Consumer Internet Behavior (CIB) Of Online Shoppers

 

     Consumer Internet Behavior (CIB) Of Online Shoppers

---In China’s Big City Context

 1. Introduction

    Consumer Internet Behavior (CIB) is the domain of activities where Internet use and consumption behavior overlap’ (Goldsmith and Bridges, 2000:22). It comprises of gathering consumption information through exposure to advertising, shopping and online buying of goods, services and information.

    This report will focus on the context of online shopping in China’s big cities such as Beijing, Shanghai and Guangzhou’s B2C electronic commerce environment. Beginning with understanding fundamentals of CIB and online shopping scene in China’s big cities, related studies are reviewed, and the shopping orientations and consumer behavior decision-making models are established as a theoretical framework. It is followed by exploratory study via in-depth interviews and findings are analyzed using the constructed framework. In addition, a CIB model is formed by applying the CIB definition together with the shopping orientation and consumer behavior decision-making models. At last, managerial implications and conclusion would be given.

2. Literature Review

2.1 Fundamentals of CIB and online shopping

   Typically, online shopping involves ‘exposure to a product choice without trial, the inability to pick up, touch, and smell the product and a wait of several days to receive the product’ (Burton, 2002:336). Whereas in-store buyers gain first hand experience and respond to multiple sensory modalities (Holbrook and Moore, 1981).

   There are large differences between a physical store and its electronic counterpart. Internet is revolutionizing the ways in which products and services are marketed to customers (Kannan et al., 1998). It constitutes an innovative means of interacting with customers, as well as offering them an innovative shopping experience (Palmer and Grifith, 1998).

2.2 Approaches of online shopping studies

   As online shopping evolves, it has become the interest of many academicians and marketers. There are two commonly used theories.

2.2.1 Traditional diffusion theory

   In a traditional diffusion theory, there are five categories of consumers in terms of when they adopt a new product--- Innovators, Early Adopters, Early Majority Consumers, Late Majority Consumers and Laggards (Schutte and Ciarlante, 988:76). Then, some marketers develop specific strategies to target each consumer category upon their similarities. Nevertheless, this theory is not completely applicable in China because typically, very few Chinese are mentally prepared to take the social risk of being innovators and trying a new product first.

2.2.2 Technology acceptance model

   The Technology Acceptance Model (TAM) developed by Davis (1993) uses the Theory of Reasoned Action (TRA) to model and examines Internet users’ adoption of the web for retail usage. TRA has been used to model the CIB by evaluating consumers’ attitudes and beliefs (Litvin and Maclaurin, 2001).

   The evolution of TRA into TAM attempts to explain and predict the determinants of individual behavior toward a given system that is exhibited as a system adoption (Agarwal and Prasad, 1999). However, similar to the Traditional Diffusion Theory, it measures intensions and reasons for some Internet users adopting online shopping or not whereas the frequency and types of products commonly purchased online are not stated.

2.3 The online shopping scene in China’s big cities

2.3.1 Perceived benefits of online shopping

    Similar to consumers from western countries, China consumers perceive benefits of online shopping as convenience; ease in purchase and timesaving where the products are available 24 hours a day, 7 days a week- a well-known 24/7. Most importantly, the E-retailers offer a wide range of unique, global merchandise not available in China’s store. And they can deliver the right products to you at the right time and right location.

2.3.2 Major weaknesses of online shopping

• Online Privacy and Security

   As Asians are less trusting and inclined to share personal information with retailers, especially in online transactions without face-to-face contact (China online, 2000), nearly 37 percent of Chinese Internet users said that the biggest drawback to online shopping is a lack of information security. Other factors are the lack of trustworthiness of the retailers in terms of delivery, refund issues and merchandise quality (Wee and Ramachandra, 2000).

• Recreational Activity in High-streets

   In China, big cities such as Shanghai, Beijing and Guangzhou have the highest levels of urbanization in the world. Moreover, access to retail shops is convenient and trading hours are extended much longer than before. It is known that shopping is considered as an “established recreational activity” in modern cities (Burton, 2002:337).

• Debt-averse

   Besides, culture plays an important role in consumer behavior (Media Asia, 2002). This is common in Asian countries, especially in China where not everyone has a credit card. In general, Asians are not comfortable with the idea of being in debt.

• Difficulty in accessing product quality

   In addition, an online survey about the level of cyber-buying activities revealed that 23.1 percent of China consumers still preferred to touch and feel the merchandise before purchasing (Wee and Ramachandra, 2000).

2.4 Building the theoretical framework

   A review of the shopping orientations literature and three consumer behavior decision-making models are set as the theoretical foundation for this study.

2.4.1 Review of shopping orientations literature

   Six shopping orientations are selected based on the perceived benefits and major weaknesses of online shopping in China’s big cities. These include economic, apathetic, innovative, recreational, personalized and conservative shopping orientations (Stone, 1954; Bellenger and Korgaonkar, 1980). The characteristics of each shopper will be identified in Section 4.

2.4.2 Review of consumer behavior decision-making models

   It is important to understand how a consumer makes a purchase decision under the external influences and internal stimuli.

• Information Processing Model (IPM)

   The study of consumer behavior has evolved from an early emphasis on rational choice to a focus on apparently irrational buying needs to the use of logical flow models of bounded rationality, an approach known as the information processing model (Holbrook and Hirschman, 1982).

• Hedonic Consumption Model (HCM)

   Following IPM, in the early 1980s, this paradigm views “the consumer as a ‘feeler’, who consumes products for certain abstract, intangible, aesthetic, symbolic and hedonic benefits” (Srinivasan, T.C., 1987: 97). This is known as hedonic consumption (Holbrook and Hirschman, 1982).

• Behavioral Perspective Model (BPM)

   Furthermore, an extension of the study of consumer behavior in early 1990s results in the development of BPM, which relates patterns of consumer choice to their differing environmental consequences (Foxall, 1993). These consequences include hedonic reinforcement, informational reinforcement and aversive consequences. 

Source: Foxall, 1993: 48

By setting the theoretical framework of the characteristics of six types of shoppers and consumer decision-making models, a further insight into who are the adopters and non-adopters of online shoppers and why China shoppers are enticed or averse to online shopping, will be stated in Part 4.

3. Research Methodology

   The primary data were collected by conducting face-to-face interviews of ten respondents. From past research, the majority of online shoppers are between the age group of 16-35 years who are degree holders with above average income and high occupational levels (Wee and Ramachandra, 2000).

   As such, similar characteristics of the majority of the respondents were selected based on these criteria in Beijing, Shanghai and Guangzhou -active internet users between age 16-35 years, Chinese, degree holders and above average income. In contrast, the non-adopters are selected based on age group of at least 35 years and above, Chinese, non-degree holders and below average income. Open-ended questions related to the psychological aspects towards online shopping, how they made purchase decisions and reasons why they were enticed or averse to online shopping were asked. The sample of questionnaire is attached in Appendix 1.

4. Findings and Discussions

   Using the theoretical framework from Section 2.4, six shopping orientations are matched against the characteristics of the respondents, who are identified as either adopters or non-adopters of online shopping. Moreover, the consumer behavior decision-making models are used to analyze two issues. Firstly, how the respondents make purchase decisions and secondly, why they are enticed or averse to online shopping. Due to the limit of counts of words, this report just briefly states the points.

4.1 Economic shopper

   Internet provides an attractive shopping medium due to the abundance of product-related information that helps economic shopper to do comparison among competing alternatives. As such, this decision-making process is similar to the traditional information-processing model stated in Section2.4. In short, he can be considered as a rational and logical shopper.

   However, the findings suggest that all the respondents (except Gao and Piao who did not do online shopping) do in-store shopping initially, followed by an online search for comparison, especially for products and services that have a relatively high value perceived by the respondents. For example, Meng explained,

   “If I want to buy travel packages, I will check out the travel itineraries and hidden charges from travel agencies first, then to the web. It provides enough information to compare product features and prices! But if the online stores offer prices at least 40 percent lower than the agencies, I will quickly buy online. If not, I will buy from the agency which offers the best travel packages.”

   However, Dr. Dong, a non-adopter of online shopping, thought otherwise,

   “I think the web is a good place to search information. But given the actual buying, it offers the same and often higher price than retailers because of the high delivery charges, especially if the products are imported. One important thing is that I cannot bargain on the web.”

   Thus, the CIB of a typical economic shopper proves a mixture of browsing in the cyberspace that resembles the information search in the traditional information-processing model.

4.2 Apathetic shopper

   As a convenience seeker, he is more likely to purchase online due to its perceived benefits such as convenience, time-saving and ease in purchase by a simple click on the mouse. This resembles the BPM of purchase and consumption.

However, from the interviews, Jiang shared his dissatisfaction with the problems.

   “Sometimes, there are errors displayed on the page, too many graphics and difficult to move around the web, the downloading is slow and worse still, the dial-up Internet line is cut off.”

Another finding from two respondents, Meng and Xu, found out that

   “…online shopping was done with minimal time and effort when we use our own way. To us it has become our habitual daily activity.”

   Generally, the CIB of an apathetic shopper who adopt online shopping suggests that the latter does not mean convenience and time saving. The common problems experienced such as slow dispatch times, error pages, difficulty experienced in web navigation, inconvenience and transactions breaking down might deter consumers from adopting online shopping. By using the BPM (Foxall, 1993), environmental factors such as the behavior setting and the ‘role of perceived effort might be seen as especially important to adoption or rejection of online shopping and buying’ (Alreck and Settle, 2002:34).

4.3 Innovative shopper

   The wide variety of global, unique merchandise on the Internet motivates he, who is an active Internet user to shop online regularly and to discover more innovative merchandise.

   Culture does have an influence on buying behavior. Accordingly, consumers from the Western nations place emphasis on the self needs and desires of an individual as well as hedonic pleasure (Kacen and Lee, 2002). However, the East seems to discourage impulsive behavior due to the collectivist notions of the self, emphasizing the importance of group needs, word-of-mouth, interdependence and moderation.

Wen who is a senior executive demonstrated his impulsive online buying behavior,

   “It is very easy to click on the icon for new PDA accessories products, but when I calculate the shipping and handling costs, it may add up to the same if I buy here locally. In the end, I will just empty the shopping carts.”

   This is consistent with the research by Pastore (1999) that 75 percent of shoppers do abandon their shopping carts before the online transactions are completed.

Furthermore, the presence of strong reference groups has an effect on the CIB of online shoppers.

As Meng highlighted,

   “…I don’t know where to buy discounted airline tickets till my best friend recommended elong.com to me.”

   Obviously, through explanations of these two cases, there is high hedonic and high informational reinforcement given online buying behavior according to BPM (Foxall, 1993).

4.4 Recreational shopper

   He tends to combine shopping with other social activities such as meeting friends and dining out together. Currently, online shopping is not meant for socialization and thus, a recreational shopper is a non-adopter of online shopping. In this instance, it can be considered as the experiential aspects of consumption or hedonic consumption (Hirschman and Holbrook, 1982).

   Piao, a homemaker, could be identified as a typical recreational shopper. The personal experiences and body language were considered crucial in her daily communications. While, Wen, an active online shopper preferred to shop online in a quiet and relaxed environment.

   “I can do all in the comfort of my home, no need to wait for long queues…I can also make friends by chatting online, hiding my real identity, this is fun!”

   “…many times, the cashiers gave me the wrong change and mixed up my goods with other customer’s.”

   Ironically, during the Sars outbreak, Wen turned to in-store shopping. He commented further,

   “…when Sars arrived, everybody avoided shopping mall…I feel so relaxed to walk around in a mall without knocking into someone, take my time to browse and buy things!”

   As shown above, external stimulus together with personalities like impatience and unpleasant past experiences (internal stimuli) entices a recreational shopper to search for alternative activities such as online chatting. The BPM (Foxall, 1993) is applicable in this case, relating patterns of consumer choice to his differing environmental consequences. It is clearly that the Internet lacks the experiential aspects of consumption or hedonic consumption (Hirschman and Holbrook, 1982). Thus, recreational shopper who does not adopt online shopping seeks fun and first hand experiences in a social settings.

4.5 Personalized shopper

   Similar to the recreational shopper, a personalized shopper loves to socialize and build close relationship, but with the salespeople on a personal level. Considered as a non-adopter of online shopper, his consumer behavior decision-making model follows the BPM of purchase and consumption (Foxall, 1993) whereby there is relatively high informational reinforcement and low hedonic reinforcement.

   As a non-adopter Gao mentioned,

   “I have known the salespeople for a long time. They are very flexible and allow me to exchange faulty goods and cheaper than others!”

 In contrast, Chao felt that,

   “I can’t really relate to the salespeople from neighborhood retail shops. Their mentality and mannerisms are different from mine!”

   Overall, the personalized shopper’s attitude and perception is prompted by past learning history, that is, online shopping lacks the personalization of face-to-face communication and human touch. On the other hand, online shopper considers maintaining relationship with neighborhood salespeople. It is low hedonic and informational reinforcement and formed due to the negative past learning experience or aversive stimuli.

4.6 Conservative shopper

   He may concern about privacy issues as well as lack of trustworthiness. Research by Brickle and Shim (1993) shows that conservative shoppers are the least satisfied with online shopping. Kang is the new user who tried online shopping for the first time during the Sars outbreak. Unfortunately, her first-time experience turned out to be an unpleasant one and since, she has reverted to in-store shopping.

Besides, all of the respondents exhibit varying levels of trusts and concern for issues of online privacy and security. For example, as an IT Security Specialist, Xu stated that,

   “I will make sure that the online reputable merchants have a privacy statement written clearly and there is secured web to protect my credit card details.”

   In this instance, the BPM is applicable. A conservative shopper is averse to online shopping due to the aversive stimuli. These include the perceptions of privacy and security issues as well as the unpleasant learning experiences associated with online shopping.

5. Formulation of the CIB Model

   Based on Goldsmith and Bride’s definition of CIB (2000:22), three elements- exposures to advertising, shopping and online buying-make up the ‘domain of activities where Internet use and consumption behavior overlap’. Together with the shopping orientations and the consumer behavior decision-making models mentioned earlier, a CIB model is formulated to show the inter-relationships among the three elements under the influences from the external environment and the internal factors of an online shopper.

   External environments include

• Organization’s marketing effort: marketing mix (4P), processes, Internet environment and relationship marketing.
• Socio-cultural environments: physical crowding, culture, reference groups or word-of-mouth and social class.

   Internal factors include

   Psychological fields: psychological crowding, attitudes, motivation, learning, perception, personality and experiences.

6. Managerial Implications

   Marketers can promote online shopping in China’s big cities by considering the issues related to external and internal influences and using CIB model as a foundation.

6.1 Managerial implications for the external influences

   There is potential for growth of online shopping in China through partnering and working with government to promote the awareness of online shopping and increase the IT literacy skills among the public, developing and implementing the 24/7 online sales as well as providing unique online crisis- related products and services.

6.2.1 Internet trustworthiness

   As stated in Section 4, trust is relatively more difficult to build and more critical in online business environment (Hoffman et al. 1999). In this case, the issues of Internet trustworthiness are distinguished between ‘hard’ and ‘soft’ trust. ‘Hard trust’ deals on security issues like technical solutions to provide secure interactions, while ‘soft trust’ includes trust in the privacy of personal information and E-retailers’ quality of service, which cannot be easily resolved (Head et al., 2001). 6.2.2 Shopping Experiences

   Taking into consideration the three elements in the CIB model as well as the psychological fields of the adopters and non-adopters of online shopping, marketers can enhance the overall online shopping experiences and achieve competitive advantage by following ways:

• Adding value to products and services
• Focusing on a niche rather than the mass market
• Maintaining flexibility
• Ensuring the right technology to diminish error
• Proving communication and ‘Human Touch’ in Customer Service

7. Future Researches

   The relatively small sample size may not represent the population and the inability to tape-record the entire interview processes might result in some misinterpretations of the findings and analysis. In addition, there are some potential areas that can be explored further. These areas include the comparison of the in-store consumer behavior with online shoppers and exploration of the external environment such like Chinese New Year’s impact on the CIB of online shoppers.

8. Conclusions

   This report aims to understand the CIB of online shoppers in China’s big cities. Based on the definition of CIB, this study involves a review of the shopping orientations literature and an understanding of the characteristics of the adopters and non-adopters of China’s online shoppers. To gain a deeper insight why consumers do shopping online or not, a CIB model is formulated based on its definition, the shopping orientations and consumer behavior decision-making models. Essentially, the effects of external environment and internal stimuli play an equally important role in influencing the choice of shopping medium and online purchase decisions.

   With the advent of new technology like the new Internet 2.0 technology as well as the 3G mobile phones, shopping in a virtual reality environments in real-time, 3-D animations and face-to-face interactions on the internet will no longer be a dream. However, the majority of the China’s skeptical shoppers will still engage in in-store shopping until the barriers and risks associated with online shopping are minimized to encourage more Internet users.