Consumers Perception Towards Internet Purchase in the Uk

CHAPTER 1 INTRODUCTION

1.1 BACKGROUND FOR THE STUDY

The Internet has grown tremendously during the past years. It radically changes the way people live, work and consume. It represents a tremendous opportunity as well as threats. As Chaffey and his colleagues (2003, p. xi) state: ÐŽoIt gives consumers a much wider choice of products, services and prices from different suppliers and the means to select and purchase items more readily. For organizations, it gives the opportunity to develop new markets, to improve the competitiveness of the company, but it also gives rise to many threats to organizationsÐŽ±.

The UK, as one of the countries with the highest percentage of Internet users, is developing rapidly in Internet connections. It has been forecasted that Internet connectivity could reach 80 per cent of households by 2010 (Damesick, 2001). At the same time, online shopping in the UK is also becoming one of the hottest trends in retailing today (CACI, 2000). On the other hand, the exponential increases in online shopping and the fast rate of growth in the number of retailers selling online have created an extremely competitive marketplace.

In this already highly competitive market, it becomes essential for e-commerce managers to understand the different factors that affect people using the Internet as a new purchasing medium. There are many benefits that attract people to choose online shopping such as convenience, time saving, more available choices and possibly lower prices, however, many people are often hold back as fear of privacy, security and delivery issues in relation to Internet shopping.

1.2 OBJECTIVES OF THE STUDY

As Internet retailing grows in size and importance, marketing and consumer researchers devote more effort to studying consumer Internet behaviour. In those researches, most have been descriptive in nature, yielding statistical information on what is purchased online and the demographic characteristics.

Beyond simple description, the present study is in an attempt to get some insight into peopleЎЇs perceptions toward Internet shopping in the UK. More precisely, it attempts to find out the perception of Internet users towards the benefits and risks associated with online purchasing. A better understanding of consumer behaviour and perception would provide web vendors more efficient and effective management and strategy.

1.3 OUTLINE OF PROJECT

Chapter 1 provides the background for the study, the objectives and the outline of this research.

Chapter 2 gives an overview of the definition, importance and development of e-commerce in the UK. It then reviews some theories and models related to consumer buying behaviour and decision making process. Furthermore, it describes and explains in detail the main benefits and risks of Internet shopping.

Chapter 3 is the methodology part. It contains the hypotheses development, explanation to data collection method, piloting test of the survey questionnaire, sample size calculation, and reliability test.

Chapter 4 describes the findings of the research. The demographic profile and the purchasing behaviour of respondents are described. Finally, the hypotheses are tested.

Chapter 5 further discusses the findings, and yields some managerial implications. It then points out the limitation of the research and makes some recommendations for further research.

CHAPTER 2 LITERATURE REVIEW

2.1 INTRODUCTION

With the fast development of internet, E-commerce is receiving greater attention from various organizations and consumers. As part of e-commerce, the online shopping is becoming a trend in the UK as well as in other countries all over the world. There are advantages of online shopping, but also drawbacks. How the consumers perceive the different benefits and risks of online shopping will to a large extent determine their purchasing behaviour. This literature review aims to address a review of all the relevant factors. It starts with an overview of definition of e-commerce, the importance and growth of it. It then reviews some theories regarding consumer perception and behaviour. It then will summarize the main benefits and risks of online shopping.

2.2 AN OVERVIEW OF E-COMMERCE

2.2.1 DEFINITION OF E-COMMERCE

E-commerce has been used as a general term in context of Internet. Some researchers define it as both financial and informational electronically mediated transactions between an organization and any third party it deals with (Chaffey, 2002). Many other definitions have been focused on buying and selling using the Internet. Torkzadeh and Dhillon (2002) describe it as the sale and purchase of products and services over the Internet. They further explain that the factors associated with e-commerce relate to the net value of both the benefits and costs of a product, and the processes of finding, ordering, and receiving it.

E-commerce is generally divided into two types: B2C and B2B. B2C is business to consumer, in other words, online transactions are made between business and individual consumers. B2B refers to business to business, that is business make online transactions with other businesses, such as when business purchase parts, fuel, or services online (Turban et al., 2003).

2.2.2 THE IMPORTANCE OF E-COMMERCE

The Internet allows people to communicate with each other over vast distances, and across all kinds of boundaries that formerly made communication difficult or impossible. Therefore it is able to commercially move business and people to a market in which every thing that is for sale is advertised and every thing that is wanted for purchase is requested somewhere, and buyers and sellers can contact each other with no cost or little cost.

The development of electronic commerce (e-commerce) is often claimed to be reshaping almost all industries (Wigand, 1997). It might be somehow overstating the importance of e-commerce, but e-commerce does influence the operation of organizations and peopleЎЇs activities greatly.

Many commentators illustrate the importance of e-commerce from companiesЎЇ perspective. Chang and his colleagues (2002) believe that the emergence of e-commerce has created fundamental changes to the way that business is conducted. These changes are altering