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Along with the rapid growth of E-Commerce as an effective tool for conducting business activities through the World Wide Web, there has also been increasing concern about one of the biggest considered hindrance to the growth of E-Commerce as well: the security aspects of E-Commerce. Reports suggest that the rate of internet adoption is fairly high and is increasing with every passing year.
E-commerce usage is also on the rise but unfortunately the
rate of E-commerce adoption is by no means doing justice to the real
potential of Internet. The literature suggested security and privacy
risk to be the main obstacle towards the realisation of e-commerce’s
full potential. It is this aspect of E-Commerce or internet shopping
on which, the dissertation will be focussing on. The objective of this
study is to investigate and find out how real are these threats to the
consumer while they are purchasing online.
The literature review enabled the researcher to understand the
various concepts of e-commerce, security as well as privacy threats in
online environments, internet crime, and perceived risks associated
with e-commerce and the concept of trust. But, any business model does
not prove valid by merely analysing it in the theoretical framework;
since the commercial world is governed by the attitudes and behaviour
of humans, which are not alike for all. The research design helped the
dissertation to judge the attitudes, knowledge and concern of the
Internet users over the security issues in E-Commerce. For this purpose
the researcher developed an online questionnaire to collect data
regarding the consumers risk perception of internet shopping. The
questionnaire was distributed primarily in the north east region of the
UK.
The responses from the survey revealed that security and privacy
concerns are indeed the most important factors that affect the
consumer’s decision to purchase products online. This finding is in
agreement to what is suggested in the literature. The study also
revealed that low level of trust increased the risk perception of the
consumer towards an online shop. Hence it is very important for the
online vendors to try and make their system as secure as possible and
convey the same to the consumer through security seals or security and
privacy policies. As the level of trust increases between the consumers
and the online merchants risk perception will gradually decrease and
e-commerce will indeed prosper and meet its full potential.
2. Introduction
2.1 Introduction
In the late nineties the most popular phenomenon in the business world
was to set up website on the internet for conducting business.
E-Commerce was the buzzword with which every business wanted to
associate itself and dot com was the means to achieve it. It is a shift
to a whole new economy where old rules apply in a very different manner
(Rosenbloom, 2002). The reason for the dot com boom can be attributed
to the fact that many investors around the world made an initial bid to
establish themselves in the new E-Commerce world by reaping the
benefits of the technology (Ernest and Young, 2000). E-commerce
introduces incredible benefits, such as the diffusion of information,
the development of new technologies, the promotion and sales of
products and services, and the collaboration between those in a supply
chain. However, as it has grown and become an important tool for some,
a majority of people are still reluctant in indulging in this recent
phenomenon.
It is not argued that consumers are not browsing through e-commerce
sites altogether, that figure is increasing however the number of
people that actually purchase from these e-commerce sites is low.
According to Blythe (1997), the biggest barrier to e-commerce growth is
not technology, but people’s attitude towards it. Consumers are still
finding it difficult to trust the online world as an entity. For
e-commerce to become a viable market place, the public must trust the
internet. The future success of e-commerce will be dependant not only
on forging initial trust, but also on developing long term
relationships to facilitate confidence and credibility. Research
suggests that online sellers have made successful efforts to increase
customer’s confidence and usage of shopping online through the
improvement of security performance and privacy protection. Companies
like eBay and Amazon.com illustrate successful examples of e-shopping
which are argued benefit from a successful brand building strategy
increasing customer loyalty. As a result it is suggested that online
shopping has become and will continue to become a full and effective
business model, (Black, 2005).
Till now, there has been much research looking into factors that
attract consumers to shop online (Mehta and Sivadas, 1995 and Donthu
and Garcia, 1999). Most of these researches have concentrated on the
benefits that attract consumers to shop online, which are offered by
B2C e-commerce stores (Joines et al. 2003). Given the rapid growth of
the Internet as a new retail medium and the lack of empirical research
addressing perceived risk associated with Internet shopping, a number
of unanswered questions remain. What types of risk are perceived by
Internet shoppers who have bought product/service online, and by
browsers who have browsed for but not purchased product/service online
to be potential barriers to making purchases on the Internet?
This study attempts to add to the existing literature (Mitchell, 1999,
Hoffmam et al, 1999 and Jacobs, 1997) by looking at how consumer
perception of risk in online shopping have impacted on their
expectations and goes on to suggest how online stores may need to
improve if they are to meet these new expectations.
2.2 Aims and Objectives
It is clear from the introduction that electronic commerce is becoming
increasingly important to both corporations and individuals as a result
of the dramatic development of technology and the emergency of a global
economy. The expansion of the usage of the Internet by organisations
and people is one of the main contributors to the development of
e-commerce in terms of e-shopping, electronic business and internet
commerce. However, as it has grown and become an important tool for
some, a majority of people are still reluctant in indulging in this
recent phenomenon. The main aim of the study will be to find out how
real are the fears in terms of security and privacy for the consumers
while shopping online.
The objectives of the study will be to.
• Understand and identify various issues related to e-commerce
• Identify the types of security and privacy threats in the online shopping environment
• Understand the concepts of perceived risks and trust in relation to internet shopping
• Examine whether the identified threats and perceived risks from the literature are similar to those of the consumers
2.3 Overview of the subsequent chapters
The entire dissertation is divided into sub parts as explained below:
Chapter 3 Literature review: This chapter presents an extensive summary
of the literature review conducted by the researcher. The chapter has
been subdivided into four sub sections dealing with e-commerce issues,
internet crime and security issues, perceived risks and the concept of
trust. A research hypothesis is formulated at the end of this chapter
based on the literature review.
Chapter 4 Research Methodology: This chapter outlines the various
paradigm and approaches that were reviewed by the researcher before
adopting a particular paradigm or approach. This section also
elaborates the research instrument used for the primary research in the
form of a questionnaire.
Chapter 5 Research Analysis: This chapter provides a detailed analysis
from the responses of the survey conducted using the questionnaire. The
chapter is subdivided as per the questionnaire so that the results can
be co-related. Graphs and tables have been used to elaborate the
results. A brief summary of the findings are presented at the end of
the chapter.
Chapter 6 Conclusion and Further work: This chapter presents the
conclusive findings from the study. It also provides shows whether the
formulated hypotheses was correct or not. Depending on this appropriate
conclusions are drawn. The researcher also includes few limitations of
the study and suggests further work that may be carried.
3. Literature Review
This chapter summarizes and critically appraises the relative strengths
and weaknesses of the ideas expressed in the literature associated with
the subject area of Internet shopping and its perceived risks. Recent
research suggests that online shopping has become and will continue to
become a full and effective business model (Black, 2005). Through
investigation of various texts on e-commerce and internet shopping the
author of this report is of the view that the available literature is
very diverse and needs careful review to achieve full understanding
behind the various associated concepts.
The first section of this chapter provides a general overview and
discussion on e-commerce, providing a background to the study and
building the foundation of the research. The following section provides
a deeper insight into perceived risks, security and privacy in
association with internet shopping.
3.1 Electronic Commerce
3.1.1 Definition
Electronic commerce may be defined as “the sharing of business
information, maintaining business relationships, and conducting
business transactions by means of telecommunications networks” [Zwass,
1998]. It may also be defined as a “potent socio-economic chemical
that reacts with everything it touches” (Kalakota & Robinson,
2001). Kenney & Curry (2001) state, one of the most remarkable
things about the Internet has been the massive commercialisation of
what began as an entirely non-commercial system. The Internet is
allowing consumers and companies across the globe to communicate with
each other, and if they can communicate, they can trade. The internet
provides a number of technologies (like WAN’s, VAN’s, Electronic Data
Interchange (EDI), email, shared databases and many other software
packages) for enhancing e-businesses. The internet has become very
popular and useful for electronic commerce because of its easier way of
linking with other businesses at a much lower cost. The Internet and
Electronic Commerce have made the world market a smaller place to trade
in. The Internet has opened up many possibilities of organising and
running an online business. It has created a universal platform for
buying and selling of goods which has resulted in faster transaction
times and reduced transaction costs.
The main three components of a market namely: sellers and buyers (or
agents), products, and processes are digitised in e-commerce.
E-commerce is not only an interactive version of retail business but it
acts as a new medium of communication and provides more useful
information, expands choices by simplifying purchasing processes and
lowering costs [Shen et al, 2002]. Electronic commerce can play a key
role in four ways: cost reduction; revenue expansion; time reduction;
and relationship enhancement [Sawhney and Zabin, 2001]. It provides
with new channels of interaction and communication between customers
and sellers.
3.1.2 The growth of the Internet
The popularity of the Internet has grown remarkably in the last few
years, and it has created a demand for ubiquitous networks. A report
(Internet Connectivity, 2004) on the survey of Internet Service
Providers (ISPs) shows that between August 2004 and August 2005 there
was a 4.7 per cent increase in the number of active subscriptions to
the Internet. The rapid diffusion of the Internet as a commercial
medium has been widely documented (Jones and Biasiotto, 1999;
Radosevich and Tweney, 1999). According to BMRB International (2004),
In February 2004 the number of Internet users in GB has increased to
22.7 million (48.4% of the adult population).
Figure 1 Great Britain Households with home access to the Internet, July 2005
The market share for ‘permanent’ (now replaced by broadband)
connections continued to increase in August and now accounts for 55 per
cent of all internet connections. Dial-up Internet connections
continued to decrease. According to BBC News (Wakefield, 2004) the
number of broadband connections in the UK finally overtook dial-up and
in December, 2004 and BT announced that it was making a new broadband
connection every 10 seconds. According to figures gathered by industry
watchdog, Ofcom, the growth means that the UK has now surpassed Germany
in terms of broadband internet users per 100 people. The UK total of
5.3 million translates into 7.5 connections per 100 people, compared to
6.7 in Germany and 15.8 in the Netherlands (BBC, 2004).
3.1.3 Importance of commercial use of Internet
The internet has become a very popular platform for conducting
businesses. Its ease of use, low cost, global connectivity and
multimedia capabilities can be sued to create interactive applications,
services and products. Some of its benefits are described below:
1. Connectivity and Globalisation
Internet provides its customers and suppliers a wide of market. It
allows individuals to access companies or businesses which normally
would be out of their reach. Small companies can also open up their
foreign markets through Internet.
2. Reduced Communication costs
Before the Internet, the firms had to build their own network and
direct mailing and faxing was used. With the advent of the Internet,
the communication and operational costs incurred in any business has
drastically reduced. Hardware and software have been developed for
Internet telephony which allows companies to use the Internet for
telephone Voice transmission. Also VPNs (Virtual private Networks) are
used as low cost alternatives to private WANs.
3. Lower Transaction Costs
Online transactions can be done at a very low cost as compared to
traditional paper based transaction processes where the total cost
(paper & human) of producing a purchase order (for example) can be
20 times higher than the electronic version of the same (Kenny and
Curry, 2001).
4. Interactivity, Flexibility and Customisation
Internet provides interactive and flexible medium for the customers to
interact with the business applications. Companies use email, chat
rooms and bulletin boards to provide good customer service to the users
and information can be gathered to provide customised information to
the customers according to their needs.
5. Wide distribution of Knowledge
Internet provides rapid and vast access to knowledge. Organisations can
use email and online databases to search for information resources. In
addition to public knowledge on the Internet, organisations can also
create their own websites as repositories of useful data and
information which can be used by its employees easily and effectively.
3.1.4 On-line shopping
Electronic Commerce is classified roughly into two categories:
Business-to-Business Electronic Commerce (B2B) and Business-to-Consumer
Electronic Commerce (B2C). B2B is commerce where purchase and sale
transactions occur not between individuals but between companies by
using the Web and extranets. B2C is commerce where these transactions
take place between the consumers and the sellers via the Internet [Lee
et al, 2002a]. Individuals can purchase goods and services from
retailers electronically through B2C commerce, who in turn can use B2B
commerce to link directly to their suppliers. Electronic payment
systems are used in both the B2C and B2B commerce. It uses technologies
like electronics funds transfer, credit cards, smart cards, debit cards
and internet based payment systems to pay for services and products
online. Lack of consumer trust in e-commerce transactions and the
social, financial and legal infrastructures of the e-commerce
environment, poses a major challenge to the large-scale uptake of B2C
e-commerce [Patton and Josang, 2004]. Online shopping is one of the
main activities in B2C electronic commerce.
The Internet allows consumers to browse product/service extensively,
collect data, locate information, download information, compare prices,
buy products, place/change orders, and receive feedback without
travelling to a shopping mall. Consumers can browse or shop online 24
hours a day, 7 days a week, from office or at home. Convenience has
been reported as the primary reason for shoppers to shop on the
Internet (Wolhandler, 1999). Additional factors such as saving money
and time, no transportation cost, more choice, no waiting lines and no
pressure from the sales people were also reported to contribute to a
more enjoyable shopping experience on the Internet (Wolhandler, 1999;
GVU’s WWW 9th User Surveys, 1998). According to Dawson et al. (1990, p.
409), ‘‘although there are many theories of shopping motivation, no one
theory has become dominant in the retailing literature.’’ However,
consumers’ shopping experiences have been examined within the context
of three behaviours: browsing (Punj and Staelin, 1983), one-time
purchase (Bulkeley and Carlton, 2000), or repeat purchases (Donthu and
Garcia, 1999).
3.2 Internet Security
3.2.1 Internet Crime and cyber criminals
Internet offers criminals unparalleled opportunities. This is not
surprising when one considers the anonymity it can provide, the speed
with which it operates, the ease with which a cyber criminal can get on
line, and the size of the market into which to tap (with online
shopping profits alone expected to exceed $103 million by 2006).
Internet crime can be defined broadly as any crime that employs a
computer on the internet in any phase of the crime (Williams, 2001).
Examples of internet crimes may include critical infrastructure attack,
fraud, online money laundering, ID fraud, stealing sensitive
information, hacking, etc. Targeted web attacks are not limited to
networks of large organizations. Such attacks accounted for 10% of
total attacks in small businesses in the first half of 2004 compared to
3% in the second half of 2003 (Symantec, 2004, p. 17).
Crimes related to online shopping websites mainly relate to credit card
fraud for theft, stealing of personal information to blackmail or
defame any particular individual or just for causing loss to the
business organisation. The criminals take control of the user’s
computer or the company web servers using malicious software. The
organisations try their best to keep their servers as secure as
possible but the criminals are relentless in continuously finding
loopholes in the secured system. Internet crime according to latest
reports rise by 30% every year (BBC News, 2005). For example number of
hijacked/hacked computers increased to 10,352 from 4,348 just in the
first half of 2005!
A survey conducted among the members of the Confederation of British
Industry indicated that the attackers in the most serious cyber crimes
in 2000 were hackers (44.8%), former employees (13.4%), organized
criminal groups (12.8%), current employees (11.5%), customers (7.9%),
competitors (5.8%), political and protest groups (2.6%) and terrorists
(1.4%) (BBC News 2001). The motivation of committing a cyber crime vary
to a great degree ranging from fun, challenge, satisfaction, economic
benefits to destructive nature (Lindenberg, 2001; Lakhani and Wolf,
2005).
3.2.2 Security risks in e-commerce
A security threat has been defined as a “circumstance, condition, or
event with the potential to cause economic hardship to data or network
resources in the form of destruction, disclosure, modification of data,
denial of service, and/or fraud, waste, and abuse” (Kalakota and
Whinston, 1996). Security, then, is the protection against these
threats. Under this definition, threats can be made either through
network and data transaction attacks, or through unauthorized access by
means of false or defective authentication.
Security commitments in B2C e-commerce are reflected in the actions of
the Web merchant. Yet, for consumers, the primary, visible access to
security on Web merchants’ sites is through statements that describe in
more or less understandable terms the security policies of the Web
merchant, from information collected to data sharing policies, and
security features such as encryption and password protections. Groups
like TRUSTe or BBBOnLine offer programs that businesses can participate
in to show their commitment to security. Once joining the program, the
business is allowed to post the third-party privacy and security ‘seal’
indicating their participation. Third party security seals are
increasingly used by businesses to communicate their commitment to
security. The effectiveness of communicating security commitments to
consumers by the use of third party verification programs would be
important for electronic businesses to know. In a 2001 study, Harris
reported that when consumers notice security seals they consider them
important, and are more willing to provide personal information to the
site because of the third party verification (Harris, 2001). Another
study reports that 60% of consumers indicated that security statements
on Web sites made them feel more confident about online transactions
(Pastore, 2001). In order to justify these concerns, it would be
helpful to examine what the online payment structure consists of, to
what extent credit card fraud takes place in e-commerce, and what
security technology exists, to secure online payments from fraud.
Numerous examples of a hacker stealing hundreds of credit card numbers
along with customer details from many e-commerce sites, indicates that
security technology is still vulnerable (Harrison, 2000). According to
a previous online article by Legard (1999), although only 2% of Visa
International Inc's credit card business relates to Internet
transactions, 50% of its disputes and frauds are conning from that
area. Interestingly, according to the same article, “illegal” consumers
are to blame, rather than online merchants, are responsible for most of
those disputes. Business and organisations are continuously working to
put in place appropriate measures to curb internet crimes. Security
measures for the safety of online transactions between consumers and
businesses such as Secure Sockets Layer (SSL) and Secure electronic
transactions (SET) protocols are developed and improved.
3.2.3 Privacy concerns in e-commerce
According to (Culnan and Milberg, 1999) people are less likely to
perceive information practices as a threat to their privacy when: i)
personal information is collected in the context of an existing
relationship, ii) the information collected is relevant to the
transaction, iii) they believe that the information will be used to
draw reliable inferences about them, and iv) they perceive that they
can control future use of information. Moving to the e-commerce
exchanges, those conditions are not met in satisfactory degree.
Consumers have concerns on how organizations use their personal data,
what is exposed from those data in public records, and fear of
unauthorized access, either within or outside the commercial
organizations (Culnan and Milberg, 1999). Lee et al (1998), describe
those concerns in more detail as:
a) Improper Access: To access consumer’s remote computer without
previous permission, in order to monitor when, where from and for how
long the user visits a Web site, as well as in what type of
transactions he is involved to.
b) Improper Analysis: To analyze consumers’ personal information,
without prior permission, in order to draw conclusion on consumers’
shopping behaviour and preferences.
c) Improper Transfer: To distribute, sell, or share customer information without notice or permission from the customer.
d) Unwanted Solicitation: To transmit information to potential customers without their knowledge or permission.
e) Improper Storage: To store personal information in a non-secure
way, enabling non-authorized individual account holders to access and
manipulate that information. Information is not kept confidential and
data integrity is not attained.
Culnan and Milberg (1999:10) point “consumers will continue to disclose
personal information, as long as perceived benefits exceed the risks”.
However, media and government attention on the issue of online privacy
is raising consumer’s perceived risk during online purchases, than
reducing them. Culnan and Milberg (1999) are emphasizing the need of
online merchants to include fair information practices, meaning that
consumers should have the right to know why information is collected,
how it is used, and how their data confidentiality and integrity is
secured. Furthermore, it is also suggested that successful online
marketing practices should involve a new approach, using personal data
in an ethical manner.
Louis Harris & Associates, on behalf of IBM (1999), conducted an
international survey of consumers’ online perceptions, with 3000
respondents from U.S., United Kingdom, and Germany. The survey results
indicate that online consumers are more likely to be concerned with
their privacy, than offline ones. Moreover, among the important
findings of the survey are: a) 47% of the respondents, are interested
on finding a privacy statement, b) 63% of the online users have refused
to give information when their fear of loss of privacy was high, and c)
40% of the respondents have decided not to proceed to a purchase due to
privacy concerns.
3.3 Risk Perception
3.3.1 Perceived Risk
Perceived Risk as an important feature of consumer perceptions, which
involves the amount of risk that consumers perceive to be present in
the product purchase has significant impact on purchasing decision
(Foxall et al., 1998). The concept of perceived risk was first
introduced by Bauer in 1960 as a combination of uncertainty with the
possibility of serious of outcome, and later had been considered in
numerous studies (Tan, 1999), many of which were related to other
consumer behaviour concept, such as cognitive style (Cox, 1967) and
trust, etc. However, most frequent definitions of perceived risk were
formulated in respect to the elements of uncertainty and consequence
(Cunningham, 1967). In this study, Cunningham elucidated that
“uncertainty” related to the identification of buying goals or the
process of matching goals with the purchase decision, i.e. uncertainty
as to buying goals and which purchases in terms of such as product and
model can best match the buying goals; while “consequences” related to
functional, performance, or psychological goals and money, time, and
effort invested to achieve those goals, or any other possible adverse
consequences if the purchase is made. Accordingly, the perceived risk
was defined as the consumer’s perception of the uncertainty and
concomitant adverse consequences of buying a product or service
(Dowling and Staelin, 1994). Based on the concept of risk deduction
which assumes that consumers enter into decision making in the market
as a means of reducing risk (Bauer, 1960), the consumer is believed to
act to get just enough information to reduce the risk to an acceptable
level before acting when faced with a market decision (Taylor, 1974).
There are six major types of perceived risk’ have been widely applied
by previous consumer researchers: financial risk, performance risk,
physical risk, social risk, psychological risk and time risk (Brooker,
1984, Jacoby and Kaplan, 1972, Peter and Tarpey, 1975, Garner, 1986,
Mitchell, 1992 and Schiffman and Kanuk, 1994). Financial risk will be
high where the loss of money is an important consideration (Horton,
1976). Performance risk occurs when the chosen product fails to perform
as desired and doses not deliver the benefits premised (Kim and Lennon,
2000; Simpson and Lakner, 1993). Physical risk refers to the possible
harm to the consumer’s health or safety due to the purchase (Roselius,
1971). Psychological risk describes the case if the product harms the
consumer’s self-esteem or self perception (Jacoby and Kaplan, 1972).
Consumers run social risk when a product choice is not approved of by
other social member (Gemunden, 1985). Finally, time risk results when
the passage of time reduces the ability of the product to satisfy
wants, such as when a product rapidly becomes obsolete, viz the
perception that time, convenience or effort maybe wasted when a product
purchased is repaired or replaced (Bauer, 1967).
For all these perceived risks, they can present in various combination
during each given purchase. However, specific risks may present higher
level in certain products, especially for financial risk and social
risk. According to Hawkins, Best and Coney (1989), it has been asserted
in this research that products with high expense or technical
complexity represent high levels of economic risk; while product
related closely to the consumer’s public or social image present high
level of social risk. In this case, PC and costume jewellery are
typical products with high financial and social risk respectively.
3.3.2 Perceived risk in on-line purchasing
Internet shopping appeared as a new type of shopping method not many
years ago, has been getting more attention along with the spread of
Internet due to the unbeatable convenience it brought about to the
consumers. Beside of the convenience, previous researches indicate
other attractive factors. The transaction can be held in anyplace
accessed to Internet. Furthermore, consumers can buy a wide choice of
products across the geographic boundaries while saving time and absence
of sales pressure (McQuitty and Peterson, 2000) without worrying about
the transportation and parking. More importantly, concerning the study
of online consumer behaviour, the Internet environment positively
affects the consumers’ decision to shop. Based on the study of Alba et
al. (1997), online shopper will gain benefits in terms of vast
selection, screening, reliability, and product comparisons. Selection
as stated before, people can buy nearly anything via the Internet.
People can screen a large number or options because abundant listings
of categories greatly facilitate the browsing. Additionally, consumers
can judge the products relying on the ratings or reputations of e-
retailers in the online interactive communication environment. Finally,
consumers are allowed to compare numerous items under various
categories and their prices in order to make the choices among the
alternatives or substitutes (Rowley, 2000).
Although compared to traditional shopping channels, it is evident that
online shopping is a rather innovative and convenient way, more and
more recent researches have pointed out the existing problems to be
settled in this constantly changing marketing channel, which make it
too risky to purchase through Internet and rely on it. In this channel,
individuals have to make decisions of purchasing products based on
limited and static information displayed on the screen such as the
picture and price, but hardly inspect and touch the physical goods, so
that there is no guarantee of getting whir, they see on the computer
screen (Jarvenpaa and Tractinsky, 1999). Moreover, the uncertainty
regarding system security, reliability, standards, and security of
private financial information, such as disclosing credit cards and
personal information etc are all reasons probably increase a certain
degree of perceived risk when shopping on the Internet.
Similar to the traditional shopping channel, at the cyber shopping
environment, perceived risk is defined as the potential for loss in
pursuing a desired outcome while engaged in online shopping. However,
the social and physical risks in online commerce have less to do with
consumer perceived risk (Ha, 2002). Depending on the previous findings,
the key risks in the online context are identified to be financial,
performance, and privacy risks (Strader and Shaw, 1999). Performance
risk can related to the online seller’s post-sale service, good return
guarantee for faulty items and product warranty, etc. Besides, the
Internet, just like any type of non-store shopping, makes it difficult
to examine physical goods; consumers must rely upon somewhat limited
information and pictures shown on the computer screen (Jarvenpaa and
Tractinsky, 1999). Hence, the performance risk in online shopping tends
to increase due to the lack of accurate judge of the product quality
compared to the traditional shopping environment (Vijayasarathy and
Jones, 2000). As in the real store, this risk is also deemed by Kim and
Lennon (2000) to be greatest when the product is technologically
complex or the price is high. Additionally, the issue of financial
security, invasion of privacy and hacker attacks has become the primary
concern of online shopper in the worldwide (Strader and Shaw, 1999).
Accordingly, privacy risk is described by Jarvenppa and Todd (1997) to
be the degree to which consumers suffer a loss of privacy owing to
personal information collected when shopping online. Actually in
another way, it can be considered as one type of psychological risk.
Previous research by Dholaka (2001) has theorized that psychological
risk is the experience of anxiety or discomfort arising from
anticipated post- behavioral affective reactions, or worry and regret
of purchasing and using the product. Accordingly, lack of privacy
protecting and private information exposure constantly remaining in the
Internet shopping site arouse consumers’ fear of the purchase. Also,
Kwon (1998) argued another risk factor at cyber-shopping malls is the
delivery time gap, or named delivery interval, which is about the gap
between the purchase and the delivery. In other words, consumer easily
feel worried about the time gap between cost and consumption. The last,
but not the least, time risk associated with the operation of online
purchases in this study focuses on the perceived lost or cost of time
for customers’ information search activities without excluding the
traditional meaning.
In total, the Internet is still considered a risky shopping channel
which means a considerable portion of consumers perceives that risks
outweigh the advantages of online shopping in their purchase decisions
so that not made an online buying. As what Darian (1987) stated, people
tend to feel uneasy with “faceless” retailer, because they are much
more familiar with offline shopping rather than the online shopping and
fear about the potential deception.
3.4 Trust
3.4.1 Definition
The nature and development of trust, has draw the attention from
different academic areas, mainly from psychology, sociology, marketing
and business theory. From a psychological perspective, Lewis &
Weigert (1985:971) characterized trust as the “undertaking of a risky
course of action on the confident expectation that all persons involved
in the action will act competently and dutifully”. Similarly, Robinson
(1996:576) defined trust as:
“A person’s expectations, assumptions, or beliefs about the likelihood
that another’s future actions will be beneficial, favourable, or at
least not detrimental to one’s interests.”
Both definitions are based on the individual’s perception of risk
towards a relationship where the outcomes of the relationship are more
or less uncertain. Similarly, Bromiley and Cummings (1995) viewed trust
as an expectation of the trusted individual to be honest and fulfil its
promises. Furthermore, Pearce (1974), on developing a model of
interpersonal trust, notes that trust is based on assumptions of
other’s knowledge, competence and motivation. However, those three
perspectives perceive trust as one individual’s action, rather as an
element of a relationship. Hardin (1992), examining the nature of trust
from a more sociological approach, emphasizes that trust depends on
three different factor: a) properties of the individual who want to
trust another individual (truster), b) attributes of the trustee and c)
the context in which trust is established.
Moving to the business literature, the concept of trust is again
largely based on a “relationship” approach, and evolves overtime. Swan
et al (1985), examining how industrial salespeople gain customer’s
trust, mention that trust has a dynamic nature as it builds over the
history of interactions between the trade partners. While Doney and
Cannon (1997), suggest that trust is developed under certain processes.
According to their research, those are:
a) Calculative process, when one party calculates the costs of failure during the exchange.
b) Prediction process, when one party acquires information to predict about the credibility of the other party.
c) Capability process, based on the perception that one party has that the other has the capabilities to perform as promised.
d) Intentionally process, based on the perception that one party has about the intention of the other.
e) Transference process, based on gaining trust from third parties
when little or no prior experience exists between the exchange parties.
3.4.2 Trust in Internet purchasing
As mentioned in the previous sections, it is reasonable for consumers
to engage in trust relationships, when they feel a level of uncertainty
with the outcomes of an exchange, or with the circumstances under which
the exchange takes place. During online purchases, that uncertainty
refers to the use of the Internet, as a commercial medium, or to online
vendor’s reliability. Considering the fact that the increase of trust
reduces the perceived risks during an online purchase, and that those
risks has proven to be negative towards a purchase decision, we can
conclude that trust is a crucial factor for the success of e-commerce
or internet shopping. (Jarvenpaa & Tractinsky, 1999).
Lack of trust towards the Internet as a commercial medium can be
translated to security concerns (i.e. credit-card fraud by ‘hackers’
etc) or concerns about the lack of a predictable legal framework on
which online purchases take place (i.e. which government laws apply in
every situation) (Ratnasigham,1998). In addition, lack of social
interactions between consumers and vendors and the fact that, as with
other distance purchases, consumers have to pay in advance in order to
receive goods or services, increase the risks, therefore increase
consumers concerns. According to Culnan and Armstrong (1997), another
difficulty faced on e-commerce purchases is that trust has to be
communicated solely through interaction with a web site.
Lack of trust towards e-commerce vendors has its grounds to security
concerns (i.e. fraud by illegal or “fake” merchants), privacy concerns
(i.e. for using the personal information for commercial purposes), or
performance concerns, (i.e. receiving low quality products or
services).Hoffman et al. (1999) emphasize that the reason many
consumers do not proceed to online purchases is that they simply do not
trust most of the Web merchants to give their credit card information
or personal information. They explain the nature of the risk involved
on an online transaction, as lack of environmental control and lack of
control over information. Lack of environmental control exists while
consumers have less control of Web merchants’ actions over their credit
card information. Lack of control over personal information is very
important specifically the concern that Web merchants use their
personal information for marketing purposes, without their knowledge or
permission. The significance of trust can be justified by Keen (2000),
who interviewed consumers on the advantages and disadvantages of the
e-commerce, trying to identify what factors can add more value to the
customers. Examining the results, we can identify that most of the
factors are related to the concept of online trust: minimise fraud,
assure security, minimise misuse of personal information, assure
reliable delivery, assure easy return process etc. Therefore, we can
state that the e-commerce will offer more value to the consumer, by the
time it will improve in terms of security, privacy, and performance, or
in other words, by the time it becomes more trustworthy.
3.5 Research Hypothesis
H1: “Consumers will rank security and privacy features as the most
important factors when considering acquisitions of goods or services
over the Internet.”
H2: “Financial, privacy and performance risks are the three most important perceived risks according to the consumers”
This hypothesis is based on variety of factors related to perceived
risk in online environment and trust as recognized from the literature
review. The hypothesis supports that the perceived risks of security
and privacy are indeed very real from the consumer’s point of view.
4. Research Methodology
4.1 Introduction
An appropriate research methodology is a general plan of how the
researcher will go about answering the research questions considering
the sources to collect data and the constraints that one might have
(access to data, time, location and money, etc). It should reflect the
fact that the researcher has thought carefully about why a particular
strategy has been employed. This chapter will elaborate the considered
and selected research paradigm, approach and tools for testing the
research hypotheses.
4.2 Research Paradigm
4.2.1 Positivist Philosophy
Although positivism has been a recurrent theme in the history of
western thought from the Ancient Greeks to the present day, it is
historically associated with the nineteenth-century French philosopher,
Auguste Comte, who was the first thinker to use the word for a
philosophical position (Beck, 1979). Here explanation proceeds by way
of scientific description (Acton, 1975). In his study of the history of
the philosophy and methodology of science, Oldroyd (1986) says: It was
Comte who consciously 'invented' the new science of society and gave it
the name to which we are accustomed. He thought that it would be
possible to establish it on a 'positive' basis, just like the other
sciences, which served as necessary preliminaries to it. For social
phenomena were to be viewed in the light of physiological (or
biological) laws and theories and investigated empirically, just like
physical phenomena. Likewise, biological phenomena were to be viewed in
the light of chemical laws and theories; and so on down the line
(Oldroyd, 1986).
The central belief of the logical positivists is that the meaning of a
statement is, or is given by, the method of its verification. It
follows from this that unverifiable statements are held to be
meaningless, the utterances of traditional metaphysics and theology
being included in this class. However the term positivism is used by
philosophers and social scientists, a residual meaning is always
present and this derives from an acceptance of natural science as the
paradigm of human knowledge (Duncan, 1968). This includes the following
connected suppositions which have been identified by Giddens (1975).
First, the methodological procedures of natural science may be directly
applied to the social sciences. Positivism here implies a particular
stance concerning the social scientist as an observer of social
reality. Second, the end-product of investigations by social scientists
can be formulated in terms parallel to those of natural science.
Positivism is based on a fundamental belief that the world is made up
of discoverable regularities that allow general explanations of
behaviour to be developed. Followers of positivism attempt to answer
questions about the current state of the topic of study.
4.2.2 Phenomenological Philosophy
In its broadest meaning, phenomenology is a theoretical point of view
that advocates the study of direct experience taken at face value; and
one which sees behaviour as determined by the phenomena of experience
rather than by external, objective and physically described reality
(English and English, 1958). Although phenomenologists differ among
themselves on particular issues, there is fairly general agreement on
the following points identified by Curtis (1978) which can be taken as
distinguishing features of their philosophical viewpoint:
• a belief in the importance, and in a sense the primacy, of subjective consciousness;
• an understanding of consciousness as active, as meaning bestowing; and
• a claim that there are certain essential structures to consciousness
of which we gain direct knowledge by a certain kind of reflection.
Exactly what these structures are a point about which phenomenologist
have differed.
Husserl, regarded by many as the founder of phenomenology, was
concerned with investigating the source of the foundation of science
and with questioning the commonsense, 'taken-for-granted' assumptions
of everyday life (see Burrell and Morgan, 1979). To do this, he set
about opening up a new direction in the analysis of consciousness. His
catch-phrase was 'back to the things!' which for him meant finding out
how things appear directly to us rather than through the media of
cultural and symbolic structures. In other words, we are asked to look
beyond the details of everyday life to the essences underlying them.
Schutz was concerned with relating Husserl's ideas to the issues of
sociology and to the scientific study of social behaviour. Of central
concern to him was the problem of understanding the meaning structure
of the world of everyday life. The origins of meaning he thus sought in
the 'stream of consciousness' — basically an unbroken stream of lived
experiences which have no meaning in themselves. One can only impute
meaning to them retrospectively, by the process of turning back on
oneself and looking at what has been going on. In other words, meaning
can be accounted for in this way by the concept of reflexivity (Burrell
and Morgan, 1979).
4.2.3 Adopted Philosophy
The research methodology used in this study draws heavily upon the
theory of positivism. Positivism has been chosen because the aims and
objectives of this study suit the methodology. The objective is to
identify the perceived risks of internet shopping by the consumers and
how real they actually are? This is in line of positivists thinking
wherein they identify the current situation and try to identify the key
influencing factors that could further influence it.
4.3 Research Approach
4.3.1 Inductive Approach
An inductive research approach is used when the research tries to gain
an understanding of the meanings human attach to the events under
consideration. A close understanding of the research context is
essential and the research may be carried out without a detailed
literature review. Qualitative data is generally collected in an
inductive approach. Inductive research is more time consuming however
it offers more flexibility to the overall research design. Inductive
approach tends to formulate theory from data.
4.3.2 Deductive Approach
Deductive research is based on scientific principals and tends to move
from theory to data. It is a more structured approach and quantitative
data is generally collected in a deductive research. The idea is to
review the literature in detail, form a hypothesis and test it using
primary data. There is a necessity to select a large sample size in
order to generalize the conclusions drawn from a deductive research.
Deductive research is quicker to complete.
4.3.3 Adopted Approach
The selected approach for this research is deductive in nature.
According to Chappell (2002), a deductive approach to research is one,
where the aim is to establish facts and test hypotheses. This is what
we are trying to do. We have established research hypothesis based on
the literature review and will test it using primary research using
questionnaires.
4.4 Research Strategy
4.4.1 Questionnaire
The foremost aim of positivist research is to “discover natural laws so
people can predict and control events” (Neuman, 2003, pg 91). It is
based on the premise of repeatability and hence they prefer to collect
quantitative data. Neuman (2003) identifies four types of quantitative
data collection techniques. These are experiments, surveys, content
analysis, and existing statistics. The author decided to use the survey
method for the purpose of this research. Surveys are commonly used in
both descriptive and explanatory research, as many people can be asked
many questions in a short time period. In survey research many people
are asked questions and the answers are recorded and then analysed.
Surveys (either by questionnaires, telephone or face-to-face
interviews) are the most popular data collection instrument in business
studies. Much existing literature has noted that electronic surveys are
attractive to researchers, both academically and commercially because
of the potential that they have to reduce the expense of survey work.
Bachmann et al. (1996) and Weible and Wallace (1998) both note that
electronic surveys offer considerable cost advantages over traditional
mail surveys. Due to the limited resources of the researcher in terms
of time and costs, it was decided to conduct an electronic survey using
questionnaires.
Questionnaires provide the easiest known way of assembling a mass of
information (Burroughs, 1971: pg 106). But a lot of care has to be
taken in order to construct questionnaires to maximise response rate.
Hence, the researcher may have prepared to collect a vast amount of
information from a huge sample, due to long length or some kind of
complexity in the questionnaire; it may yield a response rate so low
that the data may not be adequate to make any kind of generalisation or
even a reliable statement.
Advantages of using questionnaires
• Each person answering a particular questionnaire reads an identical
set of questions which allows for consistency and makes processing
answers easier (Denscombe, 1998).
• They are economical, the costs faced were nearly negligible, since
once the form was loaded on the server, and all entries came in the
form of e-mail.
• Easier to send and receive response and they supply standardised answers form all recipients
Disadvantages
• Since most questions are pre coded respondents true feelings and views do not come up
• Filling the questionnaire is on optional basis by the respondent,
care has to be taken to ask precise questions and keep the length to a
tolerable level.
• The validity and truthfulness of the information provided by the
respondent in the questionnaire is always a concern while analysing the
data
Keeping this in mind, for the purpose of this research, due care was
taken to avoid hypothetical questions, double questions, presuming
questions and any form of ambiguity or imprecision in questions. Also,
an attempt has been made to keep the length of the questionnaire very
precise, with to the point questions consisting mainly of
multiple-choice questions enabling the reader to be comfortable to fill
the questionnaire without much loss of time, thereby increasing the
questionnaires response rate as well as making data analysis simple.
Please view appendix I for the complete questionnaire.
4.4.2 Sampling
In order to collect appropriate information on the views of the users
in Internet, a very large portion of the world's population would be an
eligible target, but due to various practical problems of time and cost
involved in such a process, a sample of the population was considered
for this research. The sample population involved in this project was
carried out on a small scale due to the time and resources available.
Even though on a small scale the responses should be adequate enable a
pattern of overall stability on the basis of which reliable statements
could be made. The survey polled a population of Internet users working
in companies as well as students situated in the north-east region of
England in order to get their perspective of the security issues of
e-commerce.
5. Results and Analysis
The questionnaire was attached to the electronic emails and sent to
the convenience of 100 individuals known to the researcher in the U.K.
In each email the purpose and how to answer the questionnaire were
described, and they were also asked to distribute the questionnaire to
their friends and family. One follow-up email reminder was sent to
non-responsive individuals after five days. 56 responses were received.
The sample for the study consisted of students, professionals and few
retired people. Around 60% of the sample was men and most of them were
below 30 years. The questionnaire was sent to the sample through email
and the responses were collected and analysed through the survey
software Peruses. The questionnaire was divided into different sections
focusing on Internet self efficacy and usage, Perceived Web security
and privacy and About Yourself. The Results indicate several trends in
overall components perceived as risks to the online shoppers. The
overall research questions have been used to organize the presentation
of the data.
5.1 Internet self efficacy and Usage (Computer Training/ Access to Email/ Experience/ Confidence)
This section covered questions on the availability and accessibility to
Internet as well as the confidence in using the Internet.
1. Have you ever had any computer training for the Internet?
2. How many years have you been using Email or World Wide Web?
3. How confident do you feel using the Internet?
There has been significant development in terms of the Internet user
population and Internet usage since the last 10 years. Around 40% of
the sample had computer training for the Internet. More than 60 % of
the sample has been using Internet for the past 3-4 years (as shown in
Figure 2 - How confident do you feel using the Internet?). And almost
70% of the sample was confident in using the Internet.
Figure 2 - How confident do you feel using the Internet?
4. How often do you use the following on the Internet?
In order to investigate the respondent’s current online activities and
the degree to which online shopping is used, they were asked to state
their primary purpose of using the Internet. This question had multiple
responses. The options given for this question were: Research a topic,
Reading articles/newspapers, looking for jobs, Online Shopping,
Obtaining information about products, Planning Travel and finding about
careers. Results of the study indicate that the majority of the
participants used Internet for planning travel which was closely
followed by Gathering information on Jobs/Careers. Around 22% (12/56)
of the sample said that they never use the Internet for shopping, while
60% of them used Internet for shopping and the rest 20 % were not very
keen for Internet shopping.
Figure 3 - How often do you use the following on the internet?
5. In the past 6 months, have you ever purchased products or services through the Internet?
More than 60% of the participants had not purchased products or
services through the Internet in the past six months (shown in Figure 4
– Internet Purchase in last 6 months? Lee et al. (2000) concluded that
consumers who buy online are better educated than those Internet users
who do not, and income is higher for web buyers than non-web buyers.
Figure 4 – Internet Purchase in last 6 months?
5.2 Perceived Web security and privacy
6. Do you feel secure sending personal/financial info across the Web?
A majority (88%) of the participants agreed that they feel insecure
sending personal/financial information on the web. So retailers need to
simplify the transaction process and enhance payment security on behalf
of their consumers.
Figure 5 Do you feel secure sending personal/financial info across the Web?
7. When visiting an online shopping website, which of the following features do you look for?
When visiting an online shopping website, out of the many features
available (Company Profile, Contact Address through email, Security
Certificate, 24 Hour Customer Service, Free shipping and Handling,
Protection of personal information, Policy Notes, Hyperlinks to other
related information), the most popular and useful one valued by the
participants was the Security Certificate (51/56). Protection of
personal information was the second most valued (41/56) feature for the
respondents.
Detailed product Information, free shipping and handling, 24 hours
Customer Service and guaranteed delivery within a specified time frame
were the next most valued features of an online shopping website.
Policy notes and large selection of merchandise were the features which
did not seem important to the participants. An appealing website design
and functionality (17/56) also appeared to be not very important.
Topic Strongly Agree Agree Neutral Disagree Strongly Disagree
Company Profile and overall Brand equity.
7 26 18 5 0
Security Certificate.
35 16 4 1 0
24 Hour Customer Service.
17 17 15 7 0
Large selection of merchandise.
3 9 21 21 2
Detailed product Information.
9 27 20 0 0
Policy Notes.
0 3 28 17 8
Free shipping and Handling.
19 13 23 0 0
How clearly the Return Policy is explained.
21 18 15 2 0
Delivery within a specified time frame (Guaranteed delivery).
23 17 12 2 0
Simplicity of process. (How simple it is to buy something online.)
7 19 13 15 2
Tracking (Does the site provide any feedback or a confirmation number once the order is placed.)
7 30 16 3 0
Protection of personal information.
26 15 7 7 2
Speed (How quickly each page, text and images appear.)
3 26 12 11 4
Functionality (Overall, how well the site seems to work.)
5 12 28 6 5
Table 1 - When visiting an online shopping website, which features do you value?
Figure 6 Online shop most valued features
It was noticeable that a store’s reputation/company profile was listed
as an important factor of choosing a particular website. The risk
associated with online shopping and transaction is still perceived to
be very high. In addition to product attributes such as quality and
price, online consumers also take other factors into account in order
to decrease the risk involved when making a buying decision. For
Internet users, an online retailer’s reputation is of importance. Trust
is associated with a lower perceived risk of online shopping, and a
consumers’ perception of the Internet retailer’s reputation and size is
expected to affect their trust of the retailer (Jarvenpaa et al.,
2000). Thus, online retailers should do what they can to impress the
prospects of these two aspects with relevant marketing communications
efforts.
8. Please select the given below traditional brands/symbols that would increase your trust if you saw them on a website.
Figure 7 - Traditional brands/symbols that would increase trust on a website.
As can be seen from the figure above, the symbol of VeriSign scored the
highest (43/56) on increasing trust on a website with that symbol
followed by Visa and MasterCard. This essentially implies that the
perceived risk from a consumer’s point of view for the online shops is
relatively low if one of the above mentioned sign is displayed
appropriately.
9. Do you intend to purchase products from the internet in the near future?
Figure 8 - Do you intend to purchase products from the internet in the near future?
The above graph is self-explanatory which shows that 53 % of the
participants intend to purchase products from the internet in the near
future while the rest 47% were not interested in buying anything form
the Internet in the near future.
5.3 About Respondents
This section covered questions to gather information on the number of
males and females in the survey including their age and occupation.
10. What is your gender?
11. How old are you?
12. Are you?
These questions were important to see if the gender, age and occupation
affect the choice of shopping or not. The sample consisted of 39 males
and 17 females. Most of the participants (34/56) were below 30 years of
age. Forty of the participants were students (as the questionnaire was
distributed through email to students and they were free to circulate
it to their family and friends), twelve were in full time employment, 3
were part-time employed and 1 was unemployed.
Figure 9- What is your gender?
Figure 10 - How old are you?
Figure 11 - Occupation
5.4 Questionnaire summary
Security of sensitive information/Security certificate (91%) was the
most important factor during the actual transaction stage. Protection
of personal information was also considered to be the second most
important factor. Szymanski and Hise (2000) say in one of their papers
that the online transaction security dominates the discussions on
Internet commerce. Also credit-card security is emphasized as a major
consideration by 75 percent of Internet shoppers when deciding whether
or not to purchase online. Ranganathan and Ganapathy (2002) also find
that security and privacy have greater impact on the online purchase
intention of consumers than information content and design of a
retailing website.
The overwhelming factor that influenced or prevented them purchasing
online was the threat of breach of security. Results revealed that
security concerns were the major factor, regardless of the respondent
category, purchasing experience, etc, that portrayed negative attitudes
against online purchasing. As a result, the internet as a shopping
medium is facing difficulties in expanding mainly due to the
reliability concern attached to it, in terms of security, privacy, etc.
Security is still a major concern for internet users that have already
made an online purchase, as they may be more aware of the risks
involved than offline consumers. Therefore, online retailers must make
necessary and adequate protection mechanisms to ensure their customers
the security of transaction and sensitive information.
6. Conclusion and Further Work
Internet serves as an electronic chain of communication linking the
consumer (client) to the electronic commerce resource (commerce
server). But Internet as a medium of communication in itself is not
very secure. CTR (2001) in its article on E-Commerce security, states
that the E-Commerce market is inherently an open market, difficult to
inherit any kind of security in totality. Quoting the words of CTR
(2001) on E-Commerce,
"On the Internet - a network that was designed for openness, not
security. E-commerce, an application that demands high security, is
occurring on a network with no inherent security ".
The potential of E-Commerce as a business model are enormous and
expanding in the horizontal as well as the vertical markets, linking
business suppliers and buyers through Intranet and Extranet as well as
providing consumers with all time marketing facility accessible from
anywhere in the world. The main point that emerged from through the
brief analysis of the advantages as well as the disadvantages of using
e-commerce, was that though the e-commerce technology might seem like a
paragon to the business world, just like any economic market, it is
governed by the science of human behaviour, which is very
unpredictable. The adversaries of the web world account for a major
part of economic problems of the web market. Malpractices may be in the
form of some security threats which have the potential to cause danger
to data or network resources via destruction, modification or denial of
data. A fraudulent seller may rip innocent customers off their money
whilst not delivering goods or delivering faulty -goods, a hacker may
through various plots of fraud hack sites, and databases to gain vital
and confidential information of an organisation. By attacking an
organisations web site a hacker may Vandalise or deface the site to
display a politically motivated message, merely prove a point or just
to have fun. But the consequences that a firm may face due to such an
act, could lead to loss of trust and confidence of the customer in the
company, which once lost takes years to rectify.
The research results show that lack of trust, towards internet as a
commercial medium as well as an online transaction medium, is the first
reason why many consumers still fear to make online purchases. The
results from previous Internet surveys quote other factor as the first
barriers for online shopping, such as security of transactions and lack
of privacy over personal information, still those factors are closely
connected with trust online. Even, in the case of online consumers, who
somewhat have adopted e-commerce as familiar way of purchasing, trust
is proven to be a necessary element. The analysis of the questionnaire
data reveals that concerns over the security of online transactions is
the first factor to reduce the levels of trust towards online
commercial environments. That result is in agreement with previous
surveys results from Ernst and Young (1999). Consumers, who have not
made any online purchases, fear for security breaches from illegal
individuals, as they fear for security breaches from online merchants
may dispute their credit card information, either as a part of their
overall intentions, or from individuals inside their organizations.
Consistent with Swaminathan et al (1999) research, those security
concerns are somewhat negatively connected with the likelihood of
purchase online, as consumers more unlikely to purchase online, are the
ones who concern the most.
On the other hand, online consumers concern mostly about their credit
card data been abused by illegal individuals, than illegal merchants.
Due to the experience of purchasing interactions, their uncertainty
towards online store reliability tends to decrease, in terms of
security, but still remains high towards the reliability of the
Internet environment as a commercial medium. The research finding that
personal experience is the most influential factor, in regard to
perception of security, justifies the existence of the difference
between the two categories of consumers. Online consumer's perception
of security is based on the their prior history of online purchases,
while with non-online consumers, that perception, thus their level of
uncertainty, is based on their personal experience as users of the
chaotic web environment. Furthermore, media attention and friends have
proven to be weaker factors of influence on perception over the
security of online transactions. Finally, the survey reveals that
consumers, with better levels of education and computer experience,
tend to grow more fears over the security in e-commerce. We can assume
that those results derive from the fact that those categories of
consumers are more likely to interpret negative information about
online security, corning from the external sources of information (i.e.
media).
Thus the results of the survey uphold the hypotheses H1 as well as H2
formulated based on the literature review and suggest that security and
privacy concerns while shopping online are indeed very real from the
consumer’s point of view. This was very evident from the survey results
in which the consumers ranked security (financial), personal
information (privacy) and Delivery within a specified time frame
(performance) as the most valued factors they consider while shopping
online. To reduce vendor-related perceived risk, businesses could
consider providing more company information, such as names of owners,
staff, company history, physical addresses, and privacy policies on
their Web-sites. Businesses should also enhance their customer services
and avoid asking for unnecessary data. In terms of consumers’ perceived
product risk, businesses could consider offering incentives such as
warranty or money back guarantee. In summary, businesses should
communicate with consumers; deliver technology guarantee and product
quality guarantee, to inspire confidence.
There could be some element of geographical bias as the sample was
primarily from the north east region of UK. It could be possible that
consumers perceive different risks or threats because of where they are
located. The location may prove to play an important role as a council
from a different region may take additional steps to educate the
community regarding various threats and make them more confident while
shopping online. Also there may be some element of non-response bias.
The sample that did not respond may all have dissimilar
characteristics, which could result in misleading results. However, the
possibility of this is remote. Considering these limitations, there are
opportunities for a much larger study to be carried out on similar
lines. The variables of the study may also be operationalised to a
greater extent in future work to form stronger links among variables.
Further study may also include a detailed qualitative survey on the
factors that would make the consumer to shop online more often.
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