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Determinants of online shopping for household products

1.0 Introduction
Nearly every person who owns a computer has bought something on the internet at least once but
how are peoples lives affected? Is it unsafe or difficult to order the goods you want on a site you
do not know? Or is it more expensive than going to a shop and buy the things you want there?
The inceptions of the Internet are dated back to 1969, when the United States Defense
Department created ARPA net, in last two decades the internet has developed rapidly. By more
developed technologies like high speed connection and more accessibility, numbers of internet
users are still growing and companies also exploit that by promoting their products and services
through its websites. The existence of internet and its spread is to cover most of the world
causing appearance of e-shopping where customers can buy a various types of products or
services and they can reach any information that meet their needs and desires, the most exciting
thing about online shopping is that customers can use it 24 hours in seven days of the week. The
new innovation not just brings a lot of alternative products and services closer to customers, but
it also creates a huge market and a lot of business opportunities.
Online marketplace becomes important to distribution and communication channel where
customers and vendors can interact easily, (Hoffman et. al., 1996). So a lot of companies are
creating websites to increase communication with the customers and introduce their new product
information as extensively as possible around the market place.
Many advantages of online shopping to customers are in existence, these include among others;
save time and cost of searching considering the fact that one does not have to go to the selling
store, so all transactions are done while home or office at ones convenience! Additionally, with
online shopping the customers can easily access the information to compare the price and
product.
However, on other hand there are disadvantages of shopping online like customers can not touch,
smell or feel the product before purchase coupled with the incomplete information about
products and the security issues like hackers, (Maray de Swardt, 2008).

Any business has its strategies to attract customers and keep them in repurchase, In order to
attain success any online business has to study consumers behavior to avoid business failure, for
any online business there are other factors any company has to take into account to be more
active and efficient to get consumers satisfaction, in this study we are going to test the most
important factors that influence customers online purchasing decision which include product
price and quality, product classification, security, website quality and service quality.
1.1 Background of study
Today clothing, technology, beauty products, furniture even groceries can be purchased via the internet.
The idea of not having to wait in long lines or in traffic, shift through racks of clothing looking for the
item you need or being able to shop at any time - preferably in your convenience has caused more people
to turn online for all their shopping needs. Online furniture stores are also increasing in popularity, and
will continue to increase as the internet grows. Many people are choosing to skip the trip and purchase
their sofas and other home furnishing from the comfort of their home.
Like Chapters, Barnes & Noble is trying to adapt to stiff online competition from Amazon.com and
others. The company's biggest move recently was to introduce NOOK, an Android-based e-bookstore,
and it plans to invest heavily in online retail going forward. In the short-term, Barnes & Noble's brickand-mortar operations will probably remain reasonably solid because of their broad book selections and
high-quality amenities like Starbucks cafes, comfortable reading areas, and literary events. However, only
time will tell if the company can survive mainly on book superstores in the long-term as online
competition intensifies.
Online shopping is the process of buying goods and services on the internet. With the advent on the World
Wide Web, merchants have sought to sell their products to people who spend time online. Customers can
visit web stores from the comfort of their homes and shop as they sit at the computer (Web finance,
2014). Consumers can purchase a variety of items from online stores, and almost everything can be
bought from companies that provide their products online. Books, clothing, electronics, toys, hardware,
software, and health insurance are some of the hundreds of products that consumers can buy in a store
online. Online shopping has grown in popularity over the years, mainly because people find it convenient
and easy to bargain shop from the comfort of their home or office. One of the most enticing factor about
online shopping, particularly during a holiday season, is it alleviates the need to wait in long lines or
search from store to store for a particular item.

Many people choose to buy online because of the convenience. For example, when a person shopping in a
brick and mortar, it should go to the store, find a parking spot and walk around the store until you locate
the products you need. After finding the items you want to buy, you can often require long lines at the
cash register (Harris, 2014). In contrast, online shopping helps consumers avoid these drawbacks. A
person simply need to go online, visit the shop and choose the items you want. The items are made in a
virtual shopping cart until you are ready to make your purchase.

1.2 Online shopping over the world


Online shopping created a revolution in commerce today. In online shopping, Electronic Data
Interchange (EDI) is the medium to facilitate the deals between the seller and the buyer.
According to UCLA Center for Communication Policy (2001), online shopping was the third
most popular online activity, which e-mail the first activity and the second was web browsing.
In 1979 M. Aldrick designed a system called Videotext that was developed to help in exchanging
information between companies in UK. This system became more active in 1982 where Mintiel
got advantage of using Videotext to do online purchases and check market share. In 1990 the first
WWW server and browser created by Tim Berners-Lee, in 1991 that system opened to
commercial use. In 1994 other advantages of using internet such as online banking and Pizza hut
start selling online. In 1995 Amazon started selling everything online on a daily basis.
The volume of online shopping grew to reach $348.6 billion in 2009 around the world. It is
expected to arrive at $778.6 billion, expanding by about 125%, in 2014 and to reach $1 trillion
by 2020 (Datamonitor, 2010; 2011). But in 2012 According to eMarketer (2012), the growing of
online business sales reached $1 trillion for the first time the top country in online shopping was
USA where the sales reached 384.8 billion dollar and the second country was china by 181.63
billion dollar. (eMarketer, 2012).
According to Nielsen Company Survey (2007), 55% users bought an airline ticket, 41% make a
hotel reservation 22% bought computer hardware and software, 21% for books, 18% for event
ticket and 24% bought for others, (Nielsen Company, 2007).

Among Internet users, the highest percentage shopping online is in South Korea, where 99
percent of those with Internet access have used it to shop, followed by the UK (97%), Germany
(97%), Japan (97%) with the U.S. eighth, at 94 percent. In Malaysia, seven in 10 consumers
claimed to have made a purchase over the Internet before.
1.2.2 Online shopping in Malaysia
The year 1995 was considered the beginning of the Internet age in Malaysia. The number of
Internet users in Malaysia has been growing since. Malaysia is among the top 10 in Asia in terms
of internet usage, (Paynter and Lim, 2001). According to Statistic report by the Internet World
Stats (2009) internet penetration in Asia itself indicate 545.9 % growth based on usage of internet
from year 2000 to year 2009. Malaysia internet usages are also showing growth and increment of
internet user. Based on the favorable potential and environment, there are many retailers and
business companies using internet as their alternative distribution channel and try to gain profit
and benefit to make them more competitive in the global competition.
Online shopping in Malaysia can be considered as a new pattern of shopping since it has just
began to invade the consumer and retailers in Malaysia. Malaysia can be considered a late starter
compared to eight other countries in Asia Pacific that had shown a tremendous online shopping
market and create huge revenue to the online retailers. According to the latest Nielsen Global
Online Survey Internet Shopping Habits Globally(2007), more than half of the Internet users
have made at least one purchase online in the past month and in Malaysia, close to two-fifth
(39%) have done so.
Based on Mee et al (2009) who had conducted an investigation about the items and services
popularity with Malaysian through the web, as shown in Table

1.3 Problem statement


The need to expand ones business breeds new business strategies among which is how to market
the products and further bringing the services closer to the clients. On line transactions have
proved to be a solution to these business issues however some people are still reluctant on
engaging into some of these transactions. So what are the factors that influence peoples
decisions to go online? Many of companies widely exploit the internet as a means to contact the
consumers, stakeholders and suppliers but online businesses have to understand consumers
behavior to understand what customers expect when they purchase online and what factors
encourage them to opt for online shopping and keeping them returning.
The Internet as a global medium is speedily gaining interest and popularity as the most
revolutionary tool for marketing. It has also redefined the global nature of shopping and
communications, as it is the perfect vehicle for online shopping. The dramatic influence of online

shopping on consumers and businesses is slowly being accepted in Malaysia as an alternative


shopping mode rather than visiting brick and mortar stores. Convincing consumer to shop online
is still a challenging task for the web retailer. In recent years, the business and retail market has
been more competitive and challenging.
Even Malaysia has shown a rapid growth in terms of internet usage but yet still another 30% did
not commit with the online purchasing. There are few factors that influenced them not to use the
online shopping service. With the rapid growth of e-commerce and online consumer shopping
trends, the retailers and marketers are facing a challenge to study the factors that might be
hindering consumer to shop online.
1.4 Research questions
1- Are there any significant relationship between product review and product classification with
online purchase decision for household products?
2- Are there any significant relationship between services quality and online purchase decision
for household products?
3- Are there any significant relationship between website quality and security with online
purchase decision for household products?
4- What re the factors affect consumers in online shopping for household products?
1.5 Research objectives
1- To identify the relationship between product review and product classification with online
purchase decision for household products.
2- To identify the relationship between services quality and online purchase decision for
household products.
3- To identify the relationship between website quality and security with online purchase
decision for household products.
4- To identify the factors affecting online shopping for household products.

1.6 Significance of Study


Today many businesses are going not just to promote themselves through internet but also to
make bargains through the internet, the result of this study will help the online retailer to more
understand the customers expectation from online shopping and meet their need.
New online investors may obtain value from this research to understand the factors which impact
their business and growth in a successful way.
It also may assist the website's designers to understand the factors that make the website more
attractive to consumers and meet their expectations and needs.
For the consumers who are confuse when they doing their online shopping, this research my help
them to become more comfortable and which product or service to choose among alternative and
protect their bargains.
Finally Just as I benefited from previous studies, this research may help others in academic study
and give them more information about factors affect online shopping.
1.7 scope of study
The aim of this study is to identify factors affecting the customers purchases online for
household products. The studys main targets are house hold products in Malaysia, specifically in
Selangor.
The dramatic influence of on-line searching on customers and businesses is slowly being
accepted in Malaysia as an alternative searching mode instead of visiting stores. However,
convincing the customers to buy on-line remains a difficult task for internet retailers in Malaysia
the expansion of net technology in Malaysia has monumental potential because it reduces the
prices of product and repair delivery and extends geographical boundaries in conveyance
consumers and sellers along. This study is conducted to spot factors influencing customers
towards on-line searching in Malaysia. A virtual shopping mall offering thousands of products
from home electronics to childrens toys is rapidly becoming a favorite destination for online
shoppers all around the country, recording over 50,000 daily visits since it went live three
months ago.

Both primary and secondary data are used in this study; the secondary data are used to
substantiate the constructs of this research and the primary data are used to test the hypotheses of
this research.

1.8 Organization of study


This study is organized into five chapters where chapter 1 includes introduction, research
background, research questions and research objectives, significance of study, research scope and
organization of study. While in chapter 2 provides the review of relevant literatures and previous
study in order to develop the conceptual of the research framework.
In chapter 3 is the outline the research methodology. Which include the research framework and
hypothesis to predict the relationships between dependent variable and independents variables,
also in this chapter sampling plan, data collection method, research design and described of
technique of analysis. In chapter 4 the results and analysis of the findings while the conclusion,
discussion, limitations and recommendations are in chapter 5.