AN EXPLORATORY STUDY ON PERCEIVED RISK, BENEFITS, AND

ONLINE BUYING BEHAVIOR FROM A CROSS-CULTURAL PERSPECTIVE

by

Deloris W. Easley

DONALD JESS, DBA, Committee Chair

ERVIN CARABALLO, DIBA, Committee Member

KENNETH GRANBERRY, DIBA, Committee Member

Rhonda Capron, EdD, Dean, School of Business and Technology

A Dissertation Presented in Partial Fulfillment

of the Requirements for the Degree

Doctor of Business Administration

Capella University

December 2016




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© Deloris Easley, 2016
 Abstract

Online sales in the United States reached $335 billion in 2015 and analysts expect it to

reach $523 billion by 2020. The Internet is an online shopping medium that provides

many benefits for both companies and consumers. The purpose of this exploratory,

quantitative study was to examine attitudes toward perceived benefits and risks of online

shopping between American and British consumers as well as American and Indian

consumers and analyze the effect of attitudes on consumer purchase decisions during

online shopping. This study investigated the millennial generation, born from the late

1970s to the mid-1990s because millennials are known as “digital natives” with $200

billion in annual buying power. The millennial generational cohort represents the largest

share of Internet users between the ages of 16 and 64 and 80% of them own a

smartphone. The sample size consisted of 210 respondents who used the Internet to make

an online purchase from their mobile device. Mobile devices are expected to be a key

driver in the future growth of online sales, but Millennials think it is an invasion of

privacy when brands target consumers on their mobile phones. Previous research used the

six-part questionnaire in this study to identify consumer familiarity with the Internet,

perceived risks and benefits of online shopping and attitudes, purchase intentions and

respondent demographics. This study asked respondents to rate constructs such as

financial risks and online shopping benefits on a 5-point Likert scale from 1 for strongly

disagree to 5 for strongly agree. A 5-point semantic differential scale measured attitudes

towards making online purchases and online buying intention. Respondents expressed

their attitude toward making online purchases and online buying intention on a scale from

bad-good, unpleasant-pleasant, unfavorable-favorable or by completing an open-ended

sentence, which described feelings towards buying products on the Internet. Three bipolar

pairs measured attitude with descriptive words such as unlikely-likely, improbable-

probable and impossible-possible. The findings of this study supported previous studies

that consumers considered online shopping riskier than shopping at traditional brick-and-

mortar stores. The U.S. millennial generational cohort recognized the benefits of e-

commerce, but they shared similar concerns about time/convenience and

financial/privacy risks as UK online consumers and the same channel risk concerns as

Indian shoppers, which impedes online shopping.

 Dedication

This dissertation is dedicated to my late mother, Valerie White, who taught me the

meaning of perseverance and hard work. I miss her dearly and wish that she were still

here to share in the joy and celebration of this huge achievement. It is also dedicated to

my husband, Brian, who encouraged me to go for it when I didn’t think I had anything

else to give to accomplish it. To my children, Lamia and Jadyn, I thank you for being

patient with me along this journey. It was because of your beautiful, smiling faces and

encouraging words that I was able to complete my goal and prove that you can do

anything you want to do if you just put your mind to it. I love you all!

iv
 Acknowledgments

First and foremost, I praise God for always giving me the strength to accomplish my

goals in life. It is because of Him that I was able to persevere through the trials and

tribulations to complete my doctoral journey. A special thanks to my family and

friends who supported me through your prayers and words of encouragement. I also

wish to express my sincere gratitude to my mentor and committee chair, Dr. Donald

Jess, who supported me along the way and kept me on track when I felt discouraged. It

was because of his wisdom and guidance that I was able to move forward and

accomplish my goal. I would also like to thank my committee members, Dr. Ervin

Caraballo and Dr. Kenneth Granberry for their insight and direction. Also, I would like

to thank Dr. James Morgan. Dr. Morgan was my first professor in the program. His

candid feedback made me realize that I had the skills to complete my degree if I put in

the hard work and dedication. Last but not least, I thank all of the faculty and support

teams that made sure we were productive and on track at the residencies. You made it

fun and seamless, and I appreciate your time and commitment.

v
 Table of Contents

Acknowledgments ........................................................................................................... v

List of Tables .................................................................................................................. ix

List of Figures ................................................................................................................. x

CHAPTER 1. INTRODUCTION ....................................................................................... 1

Introduction ..................................................................................................................... 1

Background ..................................................................................................................... 3

Business Problem ............................................................................................................ 4

Research Purpose ............................................................................................................ 6

Research Questions ......................................................................................................... 8

Rationale.......................................................................................................................... 9

Theoretical Framework ................................................................................................. 10

Significance ................................................................................................................... 13

Definition of Terms ....................................................................................................... 14

Assumptions and Limitations ........................................................................................ 15

Organization for Remainder of Study ........................................................................... 17

CHAPTER 2. LITERATURE REVIEW .......................................................................... 18

Introduction .................................................................................................................. 18

E-Commerce and the Internet....................................................................................... 20

Theory of Reasoned Action .......................................................................................... 23

The Shopping Journey and Channel Preferences ......................................................... 27

Millennials and E-Commerce ....................................................................................... 30

vi
 Perceived Benefits ........................................................................................................ 31

Perceived Risks ............................................................................................................ 32

Financial Risk ............................................................................................................... 36

Mitigating Risks in E-Commerce Transactions ........................................................... 50

CHAPTER 3. METHODOLOGY .................................................................................... 54

Introduction ................................................................................................................... 54

Design and Methodology .............................................................................................. 56

Population...................................................................................................................... 58

Sample and Sample Size ............................................................................................... 58

Data Collection .............................................................................................................. 59

Instrumentation.............................................................................................................. 61

Research Questions and Hypotheses ............................................................................. 62

Data Analysis ................................................................................................................ 63

Validity and Reliability ................................................................................................. 64

Ethical Considerations................................................................................................... 65

CHAPTER 4. RESULTS .................................................................................................. 67

Introduction ................................................................................................................... 67

Data Collection Results ................................................................................................. 67

Descriptive Analysis ..................................................................................................... 68

Analysis of Hypotheses ................................................................................................. 82

Summary ....................................................................................................................... 86

CHAPTER 5. CONCLUSIONS ....................................................................................... 87

vii
 Introduction ................................................................................................................... 87

Summary of Results ...................................................................................................... 87

Evaluation of Research Questions................................................................................. 89

Fulfillment of Research Purpose ................................................................................... 93

Contribution to Business Problem ................................................................................ 94

Recommendations for Future Research ........................................................................ 94

Conclusions ................................................................................................................... 96

References ..................................................................................................................... 98

APPENDIX A. STATEMENT OF ORIGINAL WORK ............................................... 115

Statement of Original Work and Signature ................................................................. 116

APPENDIX B. AN EXPLORATORY STUDY ON PERCEIVED RISK, BENEFITS,

AND ONLINE BUYING BEHAVIOR FROM A CROSS-CULTURAL
PERSPECTIVE .......................................................................................................... 117

viii
 List of Tables

Table 1. Frequency Counts for Selected Variables (N = 210) 72

Table 2. Ratings Pertaining to the Shopping Experience Sorted by 74

Highest Mean (N =210)

Table 3. Frequency Counts for Reasons the Internet is Used Sorted by 75

Highest Frequency (N = 210)

Table 4. Ratings of Perception of Risk Items Sorted by Highest Mean 76

(N = 210)

Table 5. Ratings of Perception of Benefit Items Sorted by Highest Mean 77

(N = 210)

Table 6. Psychometric Characteristics for Perceived Benefits UK Sample 78

(N = 210)

Table 7. Psychometric Characteristics for Perceived Benefits Indian Sample 79

(N = 210)

Table 8. Psychometric Characteristics for Perceived Risks UK Sample 80

(N = 210)

Table 9. Psychometric Characteristics for Perceived Risks Indian Sample 81

(N = 210)

Table 10. Perceived Benefit Comparison Between the American Sample 82

and the British Sample. One-Sample t-Tests

Table 11. Perceived Benefit Comparison Between the American Sample 83

and the Indian Sample. One-Sample t-Tests

Table 12. Perceived Risk Comparison Between the American Sample 84

and the British Sample. One-Sample t-Tests

Table 13. Perceived Risk Comparison Between the American Sample 85

and the Indian Sample. One-Sample t-Tests

ix
 List of Figures

Figure 1. Theoretical Framework 13

x
 CHAPTER 1. INTRODUCTION

Introduction

Online sales in the United States (US) reached $335 billion in 2015, and estimates expect

it to reach $523 billion by 2020 (Lindner, 2016). Online retailing is growing faster than any

other retail sector in the United States (Morrison, 2014). The growth of electronic commerce (e-

commerce) is the result of consumers who are more willing to purchase goods online than in the

past (Bell, Choi & Lodish, 2012). In conjunction with the rise in e-commerce is an increase in

perceived risk (Hsieh & Tsao, 2014). Consumers want merchants to satisfy their buying goals

and when these goals are not met they become apprehensive (Cox & Rich, 1964). Uncertainty

about using the Internet to make purchases originates from beliefs of risks associated with online

shopping (Forsythe & Shi, 2003). Attitudes toward perceived risk affect purchasing behavior

(Park & Jun, 2003). As a result, marketers must understand how perceived risk affects attitudes

about online shopping and how attitudes affect online buying behavior to take advantage of the

potential e-commerce offers. This level of understanding applies in particular for millennials,

who are more diverse than generations that preceded them (U.S. Census Bureau, 2015).

Millennials make up the largest living generation of the nation’s population and surpassed the

number of Baby Boomers living in the US. With $200 billion in annual buying power, the

millennial generation is important to marketers and the economy.

There is a lack of trust in e-commerce, and with all the potential that e-commerce

provides for both companies and consumers, it is in the interest of the company to increase trust

among online users (Kim, Chung, & Lee, 2011; Mandić, 2009). Increasing consumer trust in

online shopping is challenging because it differs from trust consumers have when they shop

1
in-person at traditional stores. There is a presence of uncertainty, anonymity, lack of control, and

potential opportunism when consumers shop online (Jarvenpaa, Tractinsky & Saarinen, 1999).

Thus, a lack of trust in e-commerce affects profits because consumers ultimately make purchases

at brick-and-mortar stores as opposed to making them on the Internet (Alotaibi & Bach, 2013).

E-trust refers to the extent of consumer trust in e-commerce (Pennanen, 2006). Perceived

risks are precursors to e-trust because trust is a factor in risky situations. Pennanen (2006)

identified four trust formation strategies to reduce risks in e-commerce. The four trust formation

strategies consumers used to build trust in e-commerce are pretesting, buying heuristics,

extended decision-making and exploring warranties. Consumers build trust in e-commerce by

testing sites to reduce perceived risks in e-commerce service (Pennanen, 2006). Pretesting

allows consumers to use or purchase products before purchasing them and provides an

opportunity to test a merchant’s site before making purchases.

Consumers use buying heuristics to make decisions about purchases. For example,

consumers engage in unhealthy relationships when they feel a brand is trustworthy and has taken

steps to secure e-vendor sites. Extended decision-making (EDM) occurs when consumers use

feedback from friends to evaluate the trustworthiness of e-vendor sites and make informed

decisions about shopping online. Extended maintenance and warranty contracts (EMW) include

extended warranties, extended maintenance contracts, and money-back guarantees. Consumers

considered e-vendors that offer a money-back guarantee more trustworthy but were reluctant to

place their trust in foreign companies that offer money-back guarantees due to fear of not

receiving their money back. Consumers trust domestic service providers because of laws

enacted to protect consumers and policies implemented that allow them to get money back

2
when they return products. According to Pennanen (2006), consumer characteristics such as

personal values, demographics, and e-commerce experience affects how consumers build trust in

e-commerce.

Experienced online consumers identified privacy as a major concern for purchasing

behavior. Privacy in e-commerce relates to a company’s ability to protect personal information

(Mandić, 2009). The possibility of security threats such as identity theft and credit card theft

increase when consumers purchase goods online and privacy violations such as the lack of

protection for consumer information increases the risk of identity and credit card theft. With all

the potential e-commerce has, companies benefit when they increase trust, privacy, and security

for online consumers (Mandić, 2009). Previous research found consumers perceive online

shopping riskier than shopping at a brick-and-mortar store and perceived risk affects purchasing

behavior, which ultimately affects profits (Lee & Tan, 2003; Jiuan Tan, 1999).

Background

The Internet presents opportunities and challenges for companies and consumers. For

companies, it allows companies to realize benefits such as cost reductions and competitive

advantages (Izquierdo-Yusta & Schultz, 2011). For consumers, motivations to shop online result

in benefits of convenience and access to information. Despite the benefits of online shopping,

perceived risk influences consumer attitudes about shopping online and creates a barrier to using

the Internet as an online shopping medium (Izquierdo-Yusta & Schultz, 2011; Vijayasarathy &

Jones, 2000). Additionally, personal and financial information security concerns affect online

purchase rates and sales (Miyazaki & Fernandez, 2001).

Affecting consumer trust is the lack of face-to-face interaction with salespeople, concerns

3
about online payment security and the inappropriate use of personal information (Alotaibi &

Bach, 2013; Boritz & No, 2011; Cunningham, Gerlach, Harper, & Young, 2005). Online

consumers share personal information and make purchases when they trust websites (McKnight,

Choudhury, & Kacmar, 2002). Building consumer trust and addressing perceived risk

encourages consumers to engage in online shopping. Understanding why millennials participate

in online shopping is essential because they differ from all other generations before them. The

proposed study will examine if U.S. online consumers between the ages of 18-34 years old

consider using the Internet to make purchases riskier than in-store shopping. A comparison will

determine if there are differences in perceived benefits and risks towards online shopping

between American and British consumers as well as American and Indian consumers and the

effect of attitudes on consumer purchase decisions toward online shopping.

Business Problem

The growth of e-commerce means consumers recognize the value of online shopping

environments. However, consumers are reluctant to use the Internet for shopping because of

perceived risks in online transactions (Dash, 2014; Wani & Malik, 2013). Consumer beliefs

such as perceived risks and benefits are possible antecedents of consumer attitudes towards

online shopping, which determines online purchase intentions for products (Wani & Malik,

2013). Perceived risks include financial, product performance, psychological, physical and

time/convenience loss risks (Wani & Malik, 2013). The anticipation of perceived risks affects

online buying behavior (Soopramanien, Fildes, & Robertson, 2007). There is a reduction in

perceived risk when consumers feel comfortable about buying a familiar brand or when there is

enough information available to make an informed decision about their purchase (Nepomuceno,

4
Laroche, & Richard, 2014).

Functional motives such as convenience, a greater selection of merchandise, unique

product offerings and lower prices satisfy consumer-shopping goals (Bhatnagar & Ghose, 2004a,

2004b; Eastlick & Feinberg, 1999; Korgaonkar & Wolin, 2002; Januz, 1983; Rowley, 2000).

Non-functional or hedonic motives help consumers meet their goal for pleasure and enjoyment

(Babin, Darden, & Griffin, 1994; Forsythe, Liu, Shannon, & Gardner, 2006). Functional and

non-functional benefits and perceived risk influence attitudes towards online shopping and

online buying behavior (Childers, Carr, Peck, & Carson, 2001; Forsythe et al., 2006).

Consumers perceive higher risks in online shopping than traditional in-store shopping

(Lee & Tan, 2003; Jiuan Tan, 1999). The Theory of Reasoned Action (TRA) theorizes consumer

behavior consists of behavioral intention, a function of ‘attitude toward behaviors’ and subjective

norms, the consumer’s perception of others’ opinions about whether they should perform certain

behavior (Ajzen & Fishbein, 1980; Chang, 1998). According to TRA, behavioral intention is a

precursor to behavior and consists of attitudes and social pressures (Fishbein & Ajzen, 1975).

The theory of reasoned action predicts behavior intention based on consumer attitudes and social

beliefs, which are controllable by individuals. In this study, the researcher will use the theory of

reasoned action to examine the influence of consumer attitudes, subjective norms and purchase

intentions towards online shopping from beliefs about risks and benefits. This study focuses on

millennials because they do not respond to traditional methods of advertising, which means

companies must focus their marketing strategy on creating ads that are more successful at

capturing the attention of millennial consumers (Schawbel, 2015).

5
 Privacy and security risks are beliefs that a consumer’s credit card and personal

information are vulnerable to thieves when shopping on the Internet (Wani & Malik, 2013).

Privacy and security risk concerns augment perceived risk. Information privacy concerns plague

the e-commerce industry, especially in retail establishments where privacy and security

concerns are the main impediment to online shopping (Udo, 2001). For example, online thieves

hacked Target’s security and payment system in 2013 (Riley, Elgin, Lawrence, & Matlack,

2014). The malware installed in the system stole credit card information from consumers during

the holiday shopping season. One hundred million consumers had either their personal data or

credit card information stolen, and more than 12 million consumers had both their personal

information and credit card information taken (Abrams, 2014). In August 2014, Target

announced the costs related to the breach reached $148 million in the second quarter despite its

claim that online purchases were safe. The data breach at Target caused a change in consumer

spending, which affected profits.

Consumers are apprehensive about buying products on the Internet because of perceived

risks associated with online shopping (Bhatnagar, Misra, & Rao, 2000). Perceived risk is a

barrier to increased Internet sales (Cunningham et al., 2005). If perceived risk is an obstacle to

Internet sales, online merchants need to develop mitigating strategies to reduce consumer

perceptions of risks when making online purchases and increase profits from online sales.

Research Purpose

The purpose of this exploratory, quantitative study is to examine differences in perceived

benefits and risks towards online shopping between American and British consumers as well as

American and Indian consumers. If beliefs and attitudes affect online purchase intentions, then

6
marketers can influence the buying behavior of consumers by developing creative marketing

strategies and implementing innovative solutions to affect the flow from shopping to purchasing.

McGregor (2000) found cultural values influenced consumption. Park and Jun (2003) examined

Internet usage, Internet innovativeness, perceived risks of Internet buying and Internet buying

behaviors between Korean and American consumers and found culture influenced Internet usage

and perceived risks of Internet buying behavior. According to Park and Jun (2003), e-commerce

requires marketing strategies that consider cultural differences rather than online buying

intentions or buying experience.

The information presented in the proposed study can help global marketers and

businesses understand how to encourage online shopping across countries and improve

marketing efforts to capture additional Internet sales from the millennial generation. Marketers

are interested in the behavior of online consumers because an increased number of consumers

purchase goods and services, obtain product information, and browse online (Hsieh & Liao,

2011). In fact, millennials are known as “digital natives” because they are the first generation to

grow up attached to their smartphones, tablets, and laptops (Newman, 2015). This attachment

creates an opportunity for marketers who are interested in growing their online business.

Perceived risks cause consumers to become apprehensive about buying on the Internet

(Bhatnagar et al., 2000; Fram & Grandy, 1997). Perceived benefits such as shopping

convenience, product selection, ease/comfort of shopping, and enjoyment (Forsythe et al., 2006)

encourage consumers to engage in online shopping. According to comScore (2014) research,

198 million U.S. consumers bought products online in 2014. Socio-psychological theories

created by Fishbein (1963) and Fishbein and Ajzen (1975) have been used to examine online

7
consumer behavior and innovation adoption. According to Eroglu (2014), online consumers are

rational individuals that adopt innovations when benefits outweigh costs.

The Internet created opportunities and introduced problems for marketers and consumers

because online shoppers were cautious about using the Internet to make online purchases due to

fears about unauthorized intrusion and misuse of data collected about them. Despite e-commerce

growth and the benefits associated with it, most consumers prefer to shop at brick-and-mortar

stores due to a lack of control over personal data and access by unauthorized users, which plague

e-commerce growth and continue to impact decisions on using the Internet to make purchases.

Essentially, when marketers fail to secure and protect personal consumer information it reduces

trust in e-commerce.

Research Questions

Marketers have to understand consumer behavior and attitudes that influence behavior to

determine how perceived risks and consumer attitudes affect online buying intentions. The

following attitudes and behaviors impact online shopping and buying behavior (a) perceived

risks, (b) perceived benefits, (c) trust, (d) adoption of a new product or innovation, (e) behavioral

intention, (f) subjective norm, and (g) motivation.

This study will investigate the following research questions:

1. Are there significant differences in perceived benefits towards online shopping

between American and British consumers?

2. Are there significant differences in perceived benefits towards online shopping

between American and Indian consumers?

3. Are there significant differences in perceived risks towards online shopping

8
 between American and British consumers?

4. Are there significant differences in perceived risks towards online shopping

between American and Indian consumers?

Rationale

E-commerce is currently driving all retail growth in the United States. It affects prices,

product availability, transportation patterns, and the way consumers purchase what they need

(Christopher, 2011). Consumers identified convenience as the primary reason for shopping

online, and it is critical that companies augment this feeling of convenience by protecting

consumer information to build trust and loyalty.

Financial risks such as privacy and security concerns affect online sales. For example,

online retailers lose consumers and report lower sales when they fail to take steps to protect

consumer information. To make use of the potential e-commerce offers, online merchants must

understand how perceived risk affects consumer attitudes about online shopping and how

attitudes affect online buying behavior. Previous studies investigated the influence of perceived

risks and benefits of consumer purchasing decisions during online shopping for individuals and

how trust and security concerns impede online shopping (Bhatnagar et al., 2000; Jarvenpaa &

Todd, 1996; Vijayasarathy & Jones, 2000). Few studies (Park & Jun, 2003; Wani & Malik,

2013) recognized and examined differences in perceived benefits and risks and Internet

interaction across countries. The lack of such research means a gap exists in the body of

knowledge that supports the literature on this topic. Companies must understand buyer behavior

to know what affects it and to exploit the benefits of e-commerce. If companies understand

consumer buying behavior and the factors that influence this behavior, they can adjust strategies

9
for better online performance.

This study focuses specifically on the influence of perceived risks and benefits of

consumer purchasing decisions toward online shopping in the United States, specifically for

millennials between the ages of 18 - 34. Online retail sales in the United States reached $335

billion in 2015 and is on track to reach $523 billion by 2020 (Lindner, 2016). Analysts predicted

retail e-commerce sales of $99 billion in the United Kingdom and $7 billion in India in 2015

(“India,” n.d.; ‘UK,' 2015). The differences between e-commerce figures between the United

States, United Kingdom, and India justify an analysis of perceived benefits and risks and

attitudes toward shopping online between countries. The results could provide evidence

supporting the need to understand perceived risks and consumers’ intention to continue to shop

online and solidify marketing efforts.

Theoretical Framework

The theoretical framework for this study is the socio-psychological theory of behavior.

The theory of reasoned action states a person’s attitude towards objects or innovations derive

from beliefs and consumers are rational and consider implications of their actions before

performing certain behavior (Ajzen & Fishbein, 1980). Several authors observed the adverse

effect perceived risk had on online shopping behavior (Park, Lee, & Ahn, 2004), e-commerce

adoption (Salisbury, Pearson, Pearson, & Miller, 2001; Pavlou, 2003) and attitudes toward usage

behavior (Fenech & O’Cass, 2001; van der Heijden Verhagen, & Creemers, 2003; Shih, 2004).

Previous studies found consumers refused to engage in online shopping because of concerns

about credit card fraud (Liebermann & Stashevsky, 2002; Maignan & Lukas, 1997) and privacy

and security risks (Miyazaki & Fernandez, 2001; Udo, 2001). Miyazaki and Fernandez (2001)

10
found consumers with higher levels of Internet experience had lower risk perceptions for online

shopping. These studies suggested consumers with higher levels of perceived risk refrained from

making purchases on the Internet and higher levels of Internet experience lowered levels of

perceived risk (Miyazaki & Fernandez, 2001).

Previous researchers (Lee & Tan, 2003; Jiuan Tan, 1999) found consumers perceived

online shopping riskier than in-store shopping and that higher levels of perceived risk influenced

purchase intention. Thus, consumers with lower levels of perceived risk toward online shopping

make online purchases. According to Miyazaki and Fernandez (2001), privacy and security-

related concerns affected online buying behavior. Liebermann and Stashevsky (2002) confirmed

this point upon discovering consumers worried that their personal information was subject to

unauthorized access on the Internet. Furthermore, there is a lack of trust in e-commerce due to

perceived risks, which affects the growth of e-commerce transactions (Mandic, 2009). Thus,

trust influences consumer attitudes toward online buying and lowers perceived risk in online

shopping (Harridge-March, 2006; Tingchi Liu, Brock, Cheng Shi, Chu, & Tseng, 2013).

Convenience, product selection, ease/comfort of shopping, and enjoyment (Forsythe et

al., 2006) are perceived benefits consumers seek when they shop online. Benefits are desirable

consequences that consumers expect to receive from their actions. Chamie and Ikeda (2015),

discovered consumers engage in risky behavior when benefits outweigh the cost of their

behavior. Bauer (1960) concluded consumer behavior involves risks that produce consequences

because of uncertainty. According to Wani and Malik (2013), perceived risks and benefits

associated with online shopping may affect consumer attitudes towards online shopping, which

determines online purchase intentions for products. Therefore, understanding consumer risk

11
perceptions related to Internet user experience and purchase behaviors requires attention to

encourage consumers to make online purchases over the Internet.

Telephone and mail order shopping involve risks that are comparable to online shopping

although phone and mail order consumers had lower levels of perceived risks. Several studies

suggested risk perceptions toward remote shopping methods affected shopping behavior (Cox &

Rich, 1964, Jasper & Lan, 1992; Spence, Engel, & Blackwell, 1970). Miyazaki and Fernandez

(2001) hypothesized telephone and mail order consumers had fewer concerns and less perceived

risk than consumers who do not shop by phone or mail. Miyazaki and Fernandez (2001) also

concluded that consumers who perceive fewer risks in online shopping make more online

purchases than consumers who believe online shopping is riskier than in-store shopping.

Consumers with Internet and non-traditional shopping experience had lower levels of perceived

risk toward online shopping and had fewer concerns regarding security but higher concerns

regarding e-commerce privacy.

Perceived risk is a major concern for consumers who contemplate shopping online.

According to literature, consumer beliefs about online shopping are possible antecedents to

attitudes toward purchasing products online, which determines online purchase intentions for

products. E-commerce growth varies across countries and companies with global operations

need to understand consumer beliefs and attitudes toward online shopping to increase e-

commerce sales. This study will test the null hypotheses to determine if there are significant

differences in perceived risks, benefits towards online shopping between consumers in different

countries (Wani & Malik, 2013). The information presented in this study can be applied to

influence more users to use the Internet as a viable global shopping medium.

12
 Figure 1 presents the theoretical framework that examines the relationship between

beliefs, attitudes, and intentions. According to the theoretical framework displayed in Figure 1,

consumer beliefs (perceived risks and benefits) about online shopping are conceptualized and

influence consumer attitudes towards purchasing products online, which determines online

purchase intentions for products (Wani & Malik, 2013).

Figure 1. Theoretical Framework. From A comparative study of online shopping behaviour:

Effects of perceived risks and benefits, by Wani and Malik, 2013, International Journal of
Marketing & Business Communication, 2(4), p. 45. Copyright 2013 by Wani and Malik.
Reprinted with permission.

Significance

This study supports the rationale that companies gain repeat sales when they minimize

perceived risks in online shopping sites. Online merchants can build consumer trust and

minimize alienating consumers by focusing on perceived risk. If conducting online business

results in additional challenges for organizations, then more research is required to determine

how organizations that want to engage in online sales should approach consumers, specifically

13
millennial consumers who possess a tremendous amount of buying power. Additionally, if

perceived risk reduces online transactions, then consumers need to decide if they should shop

online to buy products. If the research discovers a relationship between perceived risks and

online purchase intentions, then the results provide data to determine how to reduce perceived

risks to increase online sales.

Definition of Terms

The following definition of terms is provided to ensure uniformity and understanding of these
terms throughout the study.

Brick-and-Mortar Organizations. Corporations that operate businesses offline, selling

products using physical agents (Turban, King, & Lang, 2011).

Brick-and-Mortar Retailers. Retailers who do business in the non-Internet, physical

world in traditional brick-and-mortar stores (Turban et al., 2011.

Business-to-business e-commerce (B2B). Transactions between businesses conduct

electronically over the Internet (Turban et al., 2011).

Business-to-consumer e-commerce (B2C). An e-commerce model where businesses sell

to individual shoppers (Turban et al., 2011).

Cybercriminal. An individual who commits cyber crimes and uses the computer either as

a tool, target or as both.

Cyberspace. Information resources accessible through computer networks (Movahedi-

Lankarani, 2002).

Electronic Commerce (e-commerce). The process of buying, selling or exchanging

products, services, or information via computer.

14
 E-security. The state of protection against criminal or unauthorized use of electronic data,

or the measures taken to achieve protection.

E-tailers. Retailers who sell over the Internet (Turban et al., 2011).

E-trust. When consumers feel confident that a merchant’s site is reliable and has the

integrity to perform online transactions successfully (Angriawan & Thakur, 2008).

Fraud. Any business activity that uses deceitful practices or devices to deprive another

of property or other rights (Turban et al., 2011).

Identity Theft. Fraud that involves stealing an identity of a person and then the use of that

identity by someone pretending to be someone else to steal money or get other benefits (Turban

et al., 2011).

Internet. A virtual place of exchange between buyers and sellers in cyberspace

(Movahedi-Lankarani, 2002).

Marketer. One who promotes or sells products and services (Marketer, n.d.).

Personal information. Information that is or can be, about or related to an identifiable

individual.

Privacy. A company’s policies on the use of user data (Mandić, 2009).

Security. Relates to the ability of a business to protect its consumers online and prevent

online fraud through security measures (Mandić, 2009).

Users. Individuals who have access to the Internet at home (“Internet live stats,” n.d.).

Assumptions and Limitations

Study limitations often focus on internal and external validity (Connelly, 2013). The

sample size of this survey is smaller than the designated significance level of 5% but large

15
enough to make conclusions from the collected data (Cooper & Schindler, 2014). Future

research that includes a larger sample size can examine a wider range of consumers. Also,

variables such as perceived risk and benefits are not representative of other variables that affect

consumer attitudes toward online shopping. For example, demographic, personal, occupation,

and income variables affected online shopping behavior but are omitted from this study. Further

research could examine the relationship of demographic and personal variables on online

shopping behavior. This study also omits an examination of the influence of product categories

and attitudes about online shopping. Korgaonkar, Silverblatt, and Becerra (2004) discovered

product type and type of Internet retailer influenced online shopping preferences for Hispanic

consumers. Future research could examine purchase preferences for Hispanic consumers and

product categories for online shopping.

To increase e-commerce sales, online merchants must understand factors that influence

Internet usage for online shopping. Varma Citrin, Sprott, Silverman and Stem (2000) found

consumers who spend more time online are more likely to adopt the Internet as a shopping

medium and make more purchases than other consumers. Bigné-Alcañiz, Ruiz-Mafé, Aldás-

Manzano and Sanz-Blas (2008) also found consumer innovativeness influences consumers to use

the Internet as a shopping medium. Internet related variables such as having access to the

Internet should be accounted for when examining the probability of online shopping. This study

did not examine the effect of having Internet access on a consumer’s decision to engage in online

shopping. Sánchez-Mangas and Pérez-Hernández (2011) argued that having a home Internet

connection is a variable that requires examination when analyzing online shopping. However,

not accounting for having the Internet at home has a small effect on the probability of buying

16
online. Lastly, the research examines perceived risks and benefits of online shopping for

millennials in the United States. An examination of the effect of cultural dimensions such as

power distance and uncertainty avoidance is omitted in determining how cultural dimensions

affect online shopping behavior.

Organization for Remainder of Study

The study begins with a discussion on the Internet and e-commerce, specifically on how

e-commerce sales increased. Second, a discussion of in-store and online shopping preferences

highlight benefits associated with online shopping and examines the need to build trust to

increase online sales. An examination of the shopping journey and channel preferences reveal

consumers prefer to visit traditional stores to make purchases and teens prefer to shop in brick-

and-mortar stores compared to any other age group. Third, perceived risks and benefits require

understanding to increase online buying behavior. A discussion of perceived benefits and

perceived risks allow merchants to develop strategies to determine what motivates consumers

when they make purchasing decisions and how consumers perceive risk. Financial risks such as

losing money after providing credit card or personal information over the Internet are more

associated with online shopping than in-store shopping (Wani & Malik, 2013). A discussion of

attitudes toward e-commerce privacy and security include an analysis of previous studies that

found privacy and security concerns are barriers to shopping on the Internet (Udo, 2001).

Fourth, consumers value information from user ratings and product reviews. To conclude, a

discussion of feedback mechanisms examines how access to information can mitigate risks in e-

commerce transactions.

17
 CHAPTER 2. LITERATURE REVIEW

Introduction

E-commerce is currently driving all retail growth in the United States. It affects prices,

product availability, transportation patterns, and the way consumers purchase what they need

(Christopher, 2011). Brick-and-mortar stores allowed consumers to interact with sales associates

and enjoy the ambiance of the store environment. The Internet made it possible for consumers to

shop online and eliminated the need to visit traditional brick-and-mortar stores (Wani & Malik,

2013). According to Liu, Burns, and Hou (2013), consumers viewed online shopping as a

relaxing and enjoyable experience, an environment without pressure from sales associates.

Previous studies showed consumers had concerns about shopping on the Internet and

were apprehensive about buying goods due to perceived risks about online shopping (Bhatnagar

et al., 2000). Consumers cited the following reasons for not shopping online (a) unable to touch

or feel products, (b) lack of trust, (c) credit card security, (d) information privacy and (e)

difficulty returning products (Liu et al., 2013). Researchers identified financial performance,

product performance, psychological, physical and time/convenience loss risks associated with

online shopping behavior (Akaah & Korgaonkar, 1988; Brooker 1984; Jacoby & Kaplan, 1972;

Peter & Tarpey, 1975; Garner, 1986; Mitchell, 1992; Schiffman & Kanuk, 1994). Consumers

continue to buy goods on the Internet so online retailers must take steps to reduce perceived risk

when consumers shop online. Specifically, merchants must understand how perceived risk

affects consumer attitudes and online buying behavior to make use of the potential e-commerce

offers.

Pozzi (2013) examined market share expansion and a firm’s decision to operate hybrid

18
stores. Hybrid stores consist of both physical stores referred to as ‘brick-and-mortar’ and online

markets called e-commerce. Hybrid stores possess a significant share of the online market,

which suggests leading chain stores reap benefits from selling online. Electing to sell online

removed location disadvantages and generated sales from customers who preferred to shop

online to reduce transportation costs (Pozzi, 2013). Sales generated from online shopping

presented additional risks that must be taken into consideration. For instance, retailers that

entered online markets jeopardized sales from brick-and-mortar stores when customers shopped

online.

Pozzi’s (2013) study focused on a supermarket chain that added e-commerce sales to its

network of brick-and-mortar stores for revenue expansion. The goal of Pozzi’s (2013) study was

to determine if reducing customer travel costs affected new business and if the number of

competitors affected revenue. The two factors considered in the survey were household behavior

and store sales. The sample size for Pozzi’s (2013) study was nearly 10,000 households that

shopped at least once in a physical store and on the Internet between June 2004 and June 2006.

Pozzi (2013) examined a total of 1,492,166 shopping trips and over 100,000 online orders and

found the Internet generated a majority of the new sales, and the online service captured new

customers who were less likely to shop at the store before its implementation. In Pozzi’s (2013)

study, the Internet increased revenue and income with the rise in the number of competitors. As

expected, sales decreased when rival companies offered some form of Internet service in the

surrounding area. Pozzi (2013) proved online channels diverted business from brick-and-mortar

supermarket retail chains.

The following section reviews relevant e-commerce literature to provide a basis for the

19
research conducted in this study. In this section is a discussion of published research on e-

commerce and the Internet, the theoretical framework, the shopping journey and channel

preferences, perceived benefits, perceived risks, components associated with online shopping

and mitigating risks in e-commerce transactions.

E-Commerce and the Internet

Before e-commerce, companies used slow, non-interactive and non-automated methods

to interact with suppliers, partners, and customers (Steward, Callaghan, & Rea, 1999). The

emergence of e-commerce made it easier to complete economic transactions and increased

market efficiency (Diacon, 2013). New, online shopping environments connected companies,

suppliers, partners, and customers and extended the reach and involvement from businesses to

consumers. Additionally, e-commerce reduced costs by creating demand-driven systems.

Demand-driven networks encouraged close relationships with partners, offering product

production and services according to customer demand (Hadaya & Cassivi, 2007).

Understanding customer demand and implementing ways to address demand improved company

efficiency and increased customer satisfaction (Heikkilä, 2002). Taking additional steps to

understand consumers proved process efficiency and innovation must evolve simultaneously to

fulfill customer demand (Hoover, 2001).

E-commerce changed the relationship between customers and companies. It gave

customers more power by creating larger groups that shared experiences and information on

purchases. Steward et al. (1999) believed technological progress would allow consumers to

customize how they used the Internet. The ability to communicate with others allowed

consumers to reconsider purchases based on feedback from others who made similar purchases.

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Customer feedback is valuable, and companies should use feedback to enhance websites and

achieve advantages from allowing consumers to share their knowledge and experience with

potential consumers.

E-commerce grew exponentially since 1968 and the emergence of electronic data

interchange (Weisman, 2000). The growth of e-commerce growth forced some industries to

restructure to keep up with the opportunities brought on by its evolution. According to the

United States Department of Commerce, online retail sales in the U.S. grew by 16.1% from

$168.1 billion in 2010 to $263.4 billion in 2013 (RadioShack, 2015). E-commerce sales in the

United States reached $305 billion in 2014, an increase of 15.7% from 2013 (“Retail Sales,”

2014). Respectively, e-commerce sales in the United Kingdom reached $82 billion, an increase

of 16.5% and $16 billion in India, an increase of 26%. Analysts predicted online sales in the

United States (US) would reach $523 billion by 2020 (Lindner, 2016). The number of customers

who buy products online is increasing, and companies are selling more products on the Web.

This growth means online merchants are not alone in their struggle to protect consumer

information.

Analysts recognized social-driven retail sales and referral traffic rose faster than all other

online channels (Smith, 2016). Increased revenue from social networks requires companies such

as Google, Facebook, YouTube, and Twitter to implement strategies that protect user

information. Google collects and redistributes data to Web users and maintains a significant

amount of personal data, which raises concerns about its ability to protect personal data. Other

companies need to diversify into e-commerce if they want to survive the growth of e-commerce.

Winter (2012) suggested a collaborative relationship between government, science, engineering,

21
and commerce is needed to address concerns and further advance e-commerce.

The Internet eliminated physical barriers, geographical limitations and provided access to

information, decreasing the amount of time and effort it takes to shop. As a major avenue for e-

commerce activities, the Internet solved the transportation conundrum and provided a convenient

way to shop for customers. From a business perspective, online retailers could leverage prices

and offer a wider range of products to potential clients (Maleki & Pasha, 2012). Internet

technologies reformed customer and business relationships and encouraged companies to create

business models to exploit e-commerce.

Technological advancements and changes in consumer demand transformed the shopping

experience and made it easier for consumers to buy goods and services from the convenience of

their home. However, there are limitations to shopping online such as the inability to examine

products and the store environment before making purchases and failure to take immediate

possession of goods bought online. Such factors made shopping on the Internet riskier than

shopping at a brick-and-mortar store (Lee & Tan, 2003; Schramm, Swoboda, & Morschett, 2007;

Jiuan Tan, 1999). Despite the risks, consumers considered the Internet a convenient and

informative method to investigate and buy products. In fact, the International

Telecommunication Union (2015) estimated the number of Internet users increased from 400

million Internet users in 2000 to 3.2 billion users in 2015.

Disruptive innovation appeared in 1997 in a book called Innovator's Dilemma, written by

Harvard professor Clayton Christensen. A disruptive innovation offers something new for

consumers and outpaces the established competition by disrupting existing markets and creating

new ones (Christensen, 2003). Kim and Mauborgne (2004) found companies grew faster and

22
increased profits when they built relationships with customers and found ways to deliver value.

The Internet was innovative because it provided options for consumers and made it easier and

cheaper to sell products and services. With all the advantages and innovative possibilities,

researchers noted the Internet creates barriers and vulnerabilities, which limits its full potential

(Dash, 2014; Diacon, 2013; McCole, Ramsey & Williams, 2010).

Some individuals refused to engage in online shopping because of perceived risks

(Bhatnagar et al., 2000; Forsythe et al., 2006). Other individuals adopted online shopping

because of the benefits associated with shopping on the Internet (Milne, Labrecque, & Cromer,

2009); Wani & Malik, 2013). A study by McCole et al. (2010) revealed the Internet has yet to

attain its true e-commerce potential due to consumer fears. The Federal Trade Commission

(1998) recognized consumer risk perceptions as the primary obstacle to the future growth of

online commerce, which requires attention to increase consumer confidence. Privacy and

security breaches hindered online retailing because of consumer distrust and legislative mandates

(FTC, 2000; Petty, 2000). As e-commerce and Internet growth continues, marketers have

adequate opportunity to maximize customer orientation and satisfaction for increased electronic

sales. Increased knowledge does not diminish privacy concerns, therefore; marketers should use

information security to promote online retailing. Identifying and managing business risks such

as consumer concerns allow companies to exploit the potential of e-commerce (Maleki & Pasha,

2012).

Theory of Reasoned Action

The relationship between perceived risk and consumer behavior toward online shopping

has been well researched in e-commerce and consumer research (Cox & Rich, 1964; Dash, 2014;

23
Ting, Tseng, & Pan, 2010; Tingchi Liu et al., 2013). The literature on perceived risk and

consumer behavior toward online shopping revealed an analysis of perceived risk from different

perspectives and theoretical approaches. For instance, Bauer (1960) first introduced the theory

of perceived risk that consumers have when making purchases from a subjective viewpoint.

According to Bauer (1960), consumer behavior consisted of unanticipated and unpleasant

consequences. Bauer (1960) believed risk was subjective or perceived and buying behavior

depended on levels of perceived risk.

Since Bauer, researchers examined perceived risk in two constructs (1) uncertainty risks

(Cox, 1967; Taylor, 1974) and (2) risk due to expected loss (Bettman, 1973; Khan, Liang, &

Shahzad, 2015; Roselius, 1971). Perceived risk has been studied in various industries such as

food and beverage (Cho, Bonn, & Kang, 2014; Yeung, Yee, & Morris, 2010), automotive (Yee,

2011), and banking (Lifen Zhao, Hanmer-Lloyd, Ward, & Goode, 2008). The studies above

examined perceived risks to determine their effect on consumer purchasing behavior.

Cox and Rich (1964) determined perceived risk was a behavioral determinant and

consumers with high levels of perceived risk avoided shopping situations. The greatest concern

expressed by consumers was the inability to inspect the merchandise and make comparisons.

When shopping in person, consumers have an opportunity to reduce uncertainties by inspecting

products and asking for assistance. However, uncertainty reduction is limited when consumers

are unable to gather information about products either by touching or by asking questions about

them.

Cox and Rich (1964) proposed uncertainties created perceived risk, which deterred

purchase decisions. The presence of perceived risk and the manner in which consumers deal

24
with perceived risk influence shopping behavior. The amount of perceived risk is dependent on

how much is at stake and whether consumers will “win” or “lose” some or all of what is at stake

(Cox & Rich, 1964). Risk reduction strategies such as brand reputation, the ability to try

products and the presence of warranties reduced consumer risk perceptions when consumers

shopped at brick-and-mortar stores (Boulding & Kirmani, 1993; Innis & Unnava, 1991;

Roselius, 1971). Reference groups, retailer reputation, brand image and warranties reduced

perceived risk when consumers engaged in online shopping (Jiuan Tan, 1999).

McCorkle (1990) examined perceived risk in mail order catalog shopping and found

similar results to Cox and Rich (1964) that consumers had perceived risks towards telephone and

mail order shopping and when perceived risks existed consumers hesitated or refrained from

making purchases. Internet shopping has similar problems to phone and mail order shopping,

which implies consumers who adopt similar shopping methods have fewer concerns about online

shopping (Jiuan Tan, 1999). Miyazaki and Fernandez (2001) found higher levels of Internet

experience lowered risk perceptions for online shopping. Thus, consumers who had little

Internet experience and had concerns about online shopping were less likely to shop online than

those who were less risk averse.

The Internet allowed consumers to shop virtually anywhere and provided benefits such as

time and cost savings and access to a wider range of product choices. Furthermore, consumers

began to purchase items online without communicating or coordinating purchases with

companies or individuals to complete transactions. For example, Dell allowed consumers to

design computers to meet their specific needs without interacting with a sales associate. A shift

from completing transactions in a physical store with sales people to conducting transactions

25
online without human interaction required adjustments in behavior. Consumers believed their

actions involved risks that produced positive and negative consequences (Bauer, 1960).

However, they could not envision the consequences of their decisions, leading many to believe

they could reverse outcomes from purchase decisions.

When online consumers considered monetary and non-monetary benefits and costs

associated with conducting online transactions they were considered rational because they

purposefully engaged in the behavior. According to Eroglu (2014), rational individuals used the

Internet since it provided benefits and those benefits outweighed the negative cost of using the

Internet to buy products. The Theory of Reasoned Action (TRA) derived from Fishbein’s (1963)

multi-attribute attitude theory that states consumer attitudes toward a product or innovation

depends on their beliefs about multiple consequences associated with a particular behavior

(Eroglu, 2014; Ryan & Bonfield, 1975). Beliefs link objects to attributes (Fishbein & Ajzen,

1975). Buying products or services on the Internet is a behavior that consumers willingly engage

in to meet their needs. Behavioral Intention (BI) refers to an individual’s intention to perform a

particular behavior (Fishbein & Ajzen, 1975). BI and subjective norm influence intentions

toward behavior.

Subjective norm is the influence of others’ opinions on an individual’s decision-making

process, and subjective norms are social factors or thoughts that affect behavior. An individual’s

subjective norm determines their intention to perform behaviors. For example, consumers may

reject referrals because they highly regard the opinions of people who are important to them.

According to Gutman (1982), consumers associated desirable and undesirable consequences of

specific actions. Benefits are desirable consequences consumers receive from their actions.

26
Motivations to shop online depend on benefits and losses, and an individual’s behavior intentions

align with their motivations. Chamie and Ikeda (2015) built upon Gutman’s (1982) view of

consumer motivations and recognized that benefits must be greater than sacrifices or the costs of

actions.

Estimates predict the number of global online shoppers would grow 50% by 2018

(Evans, 2015). As more consumers engage in online shopping understanding consumer attitudes

and motivations for online shopping provides opportunities to develop strategies to create

customer value and influence online purchase intentions for products. Influencing online

purchase intentions from this context could improve marketing strategies and impact online

sales.

The Shopping Journey and Channel Preferences

According to Brown, Moriarty, and Mendoza-Pena (2014), retail sales by traditional

storefronts or physical stores outpaced sales conducted through e-commerce. In fact, 90% of all

retail sales occurred in stores and 95% of all retail sales were captured by retailers that had a

brick-and-mortar presence. These numbers clearly indicate that consumers preferred traveling to

their nearest store to complete their shopping needs. For consumers, the ability to touch and feel

products along with the interaction with sales associates who are there when consumers require

assistance creates an appeal, not possible online.

Ironically, two-thirds of consumers who purchased items online also visited physical

stores either before or after they made a purchase. This behavior supported the importance of

physical stores because it showed the major impact these stores had on the decision-making

process consumers employed. Firms should use this information to develop strategies that focus

27
on creating value in physical stores during the decision-making process.

Brown et al.’s (2014) study examined consumer shopping preferences and behaviors for

2,500 U.S. shoppers born during the following years:

 Teens (1995 - 2001)

 Millennials (1980 – 1994)

 Generation X (1965 – 1979)

 Baby boomers (1950 – 1964)

 Seniors (born before 1950)

Following is an analysis of the shopping journey, which is required to determine

differences in channel preference (Brown et al., 2014).

Discovery

Channel preferences varied by age, product category, and stage of the shopping journey.

For example, consumers interested in exploring new products were more apt to visit a physical

store before making a decision to purchase items such as clothing and accessories, health and

beauty products, and furniture.

Trial and test

Consumers preferred to shop at a physical store to test products such as clothing and

accessories, health and beauty, and furniture, which rated the highest for in-store trial and testing.

Purchase

Consumers preferred to buy items such as fine jewelry, electronics, furniture, and

sporting goods in a physical store because they can take these items home upon purchase.

Delivery or pickup

28
 Consumers preferred to pick-up items such as health and beauty products and fine

jewelry products. The immediate availability of these products and the sense of reliability and

trust were leading reasons why consumers preferred to pick up health and beauty goods and fine

jewelry in-store.

Returns

Consumers preferred to return items to a physical store despite purchasing items online,

supporting previous studies that showed consumers preferred to shop at physical stores due to

their ability to exchange products and achieve efficiencies in time, which may result in new

sales.

Teens preferred to shop at physical stores compared to any other age group. Though,

millennials preferred to shop using a combination of online and physical stores referred to as

multiple channels and baby boomers showed a higher preference for shopping at brick-and-

mortar stores. Lastly, seniors preferred to shop in physical stores.

The study conducted by Brown et al. (2014) showed business models with a combination

of online and physical stores maximized sales potential. Having an online presence and

operating a physical store provided companies with opportunities to build customer loyalty and

cross-sell. A study by the Verde Group and Jay H. Baker Retailing Center (2011) found

multichannel shoppers were loyal and spent more money than consumers that shopped online or

at a physical store. For this reason, retailers engaged in both online sales and physical store sales

to maximize sales. The objective of maximizing sales is to meet consumer needs while

delivering the most value. The best way to maximize sales is to offer a variety of shopping

options that include a physical storefront to best service consumers.

29
 When firms provide consumers with a value that is unmatchable by rival companies, they

achieve competitive advantages. Competitive advantages are sustainable if other companies fail

to meet or exceed those advantages (Thompson, Peteraf, Gamble, & Strickland, 2014). Firms

have many opportunities to create value as consumers travel along the shopping journey to

purchase items. Tracking consumer engagement enabled companies to realize how much value

they provided, which influenced the level of attention provided to consumers at physical stores.

The study by Brown et al. (2014) identified various reasons why consumers within different age

groups preferred to shop in a physical store and not online and supported claims that online

shopping posed additional problems for consideration by organizations.

Millennials and E-Commerce

Millennials are Americans born from the late 1970s to the mid-1990s (Brandau, 2012).

According to population estimates by the U.S. Census Bureau (2016), millennials surpassed

Baby Boomers as the nation’s largest living generation. Millennials make up more than half of

consumers who intend to buy products online (Dua, 2015). Globally, this generational cohort

represents the largest share of Internet users between the ages of 16 and 64 and 80% of them own

a smartphone (“GWI,” n.d.). The purchasing power that this demographic has will affect the

future growth of e-commerce and mobile commerce primarily because of a significant number of

individuals in this generation.

Estimates showed the spending power of millennials is $200 billion annually (Schawbel,

2015). This generation is known for being trendsetters across all industries, requiring companies

to develop non-traditional advertising methods to capture their attention and connect with them.

According to the CEO Co-founder of Elite Daily (Schawbel, 2015), millennials are highly

30
educated, career-driven, politically progressive and developed strong brand loyalty when

presented with quality products and when brands engaged them.

According to a report by Razorfish (2015), 74% of millennials trusted brands to protect

their privacy, and 75% of millennials thought it was an invasion of privacy for brands to target

people on mobile phones. Consumers that fall within this demographic are vocal with their

opinions about brands and products. For these reasons, brands must adjust the way they target

millennials to avoid intrusion and to reach different segments within this demographic (Brandau,

2012).

Perceived Benefits

Perceived benefits are beliefs that something positive will occur from a perceived threat

(Chandon, Wansink, & Laurent, 2000). For example, consumers related sales promotions with

monetary savings. However, sales promotions also provided other benefits beyond monetary

savings. Chandon et al. (2000) discovered monetary, and nonmonetary promotions satisfied a

consumer’s desire for value, entertainment and exploration (hedonic benefits) and savings,

higher product quality, and convenience (utilitarian benefits). Hedonic benefits are intrinsic and

satisfy a consumer’s multisensory, fantasy and emotive use of products (Hirschman & Holbrook,

1982). Tastes, sounds and visual images are multiple sensory modalities. Fantasy occurs when

consumer’s make-up imaginary sequences based on real experiences. Emotive responses involve

emotional arousal and link consumer desires. Hedonic consumption is what consumer’s desire

for reality and is present during the use of products (Hirschman & Holbrook, 1982). Sarkar

(2011) found consumers with hedonic values avoided online shopping because of increased risk

perceptions, lower perceived benefits and delays in hedonic arousal due to the inability to touch,

31
smell, or taste products.

Utilitarian benefits are extrinsic and satisfy needs for functional, instrumental, and

practical benefits (Chitturi, Raghunathan, & Mahajan, 2008). Consumers with utilitarian

motives valued convenience, variety, quality merchandise, and reasonable prices and were more

likely to shop online for these reasons (Forsythe et al., 2006; Sarkar, 2011). Sarkar (2011) found

consumers with utilitarian values perceived greater benefits from online shopping because

shopping online saves time and costs. Sarkar’s (2011) study also found consumers with

utilitarian values perceived greater risks in online shopping, which supported the need to

minimize perceived risks for utilitarian shoppers to retain them as customers.

Sales promotions are utilitarian because they allow consumers to maximize shopping

behavior. Chitturi et al. (2008) found hedonic benefits evoked emotions such as cheerfulness

and excitement (promotion), and utilitarian benefits evoked confidence and security (prevention)

emotions. According to Chitturi et al. (2008), promotion and prevention were antecedents to

delight and satisfaction, which improved word-of-mouth and influenced repurchase intentions.

If delighting and satisfying consumers affected word-of-mouth and influenced repurchase

intentions, then merchants need to appeal to hedonic and utilitarian benefits when promoting

products.

Perceived Risks

Internet growth provided opportunities for marketers (Jiuan Tan, 1999). Despite the

growth of the Internet, marketers experienced risks such as lack of security and lack of control

over proprietary information (Pallab, 1996). Consumers have buying goals and when those goals

are not met; it creates perceived risk (Jiuan Tan, 1999). Bauer (1960) described perceived risk as

32
feelings of uncertainty about consequences of transactions. Cox (1967) described perceived risk

as consequences consumers suffer when making purchases, before and after purchase

transactions. Chang, Cheung, and Lai (2005) classified perceived risk as product risk, credit card

fault risk, uncertainty, and system security. Perceived risk is higher for online shopping than for

traditional in-store shopping, and it influences purchasing behavior and attitudes that adversely

affect perceptions about shopping online (Akaah & Korgaonkar, 1988; Forsythe et al., 2006;

Crespo, del Bosque, & de los Salmones Sánchez, 2009; Lee & Tan, 2003). Perceived risk in e-

commerce focuses on delivery systems, privacy and security issues, and the inability to touch,

feel, smell or taste products before purchasing them (Miyazaki & Fernandez, 2001; Jiuan Tan,

1999).

Cho et al. (2014) believed perceived risks negatively affected repurchase intentions. For

instance, the growth of the wine industry forced U. S. wine businesses to create additional

distribution channels such as e-commerce sales to gain market share and remain competitive.

From a company perspective, online wine merchants realized benefits such as an extended

geographical reach (Gebauer & Ginsburg, 2003). From a customer perspective, offering wine

sales online provided convenience, better product selection and less time pressure to make

decisions. The benefits of online wine sales compelled some U. S. wine businesses to engage in

additional channels to gain sales.

Cho et al. (2014) used hierarchical linear modeling (HLM) to study wine attributes,

perceived risk, repurchase intention and website quality, attributes, and perceived risk. Sensory-

related attributes such as taste and aroma and origin-related attributes are perceived risks that

influenced online wine purchasing behavior. Cho et al.’s (2014) study found sensory-related and

33
origin-related attributes positively influenced perceived risk, which influenced repurchase

intention. Online wine merchants faced similar challenges in using e-commerce as a distribution

channel. Thus, online merchants, in general, should understand consumer perceptions of online

shopping and the role risk perception plays in online shopping behavior for online business

success.

Akaah & Korgaonkar (1988) found functional, physical, financial, social, and

psychological risks affected purchasing decisions. Aesthetically, consumers preferred to see,

hear, taste and feel products before making purchases (Liu et al., 2013). Jiuan Tan (1999)

conducted an experimental study to identify risk perception based on feedback from online

consumers and to obtain online consumer perception of risk reduction mechanisms. Jiuan Tan

(1999) used a survey and interviews to examine product availability and selection through direct

marketing and on the Internet. The sample size was 179 undergraduate students in Singapore,

71.9% female, and 28.1% male. A six-point Likert scale examined in-store shopping risks

versus Internet shopping, consumer perceptions about product risks and buying behavior. Jiuan

Tan’s (1999) study supported previous studies that showed online consumers perceived Internet

shopping riskier than in-store shopping and consumers who were less risk averse were more

likely to shop on the Internet (Akaah & Korgaonkar, 1988; Lee & Tan, 2003).

Jiuan Tan (1999) also found consumers had a high regard for reference groups and

contacted them before making purchases. In fact, information received from reference groups

was more effective at eliminating perceived risk than retailer reputation, brand image, and

warranty. In-store shoppers who were more reluctant to take risks expressed their desire to see,

feel or touch products (Liu et al., 2013). Järvenpää and Tractinsky (1999) supported the findings

34
by Liu et al. (2013), which showed a connection between perceived risk and purchase intention.

Types of Perceived Risk

Perceived risk encompasses any of the following losses: financial, product performance,

social, psychological, physical, or time/convenience loss (Brooker 1984; Jacoby & Kaplan,

1972; Peter & Tarpey, 1975; Garner, 1986; Mitchell, 1992; Schiffman & Kanuk, 1994).

Financial risk is fear of monetary loss that consumers related to online shopping more than with

in-store shopping (Horton, 1976; Sweeney, Soutar, & Johnson, 1999; Wani & Malik, 2013).

With financial risk, consumers feared they would become a victim of credit card fraud. Forsythe

et al. (2006) attributed financial risk to a lack of trust on retailer sites, the possibility of making

incorrect purchases and credit card issues. According to Jarvenpaa and Todd (1996), consumers

feared the collection and misuse of their personal data known as privacy and security risk

perceptions, which affected online buying behavior (Miyazaki & Fernandez, 2001). Perceived

performance risk arises when products fail to work or only work for a limited amount of time

(Horton, 1976). Product performance risk materializes when consumers are unable to physically

touch products, which, affects their ability to judge the quality of products (Forsythe & Shi,

2003). Perceived time/convenience risk indicates the amount of lost time and inconvenience of

shopping online.

Product research occurs on the Internet, but consumers prefer to visit stores to make

purchases due to risks in online shopping (Hsieh & Tsao, 2014). Perceived customer value is the

consumer’s perception of benefits over costs to obtain desired benefits (Chen & Dubinsky,

2003). Perceived value influences consumer satisfaction, trust and behavioral intentions (Chahal

& Kumari, 2012). Online searches for products provide opportunities companies can use to

35
influence consumer interaction while looking for value. The Internet allows companies to

promote products and gain additional business. To maximize the benefits the Internet provides,

companies must first identify and remove perceived risks to address consumer concerns and

enhance value.

Financial Risk

Perceived financial risk is fear of a monetary loss (Lim, 2003). Consumers fear losing

money when they engage in online shopping. Monetary loss can occur from purchasing

unsatisfactory products or spending an exorbitant amount of money to repair what was

purchased. Studies showed a significant amount of consumers worried about unauthorized

access to their personal information on the Internet (Liebermann & Stashevsky, 2002).

Specifically, access to credit card information was a major obstacle to making an online purchase

(Maignan & Lukas, 1997). Perceived privacy risk arises when consumers fear the collection and

misuse of their personal data (Jarvenpaa & Todd, 1996). Miyazaki and Fernandez (2001) found

risks such as privacy and credit card risks affected online buying behavior. Thus, privacy and

security risk perceptions are major barriers to e-commerce development and require further

analysis in this study (Liebermann & Stashevsky, 2002).

Previous studies revealed privacy and security concerns are the main impediment to

shopping on the Internet (Udo, 2001). Citing Lardner’s (1999) article, users lacked public

confidence in e-commerce security and information privacy, which impeded the acceptance of it.

Udo (2001) surveyed 158 information technology (IT) users to determine if they had similar

concerns about privacy, security and threats, and forged identity expressed in earlier studies.

Udo (2001) considered IT as e-mail and Internet shopping. When IT users access the Internet,

36
they are subject to threats such as spam mail, viruses, and cookies that many considered an

invasion of privacy. IT users are also subject to security threats such as break-ins, technology

disturbances, hacking and identity theft. Udo (2001) defined security as protection against

unauthorized disclosure and privacy as the right to determine how to share information with

others.

Udo’s (2001) study revealed privacy and security concerns were the leading reasons why

users did not make purchases over the Web. In fact, 55.1% of respondents ranked privacy as

their number one concern, and 15.2% ranked security and threats second. Moreover, 17% of

respondents indicated the laws and regulations in place were not sufficient to protect them from

issues related to e-commerce. Udo’s (2001) study confirmed public reports that online

consumers had major concerns about e-commerce safety and did not feel safe with laws and

regulations enacted to address e-commerce safety. Lardner (1999) recognized consumers were

wary of using the Internet because of confidentiality concerns. Udo (2001) was one of many

researchers that found risks such as privacy and security influenced decisions to shop online

(Alotaibi & Bach, 2013; Eri, Aminul Islam, & Ku Daud, 2011; Izquierdo-Yusta, & Schultz,

2011; Raman, 2014).

Reda (1996) predicted consumer privacy would result in a disruptive change. This

prediction became a reality when websites began gathering information that created a complete

data picture of individuals and their families, and the Internet was used to collect a large amount

of data that was distributed globally. Consumers became more aware of companies collecting

their information and using it to monitor them, which many deemed intrusive. Internet users

37
wanted reassurance that companies were protecting their privacy (FTC, 1998). Using the data

from Udo’s (2001) study, organizations were more equipped to address consumer concerns about

Internet privacy.

Attitudes on e-Commerce Privacy

Rohm and Milne (1998) found most Internet users – those who made online purchases

and those who did not - worried about information privacy. Internet privacy is the ability to

protect consumer data against unauthorized intrusion (Dhillon & Moores, 2001). Boritz and No

(2011) considered privacy to be an individuals’ right to control their personal information and

how companies used it. Customers were concerned about how companies used their

information, and these concerns reduced their level of trust in e-commerce (Boritz & No, 2011).

E-commerce transactions required customers to provide personal information for purchases that

companies used to meet internal and external goals. Consequently, companies faced pressure to

implement privacy practices that protected consumer information.

Miyazaki and Fernandez (2001) explored relationships between Internet user experience,

risk perceptions, and online purchasing rates. Miyazaki and Fernandez’s (2001) study used

previous research by Jarvenpaa and Todd (1996) that suggested risk perceptions played a role in

the adoption of online shopping. Information privacy is a consumer right, legally and ethically

and information security is an integral part of maintaining privacy. The sample size of Miyazaki

and Fernandez’s (2001) study was 160 respondents, with a response rate of 84.7%. Respondent

ages ranged from 15 to 75 years old with an almost equal gender balance of 52% male and 48%

female. Respondents identified six categories of concern; privacy, system security, online

retailer fraud, inconveniences of online shopping, no concerns regarding online shopping, and

38
unclassified responses. The online purchasing behavior and concerns of respondents revealed

shopper concerns influenced purchasing behavior. The study by Miyazaki and Fernandez (2000)

supported previous research that showed experienced Internet users had lower risk perceptions of

online shopping. Respondents had fewer concerns about security and retailer fraud, but more

concerns about privacy, which suggested experience influenced privacy concerns. Miyazaki and

Fernandez (2000) suggested gaining an understanding of consumer risk perceptions to determine

how these perceptions connected user experience and purchase behaviors.

Kim and Mariea (2000) examined recommendations made by the Federal Trade

Commission (FTC) and responses from an e-mail survey administered to online consumers to

determine attitudes toward online privacy. The email survey, which polled 889 online users was

the first of its kind. The investigation revealed the FTC adopted policies such as notification of

information practices, consumer choice on use and dissemination of information, and access to

information collected about them to address consumer concerns. While addressing most

concerns, policies implemented by the FTC did not provide a platform for consumers to express

their concerns about privacy on the Internet. Kim and Mariea (2000) discovered consumers’

desired flexibility when assessing online marketers’ communication practices and wanted

consumer perspectives included in the analysis to determine privacy concerns.

Online merchants can attract customers, enhance service offerings and improve

relationships when consumers provide data during the registration or the ordering process.

Customers provide some data during the registration and ordering process, but merchants also

have the ability to obtain data without user consent. Internet Protocol or IP addresses allowed

companies to identify what sites a customer viewed, and cookies stored data such as

39
customer preferences to identify them when they accessed Web sites (Harper, 2010). Lastly,

radio frequency identification (RFID) and global positioning systems (GPS) allowed companies

to track physical locations and the movement of products and individuals (Bustillo 2010; Steel &

Scheck 2010). Studies showed RFID technology improved performance and provided

competitive advantages over competitors (Delen, Hardgrave, & Sharda, 2007; Wang, Wang,

Huang, & Chen, 2011). Despite the benefits of using this technology, companies must weigh the

benefits of using RFID and GPS technologies against consumer privacy and security concerns.

Tracking methods like RFID and GPS technologies helped companies attract consumers

based on personal interests. However, merchants that used location technology did not always

inform consumers of tracking measures or how their data was used or who had access to their

data (Steel & Scheck, 2010). Misuse occurs when merchants contact consumers without their

permission, sell information to other companies or leak sensitive information. Individuals feel

violated and worried about negative consequences such as having their data used against them or

being excluded from future e-commerce opportunities when their information is used without

permission. Boritz and No (2011) suggested countering e-commerce privacy risks with

regulation, technology to enhance privacy measures, and the option of opting out of e-commerce.

Harper (2010) suggested individuals control the amount of personal information placed online if

they want less information sent to them in the form of advertisements.

Boritz and No (2011) examined the extent of privacy research in e-commerce and

identified the following stakeholders (a) companies, (b) customers, (c) privacy solution providers

(PSPs), and (d) governments. Following is a description of how each stakeholder addressed

privacy in e-commerce. Companies balanced the benefits and risks associated with using the

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personal information of its customers. Customers addressed e-commerce privacy by

implementing technology to enhance privacy or by lobbying for additional regulation of privacy

practices. Privacy solution providers (PSPs) developed services and technologies to enhance

online privacy. Governments enacted laws and oversaw them, educated consumers on privacy

issues, encouraged self-regulation, and regulated solutions to address customer privacy concerns.

Privacy protections and disclosures countered competitive advantages and risked alienating

customers by not protecting consumer privacy.

Information Privacy Concerns and Retail Sales

Information privacy concerns (IPC) are concerns about merchant websites. Hong and

Thong (2013) defined IPC as an individual’s ability to control how companies collected and used

their personal information during visits to websites. Hong and Thong (2013) conducted a

comparison to examine similarities between existing conceptualizations of IPC and the proposed

conceptualization of IPC. Hong and Thong’s (2013) study found interaction management and

information management influenced IPC and consumers worried about the collection of their

personal information and how websites used it. Secondly, consumers that shopped online

worried about actions that were taken to protect their personal information. These concerns are

justified as reports of identity theft and credit card fraud arose in the media.

Information privacy concerns influenced e-commerce success and security mechanisms

increased the perceived trustworthiness of Web merchants (Meinert, Peterson, Criswell, &

Crossland, 2006). To gain consumer trust, Web merchants employed security mechanisms such

as third-party certifications, Web site enhancements, endorsements, and money-back guarantees.

Privacy policy statements identified how Web merchants treated personal information. Previous

41
studies showed privacy policy statements increased consumer trust and connected intention to

transactions (Pennington, Wilcox, & Grover, 2003; Ranganathan & Ganapathy, 2002).

Meinert et al. (2006) conducted an exploratory study to examine the relationship between

obtaining and protecting personal information in privacy policy statements to understand how

policy statements affected consumer trust. A six-point Likert scale identified information

consumers were willing to provide on Web sites. The sample population was 261 graduate

students at two Midwestern state universities. Meinert et al. (2006) discovered a connection

between how much information consumers provided and the type of information requested. Out

of 261 students, 77% acknowledged seeing privacy policy statements but only 45% indicated

they were familiar with or read privacy policy statements.

Being familiar with privacy statements had no bearing on an individual’s willingness to

provide personal information, but the degree of privacy provided in privacy statements affected

their decision to disclose information. Interestingly, individuals familiar with policy statements

were more likely to provide personal information when Web merchants provided strong privacy

statements. For this reason, Web merchants should secure websites with privacy policy

statements that offer consumers a strong guarantee of privacy. Privacy policy statements are a

direct response to information privacy concerns. Previous studies showed information requested

online, and a lack of privacy policy protection influenced consumer privacy concerns.

A study on the automotive industry examined if consumers were more likely to provide

personal data on sites that stated personal data would only be used by the companies who

collected it and only for specific purposes. Out of 2,313 unique visitors, only 269 clicked the

privacy policy form to reflect they read and agreed with the privacy policy. Seven visitors

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clicked on the privacy policy links and only one visitor clicked the privacy policy and submitted

the form to authorize a credit report. Malaga (2014) found most consumers failed to access

online privacy policy forms but did not identify why users did not access the privacy links.

Karat, Karat, Brodie and Feng (2005) suggested technology is a catalyst for flexible, reliable and

accountable privacy policies and that more than one privacy policy is required to address

different privacy needs.

Kukar-Kinney and Close (2010) identified eight inhibitors to online purchasing. The

inhibitors to online purchasing consisted of social influences, lack of availability, high price,

financial status, time pressure, organization and research, privacy and security issues, and

technology glitches and problems (Kukar-Kinney & Close, 2010). Like Miyazaki and Fernandez

(2001), Kukar-Kinney and Close (2010) found consumers ranked privacy and security as the

main inhibitor for online purchasing.

Boritz and No (2011) suggested a customer’s home country and culture influenced

privacy concerns. In 2010, the number of online shoppers in India increased but the average

online cart conversion rate showed little increase. This misalignment caused Kansal (2014) to

examine the effect of online privacy concerns on consumer behavior in the Indian culture.

Specifically, the relationship between consumer privacy concerns, consumer reactions, and

online purchasing behavior. Chandigarh, India was chosen for Kansal’s (2014) study because it

is comprised of communities with strong cultural beliefs and customs (Jeyashree, Gupta,

Kathirvel, & Singh, 2013). Furthermore, India has a distinct culture, and its online users

represented 60% of users that visited a retail site in 2011 (Kansal, 2014). Mehta and Kumar

(2012) found reliability was the most important factor that influenced the purchase intention of

43
the respondents. Kansal (2014) found 78% of Indian consumers worried about online privacy

issues and only used the Internet to gather data but refrained from making purchases due to

privacy concerns. According to Mitra and Saxena (2013), Indian online shoppers are risk averse

so respondents may have felt they needed to protect themselves from a lack of control of the

content and information collected by online companies. Kansal’s (2014) study revealed

concerns about the use of information and revealed a clear correlation between online privacy

concerns and purchasing behavior.

Kansal (2014) used snowball sampling to select participants for the study. Researchers

use snowball sampling to overcome recruitment challenges (Sadler, Lee, Lim, & Fullerton,

2010). In snowball sampling, study participants refer other people with similar characteristics,

experiences, or attitudes to researchers (Cooper & Schindler, 2014). The sample consisted of a

majority of respondents between the ages of 18 – 25 years old, which represented 65% of the

total respondents (Kansal, 2014). Similar to a study conducted by Mehta and Kumar (2012),

most of the respondents were males. The questionnaire used a five-point Likert scale, which

asked respondents to evaluate subjective or objective criteria. External validity is the

generalization of findings produced by the research. The sample data used by Kansal (2014)

cannot conclude the same behavior would occur in consumer behavior in general.

Consumers identified privacy concerns based on a company’s ability to use information

technology to collect and use their personal information (Culnan, 1993). According to Culnan

(1993), privacy is an individual’s ability to control access to their personal information. Culnan

(1993) conducted a study on consumer perceptions regarding the secondary use of personal

information in direct marketing. Secondary information is personal information that is collected

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and utilized for a different purpose. The goal of Culnan’s (1993) study was to identify a research

strategy to investigate different perceptions about the use of secondary information. It was

discovered that consumers who were less sensitive about the secondary use of personal

information had positive attitudes towards shopping by mail. Culnan’s (1993) findings

supported previous research that showed consumers felt less invaded when they had more

control over the collection and use of their personal information (Fusilier & Hoyer, 1980).

Consumers admitted not being aware of website privacy practices more than other

concerns about data collection, secondary usage of data, errors in data, improper access, and

control. If companies choose not to educate consumers of privacy practices, then consumers are

not aware of their actions to protect personal information. Furthermore, omitting privacy

practices exposes consumers to additional risks since they may not be aware of how companies

collect and use their personal information. Obstacles such as security of personal information,

dissatisfaction with products, and delivery concerns affected the growth of online shopping

(Liao, Chu, Chen, & Chang, 2011; 2012). According to Liao et al. (2011; 2012), customers also

worried about network security which forces online merchants to address privacy concerns to

attract and retain customers.

Protecting Consumer Privacy

Consumers are concerned their privacy when conducting online transactions, and e-

commerce merchants have a duty to ensure the personal privacy of consumers (Maleki & Pasha,

2012). Culnan and Williams (2009) suggested firms protect personal consumer information to

gain trust from internal and external audiences. Internally, shareholders and employees tend to

support companies that display moral behavior. Externally, regulators, the media, and

45
customers trust companies that make every attempt to protect its customers. Much like Boritz

and No (2011), Culnan and Williams (2009) felt companies needed privacy practices to enhance

their ability to protect consumer information. Hagen (2000) found a gap between consumer

demands for privacy and practices implemented to address privacy concerns. The terminology

and legalese in privacy policies led many consumers to believe they protected companies more

than they protected consumers. The implementation of privacy practices such as governance

programs and creating a culture of moral behavior expanded the actions taken by companies to

protect consumer privacy.

Attitudes towards privacy and marketing (Does it help or hinder)

Companies must respect consumer attitudes towards direct marketing, privacy,

environmental concerns, and trust issues when they enter new markets (Lee, 2004). Direct

marketing is an interactive marketing campaign that uses advertising media to obtain responses

and transactions. It includes material sent through the mail, mail order where consumers contact

sellers to purchase products, and direct response marketing where consumers respond to requests

from companies. Direct marketing enabled companies to communicate with consumers and

alleviated restrictions, allowing consumers the luxury of purchasing products whenever and

wherever they wanted. The objective of direct marketing was to create a direct link to

consumers by bypassing wholesalers and retailers (Oppenheim & Mulcahy, 2004). Both,

telemarketing and database marketing consisted of contacting potential consumers and

consumers that existed in an electronic database. The Direct Marketing Association’s 2001 State

of the E-Commerce Industry Report found direct marketing efforts provided high returns from e-

commerce, resulting in increased investments in interactive media selling initiatives.

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 Negative attitudes about direct marketing activities began with concerns over privacy,

intrusive selling practices, and consumer complaints about direct marketers that were dishonest,

particularly in telemarketing (Lane & Russell, 2001). A 1999 study by Louis Harris &

Associates revealed 87% of experienced Internet users expressed concern over threats to their

online privacy, which supported earlier studies that found privacy was the number one reason

why consumers avoided the Internet (BW/Harris, 1998; Cranor, Reagle, & Ackerman, 1999).

Consumers expressed concerns over keeping their personal information private at a meeting with

the Federal Deposit Insurance Corporation. More than 250,000 consumers commented against

marketing techniques to collect information on customers. The public denouncement of

marketing techniques urged companies to adopt the privacy promise, which allowed consumers

to opt out of marketing messages and promised compliance with fair information practices.

Attitudes on E-Commerce Security

According to research, e-commerce sales reached $1 trillion for the first time in 2012 and

continues to grow with China and the United States leading the e-commerce market (“Retail

Sales,” 2014; Lai, 2014). Despite its growth, the Internet is riskier than traditional retail

channels (Schramm et al., 2007). Online security, or a perceived lack of it, is one of the primary

reasons why online users refused to engage in e-commerce (Udo, 2001). Mandic (2009) defined

security as a company’s ability to protect consumer information and prevent online fraud.

Security requires managerial and technical measures required to protect consumer information

and limit access to data. Managerial measures consist of restricting access to data to ensure it is

not used for unlawful purposes. Technical measures are taken to protect consumer data against

unauthorized access by encrypting it, implementing password requirements, and storing

47
it on secure servers or computers (Shalhoub, 2002). Consumers perceived their personal data

was secured if no compromises occurred (Mandic (2009). In e-commerce, online security

happens when authorized parties receive transmitted data and verification of authentication

(Mandic (2009).

Trust is a decisive factor in the success or failure of e-businesses (Zeinab, 2006).

Shalhoub (2002) found privacy and security are the main determinants of trust in e-commerce.

Angriawan and Thakur (2008) found a correlation between e-trust and security and privacy.

Companies achieved e-trust once consumers felt confident in their ability to address online

transactions. Potential threats to consumer privacy and security caused a lack of trust and

hindered abilities to maximize benefits associated with e-commerce. The lack of physical

presence between buyers and sellers, buyers and products, and unique challenges associated with

e-commerce make it difficult to build relationships with consumers. Mandic (2009) argued

securing online technology and appreciating customer privacy helps build trust and encourages

consumers to engage in e-commerce and establish relationships with companies. For companies,

building consumer trust allows them to attract consumers and potentially gain their loyalty.

E-commerce growth increased opportunities for cyber criminals to launch attacks to gain

access to sensitive information (Smith, 2004). Cyber criminals use various techniques such as

intercepting messages, stealing passwords and breaking codes to obtain access to consumer

information. Policies were implemented to secure electronic data and identify information that

required protection. These same policies provided restrictions for protecting personal

information and forced companies to take additional measures to protect consumers. Encryption

is a technique used to scramble information and protect data during transmission. Digital

48
certificates helped to determine if websites were credible and if users were whom they said they

were by undergoing user identification to verify authenticity. User identification is a one-way

authentication process, which meant consumers were still vulnerable to cyber-attacks.

Encryption, digital certificates, and user identification were just a few techniques companies

employed to establish e-security. Privacy statements provided information on security and

privacy policies and allowed consumers to make informed decisions about using a company’s

website to make purchases.

Consumers determine if websites or the Internet is trustworthy before making online

purchases and if third parties can be trusted to rectify situations that go wrong. According to

Schoorman, Mayer, and Davis (2007), consumers are more apt to take risks when trust is present,

so trust is required when an exchange creates uncertainty. E-commerce requires confidence in

infrastructure and control mechanisms before completing transactions (Ratnasingam, Pavlou, &

Tan, 2002). Mandić (2009) found obstacles in e-commerce derived from consumer distrust and

concerns related to the protection of their private information and other risks. Mandić (2009)

reinforced the need to increase trust with online users to capture e-commerce sales. Risks were

minimized when consumers received information from referrals, purchased products with high-

quality images, made repeat purchases and bought the most expensive products (Akaah &

Korgaonkar, 1988).

Akaah and Korgaonkar (1988) studied the influence of direct-marketing features such as

product costs, money back guarantees, and distributor reputation on consumers' perceptions and

preferences to assist marketers interested in improving sales performance. A random sampling

of 83 respondents from the ages of 24 to 65 with a ratio of 58% female and 42% male found

49
offering a money-back guarantee was the most important risk reliever for online purchases. The

sample size was small, but it was representative of the sample size used in similar studies. As a

result, Akaah and Korgaonkar (1988) suggested marketers should provide money-back

guarantees as a marketing tool. Jiuan Tan (1999) also found consumers preferred money-back

guarantees when they purchased high-risk products such as inkjet printers. Offering money-back

guarantees was just one method companies used to attract customers. Schoorman et al. (2007)

suggested companies implement control systems to address risk and lower perceived risks

consumers have when shopping online.

Mitigating Risks in E-Commerce Transactions

More than 80% of the online population used the Internet to purchase products and more

than 50% shopped online more than once (Weinstein, 2013). Despite its popularity, online

commercial transactions lacked elements to build trust and credibility among exchange parties

(Flanagin, Metzger, Pure, Markov, & Hartsell, 2014). Advancements in digital media decreased

direct interaction between companies and consumers. The lack of interaction between buyers

and sellers benefited consumers who conducted online product research before making purchases

(Horrigan, 2008). User ratings and product reviews mitigated risks associated with using e-

commerce sites and helped consumers make informed decisions about online purchases.

The Internet increased the amount of information available to consumers who were

interested in making an online purchase. Online environments gave consumers the freedom to

publish anonymous feedback on goods and services they purchased. Specifically, digital

technology made it easier to spread the word about positive or negative online experiences,

ratings, and opinions. Thus, consumers had access to spread information about their shopping

50
experiences by word-of-mouth, which proved influential in encouraging or changing other

consumer’s opinion of products (Herr, Kardes, & Kim, 1991). Steffes and Burgee (2009) proved

that word of mouth was more important than direct personal experience and customer referrals

affected sales.

Online risks are mitigated when consumers have access to feedback from other

consumers. Flanagin et al. (2014) conducted a study to examine the relationship between

credible information housed on commercial sites and consumer attitudes toward e-commerce.

Flanagin et al.’s (2014) study revealed consumers relied heavily on web-based information

compared to other channels such as brand websites, and that rating information was critical in the

evaluation of the credibility of commercial online information. Consumer purchasing decisions

depend on ratings, and consumer ratings were positively associated with perceptions of product

quality and purchase intention (Cheung et al., 2008). Consumers with access to online feedback

should consider the credibility of information provided online and the source providing the

information before making purchases (Cheung, Lee, & Rabjohn, 2008).

An understanding of e-commerce success is required to determine when companies

achieve it. Ghandour, Benwell, and Deans (2010) examined e-commerce websites to justify a

company’s decision to engage in e-commerce sales. Ghandour et al. (2010) used a previous

study conducted by DeLone and McLean (2004) who created the DeLone & McLean (2004)

Information Systems Success Model to measure the level of success of Information Systems (IS).

The DeLone and McLean (2004) Information Systems Success Model includes the following six

dimensions:

 System quality

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  Information quality

 Service quality

 Usage

 User satisfaction

 Net benefits

DeLone and McLean (2004) introduced the e-Commerce Success Model and identified

system quality, information quality, and service quality as pre-requisites to e-commerce success.

According to DeLone and McLean (2004), system quality, information quality, and service

quality influenced e-commerce usage and purchasing behavior. Kuan, Bock, and Vathanophas

(2008) found that higher perceptions of the system, information, and service quality resulted in

repeated purchases. Forsythe and Shi (2003) argued consumers with decreased risk perceptions

were more willing to patronize online stores and make purchases.

Like IS, the e-Commerce Success Model measured e-commerce success as evidenced in

case studies in traditional brick-and-mortar operations versus online operations. The case studies

supported using the model to measure e-commerce success from a customer perspective. From a

customer perspective, the success of an e-commerce website is based on the site's ability to

successfully meet their needs and enhance their overall experience on the site.

Management decisions include an assessment of how much of an operation should focus

on e-commerce and how to determine a company’s success in e-commerce. Specific decisions

about e-commerce activity are dilemmas companies should address before examining the success

of e-commerce. Ghandour et al.’s (2010) study examined e-commerce success from an

organizational perspective. From an organizational standpoint, the number of unique visitors

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that help an organization meet its goals determines e-commerce success (Ghandour et al., 2010).

E-commerce success, a key factor to generate retail sales, is measured by the amount of customer

interaction a website generates and the organizational benefits received from customer

interactions.

E-commerce website design affected customer website interaction. Ghandour et al.

(2010) found e-commerce website performance was multidimensional and required various

instruments to measure performance. Ghandour et al.’s (2010) study provided information to

determine if companies should use e-commerce to help generate sales. This study examines

perceived risk and benefits consumers consider when online shopping. When companies fail to

address perceived risks, they decrease the amount of customer interaction, which affects sales.

The following chapters examine the research methodology used to obtain data, the results

of the study, and implications and recommendations for future research.

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 CHAPTER 3. METHODOLOGY

Introduction

Online retailing grew faster than any other retail sector in the United States, which means

organizations had to determine how they would address demand from consumers who were more

willing to purchase goods online than in the past (Bell et al., 2012). Perceived risk is a barrier to

increased Internet sales in online shopping (Cunningham et al., 2005). If perceived risk is an

obstacle to Internet sales, then online merchants need to develop mitigating strategies to reduce

consumers’ perceptions of risk when making online purchases. The purpose of this quantitative

study is to examine differences in perceived benefits and risks towards online shopping between

American and British consumers as well as American and Indian consumers. Online shopping

continues to grow in countries like the United Kingdom and the U.S. According to AT Kearney

(2015) research, the United Kingdom, and the U.S. ranked in the top three positions for e-

commerce potential. India has the third largest number of Internet users, but e-commerce has not

grown at the same level in India as it has in other countries (Gadgets Now, 2015).

Literature about the role of perceived risks and benefits for individuals is available.

However, few studies examined this information on a country level. Specifically, there is a lack

of research on perceived risks and benefits of online shopping behavior and differences in

perceived benefits and risks across countries. Researchers (Park & Jun, 2003; Wani & Malik,

2013) agreed marketers need to consider cultural differences in global marketing web sites to

understand online buying behavior and address variances in motivations for shopping online. To

help understand online buying behavior, components such as privacy and security risks require

further attention since consumers are more willing to purchase products online when companies

54
take action to protect privacy and security (Pennington et al., 2003; Ranganathan & Ganapathy,

2002).

The growth of online shopping meant companies had to minimize risks to personal

information for consumers to purchase products on their sites. Research to understand and

examine online buying behavior across countries is important for companies interested in

developing strategies to influence online buying intention. Privacy and security loss risk are

components associated with online shopping and understanding privacy and security concerns

can help companies build consumer trust and minimize alienating consumers, which affects sales

and revenues.

The theoretical framework of this study is based on Ajzen and Fishbein’s (1980) Theory

of Reasoned Action (TRA), which examines the relationship between attitudes and behavior and

predicts how individuals behave based on pre-existing attitudes and behavioral intentions. TRA

assumes individuals are rational and consider implications of their actions before making

decisions to engage in a particular behavior (Ajzen & Fishbein, 1980).

This chapter will explain and support the methodological choice to obtain quantitative

data from an online survey. The objective of this study is to test the null hypotheses that:

1. There are no significant differences in perceived benefits towards online shopping

between American and British consumers.

2. There are no significant differences in perceived benefits towards online shopping

between American and Indian consumers.

3. There are no significant differences in perceived risks towards online shopping

between American and British consumers.

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 4. There are no significant differences in perceived risks towards online shopping

between American and Indian consumers.

An analysis of the research design, sample population, collection and analysis of data,

validity and reliability and ethical considerations identify steps that will be taken to ensure the

research will not harm or negatively affect respondents.

Design and Methodology

The research design is used to fulfill objectives and answer questions (Cooper &

Schindler, 2014). Companies need to understand attitudes toward online shopping and online

buying behavior to address consumer concerns and apprehension toward online shopping,

engage consumers and increase online purchases. This study examined differences in perceived

benefits and risks towards online shopping between American and British consumers as well as

American and Indian consumers by exploring the Theory of Reasoned Action to improve

marketing efforts and capture additional Internet sales from the millennial generation. In that

sense, following Wani and Malik (2013) and Park and Jun (2003), a quantitative approach was

employed to measure consumer behavior, knowledge, opinions, and attitudes. The research for

this study was exploratory and analyzed the effect of independent variables (perceived risk and

online buying behavior) on a dependent variable (attitude toward online shopping).

Culnan (1999) identified consumer risk perceptions as the primary obstacle to the future

growth of online commerce. According to Miyazaki and Fernandez (2001), consumers who

perceived fewer risks or had fewer concerns about online shopping made more online purchases

than consumers with higher concerns about online shopping did. Miyazaki and Fernandez

(2001) conducted a quantitative study to show how consumer risk perceptions affected online

56
shopping activity. The sample size for Miyazaki and Fernandez’s (2001) study was 160

respondents between the ages of fifteen to seventy-five years old, with a mean of 34.5 (median of

34). The gender of respondents in their study was 52% male and 48% female. Education levels

ranged from grade school to graduate degree with a median of a four-year degree and the annual

household gross income ranged from $0 to $5,000 to over $110,000, with a median of $60,000 to

$70,000. Thirty-six percent of respondents in Miyazaki and Fernandez’s (2001) study reported

concerns over the security of personal and financial information toward online shopping.

Although the respondents identified privacy and potentially fraudulent behavior as key concerns,

these concerns were not instrumental in predicting online purchasing rates. Miyazaki and

Fernandez’s (2001) study found lower levels of perceived risk toward online shopping resulted

in higher online purchase rates and perceived risk partly influenced online purchase behavior.

Generalizability of the findings in Miyazaki and Fernandez’s (2001) study was limited since the

information did not come from a random national or international sample of Internet users.

Information and communication technologies, including e-commerce, influence

consumer behavior (De Muylder, Dias, Filho, de Oliveira & Alves, 2013). De Muylder et al.

(2013) used quantitative, descriptive research to analyze buying habits for 191 graduating

students in Brazil. De Muylder et al.’s (2013) questionnaire examined data on the frequency of

buying habits and included demographic information such as age, income, and education to

examine consumer behavior. De Muylder et al.’s (2013) study showed the population of

students studied did not participate in compulsive buying and preferred to conduct sales

transactions in a physical store as opposed to on the Internet, which contradicts trends in e-

commerce activity.

57
 A quantitative research design was implemented in this study to examine and investigate

variables that affect consumer beliefs and attitudes, which determines online purchase intentions.

This researcher used an online questionnaire that assessed Internet familiarity, perceived risks

and benefits of online shopping, attitudes, purchase intentions and demographic parameters.

According to Alvarez, Canduela, and Raeside (2012) questionnaires contribute to the knowledge

creation process.

Population

The population in the data analysis for this study was millennials (ages 18-34 years old)

who live in the United States. The United States was chosen because it is estimated there are

75.4 million millennials in the U.S. population. The target population was millennials because

they spend more money online in a given year than any other age group (Luthi, 2014).

Millennials spend around $2,000 annually on e-commerce despite having lower incomes than

older adults have (Smith, 2015). To be included in this study, participants had to meet all three

of the following requirements (1) live in the United States, (2) fall within the desired age range,

and (3) have previously used a cell phone to make an online purchase.

Sample and Sample Size

In sampling, a part of the population is used to draw conclusions about the entire

population (Cooper & Schindler, 2014). The sample population for this study was a

representative group of consumers between the ages of 18 - 34 that live in the United States. The

sample size for this study was 210 participants that used the Internet to make an online purchase

from their mobile device since 42% of millennials purchased products on their phone (“GWI,”

n.d.).

58
 A sample draws statistical inferences for quantitative research. Researchers Wani and

Malik (2013) examined the belief-attitude-behavioral intention link using a sample of 104

responses in the United Kingdom and 97 responses in India. With a confidence level of 5%, the

recommended sample size is 384 (Survey Sample Size, 2014). However, the purpose of this

study was to examine what millennial online consumers thought and felt about online shopping

and why they were reluctant to use the Internet to make purchases, which required fewer

participants (< 300). Probability (random) sampling gives every member of the population an

equal chance for inclusion in studies (Polit, & Beck, 2010). This researcher used information

collected from the sample to make inferences about the entire population, which eliminated the

need to increase the sample size to enhance the generalization. To complete the survey,

consumers gave permission to share information about their online activity.

Data Collection

Decisions on data sources and data collection procedures are most critical to the overall

quality of a study and the soundness of a researcher’s findings. This researcher used a sampling

method employed in previous online survey research that restricted participation to invited

respondents who were online shoppers and who were voluntarily willing to complete the survey

questions (Wani & Malik, 2013). Respondents received information on the study’s purpose,

procedures to collect data, confidentiality measures, and participation guidelines before they

were asked to complete the questionnaire.

Surveys are a dominant methodology in quantitative research and have been used by

previous researchers to conduct studies (Cooper & Schindler, 2014). For example, Hwang

(2008) distributed email questionnaires to explore the impact of privacy and security on

59
consumer trust and decisions to purchase items online. Invitations to complete Hwang’s (2008)

survey were distributed to 4000-panel members maintained by an online marketing research

firm. Out of four thousand emails, only 390 responses were usable, which equates to a 9.75%

response rate. Udo (2001) mailed questionnaires to 250 online IT users to collect data on their

opinions and views while shopping on the Internet. The 29-item questionnaire used a scale of

“strongly agree” to “strongly disagree” to measure user opinions. Udo (2001) received 158

usable responses, a 63.2 percent response rate. The methodology for this study was unchanged

from previous studies that measured similar opinions and views about online shopping (Cooper

& Schindler, 2014).

Wani and Malik (2013) sent a self- administered questionnaire to 200 respondents in the

UK to test whether perceived risks and benefits influenced attitudes towards online shopping and

if attitudes towards online shopping influenced online buying intention. The researchers mailed

the link to an online survey to known respondents. In India, Wani and Malik (2013) distributed

an online questionnaire to 200 respondents that were known to the researcher. Since this study is

based on Wani and Malik’s (2013) work, the response objective was to obtain a minimum of 200

responses to analyze the relationship between attitudes and online buying intentions for

millennial consumers in the United States. Survey results for this study were excluded in the

data analysis if 80% of the data was unanswered or missing to prevent distorting the study

findings. According to Dillman, Smyth and Christian (2014), improving a survey’s visual appeal

and graphics, ordering items logically, and arranging items clearly on each page increases

response rates when using electronic questionnaires. The researcher for this study used a

custom-built theme and customized the survey’s fonts and colors to appeal to respondents and

encourage participation.
60
 Instrumentation

Survey research is a useful and legitimate approach to describe and explore variables and

constructs (Ponto, 2015). This study used an online survey to collect quantitative data about

perceived risks and benefits, attitudes towards online shopping and online buying intention. This

researcher requested and received permission to use the study instrument developed by Wani and

Malik (2013), which investigated the role of perceived risks and benefits in influencing the

consumer purchase decisions for online shoppers in the UK and India.

Online surveys are efficient and convenient and save time and costs to collect responses.

Qualtrics was selected to administer the online survey to participants for this study because they

offered an online research suite that provided the researcher with the flexibility to customize and

design the study’s instrument. Qualtrics also allowed this researcher to distribute the survey

quickly to participants, provided various ways for respondents to complete responses and

allowed the researcher the option to script new experiences without learning how to program

information (Carr, 2013). An anonymous link was distributed to respondents to access the

survey. Qualtrics survey software allowed the researcher to view responses in real-time and

provided options to export data into bivariate or multivariate cross tabs to explore statistical

relationships between the questions.

Pretesting allows researchers to discover errors and refine measurement instruments

(Cooper & Schindler, 2014). The survey instrument used in this study was tested on twenty

participants, and the researcher conducted a review to identify discrepancies and data quality

issues before resuming data collection. The participants were timed to determine how long it

took them to answer the questions. The pretest discovered the median time for completion was

61
just over three minutes, which is ideal for millennials who exhibited shorter attention spans

(Whitler, 2015).

For this study, a six-part questionnaire identified consumer familiarity with the Internet,

perceived risks and benefits of online shopping and attitudes, purchase intentions and respondent

demographics. Respondents rated constructs such as financial risks and online shopping benefits

such as shopping and convenience on a 5-point Likert scale from 1 for strongly disagree to 5 for

strongly agree. A 5-point semantic differential scale measured attitudes towards online

purchases and online buying intention on a scale from bad-good, unpleasant-pleasant,

unfavorable-favorable or by completing an open-ended sentence, which described feelings

towards buying products on the Internet. Three bipolar pairs measured attitude with descriptive

words such as unlikely-likely, improbable-probable and impossible-possible. Lastly, the study

included demographics such as gender, age, and total monthly household income.

Research Questions and Hypotheses

Feedback from respondents who used the Internet for online shopping helped to

determine differences in perceived risks and benefits towards online shopping from a cross-

cultural context. The research questions and hypothesis for this research follow:

RQ1: Are there significant differences in perceived benefits towards online shopping

between American and British consumers?

H10: There are no significant differences in perceived benefits towards online shopping

between American and British consumers.

H1a: There are significant differences in perceived benefits towards online shopping

between American and British consumers.

62
 RQ2: Are there significant differences in perceived benefits towards online shopping

between American and Indian consumers?

H10: There are no significant differences in perceived benefits towards online shopping

between American and Indian consumers.

H1a: There are significant differences in perceived benefits towards online shopping

between American and Indian consumers.

RQ3: Are there significant differences in perceived risks towards online shopping

between American and British consumers?

H10: There are no significant differences in perceived risks towards online shopping

between American and British consumers.

H1a: There are significant differences in perceived risks towards online shopping

between American and British consumers.

RQ4: Are there significant differences in perceived risks towards online shopping

between American and Indian consumers?

H10: There are no significant differences in perceived risks towards online shopping

between American and Indian consumers.

H1a: There are significant differences in perceived risks towards online shopping

between American and Indian consumers.

Data Analysis

According to Wani and Malik (2013), perceived risks and benefits have multiple

dimensions. Due to the complexity of perceived risks and benefits, Wani and Malik (2013) used

multiple regression analysis to test the perceived risks and perceived benefits of online shopping

63
and a simple regression to measure online purchase intention. One-way Analysis of Variance

(ANOVA) tests equality through measures of variance. Wani and Malik (2013) used one-way

ANOVA to determine if differences existed between perceived benefits and risks towards online

shopping for British and Indian online shoppers. Cronbach’s alpha determines the average

correlation of items to measure its reliability (Cronbach, 1951). This study used Cronbach’s

alpha to test the reliability of the variables in the survey instrument. Factor analysis was not

required in the determination of Cronbach’s alpha.

This study used an online survey to reveal participants’ attitudes and opinions toward

online shopping. Hypothesis testing was conducted using SPSS v.24 to interpret the data and

compare it to previous research. Quantitative data uses codes, categories, and numbers for

statistical analysis (Cooper & Schindler, 2014). A histogram (or bar chart) showed the data

summarized from the frequency distribution. Giving the display a clear and concise title,

keeping the display simple, using distinct colors, and clearly labeling each axis ensured the key

information was correctly displayed. The researcher for this study did not retest respondents, but

variance inflation factor scores ensured there were no issues with the correlated variables

(Hwang, 2008). This study’s data was coded based on response items (possible answers to

survey questions) and was entered as numeric codes (Leahy, 2004). Upon closing the online

survey, the data was downloaded into SPSS for further analysis.

Validity and Reliability

Researchers should identify issues with the design of a study and discuss how the issues

affected the findings (Cooper & Schindler, 2014). The questionnaire for this study used pre-

existing questions from an existing instrument developed by Wani and Malik (2013). Pre-

64
existing questions undergo extensive testing before being used in a study. Twenty members of

the survey audience completed the survey before it was distributed to a wider audience. Opening

the survey up to a smaller number of the sample audience allowed the researcher to make any

necessary changes to the design of the study. According to Carbonaro and Bainbridge (2000),

researchers should (1) provide easy access for all participants, (2) make it simple to complete, (3)

incorporate built-in security systems to ensure credibility and anonymity, and (4) require

minimal computer skills to complete surveys. The survey instrument for this study contained

attention filters or quality check questions to ensure respondents provided quality responses for

the survey.

Data collected from surveys raise reliability and validity concerns due to low response

rates and non-response bias (Alvarez et al., 2012). This researcher sent advanced notification of

the delivery of the survey and reminders to increase response rates. This survey was initially

distributed to twenty participants to test and identify flaws in the survey format and to ensure

validity and reliability of the measures before data collection (Wani & Malik, 2013). The

participants who participated in the soft launch had no feedback, so no revisions were required.

Ethical Considerations

Participants of a survey or other research design should be aware of what is required of

them before they agree to participate in a study. Informed consent means participants receive

information about study procedures and specific details about the study before taking it (Cooper

& Schindler, 2014). De Muylder et al. (2013) used data from a company that collected surveys

from shoppers, and a questionnaire gathered information from students. In Brown’s (2007)

study on how organizations deliver value through e-commerce, the author provided an

65
explanation of the objectives of the study, the underlying value theory, and the categories

investigated.

Respondents are more willing to participate if they understand the goals of a study and its

importance before administering it. Invitations sent to participants in this study explained the

benefits and participants’ rights and protections, including anonymity. Informed consent means

full disclosure of the procedures of the survey, and there is an agreement to participate in the

study. Research ethics state researchers should make sure participants do not suffer adverse

consequences from research activities (Cooper & Schindler, 2014). This researcher followed the

above guidelines to ensure the ethical treatment of all participants in this study (Cooper &

Schindler, 2014).

66
 CHAPTER 4. RESULTS

Introduction

The purpose of this exploratory, quantitative study was to examine differences in

perceived benefits and risks towards online shopping between American and British consumers

as well as American and Indian consumers. Chapter 4 will present the findings of the online

survey research. The chapter discloses the instrument used to gather feedback from millennial

shoppers in the U.S. and the results of the data collection. Next, is a description of the frequency

counts for selected variables, including the ages, cell phone usage, and Internet usage for the

sample. The next section states the hypotheses described in Chapter 1 and includes a description

of the statistical analysis used to accept or reject the hypotheses. The final section provides a

summary of the study results. A total of 210 U.S. millennials participated in this study.

Data Collection Results

The data for this study was collected from an online survey where respondents who met

the inclusion criteria were invited to participate in the online survey. A quantitative research

design was implemented to examine and investigate variables that affected consumer beliefs and

attitudes, a determining factor in online purchase intention. The survey assessed Internet

familiarity, perceived risks and benefits of online shopping, attitudes, purchase intentions and

demographic parameters for millennial residents in the United States between the ages of 18 to

34 years old. The millennial generation was examined because they make up the largest living

generation of the nation’s population, and they account for $200 billion in annual buying power.

An anonymous survey link was sent to participants asking them to complete the survey. The

anonymous survey link directed participants to the online survey, which initiated with the

67
informed consent form. The informed consent form identified the study title, researcher and

contact information, and provided an explanation of the study. The form then asked participants

if they wanted to participate in the study by selecting “Agree” to continue to the survey or

“Disagree” to exit it. Participants were asked screening questions such as their age and if they

have ever used a cell phone to make an online purchase upon agreeing to participate in the

survey. If they did not agree, participants were directed to the end of the survey and allowed to

exit without providing any data. Although a total of 210 respondents took the survey, the sample

size may affect the ability to obtain high-quality solutions (Jung & Lee, 2011). Also, the survey

instrument used a 5-point Likert scale. The scale labels for several of the questions did not

provide a description of the neutral options between the positive and negative sides of the scale.

The scores may need to be re-coded before future data analysis is conducted to obtain accurate

mathematical calculations for reporting.

Descriptive Analysis

Table 1 displays the frequency counts for the variables. The millennials in this study

ranged in age from 18 – 34 years old. All (100%) of the respondents used a cell phone to make

an online purchase. The length of years on the Internet ranged from “Less than five years” to

“More than five years.” Ninety-two percent of the respondents used the Internet for more than

five years. Hours spent per week using the Internet ranged from “Less than 5 hours” to “More

than 5 hours”. Eighty-seven percent used the Internet more than five hours per week, and 100%

of the respondents used the Internet for online shopping. Money spent on the Internet over the

last 12 months ranged from “$0 to $150 (11.4%)” to “Above $3,500 (7.1%)” with a median of

$600. Seventy percent of millennials surveyed for this study were female, and 30% were male.

68
Incomes ranged from $0 to $750 (5.2%)” to “Above $5.00 (15.2%)” with the median income

being $2,500 (Table 1).

Table 2 displays the descriptive statistics for 25 ratings about shopping experience sorted

by the highest mean. The ratings were based on a five-point metric: 1 = Strongly Disagree to 5 =

Strongly Agree. The highest rated experiences were item 3.6 “I enjoy spending time browsing”

(M = 4.18) and item 3.5 “I enjoy shopping” (M = 4.17). The lowest rated experiences were item

3.24 “I do not go shopping until I absolutely have to do it” (M = 2.66) and item 3.7 “I don’t like

to spend much time shopping” (M = 2.66) (Table 2).

Table 3 displays the descriptive statistics for 12 reasons the Internet is used sorted by

highest frequency. The most common reasons for using the Internet were 6.1”Checking Email”

(95%) and 6.2 “Searching for information” (89%). The least common reasons for using the

Internet were 6.12 “Use Internet – Other” (10%) and “Making a donation to a charity online”

(17%) (Table 3).

Table 4 displays the descriptive statistics for 15 perception of risk items sorted by the

highest mean. The ratings were based on a five-point metric: 1 = Strongly Disagree to 5 =

Strongly Agree. The biggest risks consumers associated with online shopping were item 10.8 “I

can’t examine the actual product” (M = 3.56) followed by item 10.9 “I am not able to touch and

feel the item” (M = 3.55). The least risk associated with online shopping was item 10.12 “It is

too complicated to place orders” (M = 2.30) and item 10.14 “Pictures take too long to come up”

(M = 2.37) (Table 4).

Table 5 displays the descriptive statistics for the perception of 22 benefit items sorted by

the highest mean. The top two benefits consumers associated with using the Internet for

69
shopping were 11.1 “I can shop in the privacy of my home” (M = 4.26) and 11.3 “I can shop

whenever I want” (M = 4.24). The least two benefits consumers associated with using the

Internet for shopping were 11.17 “I can buy on impulse in response to ads” (M = 3.70) and 11.21

“Internet shopping is less expensive and provides the best prices” (M = 3.82) (Table 5).

Table 6 displays the psychometric characteristics of the four (4) perceived benefits for the

UK sample. The Cronbach alpha reliability coefficient for shopping convenience was r = .88.

The Cronbach alpha reliability coefficient for product selection was r = .87. The Cronbach alpha

reliability coefficient for ease and comfort was r = .78 and the Cronbach alpha reliability

coefficient for hedonic enjoyment was r = .75. Cronbach’s alpha over .70 suggests that all scales

had adequate levels of internal reliability (Connelly, 2011).

Table 7 displays the psychometric characteristics of the four (4) perceived benefits for the

Indian sample. The Cronbach alpha reliability coefficient for shopping convenience was r = .87.

The Cronbach alpha reliability coefficient for product selection convenience was r = .86. The

Cronbach alpha reliability coefficient for hedonic enjoyment was r = .75. The Cronbach alpha

reliability coefficient for ease and comfort was r = .74. Cronbach’s alpha over .70 suggests that

all scales had adequate levels of internal reliability (Connelly, 2011).

Table 8 displays the psychometric characteristics of the four (4) perceived risks for the

UK sample. The Cronbach alpha reliability coefficient for time/convenience risk was r = .85.

The Cronbach alpha reliability coefficient for financial/privacy risk was r = .85. The Cronbach

alpha reliability coefficient for product risk was r = .79 and the Cronbach alpha reliability

coefficient for channel risk was r = .78. Cronbach’s alpha over .70 suggests that all scales had

adequate levels of internal reliability (Connelly, 2011).

70
 Table 9 displays the psychometric characteristics of the four (4) perceived risks for the

Indian sample. The Cronbach alpha reliability coefficient for financial/privacy risk was r = .85.

The Cronbach alpha reliability coefficient for time/convenience risk was r = .85. The Cronbach

alpha reliability coefficient for product risk was r = .86 and the Cronbach alpha reliability

coefficient for channel risk was r = .78.

Cronbach’s alpha over .70 suggests that all scales had adequate levels of internal

reliability (Connelly, 2011).

71
Table 1

Frequency Counts for Selected Variables (N = 210)

_____________________________________________________________________________________

Variable Category n %

_____________________________________________________________________________________

Age
18 - 34 years 210 100.0

Use cell phone for online purchase

Yes 210 100.0

How long used Internet

Less than 5
years 16 7.6
More than 5
years 194 92.4

Hours spent using the Internet

Less than 5
hours 17 8.1
5 hours 10 4.8
More than 5
hours 183 87.1

Used the Internet for Online Shopping

Yes 210 100

Money Spent on the Internet for Purchasesa

$0 - $150 24 11.4
$150 - $450 62 29.5
$450 - $750 48 22.9
$750 - $1,500 35 16.7
$1,500 - $2,250 14 6.7
$2,250 - $3,000 8 3.8
$3,000 - $3,500 4 1.9
Above $3,500 15 7.1
_____________________________________________________________________________________
a
Money Spent: Mdn = $600.
72
Table 1 Continued

______________________________________________________________________________

Variable Category n %

______________________________________________________________________________

Gender
Male 62 29.5
Female 148 70.5

Income Ranges b
$0 - $750 11 5.2
$750 - $1,500 28 13.3
$1,500 - $2,000 36 17.1
$2,000 - $3,000 48 22.9
$3,000 - $4,000 37 17.6
$4,000 - $5,000 18 8.6
Above $5,000 32 15.2

______________________________________________________________________________
b
Income: Mdn = $2,500.

Table 1 Continued

73
Table 2

Ratings Pertaining to the Shopping Experience Sorted by Highest Mean (N = 210)

______________________________________________________________________________

Item M SD
______________________________________________________________________________
3.6 I enjoy spending time browsing 4.18 0.84
3.5 I enjoy shopping 4.17 0.85
3.13 I can save a lot of money shopping around for
4.14 0.89
bargains
3.11 I pay a lot of attention to prices 4.09 0.97
3.12 I enjoy spending time browsing 4.06 0.88
3.4 Shopping puts me in a good mood 4.03 0.86
3.19 I like a great deal of variety 4.02 0.87
3.20 I like to try different things 4.01 0.87
3.10 I shop a lot for special deals 4.01 0.86
3.18 I like to try new styles 3.90 0.94
3.1 I like to buy popular brands 3.88 0.97
3.2 A well-known brand means good quality 3.78 0.98
3.17 I put a high value on convenience when shopping 3.71 0.95
3.21 Once I find a brand I like, I stick with it 3.71 0.94
3.9 I often like to shop even when I do not need anything 3.70 1.05
3.8 For me, shopping is a form of recreation 3.70 1.02
3.22 I try to stick to certain brands and stores 3.63 0.94
3.15 I usually buy at the most convenient place 3.56 1.03
3.14 I tend to travel several shopping places to compare
3.45 1.14
prices
3.16 I shop where it saves time 3.44 1.04
3.3 I don’t pay much attention to brand names 2.91 1.27
3.23 I shop as quickly as I can to get it over with 2.89 1.33
3.25 There are very few things I would enjoy shopping for 2.80 1.34
3.7 I don’t like to spend much time shopping 2.66 1.31
3.24 I do not go shopping until I absolutely have to do it 2.66 1.30
______________________________________________________________________________

Note. Ratings based on a five-point metric: 1 = Strongly Disagree to 5 = Strongly Agree

74
Table 3

Frequency Counts for Reasons the Internet is Used Sorted by Highest Frequency (N = 210)

______________________________________________________________________________

Rating n %
______________________________________________________________________________

6.1 Checking Email 200 95

6.2 Searching for Information 187 89
6.4 Shopping 181 86
6.5 Surfing the Internet 170 81
6.11 Networking/Social 168 80
6.7 Listening to Music or Watching a Video
Clip 160 76
6.6 Paying Bills Online 147 70
6.8 Playing Online Games 132 63
6.10 Work Home/Office 101 48
6.3 Buying or Making Reservations for
Travel 84 40
6.9 Making a Donation to a Charity Online 36 17
6.12 Use Internet - Other 21 10
______________________________________________________________________________

Note. Respondents were able to endorse multiple reasons.

75
Table 4

Ratings of Perception of Risk Items Sorted by Highest Mean (N = 210)

______________________________________________________________________________

Item M SD
______________________________________________________________________________

10.8 I can't examine the actual product 3.56 1.12

10.9 I am not able to touch and feel the item 3.55 1.16
10.10 I must pay for shipping and handling 3.49 1.11
10.11 I must wait for merchandise to be delivered 3.47 1.17
10.6 My credit card number may not be secure 3.19 1.20
10.15 It is difficult to return items that I do not want to
keep 3.09 1.20
10.4 My personal information may not be kept 3.01 1.18
10.5 I may not get what I want 2.95 1.17
10.7 I might be overcharged 2.75 1.10
10.2 I may not get the product 2.67 1.06
10.13 It is difficult to find appropriate websites 2.47 1.16
10.1 I can't trust the online company 2.47 1.18
10.3 I may purchase something by accident 2.40 1.16
10.14 Pictures take too long to come up 2.37 1.09
10.12 It is too complicated to place orders 2.30 1.14
______________________________________________________________________________

Note. Ratings based on a five-point metric: 1 = Strongly Disagree to 5 = Strongly Agree

76
Table 5

Ratings of Perception of Benefit Items Sorted by Highest Mean (N = 210)

_________________________________________________________________________

Item M SD
_________________________________________________________________________

11.1 I can shop in the privacy of my home 4.26 0.89

11.3 I can shop whenever I want 4.24 0.89
11.16 It's exciting to receive a package 4.19 0.86
11.2 I don't have to leave home 4.16 0.93
11.22 It is easy to compare prices on the Internet 4.14 0.84
11.4 I can save the effort of visiting stores 4.10 0.84
11.5 I can avoid the hassle of driving and parking 4.10 0.87
11.9 I can access many brands and retailers 4.08 0.89
11.6 Items from everywhere are available 4.07 0.92
11.14 I don't have to deal with pushy salespeople on the
4.07 0.90
Internet
11.8 I can get a broader selection of products 4.07 0.88
11.10 I can find special products not available elsewhere 4.02 0.88
11.11 I don't have to wait to be served 4.00 0.99
11.7 I can get good product information online 4.00 0.85
11.15 I can try a new experience 3.98 0.90
11.19 Internet shops make shopping fun 3.94 0.93
11.18 I can custom-design products 3.89 0.94
11.12 I won't be embarrassed even if I don't buy 3.86 1.07
11.13 I don't get any busy signal 3.83 1.02
11.20 Internet shopping is a subject of good conversation 3.83 0.99
11.21 Internet shopping is less expensive and provides the best
3.82 0.95
prices
11.17 I can buy on impulse in response to ads 3.70 1.11
_________________________________________________________________________

Note. Ratings based on a five-point metric: 1 = Strongly Disagree to 5 = Strongly Agree

77
Table 6

Psychometric Characteristics for Perceived Benefits UK Sample (N = 210)

______________________________________________________________________________

Number

Score of Items M SD Low High α

______________________________________________________________________________

Shopping Convenience Benefit 5 4.17 0.72 1 5 .88

Product Selection Benefit 6 4.01 0.70 1 5 .87
Ease and Comfort Benefit 4 3.55 0.49 1 5 .78
Hedonic/Enjoyment Benefit 3 3.84 0.81 1 5 .76
______________________________________________________________________________

Note. Ratings based on a five-point metric: 1 = Strongly Disagree to 5 = Strongly Agree

78
Table 7

Psychometric Characteristics for Perceived Benefits Indian Sample (N = 210)

______________________________________________________________________________

Number

Score of Items M SD Low High α

______________________________________________________________________________

Shopping Convenience Benefit 5 4.17 0.72 1 5 .88

Product Selection Benefit 6 4.07 0.70 1 5 .87
Hedonic/Enjoyment Benefit 3 3.84 0.81 1 5 .76
Ease and Comfort Benefit 3 3.96 0.78 1 5 .74
______________________________________________________________________________

Note. Ratings based on a five-point metric: 1 = Strongly Disagree to 5 = Strongly Agree

79
Table 8

Psychometric Characteristics for Perceived Risks UK Sample (N = 210)

______________________________________________________________________________

Number

Score of Items M SD Low High α

______________________________________________________________________________

Time/Convenience Risk 3 2.38 0.99 1 5 .86

Financial/Privacy Risk 4 2.95 0.96 1 5 .86
Product Risk 3 3.43 0.97 1 5 .79
Channel Risk 2 3.48 1.03 1 5 .78
______________________________________________________________________________

Note. Ratings based on a five-point metric: 1 = Strongly Disagree to 5 = Strongly Agree

80
Table 9

Psychometric Characteristics for Perceived Risks Indian Sample (N = 210)

______________________________________________________________________________

Number

Score of Items M SD Low High α

______________________________________________________________________________

Financial/Privacy Risk 4 2.95 0.96 1 5 .86

Time/Convenience Risk 3 2.38 0.99 1 5 .86
Product Risk 2 3.55 1.07 1 5 .86
Channel Risk 2 3.48 1.03 1 5 .78
______________________________________________________________________________

Note. Ratings based on a five-point metric: 1 = Strongly Disagree to 5 = Strongly Agree

81
 Analysis of Hypotheses

Research Hypothesis One

Research Hypothesis One predicted, “There are significant differences in perceived

benefits towards online shopping between American and British consumers.” This hypothesis

was addressed using one-sample t-tests comparing the current sample with the similar mean

ratings from the Wani and Malik (2013) article (Table 10). Inspection of the table found the

British sample to rate ease and comfort higher (p = .001) but hedonic/enjoyment lower (p =

.001). This combination of findings provided support for research hypothesis one.

Table 10

Perceived Benefit Comparison Between the American Sample and the British Sample. One
Sample t Tests
_____________________________________________________________________________________

Current Sample Wani & Malik (2013) a

Scale M SD M t p
_____________________________________________________________________________________

4.17 0.72 4.21 0.72 0.48

Benefit-Shopping
Convenience

Benefit-Product
4.02 0.7 4.01 0.2 0.84
Selection

Benefit-Ease and
3.55 0.49 3.88 9.74 0.001
Comfort

Benefit-
3.84 0.82 2.82 18.18 0.001
Hedonic/Enjoyment

_____________________________________________________________________________________

Note. Ratings based on a five-point metric: 1 = Strongly Disagree to 5 = Strongly Agree

82
Research Hypothesis Two
Research Hypothesis Two predicted, “There are significant differences in perceived

benefits towards online shopping between American and Indian consumers.” This hypothesis

was addressed using one-sample t-tests comparing the current sample with the similar mean

ratings from the Wani and Malik (2013) article (Table 11). Inspection of the table found the

American sample to rate all four benefits significantly higher at the p = .001 level. This

combination of findings provided support for research hypothesis two.

Table 11

Perceived Benefit Comparison Between the American Sample and the Indian Sample. One
Sample t Tests
_____________________________________________________________________________________

Current Sample Wani & Malik (2013) a

Scale M SD M t p
______________________________________________________________________________

Benefit-
Shopping 4.17 0.72 3.75 8.5 0.001
Convenience
Benefit-
Product 4.08 0.7 3.58 10.27 0.001
Selection
Benefit-
Hedonic 3.84 0.82 3.2 11.43 0.001
benefit
Benefit-Ease
3.97 0.79 3.61 6.59 0.001
and Comfort
_____________________________________________________________________________________

Note. Ratings based on a five-point metric: 1 = Strongly Disagree to 5 = Strongly Agree

83
Research Hypothesis Three

Research Hypothesis Three predicted, “There are significant differences in perceived

risks towards online shopping between American and British consumers.” This hypothesis was

addressed using one-sample t-tests comparing the current sample with the similar mean ratings

from the Wani and Malik (2013) article (Table 12). Inspection of the table found the British

sample to rate three of the four risks (financial/privacy, time/convenience, and product)

significantly higher at the p = .001 level. This combination of findings provided support for

research hypothesis three.

Table 12

Perceived Risk Comparison Between the American Sample and the British Sample. One Sample t
Tests
_____________________________________________________________________________________
Current Sample Wani & Malik (2013) a

Scale M SD M t p
_____________________________________________________________________________________

Financial/Privacy
2.96 0.96 3.31 5.27 0.001
Risk

Time/Convenience
2.39 0.99 2.84 6.59 0.001
Risk

Product Risk 3.56 1.07 4.14 7.87 0.001

Channel Risk 3.49 1.03 3.5 0.21 0.83

______________________________________________________________________________

Note. Ratings based on a five-point metric: 1 = Strongly Disagree to 5 = Strongly Agree

84
Research Hypothesis Four

Research Hypothesis Four predicted, “There are significant differences in perceived risks

towards online shopping between American and Indian consumers.” This hypothesis was

addressed using one-sample t-tests comparing the current sample with the similar mean ratings

from the Wani and Malik (2013) article (Table 12). Inspection of the table found the Indian

sample to rate product risk (p = .001) and channel risk (p = .02) higher. This combination of

findings provided support for research hypothesis three.

Table 13

Perceived Risk Comparison Between the American Sample and the Indian Sample. One Sample t
Tests
_____________________________________________________________________________________

Current Sample Wani & Malik (2013) a

Scale M SD M t p
_____________________________________________________________________________________

Time/Convenience 2.39 0.99 2.26 1.87 0.06

Risk

Financial/Privacy
2.96 0.96 2.9 0.9 0.37
Risk

Product Risk 3.44 0.97 4.13 10.32 0.001

Channel Risk 3.49 1.03 3.65 2.32 0.02

_____________________________________________________________________________________

Note. Ratings based on a five-point metric: 1 = Strongly Disagree to 5 = Strongly Agree

85
 Summary

The purpose of this exploratory, quantitative study was to examine differences in

perceived benefits and risks towards online shopping between American and British consumers

as well as American and Indian consumers. The sample was U.S. millennial online consumers

between the ages of 18 to 34 years old. Millennials were examined because they make up the

largest living generation of the nation’s population, and they account for $200 billion in annual

buying power.

Four hypotheses were tested, and all supported. Hypothesis 1 compared benefit

differences between the American and British sample (Table 10). Hypothesis 2 compared

benefit differences between the American and Indian sample (Table 11). Hypothesis 3 compared

risk differences between the American and British sample (Table 12). Hypothesis 4 compared

risk differences between the American and Indian sample (Table 13).

In Chapter 5, the researcher will discuss and interpret the results of the study. The

findings of the study will be analyzed to help marketers develop strategies to promote online

shopping across countries and improve marketing efforts to increase Internet sales from the

millennial generation.

86
 CHAPTER 5. CONCLUSIONS

Introduction

Chapter 5 addresses and discusses the meaning of this study and its implication on the

research questions, previous literature, and e-commerce marketers. This chapter will also

discuss design and methodological improvements to strengthen the study if replicated in the

future. The first section includes a summary of the results of the research. Next, is an evaluation

of the research questions, an analysis of the fulfillment of the research purpose, contribution to

the business problem, and recommendations for future research. The final section provides

concluding remarks on the study.

Summary of Results

The sample population for this study were millennial residents (ages 18-34 years old)

who live in the United States. Millennials were targeted because they are considered the “ultra-

connected” generation (Whitler, 2015) who are attached to their smartphones, tablets, and

laptops (Newman, 2015). The millennial generational cohort also has an abundance of buying

power, and they influence other generations, which is valuable to marketers who wish to expand

their business through e-commerce sites. The study’s participants used the Internet to make an

online purchase before participating in the survey. The criteria allowed the researcher to gather

data regarding their beliefs about online shopping risks and benefits and their attitudes towards

making online purchases.

Forty-two percent (88) of the shoppers for this study indicated they enjoyed shopping,

followed by they paid a lot of attention to prices (88). Many participants acknowledged they can

save a lot of money shopping around for bargains (86), and they enjoy spending time browsing

87
(85) suggesting that while they enjoy shopping, this generational cohort prefers to shop for

bargains and will spend time looking for them. Sixty percent (128) of respondents indicated they

agreed or strongly agreed with placing a high value on convenience when shopping. In fact,

fifty-five percent (116) revealed they usually buy at the most convenient place supporting

research (Forsythe et al., 2006) that consumers are motivated to shop online because of benefits

such as convenience, ease, comfort and hedonic enjoyment, which positively relate to attitudes

towards online shopping.

According to the Theory of Reasoned Action, behavioral intention is a precursor to

behavior and attitudes and norms influence intention, which is the main motivator of behavior

(Fishbein & Ajzen, 1975). TRA considers behavioral intentions rather than attitudes as the main

predictor of behavior. Almost fifty percent (49%) of respondents indicated they strongly

disagreed or disagreed with using the Internet to seek out little information supporting research

that U.S. millennials intend to use the Internet to buy products or seek information. TRA was

used to explore respondent attitudes to make predictions about the shopping behavior for this

generational cohort. The behavioral intention construct for this study was the perceived

likelihood that U.S. millennials would continue to shop online. The subjective norm was their

belief about whether most shoppers shop online or shop at traditional brick-and-mortar stores.

This study investigated four (4) variables related to perceived benefits. The four (4)

variables related to perceived benefits were shopping convenience, product selection, ease and

comfort, and hedonic enjoyment. Four (4) variables related to risk were also examined to

determine their impact on online shopping and purchasing behavior. The four (4) variables

related to perceived risks were time/convenience, financial/privacy, product risk, and channel

risk.
88
 Evaluation of Research Questions

RQ1: Are there significant differences in perceived benefits towards online shopping

between American and British consumers? RQ2: Are there significant differences in perceived

benefits towards online shopping between American and Indian consumers? RQ3: Are there

significant differences in perceived risks towards online shopping between American and British

consumers? RQ4: Are there significant differences in perceived risks towards online shopping

between American and Indian consumers?

The results of the t-tests for perceived benefits (shopping convenience, product selection,

ease and comfort, and hedonic enjoyment) between American and British consumers found no

statistically significant differences between the UK and Americans for shopping convenience

and product selection. However, the comparisons found UK online shoppers felt higher levels of

perceived benefits of online shopping regarding ease and comfort and the U.S. millennials felt

higher levels of perceived benefits of online shopping regarding hedonic/enjoyment benefits.

The comparisons to determine differences in perceived benefits towards online shopping

between American and Indian consumers found the U.S. respondents perceived higher levels of

benefits of online shopping regarding shopping convenience, product selection,

hedonic/enjoyment and ease and comfort.

The results of the one sample t-tests for perceived risks (time/convenience,

financial/privacy, product risk, and channel risk) between American and British consumers

found no statistically significant difference in the ratings for time/convenience risk or

financial/privacy risk. The UK online shoppers felt a higher level of perceived risks regarding

product risk and channel risk. As far as perceived risks between American and Indian

89
consumers, Indian online shoppers felt a higher level of perceived risks regarding

financial/privacy risk, time/convenience risk, and product risk than their U.S. counterparts did.

The comparisons did not identify any statistically significant difference in channel risk between

the two countries.

The results of this study support the alternative hypotheses that there are significant

differences in perceived risks, benefits towards online shopping between American and British

shoppers and American and Indian shoppers. Differences in the cost of living between the UK

and India may explain disparities in the levels of perceived risks and benefits that online

shoppers have in these countries (Wani & Malik, 2013). The cost of living index is an indicator

of consumer goods price, including groceries, restaurants, transportation and utilities. According

to research (“Cost of Living,” 2016), the cost of living index in the U.S. (73.21) was higher than

in the U.K. (72.73) and the cost of living index for India (24.02) was lower than both the U.S.

and the U.K.

For Indian online shoppers, constructs such as financial/privacy risk, time/convenience

risk, and product risk are important because their average monthly disposable salary was $509

compared to $2,853 for the U.S. (“Cost of Living Comparison,” 2016). Indian online shoppers

are risk averse (Mitra & Saxena, 2013), and lower disposal incomes may result in them being

labeled as conscious consumers. Thus, these shoppers may evade transactions they consider a

waste of time or that will result in them losing money. Hofstede (2011) proposed six cultural

dimensions to examine cultural differences between countries. The indulgence vs. restraint

(IVR) dimension is the extent people can control their desires and impulses. According to

Hofstede (2011), India is considered a restraint society with stricter social norms where

90
gratifications of drives are suppressed and regulated. India’s IVR dimension is low (26)

indicating actions are restrained by social norms, and gratification is controlled and regulated,

which supports the results of this study that Indian online consumers had lower perceived

benefits toward online shopping (Hofstede, 2011). The IVR dimension for the United States is

higher (68) than it is for India, indicating Americans have less control over impulses, which

supports the results of this study that the U.S. millennial online shoppers felt higher perceived

benefits toward online shopping than Indian online shoppers.

The UK’s average monthly disposal salary closely matches that of the U.S. at $2,250

(“Cost of Living Comparison,” 2016), which explains why there was no statistically significant

difference in the ratings between the UK and Americans for time/convenience risk or

financial/privacy risk. British online shoppers may not be as apprehensive to take risks because

they have more disposal income. Moreover, they are careful spenders and require more

convincing to make purchases (Chahal, 2014). According to Hofstede (2011), the IVR

dimension for the UK is higher (69) than for the United States. A higher IVR for the UK

supports the results of this study that showed the UK and U.S. online shoppers felt the same level

of perceived benefits for shopping convenience and product selection but online consumers in

the UK felt a higher level of perceived benefits for ease and comfort. Although the high IVR

score indicates UK online shoppers are more apt to realize their impulses and desires concerning

enjoying life and having fun, the UK respondents felt a higher level of perceived risks regarding

product risk and channel risk in online shopping, placing higher values on touching and feeling

products before purchasing them.

91
 The UK decided to leave the European Union (EU) in 2016. Many believed the EU

membership boosted the British economy and made it more dynamic (“The economic

consequences,” 2016). Thus far, the departure from the EU has resulted in the pound losing

value and increased costs for companies (Wheeler & Hunt, 2016). Future studies on the

economic impact of online shoppers in the UK should examine the impact of the UK’s exit from

the EU and its effect on businesses and consumers who use e-commerce to sell and buy products.

Research (Bhatnagar et al., 2000) about perceived risks and benefits towards online

shopping relates that consumers have concerns about shopping on the Internet and are

apprehensive about buying goods due to perceived risks about online shopping. Researchers

(Liu et al., 2013) revealed variables such as (a) unable to touch or feel products, (b) lack of trust,

(c) credit card security, (d) information privacy and (e) difficulty returning products impacted

online shopping. Previous research identified financial performance, product performance,

psychological, physical and time/convenience loss risks associated with online shopping

behavior (Akaah & Korgaonkar, 1988; Brooker 1984; Jacoby & Kaplan, 1972; Peter & Tarpey,

1975; Garner, 1986; Mitchell, 1992; Schiffman & Kanuk, 1994). The results of this study

support previously held beliefs that consumers are motivated to shop online because of

convenience and access to information, and that U.S. millennials require more surprise and

delight from online retailers who seek their business (Scarano, 2016). It is projected that

millennials will spend $1.4 trillion annually by 2020 (Scarano, 2016). According to Cue

Connect research (2016), retailers should know the consumers they are talking to, what

consumers are saying and why they are saying it to capture their share of the money spent by

millennials each year.

92
 Fulfillment of Research Purpose

The goal of this study was to examine how perceived risks and benefits influence the

consumer purchase process during online shopping for millennials in the United States. The

findings of this study support previous studies that online shopping is considered riskier than

shopping at traditional brick-and-mortar stores. The U.S. millennial generational cohort

recognizes the benefits of e-commerce, but they also share the same time/convenience and

financial/privacy risk concerns as the UK and the same channel risk concerns as Indian shoppers,

which impedes online shopping. Since beliefs and attitudes were thought to affect online

purchase intentions, then marketers can use the results of this study to influence the buying

behavior of this generational cohort through marketing strategies and innovative solutions to

increase purchases. The comparison between online shopping behaviors between consumers in

different countries can be used to help international marketers and businesses encourage online

shopping across countries and improve marketing efforts to capture additional Internet sales from

the millennial generation.

Perceived benefits encourage consumers to engage in online shopping, and perceived

risks make consumers apprehensive about buying on the Internet (Bhatnagar et al., 2000;

Forsythe et al., 2006; Fram & Grandy, 1997). According to comScore (2014) research, 198

million U.S. consumers made an online purchase in 2014. Online sales in the U.S. are expected

to reach $523 billion by 2020 (Lindner, 2016) as compared to $99 billion in the United Kingdom

and $7 billion in India in 2015 (“India,” n.d.; ‘UK,' 2015). A lack of control over personal data

and access by unauthorized users plagued e-commerce growth, and online shoppers are cautious

about using the Internet to make online purchases because they fear unauthorized intrusion and

93
misuse of data collected about them. Marketers should understand the behavior of this

generational cohort and pursue opportunities to increase consumer perceptions of the benefits of

e-commerce while reducing security and time issues to address fears and concerns about using

their sites to purchase products.

Contribution to Business Problem

Wani and Malik (2013) argued consumers are reluctant to use the Internet for shopping

because of perceived risk in online transactions, and perceived risks and benefits are possible

antecedents of consumer attitudes towards online shopping, which determines online purchase

intentions for products (Wani & Malik, 2013). The literature relates that benefits and perceived

risk influence attitudes towards online shopping and online buying behavior and the anticipation

of perceived risks affect online buying behavior (Childers et al., 2001; Forsythe et al., 2006;

Soopramanien et al., 2007). The results of this study showed that although U.S. millennial

shoppers recognized perceived risks and benefits when shopping online, they do not intend to

stop using the Internet to buy products.

Privacy and security risks are beliefs that a consumer’s credit card and personal

information is vulnerable to thieves when shopping on the Internet (Wani & Malik, 2013). Even

though the literature indicates perceived risk is a barrier to increased Internet sales (Cunningham

et al., 2005), the respondents in this study indicated they would use the Internet to buy products

in the next six (6) months. This study provided a valuable contribution to the research literature

on e-commerce and millennials. The findings of the study lend support of developing mitigating

strategies to engage millennials and increase sales.

Recommendations for Future Research

94
 This study used Qualtrics to collect the data from Qualtrics audience members. By using

Qualtrics, all responses for the study were limited to millennials who had access to the Internet to

take the study. Furthermore, the participants of the study resided in the U.S. who may not feel

the same way about online shopping as millennials located in different countries. The current

research should be replicated using a different sample group based on age to determine if

perceived risks and benefits differ for other age groups.

The small sample size limited the researcher’s ability to conduct detailed research for this

study. Future research should increase the sample size to eliminate any discrepancies in the data.

The variables researched in this study and the variables identified by Wani and Malik (2013),

Akaah and Korgaonkar (1988), Brooker (1984), Jacoby and Kaplan (1972), Peter and Tarpey

(1975), Garner (1986), Mitchell (1992), Schiffman and Kanuk (1994) deserve additional

attention to determine their influence on online shopping behavior for millennials. If future

studies use the same survey, the options should be modified to ensure respondents only select

answers that pertain to the question. The rating scale should also be reviewed to ensure the

points are clear and precise to extract the necessary information.

Secondly, Korgaonkar et al. (2004) discovered product type and type of Internet retailer

influenced online shopping preferences for Hispanic consumers. Future research could examine

the influence of product categories, product type, type of Internet retailer and attitudes about

online shopping for Hispanic consumers to gain a better understanding of the influence these

variables have on purchase preferences and product categories for online shopping.

Thirdly, this study used Cronbach’s alpha to determine if significant differences existed

between perceived benefits and risks towards online shopping between shoppers in different

95
countries. A structural equation model (SEM) would examine the relationship between latent

and observed variables (Brandmaier, von Oertzen, McArdle, & Lindenberger, 2013). The

relationship between these variables requires additional research to provide marketers with more

information on the shopping and purchasing behavior of millennials. Future studies that use

structural equation models can provide information on the causal relationship between the

variables.

Lastly, Park and Jun (2003) found culture influenced Internet usage and perceived risks

of Internet buying behavior. Future research should examine relationships between Internet

usage and buying behavior and cultural dimensions such as power distance and uncertainty

avoidance to determine how cultural dimensions affect online shopping behavior. The influence

of other demographic and personal variables such as gender, occupation, and personality traits

should also be conducted to examine the relationship of these variables on online shopping

behavior.

Based on the buying power of millennials, it is important for marketers to understand the

millennial generational cohort and their online shopping and purchasing behavior. Marketers

need millennial shoppers to move past the information gathering stage and make online

purchases. Research (U.S. Millennial, 2016) showed 91% of millennials reported making a

purchase on their smartphones monthly. Although this research did not confirm that millennials

prefer to use smartphones to transact purchases, more research should be conducted to determine

if this generational cohort will increase their mobile purchasing habits to complete transactions

since they influence older and younger generational cohorts (Annalect, 2015).

Conclusions

96
 This study investigated whether there are significant differences in perceived risks,

benefits towards online shopping between American and British consumers as well as American

and Indian consumers. As discussed in Chapter 1, e-commerce statistics differ between the

United States, United Kingdom, and India. The differences justified the analysis of perceived

benefits and risks and attitudes toward shopping online between these countries to determine

their impact on e-commerce sales. The analysis discovered both significant and non-significant

differences in perceived risks, benefits towards online shopping between U. S. millennials and

British and Indian consumers.

Millennials are the most studied generation because they differ from other generational

cohorts. The annual buying power and spending habits for this generation make them major

contributors to the market. This generational cohort is instrumental in influencing purchases

made by others since they are vocal consumers and early adopters. It is estimated that the peak

buying power of this generation is still to come, which means marketers must develop well-

thought-out strategies to gain their business. The results of this research provided a closer look

into the attitudes and buying behavior of this generational cohort, thus establishing the

foundation for future studies. The researcher hopes this study will inspire marketers to learn

more about how this generation feels about online shopping to successfully engage and interact

with them and to capture more of the buying power that this generational cohort possesses.

97
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 APPENDIX A. STATEMENT OF ORIGINAL WORK

Statement of Original Work and Signature

I have read, understood, and abided by Capella University’s Academic Honesty Policy and

Research Misconduct Policy, including the Policy Statements, Rationale, and Definitions.

I attest that this dissertation or capstone project is my own work. Where I have used the ideas or

words of others, I have paraphrased, summarized, or used direct quotes following the guidelines

set forth in the APA Publication Manual.

Learner name and date: ______________________________________________________

Mentor name and school: _____________________________________________________

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116
APPENDIX B. AN EXPLORATORY STUDY ON PERCEIVED RISK, BENEFITS, AND

ONLINE BUYING BEHAVIOR FROM A CROSS-CULTURAL PERSPECTIVE

From A comparative study of online shopping behaviour: Effects of perceived risks and benefits, by Wani and
Malik, 2013, International Journal of Marketing & Business Communication, 2(4), p. 45. Copyright 2013 by Wani
and Malik. Reprinted with permission.

What is your age?

 0 - 17 yrs
 18 - 34 yrs
 35 - 41 yrs
 42 - 48 yrs
 49 - 55 yrs
 Above 55

Have you used a cell phone to make an online purchase?

 Yes
 No

We would like to know the different ways you like to shop. Please indicate your level of agreement with each of the
statements using the following scale. Click on the circle that best matches your response to each statement.

Strongly Neither Agree Strongly

Disagree Agree
Disagree nor Disagree Agree
I like to buy
popular     
brands.
A well-known
brand means     
good quality.
I don’t pay
much attention
    
to brand
names.
Shopping puts
me in a good     
mood.
I enjoy
    
shopping.
I enjoy
spending time     
browsing.
I don’t like to
spend much     
time shopping.

117
 For me,
shopping is a
    
form of
recreation.
I often like to
shop even
    
when I do not
need anything.
I shop a lot for
    
special deals.
I pay a lot of
attention to     
prices.
I enjoy
spending time     
browsing.
I can save a lot
of money
shopping     
around for
bargains
I tend to travel
several
shopping
    
places to
compare
prices.
I usually buy
at the most
    
convenient
place.
I shop where it
    
saves time.
I put a high
value on
convenience     
when
shopping.
I like to try
    
new styles.
I like a great
    
deal of variety.
I like to try
different     
things
Once I find a
brand I like, I     
stick with it.

118
 I try to stick to
certain brands     
and stores.
I shop as
quickly as I
    
can to get it
over with.
I do not go
shopping until
    
I absolutely
have to do it.
There are very
few things I
    
would enjoy
shopping for

In this part, we would like to learn about your familiarity with using the Internet. We are also interested in learning
how the Internet has been used in your life. Please answer each question below to your best knowledge. How long
have you been using the Internet?

 0 yrs
 1 yr
 2 yrs
 3 yrs
 4 yrs
 5 yrs
 + 5 yrs

On average, how many hours do you spend per week using the Internet?

 0 hrs
 1 hr
 2 hrs
 3 hrs
 4 hrs
 5 hrs
 + 5hrs

For what purposes have you used the Internet? Please check all that apply.

 Checking Email
 Searching For Information
 Buying Or Making Reservations For Travel
 Shopping
 Surfing The Internet For Fun
 Paying Bills Online
 Listening To Music Or Watching A Video Clip
 Playing Online Games
 Making A Donation To A Charity Online
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 Work Home/Office
 Networking / Social
 Other

Have you used the Internet for online shopping?

 Yes
 No

Over the last 12 months, approximately how much have you spent on the Internet for purchases?

 0-150
 150-450
 450-750
 750-1500
 1500-2250
 2250-3000
 3000-3500
 above 3500

On this question select strongly disagree to verify your response.

 Strongly agree
 Agree
 Somewhat agree
 Neither agree nor disagree
 Somewhat disagree
 Disagree
 Strongly disagree

Please indicate your level of agreement with each of the statements using the following scale. Please circle the
number that best matches your response to each statement.

Strongly Neither Agree

Disagree Agree Strongly Agree
Disagree nor Disagree
In general, I
am among the
last in my
circle of
friends to visit
    
a company's
new Web site
when it
appears on the
WWW
If I heard that
a new retail
    
site was
available on

120
 the Web, I
would not be
interested
enough to
shop from it
Compared to
my friends, I
seek out
relatively little     
information
over the
WWW
In general, I
am the last in
my circle of
friends to     
know of any
new retail
Web sites

The following set of statements relates to the different risks that consumers may associate with online shopping.
Please indicate your level of agreement with each of the statements using the following scale. Click on the circle that
best matches your response to each statement.

Strongly Neither Agree

Disagree Agree Strongly Agree
Disagree nor Disagree

I can't trust the

online     
company

I may not get

    
the product

I may
purchase
    
something by
accident
My personal
information
    
may not be
kept

I may not get

    
what I want

My credit card
number may     
not be secure

121
 I might be
    
overcharged

I can't
examine the     
actual product
I am not able
to touch and     
feel the item
I must pay for
shipping and     
handling
I must wait for
merchandise     
to be delivered
It is too
complicated to     
place orders
It is difficult to
find
    
appropriate
websites
Pictures take
too long to     
come up
It is difficult to
return items
    
that I do not
want to keep

The following set of statements relates to the different benefits consumers seem to associate with using the Internet
for shopping. Please indicate your level of agreement with each of the statements using the following scale. Click on
the circle that best matches your response to each statement.

Strongly Neither Agree

Disagree Agree Strongly Agree
Disagree nor Disagree
I can shop in
the privacy of     
my home
I don't have to
    
leave home
I can shop
whenever I     
want
I can save the
effort of     
visiting stores

122
I can avoid the
hassle of
    
driving and
parking
Items from
everywhere     
are available
I can get good
product
    
information
online
I can get a
broader
    
selection of
products
I can access
many brands     
and retailers
I can find
special
products not     
available
elsewhere
I don't have to
wait to be     
served
I won't be
embarrassed
    
even if I don't
buy
I don't get any
    
busy signal
I don't have to
deal with
pushy     
salespeople on
the Internet
I can try a new
    
experience
It's exciting to
receive a     
package
I can buy on
impulse in
    
response to
ads

123
 I can custom-
design     
products
Internet shops
make     
shopping fun
Internet
shopping is a
subject of     
good
conversation
Internet
shopping is
less expensive     
and provides
the best prices
It is easy to
compare
    
prices on the
Internet

Now we would like to learn your opinion about buying products on the Internet. Please indicate your level of
agreement with each of the statements using the following scale. Click on the circle that best matches your response
to each statement. Buying products from the Internet is

1 2 3 4 5
Bad:Good
    

Unpleasant
    
:Pleasant

Unfavorable
    
:Favorable

I ________ buying products from the Internet.

1 2 3 4 5
Dislike : Like
    

For me, buying products from the Internet in the next 6 months is

1 2 3 4 5

124
 Unlikely :
    
Likely

Improbably:
    
Probably

Impossible
    
:Possible

Please select your gender

 Male
 Female

Which of the following ranges include your total monthly household income?

 0-750
 750-1500
 1500-2000
 2000-3000
 3000-4000
 4000-5000
 Above 5000

125