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PERCEIVED RISK OF PURCHASING ONLINE by Matt Pollington Coker et al.

identify in the articleMeasuring internet product purchase risk that those surveyed who had purchased a mobile phone, or a digital camera through the internet on a previous occasion, had a lower perceived risk of making another purchase of the same product online. Supporting this concept of experience, Veerasamy et al. establish in the study; Online consumer buying behavior amongst tertiary students in the greater Durban area that there isa strong intention to purchase leisure items over the internet. This would suggest that the conclusion of Veerasamy et al. that ‘marketers need to be aware of consumer education levels’, while just, would not have a significant impact should the user have previously purchased from the product category. Furthermore, it is clear that the product type and category is a common factor on the impact of perceived risk of purchasing online. In the presentation of Internet Purchase Product risk (IPPR), Coker et al. describe a book product to have a median IPPR of 23, and a Jacket product to have an IPPR of 38, a significant difference. Furthermore, Veerasamy et al. demonstrate the intention to buy a book at 33%, and clothing 40%. This shows that a book as a product type has a high intention and a low perceived risk of purchasing online, whilst a jacket as a product type possess a high intention, but a high associated risk. This is because the jacket as an item bears more factors which can potentially go wrong. For example sizing choice can result in a risk of a poor fit, i.e. there is a higher uncertainty of the jacket product type not functioning at some expected level (Biswas and Biswas , 2004). Further study could be implemented to assess the IPPR against the product value. Wayne D Hoyer et al. identify that; “Perceived risk…tends to be higher…when brands differ fairly substantially in quality and might cause the consumer to make an inferior choice” However, neither study by Coker et al., nor Veerasamy et al. explore the impact of a product brand perception on the perceived risk of purchase. Coker et al. however do recognize the ‘antedents’ of homogenous products. Curtis P et al. cite Smith and Park (1992) on the impact of brand on perceived risk: “Smith and Park (1992) argued that stronger brands might have a greater ability to reduce perceived risk…” Curtis P et al. (2005) It is possible therefore, that similar products from different brands could enable a user to establish a lower perceived risk of, and higher intention, to purchase. There is a clear relationship between available information and perceived risk of purchasing online. Veerasamy et al. found that while 63% are willing (Likert 1-3/5) to purchase over the internet, 30% of those surveyed use the internet for information search. Furthermore, the article also highlights the advantage of information in “electronic commerce” as; “Increased information about products and brands from manufacturers and dealers…[plus] independent agencies”,

andthe disadvantages of information as: “Information overload from too much readily available data… / Time and effort costs to access information.” It can therefore be concluded that an optimum balance between the amount of, and the right type of information (i.e. rich media), could yield a more efficacious result in reducing perceived risk. This is further identified by Wayne D Hoyer et al.: “Perceived risk…tends to be higher (1) when little information is available about the offering…(3)when the offering has a high price, (4) when the offering is technologically complex)”

References: Veersamay et al.;Online consumer buying behavior amongst tertiary students in the greater Durban area; DayaneethieVeerasamy, Jeevarathnam P Govender and WaseemJadwat; Durban University of Technology, 2011 Coker et al.; Measuring internet product purchase risk, Coker B., Ashill N., Hope B.; European Journal of Marketing; Vol. 45 No. 7/8, 2011 Biswas and Biswas, 2004; The diagnostic role of signals in the context of perceived risks in online shopping: do signals matter more on the web?;Biswas, D., Biswas A.; Journal of Interactive Marketing, Vol. 18, pp. 30-45, 2004 Curtis P et al. (2005); Online consumer psychology: understanding and influencing consumer behavior in the virtual world; Curtis P. Haugtvedt, Karen A. Machleit, Richard Yalch; Publisher Psychology Press, 2005 Wayne D Hoyer et al. (2009); Consumer Behavior; Wayne D. Hoyer, Deborah J. Macinnis; Edition 5, revised; Publisher Cengage Learning, 2009