Online Shopping and Consumer Phobia

1
Online Shopping and Consumer Phobia

• Patrick Kierkegaard

2
Online Shopping and Consumer Phobia

• The Internet offers consumers a multitude of
  benefits including ready access to information,
  instantaneous communication, and twenty-four-hour
  shopping.
• The increase in broadband connections has lead to
  more shoppers embracing the speed and efficiency
  of online shopping.

3
Online Shopping and Consumer Phobia

• Interactive Media in Retail Group (IMRG)
• 80 billion of consumer spending is either on or
  influenced by the internet
• 30 billion of retail spending is online (10 of
  total retail sales)
• 20 billion of other consumer spending takes
  place online
• 30 billion of offline retail sales are impacted
  by internet information, research or activity

4
Online Shopping and Consumer Phobia

• IMRG found in its May 2006 survey of over 3,900
  consumers that
• 52 of respondents intended to reduce their high
  street spending in 2006.
• 45 of respondents intend to increase their
  internet spending this year (Baiggori, 2007).

5
Online Shopping and Consumer Phobia

• Forrester Research (2007) predicts that
• Online retail sales in Europe will more than
  double in the next five years as the number of
  online shoppers grows to 174 million.
• In the second quarter of 2006, on-line retail
  reached 45 billion, and that number is expected
  to surpass 211 billion by the end of the year.
• Driving the growth an increasing number of women
  bringing their shopping power to the Net.

6
Online Shopping and Consumer Phobia

• A number of consumers are still reluctant to
  convert from Internet browsers and high street
  shopping to potential online purchases.
• An Internet shopping survey reveals a number of
  people are suffering from Internet Shopping
  phobia.
• A study commissioned by Enterasys Networks in
  2006 revealed that the public has a deep distrust
  of using the Internet to shop online.

7
Online Shopping and Consumer Phobia

• Just half of the UK population have ever shopped
  online and 43 of us are putting off shopping or
  banking online because of security concerns.
• E-commerce still has a long way to go to earn the
  trust of the public. (WhatDigitalCamera, 2007)

8
Online Shopping and Consumer Phobia

• A report issued by Consumer Reports WebWatch
  (2005) stated
• A quarter of Internet users have stopped making
  online purchases for fear of identity theft.
• 80 of Internet users are concerned that someone
  might steal their identity from the personal
  information available on the Web.
• 86 have made at least one change in their
  behaviour because of fears of identity theft.

9
Online Shopping and Consumer Phobia

• So what is driving the users anxiety and
  reluctance to shop online?
• Risk
• Fear
• Anxiety

10
Online Shopping and Consumer Phobia

• Online shopping anxiety is closely related to
  computer anxiety
• the irrational anticipation of fear evoked by
  the thought of using or (actually using)
  computers, the effects of which result in
  avoiding or minimising computer usage. (Brosnan,
  1998)
• Several researches have found that computer
  anxiety is negatively related to computer use and
  attitudes towards computers (Jackson et al, 2003
  Durndell and Haag, 2002)

11
Online Shopping and Consumer Phobia

• Much of the relevant literature focuses on the
  perceived risks associated with online shopping
  and consumer attitudes that foster or inhibit
  online exchange.
• The theory of perceived risk has been used to
  explain consumers' behaviour.
• Online consumers are concerned with those risks
  inherent in buying on the Web such as credit card
  fraud and not receiving the right products
  (Bhatnagar et al. 2000)
• Perceived risk of online shopping and perceived
  ease of use of the Web site have been shown to
  influence attitude towards online purchasing
  (Heijden et al. 2001).
• Consumers are apprehensive when they cannot be
  sure that purchases will allow them to achieve
  their buying goals (Cox and Rich, 1964).
• Consumers perceive Internet shopping to have
  higher risk than in-store shopping (Tan, 1999).
• Jarvenpaa Todd (1997) reported that perceived
  risk influenced attitudes toward online shopping,
  but not the intention to shop online.
• Vijayasarathy Jones (2000) found that perceived
  risk influenced both attitudes toward online
  shopping and intention to shop online.
• Other studies similarly found that perceived risk
  negatively influenced consumers' attitude or
  intention to purchase online (Liu Wei, 2003
  van der Heijden, Verhagen Creemers, 2003)

12
Online Shopping and Consumer Phobia

• The most common concept of perceived risk used by
  researchers defines risk in terms of the
  consumer's perception of uncertainty.
• The uncertainty can be about the outcome or about
  the adverse consequences of buying a product (or
  service). These may produce anxiety.

13
Online Shopping and Consumer Phobia

• Six components or types of perceived risk have
  been identified
• Financial
• Product performance
• Social
• Psychological
• Physical
• Time/convenience loss
• Forsythe and Shi (2003) characterized four risk
  types financial, product performance,
  psychological, and time/convenience loss
• Lim (2003) examined a different set of perceived
  risks technology, vendor, and product risk.

14
Online Shopping and Consumer Phobia

• Financial risk is defined as a net loss of money
  to a customer and includes the possibility that
  one's credit card information may be misused
  which is a major obstacle to online purchases
  (Maignan and Lukas, 1997).
• Product risk The consumers' inability to
  physically inspect products (Spence et al., 1970
  and Bhatnagar et al., 2000) and making a poor
  economic decision through an inability to compare
  prices, being unable to return a product, or not
  receiving a product paid for (Jarvenpaa Todd,
  1997 Vijayasarathy Jones, 2000).
• Product performance The risk that a product will
  not function as expected (Bhatnagar et al., 2000
  Jarvenpaa Todd, 1997 Tan, 1999 Vijayasarathy
  Jones, 2000, Horton, 1976).
• Psychological risk refers to disappointment,
  frustration, and shame experienced if one's
  personal information is disclosed. The Internet
  is often perceived as likely to violate users'
  privacy, a major concern of many Internet users
  (Maignan and Lukas, 1997, Jacobs, 1997 and
  Benassi, 1999).

15
Online Shopping and Consumer Phobia

• Time/convenience risk may refer to the loss of
  time and inconvenience. Two leading causes of
  dissatisfying online experiences that may be
  thought of as a time/convenience risk include a
  disorganized or confusing Web site and pages that
  are too slow to download (GVU's 9th WWW User
  Surveys, 1998). Convenience concerns
  psychological cost and other forms of
  non-monetary costs such as time, effort and
  stress (Aylott and Mitchell, 1998 Cassill et
  al., 1997).
• Social Risk is associated with the loss of social
  interaction, are closely associated with online
  purchasing behaviour. Perceived risk seems to
  deter Internet users from shopping online
  frequently and from spending significant amounts
  of time and money.
• Technological risk is associated with the fear
  of using the technology due to loss of security,
  fraud and technical errors that have been widely
  reported both in the interactive and mainstream
  media

16
Online Shopping and Consumer Phobia

• Security and Privacy
• A common perception among consumers is that
  communicating credit card information over the
  Internet is inherently risky due to the
  possibility of credit card fraud (Bhatnagar et
  al., 2000 Furnell Karweni, 1999 George, 2002
  Hoffman, Novak Peralta, 1999 Jarvenpaa Todd,
  1997 Jones Vijayasarathy, 1998 Liebermann
  Stashevsky, 2002).
• Swaminathan, Lepkowska-White, and Rao (1999)
  reported that consumers in their study seemed
  less concerned about the security of online
  transactions.
• Ranganathan and Ganapathy (2002) found that
  security was a major factor in discriminating
  between high and low intentions to purchase
  online.
• A 2007 Zogby Interactive survey has found that
  worry about identify theft has now reached most
  online Americans91 of those polled said they
  are concerned that their identity might be stolen
  and used to make unauthorized purchases.

17
Online Shopping and Consumer Phobia

• Consumers' concerns about privacy
• Security Risks follow from the consumers' fear
  that the open Internet network would allow their
  personal data to be compromised (Andrianie,
  1999).
• The unauthorized acquisition of personal
  information during Internet use or the provision
  of personal information collected by companies to
  third parties (Furnell Karweni, 1999 George,
  2002 Hoffman et al., 1999 Lim, 2003 Wang, Lee
  Wang, 1998).
• A large number of Internet consumers do not trust
  Web providers enough to exchange personal
  information with them (Hoffman et al., 1999
  Liebermann Stashevsky, 2002).
• Increasing privacy concerns is the likelihood of
  a decrease in purchasing online (Hoffman et al.,
  1999).
• George (2002) found that a belief in the privacy
  of personal information was associated with
  negative attitudes toward Internet purchasing.

18
Online Shopping and Consumer Phobia

• Fraudulent card transactions
• Although online transactions only account for
  around 11 of all credit card transactions, they
  account for 23 of all fraudulent card
  transactions.
• Fears of bank card fraud and identity theft
  prevent more than half of consumers from shopping
  online if it requires providing a bank card
  number over a web site
• Unisys Corp.s Trusted Enterprise Index survey
• 16 of 1,744 consumers surveyed say they strongly
  agree with the statement Worry about bank card
  fraud and identity theft has prevented me from
  on-line shopping when it requires me to provide a
  bank card number over a web site.

19
Online Shopping and Consumer Phobia

• Phishing and pharming
• Phishing and pharming continue to plague many
  financial institutions and e-commerce websites.
• Phishing
• A form of online identity theft that employs both
  social engineering and technical subterfuge to
  steal consumers' personal identity data and
  financial account credentials.
• Social-engineering schemes use 'spoofed' e-mails
  to lead consumers to counterfeit websites
  designed to trick recipients into divulging
  financial data such as account usernames and
  passwords.
• Technical subterfuge schemes plant crimeware onto
  PCs to steal credentials directly, often using
  key logging systems to intercept consumers online
  account user names and passwords, and to corrupt
  local and remote navigational infrastructures to
  misdirect consumers to counterfeit websites and
  to authentic websites through phisher-controlled
  proxies that can be used to monitor and intercept
  consumers keystrokes.

20
Online Shopping and Consumer Phobia

• The Anti Phishing Working Group (APWG) has
  reported that in January 2007, the number of
  phishing spoof sites reached an all time high of
  29,930 unique phishing URLs reported in January,
  an increase of more than 25 percent from December
  and nearly 5 percent from the previous high in
  June, 2006.
• APWG saw a total of 135 brands being hijacked in
  January with numerous non-traditional websites
  spoofed such as social network portals and
  gambling sites.
• APWG notes that more brokerage company websites
  and many more International banks brands were
  spoofed and hijacked in January. The number of
  crimeware variants reached an all time high in
  January of 345, up from 340 in December, 2006,
  rising 1.5 from that month, which was the
  previous highpoint for keylogging crimeware
  variants detected in a single month.

21
Online Shopping and Consumer Phobia

• There can be little doubt that anxiety induced by
  fear of online shopping technology constitutes a
  real phenomena.
• The statistics and studies show is that people
  still fear online shopping and mistrust the
  technology.
• There is still a common perception amongst
  cardholders that shopping online is a very risky
  activity and a number of Internet users fear
  online shopping!

22
Online Shopping and Consumer Phobia

• Companies should address these concerns to
• Convince some of the e-commerce virgins to take
  the plunge
• Build greater confidence amongst those who are
  occasional cyber-shoppers.
• Numerous studies have suggested that the most
  appropriate and effective way of minimizing
  online risk is through establishing trust.
• Specific antecedents of online trust appear to be
  fundamental to perceived risk
• security of payment, privacy of personal
  information and confidentiality of processing,
  product quality, reliability of fulfillment and
  timeliness and quality of customer service.

23
References

• Andrianie , S. 1999c, Online shopping yet to
  catch on. Sunday Times, 6 June.
• Aylott, R. and Mitchell, V-W. (1998), An
  exploratory study of grocery shopping stressors,
  International Journal of Retail Distribution
  Management, Vol. 26 No. 9, pp. 362-73.
• Bauer, R. (1967) Consumer Behaviour as Risk
  Taking, Risk Taking and Information Handing in
  Consumer Behaviour, pp. 2333. Graduate School of
  Business Administration. Harvard University,
  Boston, MA.
• Baiggori, 2007 Marta Baiggori Online Retailing
  Creating the Right User-Experience
  http//www.marketinfo.sg/articles/SRA/OnlineRetail
  ingCreatingtheRightUserExperience.html
• Bhatnagar, Amit, Sanjog Misra, H. Raghav Rao.
  2000. On risk, convenience, and Internet shopping
  behavior. Comm. ACM 43(11) 98-105.
• Bhatnagar, A. and Ghose, S. (2004), Segmenting
  consumers based on the benefits and risks of
  internet shopping, Journal of Business Research,
  Vol. 57 No. 12.
• Brosnan, M. (1998) Technophobia , The
  Psychological Impact of Information Technology.
  Routledge.
• Yang, B. and Lester, D. (2004). Attitudes Toward
  Buying Online CYBERPSYCHOLOGY BEHAVIOR Volume
  7, Number 1, 2004
• Brooker, 1984. G Brooker, An assessment of an
  expanded measure of perceived risk. Assoc Consum
  Res 11 (1984), pp. 439446.
• Choi, S.Y., Stahl, D.O., Whinston, A.B. (1997).
  Economics of electronic commerce. Indianapolis
  Macmillan.
• Consumer Reports WebWatch, ( 2005) Retrieved from
  http//www.diamondvues.com/2005/11/consumers_fear.
  html
• Cox, D. and Rich, S.U., 1964. Perceived risk and
  consumer decision makingthe case of telephone
  survey. J. Mark. Res. 1 November, pp. 3239.
• Derbaix, 1983. C Derbaix, Perceived risk and risk
  relievers an empirical investigation. J Econ
  Psychol 3 (1983), pp. 1938.
• Dowling, G.R. and Staelin, R. (1994), A model of
  perceived risk and intended risk-handling
  activity, Journal of Consumer Research, Vol. 21
  No. 1, pp. 119-34.
• Durndell, A., Haag, Z. (2002). Computer
  self-efficacy, computer anxiety, attitudes
  towards the Internet and reported experience with
  the Internet, by gender, in an East European
  sample. Computers in Human Behavior, 18, 521-535.
• Furnell, S.M., Karweni, T. (1999). Security
  implications of electronic commerce A survey of
  consumers and business. Internet Research, 9(5),
  372-382.
• Forsythe, S.M. and Shi, B. (2003), Consumer
  patronage and risk perceptions in internet
  shopping, Journal of Business Research, Vol. 56
  No. 1, pp. 867-75.
• Heijden, Hans van der, Tibert Verhagen, Marcel
  Creemers. 2001. Predicting online purchase
  behavior Replications and tests of competing
  models. Proc. 34th Hawaii tiiternat. Conf.
  Si/stem Sci.,Maui, HI.
• Hoffman, D.L., Novak, T.P., Peralta, M. (1999).
  Building consumer trust online. Communications of
  the ACM, 42(4), 80-85.

24
References

• Horton, 1976. RL Horton, The structure of
  decision risk some further progress. J Acad Mark
  Sci 4 (1976), pp. 94706.
• Horton, R.L. (1976), The structure of perceived
  risk, Journal of the Academy of Marketing
  Science, Vol. 4 No. 4, pp. 694-706.
• Jarvenpaa, S. L. Todd, P. A. (1997). Consumer
  reactions to electronic shopping on the World
  Wide Web. International Journal of Electronic
  Commerce, 1(2), 59-88.
• Jacobs, 1997. P Jacobs, Privacy what you need to
  know. InfoWorld 19 44 (1997), pp. 111112.
• Jackson, L. A., Ervin, K. S., Gardner, P. D.,
  Schmitt, N. (2001). Gender and the Internet
  Women communicating and men searching. Sex Roles,
  44, 363-379.
• Jacoby and Kaplan, 1972. J Jacoby and L Kaplan,
  The components of perceived risk. In M
  Venkatesan, Editor, Proceedings of the 3rd Annual
  Convention of the Association for Consumer
  Research, Chicago IL (1972), pp. 382393
• Internet shopping survey reveals e-phobia,
  Retrieved from, http//www.whatdigitalcamera.com/n
  ews/Survey_reveals_ephobia_in_runup_to_Christmas_s
  pending_spree_news_101315.html
• Lammers, H. Bruce Curren, Mary T. Cours,
  Deborah Lammers, Marilyn L. (2003) Social image
  of students who shop and don't shop online.
  Psychological Reports. 92(3), Jun 2003, 823-827.
• Leyden, J. (November 29, 2005).Cybercrime More
  Lucrative than Drugs. UK The Register.
• Leyden, J. (May 5, 2004). UK Police Arrests 12
  Phishing Mule Suspects. UK The Register.
• Loewenstein, G. F., Hsee, C., Weber, E. U.,
  Welch, N. (2001). Risk as feelings. Psychological
  Bulletin, 127, 267286.
• Lim, N. (2003), Consumers perceived risk
  sources versus consequences, Electronic Commerce
  Research Applications, Vol. 2 No. 3, pp.
  216-29.
• Liu, X. Wei, K.K. (2003). An empirical study of
  product differences in consumers' e-commerce
  adoption behaviour. Electronic Commerce Research
  and Applications, 2, 229-239.
• Garner, 1986. SJ Garner, Perceived risk and
  information sources in services purchasing.
  Mid-Atl J Bus 24 (1986), pp. 4958 Summer .
• Gefen, David, Detmar Straub. 2(X)0. The relative
  importance of perceived ease of use in IS
  adoption A study of e-commerce adoption. /.
  Association for Inform. Systems 1(1)
  (http//jais.isworld.org).
• George, J.F. (2002). Influences on the intent to
  make Internet purchases. Internet Research,
  12(2), 165-180.
• Maignan and Lukas, 1997. I Maignan and BA Lukas,
  The nature and social uses of the internet a
  qualitative investigation. J Consum Aff 31 2
  (1997), pp. 346371.
• Mitchell, 1992. V-W Mitchell, Understanding
  consumers' behavior can perceived risk theory
  help?. Manage Decis 30 (1992), pp. 2631.
• Mitchell, V-W. (1999), Consumer perceived risk
  conceptualisations and models, European Journal
  of Marketing, Vol. 33 Nos 1/2, pp. 163-96.

25
References

• ONS (2002b), Internet access household and
  individuals, Office for National Statistics,
  London.
• Peter, J. and Tarpey, L. (1975) A comparative
  analysis of three consumers decision strategies.
  J Consum Res 2 (1975), pp. 2937.
• Ranganathan, C., Ganapathy, S. (2002). Key
  dimensions of business-to-consumer Web sites.
  Information Management, 39(6), 457-465.
• Swaminathan, Lepkowska-White, and Rao (1999)
  reported that consumers in their study seemed
  less concerned about the security of online
  transactions.
• Swaminathan, V., Lepkowska-White, E., Rao, B.P
  (1999). Browsers or buyers in cyberspace? An
  investigation of factors influencing electronic
  exchange. Journal of Computer-Mediated
  Communication, 5(2). Retrieved December 22, 2004,
  from http//www.ascusc.org/jcmc/vol5/issue2/swamin
  athan.htm
• Schiffman and Kanuk, 1994. LG Schiffman and LL
  Kanuk. Consumer behavior, Prentice-Hall,
  Englewood Cliffs (NJ) (1994).
• Sweeney et al., 1999. JC Sweeney, GN Soutar and
  LW Johnson, The role of perceived risk in the
  qualityvalue relationship a study in a retail
  environment. J Retailing 75 1 (1999), pp. 77105.
  Abstract PDF (1929 K)
• Teo, T.S.H. and Yu, Y. (2005), Online buying
  behavior a transaction cost economics
  perspective, Omega (Oxford), Vol. 33 No. 5, pp.
  451-65.
• Tan, S.J. (1999). Strategies for reducing
  consumers' risk aversion in Internet shopping.
  Journal of Consumer Marketing, 16(2), 163-180.
• Tan, F.B., Sutherland, P. (2004). Online
  consumer trust A multi-dimensional model.
  Journal of Electronic Commerce in Organizations,
  2(3), 41-59.
• Taylor, J.W., 1974. The role of risk in consumer
  behavior. J. Mark. 39 April, pp. 5460.
• Turban, E., Lee, J., King, D. Chung, H. (2002)
  Electronic Commerce a Managerial Perspective.
  Prentice Hall, Upper Saddle River, NJ.
• Vastfjall, D., Garling, T. (2002). The
  dimensionality of anticipated affective reactions
  to risky and certain decision outcomes.
  ExperimentalPsychology, 49(3), 228238.
• Vijayasarathy, L.R., Jones, J.M (2000). Print
  and Internet catalog shopping Assessing
  attitudes and intentions. Internet Research,
  10(3), 191-202.
• Weiss, T. (March 23, 2004).Feds Shut Down PayPal,
  AOL Scams. San Francisco, California PC World.
• Wee, K., Neo, L. Ramcachandra, R. (2000)
  Cyberbuying in China, Hong Kong and Singapore.
  tracking the who, where, why and what of buying
  online. International Journal of Retail and
  DistributionManagement, 28, 307317.
• Wilson-Jeanselme, M. (2001), Grocery retailing
  on the internet the leaky bucket theory,
  European Retail Digest, Vol. 30, pp. 9-12.
• Consumers Fear ID Theft for Online Shopping.
  http//www.diamondvues.com/2005/11/consumers_fear.
  html
• www.forrester.com/ER/Press/Release/0,1769,1086,00.
  html