy or order goods or services online by the end of 2002.
Figure 1: Percentage of Population Who Are Internet Users
25 24 21 75 76 79 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2000 2001 2002 Non-Internet User Internet User
Source: TNS Interactive (2002). Global eCommerce Report 2002.
There is high demand for e-buying among Malaysians Internet users conducting online shopping due to E- Commerce providing enormous potential benefits that cannot be underestimated for consumers worldwide. Wider choice ranges, lower prices, and entirely new products have become made available in many product categories such as books, CDs, and travel packages, to consumers who are physically far away from the world’s centers of traditional commerce. Furthermore, the Internet users could receive more attractive sales promotional offers from Internet sellers and also through individual e-mail accounts.
Electronic Commerce also enhances flexibility and convenience. Convenience is a key motive behind in-home shopping (Eastlick and Feinberg 1994). Convenience is measured by timely delivery, ease of ordering, and product display. Consumers can enjoy window-shopping on the Internet without the pressure to purchase, unlike the traditional shopping environment. Consumers are able to initiate and control non-linear searches, due to the interactive nature of the Internet and the hypertext environment. For example, Swaminathan et al., (1999) in his study found that consumers who are primarily motivated by convenience are more likely to make purchases online. Meanwhile, those who value social interactions are less interested in the Internet use for shopping and thus shop less frequently on the Internet and spend less money on E-Commerce.
The ability of online shopping to cater to social experiences outside the home, without actually leaving home, offers a distinct advantage for those unable or unwilling to venture out to physical locations, as well as offering social support (e.g. Kang & Ridgway, 1996). Kozinet (1999) prescription for marketers to follow a membership strategy as a way of rewarding loyal customers, through access to a desirable community, not only builds on these social motivations, but also suggests that membership can provide elevated status in a meaningful virtual community, thus satisfying another social motivation. Beside convenience factor and socialisation factor, time delivery is also the single most important feature that improves the satisfaction of online shopping (Kim, 2002).
METHODOLOGY
Questionnaires were developed to determine the extent of Internet users' motivation factors when browsing or purchasing through the Internet and also their personal background. Variables are chosen based on several researches done in other countries such as United States, United Kingdom (Korgaonkar & Wolin, 1999; Phau & Poon, 2000).
Respondents in this study were chosen at random at various locations such as cyber cafes, higher learning institutions' labs, and shopping malls. Out of 800 respondents, there were 579 respondents to this survey; 161 respondents from Penang, 241 respondents from Selangor and 177 respondents from Kuala Lumpur, the metropolitan city of Malaysia, out of which 334 were "Male" and the balance were "Female". They were selected from the Business to Consumer (B2C) market segment’s population but only those who met the condition of having had experience in browsing or purchasing through the Internet were considered for the sample. They were drawn from different occupational categories, education, age, gender or ethnic categories but all of them fulfilled the basic condition mentioned earlier. The majority of respondents (472) in the age group of "less than 30 years old", were mostly Malays. It can be noted that in the sample, 40% of the respondents were "students" from university community such as undergraduates and MBA students. The results showed that more than half of the total respondents (63%) earned a salary of "less than RM 3,000" per month. Most of the respondents work/study in "Selangor" which represents 42% of total respondents, followed by 31% in "Kuala Lumpur". This study applied a stratified random sampling technique as a sampling method.
After the survey was administered, the data were assessed for reliability and construct validity using Cronbach Alpha coefficient (Nunally 1978). The construct validity for this research was established using factor analysis; a multivariate technique which would confirm the dimensions of the concept that have been operationally defined, as well as indicated which items were most appropriate for each dimension. Factor with eigenvalues greater than 1.00 and factor loading greater than 0.30 were considered to have adequate convergent validity (Zeller and Carmines, 1980). Data in this study were analysed using Statistical Package for Social Science (SPSS) Version 10.0.
DATA ANALYSES & FINDINGS
Cronbach coefficient alpha was used to assess the reliability of a multi-item measurement scale of the items interrelated to motivational factors. In the current study, it was found that motivational factors had coefficient alpha of 0.9478 which exceeded the recommended value of 0.70 by Nunally (1978). Thus, it is reliable for further analysis. Since the items were numerous, Factor Analysis was carried out in order to identify the underlying factors and a smaller set of important variables relevant to Internet users' motivational factors. The data analysis and interpretation of the motivation are given as follows and also stated in Appendix A.
Accessibility
The most important motivational variable when browsing or purchasing through the Internet rated by the 579 respondents was "Accessibility". "Instant access to detailed information" was eliminated from this factor because its factor loading is lesser than the fixed criteria of 0.50, causing variable 1 to comprise of ten statements with 14.548% of variance. The eigenvalue for this variable was 13.268. Out of the ten statements, the statement "easy access to wider information" was the most important statement with a loading of 0.805. The next highest statement was "faster access to latest information" which constituted 0.780 factor loading. This was followed by "the best source to search for information" with a loading of 0.668. The Internet benefit of "reduce need for intermediaries" was cited as the least important item in this variable with a loading of 0.537.
Reliability
The second variable was categorised under "Reliability" which accounted for 13.624% of variance. The eigenvalue for this variable was 3.186. The statements "web pages are visually attractive" and "convenient order cancellation process" had been eliminated from this study due to their factor loading are lesser than 0.50. Thus, variable 2 yielded with seven elements. From the results obtained, it showed that "freight charges clearly stated" was the most important element in this section with 0.814 factor loading compared to six other elements. Whereas, the second important element was "prices of product clearly stated" with a loading of 0.807. However, 0.507 factor loading was accounted in the statement "web pages are loaded faster".
Convenience
The next group of dimension is related to "Convenience", consisted of six statements with 10.546% of variance. The eigenvalue for this variable was 1.821. Shopping convenience is acknowledged to be the primary motivating variable in consumer decisions to buy at home (Gillett, 1976). It included the time, space and effort saved by a consumer and it included aspects such as an ease of placing and cancelling orders, returns and refunds, timely delivery of orders (Gehrt, Yale and Lawson, 1996).
All of the items in this variable had factor loading greater than 0.50, with the exception of one item, i.e. "faster source of getting product information" because it had a loading of less than 0.50, therefore, it was eliminated from this variable. The least important statement for variable 3 was "more product variety for selection" with a factor loading of 0.501. However, the most important statement claimed by the respondents was "no crowd of people shopping", with factor loading accounted for 0.798. This was followed by 0.743 factor loading in the next statement of "no traffic jam".
Distribution
There were four statements that were loaded in this variable. The statement "no stress from customer service people" was eliminated because it did not reach the criteria of factor loading of greater than or equal to 0.50, which constituted of 9.204% of variance. Eigenvalue for this variable was 1.531.
The most important statement in this variable was "orders are delivered in good condition" with the highest loading of 0.752. This is followed by "better product return service" with a loading of 0.747. The statement "orders are delivered on time" rank in third place with 0.716 factor loading. Whilst the statement "more convenient shopping on the Internet" is the least important statement in "Distribution Motivational Factor" with a factor loading of 0.598. Most of the attributes relate to distribution pattern of online shopping, therefore this factor is called "Distribution Motivational Factor".
Socialisation
The fifth variable grouped dimensions related to "Socialisation" which accounted for an additional 3.175% of the variance. The eigenvalue for this variable was 1.375.
Of the three elements selected in Socialisation, the most important variable was that they "could have foreign friends" with a loading of 0.795. The next statement was they "could practice foreign languages by communicating with people from other countries". This also had the same factor loading of 0.795. The least important element pertaining to this variable was to "allow unrestricted discussion of current issues" which constituted a loading of 0.580.
Searchability
Variable six describes "Searchability" which accounted for an additional 1.978% of variance from variable 5. However, there were only two statements which resulted in this variable and the most important element claimed by respondents was "owning a credit card" which had a loading of 0.672. This is followed by "need few movement to find product" which had a loading of 0.586. Eigenvalue for this variable was 1.088.
Availability
The final variable in motivation was "Availability", which consisted of only one statement with 3.399% of variance. The statement "availability of products on the Internet that cannot be found locally" had a loading of 0.500. The eigenvalue for this variable was 1.065.
CONCLUSION
Factor Analysis revealed that seven important motivational variables such as accessibility (the most important variable when shop online), reliability, convenience, distribution, socialisation, searchability, and availability were extracted, which accounted for 61.402% of total variance. Of the 38 elements, 33 elements which pertain to these variables were selected. A review of the eigenvalues and factor loading indicated that all of these
variables were appropriate for further analysis and the model possessed convergent validity (i.e. the extent to which a measure correlates highly with other measures designed to measure the same construct, Churchill, 1979).
As a summary, Internet Shoppers could gain the ability to search for products not on display, gather in-depth information without taking up the salesperson's time, and even purchase or pay for products for immediate or subsequent delivery, when conducting e-buying or online shopping. Beside that, in order to retain existing Internet shoppers, order processing on the Internet should be easy for customers to do; moreover, receiving order confirmations via e-mail, including information about shipping, returns, and order tracking numbers, facilitates order-processing behaviour. If order processing is time consuming and complicated, customers will likely become frustrated and give up purchasing from e-tailer. Therefore, electronic transactions should be easy, reliable, secure, and trusted in order to attract and maintain existing users of the Internet. Such measures would increase Internet users confidence on the credibility of Internet sellers.
Moreover, by understanding consumers attitudes specifically their motivational factors toward e-buying, it can help marketing managers and online retailers predict the online shopping rate of adoption and evaluate the future growth of online commerce. It is thus important to recognize that numerous motivational factors precede attitude formation and change of consumers regarding e-buying. Future researchers should study other new variables, besides the variables mentioned in this study, such as reluctance to change, security and privacy.
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APPENDIX A: Internet Users’ Motivation Factors .805 .780 .668 .667 .596 .595 .587 .550 .550 .537 .814 .807 .751 .732 .626 .574 .507 .798 .743 .733 .578 .503 .501 .752 .747 .716 .598 .795 .795 .580 .672 .586 .500 13.268 3.186 1.821 1.531 1.375 1.088 1.065 14.548 13.624 10.546 9.204 6.029 4.051 3.399 Variable Easy access to wider Faster access to latest The best source to search for Cheaper source of
Can customise level of detailed require
Can download free software on the No restriction in browsing Can browse Internet for 24 hours a every day
Broad range of products available on Internet
Reduce need for Shipping cost clearly Product prices clearly Special offers clearly
Customer service contact number stated
Web pages are updated
More interesting sales promotional Web pages are loaded
No crowd of people No traffic
No hassle of queuing to counter payment
Reduced waiting time for products
Convenient ordering More product variety for Orders are delivered in good Better product return Orders are delivered on
More convenience shopping on the Can have friends from foreign Can practice use of foreign communicating with people from countries
Allows unrestricted discussion of issues
Owning a credit
Need lesser movements to find Availability of products on the Internet cannot be found
Total Initial Eigenvalues % Rotation Sums of Squared
1 2 3 4 5 6 7