customer trust in shopping online

CUSTOMER TRUST IN ONLINE SHOPPING


TABLE OF CONTENTS

EXECUTIVE SUMMARY ………………………………………………………….….. 2

INTRODUCTION ……………………………………………………………….……. 2-3

RESEARCH OBJECTIVE ……………………………………………………………… 3

METHODOLOGY …………………………………………………….……………...….3

POPULATION …………………………………………………………….…......4

SAMPLE PLAN …………………………………………………………….…... 4

SAMPLE SIZE ………………………………………………………………..… 4

DEVELOPMENT OF THE QUESTIONNAIRE …………………………..…… 4

LIMITATION OF THE STUDY ………………………………………………………... 4

LITERATURE REVIEW ……………………………………………………………... 5-8

DEFINATION OF TRUST ………………………………………………………

5

TRUST AND ONLINE SHOPPING …………………………………………. 5-6

STUDIES RELATED TO ONLINE SHOPPING…………………….…….…..6-8

ANALYSIS AND RESULTS …………………………..…………………………… 8-16

CONCLUSION ……………………………………………………………………...… 17

RECOMMENDATIONS ………………………………………………………………. 17

REFERENCE ………………………………………………………………………….. 18

APPENDIX ……………………………………………………………………………. 19

1


EXECUTIVE SUMMARY

Online business has become one of the most important trades nowadays, different

from traditional trade and characterized with uncertainty, anonymity, and lack of control

and potential opportunism. Therefore, trust is an important factor to facilitate online

transactions. The purpose of this study is to find out the role of trust in online business

and the factor that followed by customer when they buying online. Also we focused on

the threats that face trust online that could influence attitude towards online purchase.

INTRODUCTION

Retailers find it increasingly important to represent themselves on the Internet to

get more customers, increase the public’s awareness of the company and its products and

– last but not least – to sell more of its products (Sonja G.K., 2002). Today most of

customer looks for fast and easy way to buy their product with high quality and less price

and they find that online shopping is the best way to get their want. Therefore, trust play

a an important role in facilitating the purchasing process that are traded over the Internet.

It helps ensure that one party will not take advantage of the vulnerability of the other

during or after a transaction. Trust is quite challenging to define because it manifests

itself in many different forms (A. Josang, R. Ismail, and C. Boyd).So, online stores must

effectively manage the processes which promote online consumer trust. Trust can be

defined as “the willingness of a party to be vulnerable to the actions of another party

based on the expectation that the other will perform a particular action important to the

trust or, irrespective of the ability to monitor or control that other party” (Mayer, Davis &

Schoorman, 1995, p. 712). Traders should consider this definition to gain consumer

confidence and knowledge of the concerns that they may have.

2


On the other hand, Lack of customer trust is a critical obstacle to the success of

transactions (A. F. Salam, L. Iyer, P. Palvia, and R. Singh). This is influenced by several

factors. Lack of face-to-face interaction, the virtual nature of a web store, and often the

lack of physical stores, customer trust is difficult to establish (M. Koufaris &W. H.Sosa).

There are also many new threats that jeopardize trust online, including privacy invasion,

identity theft, spam and phishing. For example on-line consumers are required to share

personal detail (such as mailing address, telephone number), financial information (such

as credit card numbers), and suffer from the risk of products or services not matching the

description on the website, and the risk of damage during the delivery process, etc. There

seems little assurance that customers will receive the products or services comparable to

the ones they ordered according to the description and image on the computer screen

(T.W. Tang, W.H.Chi)

RESEARCH OBJECTIVE

The purpose of our study is to find out the role of trust in online shopping and the

procedures that followed by customer when buying online. Also we focused on the

threats that face trust online that could influence attitude towards online purchase. The

survey that we prepared will help us to know more about how customer trust on online

shopping, So we can prepare suitable advices and the right recommendations for

companies that will spread their business to online market.

METHODOLOGY

One way of our plan to achieve the objective of the study is to follow many steps. Firstly,

choose the right type of research which was exploratory research the reason behind

choosing this type is because it collects information in an unstructured and informal

manner. Secondly, we chose the sample size to collect the data and the information.

Thirdly, both primary and secondary data were used but we used primary data as the

main source of information. Finally, we distribute the questionnaire as an ending step for

collecting primary data and solving the problem.

3


POPULATION

The population was all ‘females’ as they are more shopaholic and more curious about

new and unique products and interest in online shopping in any country and those who

regularly shop online were considered as a representative sample (or subset) of that

population.

SAMPLE PLAN

The sample plan that has been used to select the sample from the population was

randomly because the questionnaire was distributed in the UAE university for the

students, some female instructors and managing stuff.

SAMPLE SIZE

Our sample size was around 100 respondents which are as it is required in the guideline

step and we think is enough to measure customer’s trust and attitude toward online

shopping.

DEVELOPMENT OF THE QUESTIONNAIRE

To get the primary information a questionnaire must be conducted in a clear way

with understandable questions that will help to have the right information about

what it’s required to be found. The questionnaire mustn’t be very long so that the

respondents will not get bored.

LIMITATION OF THE STUDY

When we have done the study we faced several problems disallowed us from

establishing a well-marketing research. Lake of time, lack of experience and resources

were the main problems we faced. On the other hand we recognize that some of the

respondents didn’t take the questionnaire seriously, they answered unreasonably. One

other problem was that even though we distributed our questionnaire in many other

places but we got very few responds, so most of our respondents were university students

who are similar in age, income occupation. And this affected the results we got. Also the

number of the responses was big and it took time to enter the data in to the SPSS .

4


LITERATURE REVIEW

- DEFINATION OF TRUS

The basis of trust comes from a branch of philosophy called ethics in the context

of social and democratic process. (Roger Clarke, 2001).

Trust is quite challenging to define because it manifests itself in many different

forms [A. Jøsang, R. Ismail, and C. Boyd, 2007]. Mayer, Davis, and Schoolman defined

trust as “the willingness of a party to be vulnerable to the actions of another party based

on the expectation that the other will perform a particular action important to the trustors,

irrespective of the trustors’ ability to monitor or control that other party” [R. C. Mayer, J.

H. Davis, and F. D. Schoorman,1995]. Trust is an especially important factor under

conditions of uncertainty and risk. It helps ensure that one party will not take advantage

of the vulnerability of the other during or after a transaction .

- TRUST AND ONLINE SHOPPING

Online world is quite different from the real world. Not only in how people operate

there, but also how they perceive it. Through the internet, it is impossible to touch, smell

or use a tangible product, so customer has to make his or her decisions, based solely on

the information he or she read (which may not be 100% correct and honest, too). Thus,

one of the most important things customer needs to feel before making a decision to buy

something online is whether he or she trust the seller or not. On the other hand, even the

‘consumer trust’ differs from online shopping to the traditional one especially in terms of

relationship. Internet shopping involves more uncertainty and risk than traditional

shopping in which trust is based on a combination of judgment or opinion based on face

to face meetings, or recommendations of colleagues, friends and business parties. While

internet based shopping generally does not involve human interaction and therefore, this

new context requires a new understanding of trust. Lack of trust from potential customers

was one of the reasons cited for slower-than-expected adoption in the early days of online

business. Today, a majority of consumers have tried online shopping and “lack of trust”

is no longer a barrier to transacting online. Trust, however, matters now more than ever .

5


- STUDIES RELATED TO ONLINE SHOPPING

Studies showed that even though acceptance of the Internet as a marketplace has

increased, trust in individual brands is decreasing. And that here are also many new

threats that jeopardize trust online, as well as privacy attack, identity stealing, spam and

phishing. So, trust still plays a major role across digital channels, but rather than being a

barrier to use, it has now become a key differentiator. (Jens Riegelsberger, 2005).

A survey related to Online Shopping resulted in the following outcome, 76 percent

of respondents referred to insufficient product information as a reason not to purchase, 79

percent rarely or never purchase with incomplete information, and 72 percent will dump a

site for a competitor or further research, usually finding the product elsewhere.

(WebProNews, 2009).

Moreover, in a clear relationship of consumer trust and the internet shopping a

research showed that 35 percent of non-buyers (i.e. those who have never bought any

products online) in North America surveyed recently by Forrester Research Inc. had

abandoned a shopping cart while shopping online because they were concerned about

providing their personal information, and 24 percent had done so due to fears about credit

card fraud (Kelley, Rhinelander, and DeMoulin, 2001). A recent Gallup research survey

provided additional evidence when it found that more than 40 percent of Canadian

Internet users would complete more online purchases if they could trust that a store

would respect their privacy (Shaw, 2001). Similarly, various academic studies have

suggested that trust has a positive influence on purchase intentions (Jarvenpaa,

Tractinsky, and Vitale, 2000, Lim, Sia, Lee, and Benbasat, 2001, Wetsch and

Cunningham, 1999) and actual buying decisions (Lim et al., 2001). Although the overall

volume of B2C (business-to-consumer) commerce has been growing rapidly, its full

potential will not be realized unless trust-related concerns are alleviated (Cheskin

Research and Studio Archetype/Sapient, 1999). Lack of trust seems to be one of the key

barriers to online shopping; hence examining how to imp rove consumer trust may be

beneficial to both consumers and Internet stores.

With the most mature of the Internet technique environment, the concept of trust

has been the core of the matter when people interactions with e-commerce web portals. A

6


previous survey showed that over (80%) say that being able to trust a web site is very

important for them in making a decision to interact with that site (Princeton Survey

Research Associates, 2002).

A study of online shopping reveals that difficulty in finding product and delivery

information fuels consumer frustration and leads to shopping cart abandonment. The

survey, conducted by YouGov Plc and commissioned by RightNow® Technologies,

polled nearly 2,000* regular internet users across Britain and found that of those that did

Christmas shopping online, nearly one fifth (19%) of online shoppers abandoned a

purchase either because they could not find specific product information or could not ask

questions about a product. 16% abandoned a purchase because they couldn't find

information about delivery charges and times prior to checkout.

The findings cover a period during which time several top supermarkets made seasonal

increases to their delivery charges and when understanding details about an intended

purchase, and whether it will be delivered by Christmas, escalates in importance.

"Industry pundits continue to be bullish about online shopping; some even predict that

internet shopping could account for half of Britain's £300 billion-a-year retail market by

as early as 2018. To capitalise on this burgeoning market a retail website should be as

sticky as possible by being properly organised and consumer-centric – that means

providing consumers with purchase decision-making information at the right place and at

the right time. By designing a site with the consumer shopping experience in mind,

retailers can reduce consumer frustration and increase sales. This survey reveals what

consumers want and when – retailers should take heed of it rather than just guessing at

what's needed," commented Joe Brown, General Manager EMEA, RightNow.

Better accessibility to current and relevant information during the customer journey

should help bolster satisfaction levels around customer experiences. During the 2007

Christmas buying season, 14% of those that did their Christmas shopping online

indicated that they had a negative experience that will prevent them from doing any

future business with the online retailer at fault. The importance of providing a good

7


customer experience is borne out with 24% of consumers citing it as a top factor when

shopping online.

The survey's findings add to the argument that retailers need to focus on the following

areas to improve the online shopping experience provided to customers: Clarify essential

information, present dynamic content in context, offer multi-channel choice, make it easy

for customer to do business and drive towards repeat business. (Maidenhead, 2008).

ANALYSIS AND RESULTS

In the questionnaire that was distributed to the respondents, we concentrated on

having questions that are related to what we like to know about and find out also the

questions were selected carefully to measure customer’s trust and attitude toward online

shopping. Our questions were a door to determine type of products, reasons, threats and

the most important factors affecting customer’s online purchase decision.

The following graphs and tables are representing the results of the collected data

from questionnaire.

The questionnaire contained two parts the first part was about the respondent’s

demographics such as age, nationality, occupation, education level and income. And the

second part contained six questions related to type of products, reasons, threats and the

most important factors affecting customer’s online purchase decision.

8


The figure shows number of purchases by respondents, we find out that about

more than half or most of respondents ‘61%’ used to purchase online ‘every 6

months or more’ and the rest vary as the follow, 13% every 4-5 months, 12%

every 2-3 months, 9% every month and only 5% more than once a month!

This means that still online shopping is not that common or it might have some

threats which we are going to mention later on.

9


This figure shows the types of products usually purchased online, we can see here

again a significant result that is almost half of respondents buy clothing, shoes &

jewelries, 15% electronics, 14% movies, music and games, only 5% for cosmetics

and 23% other things.

As girls have a craze of looking beautiful and fashionable they did not leave even

the internet to shop and find the latest fashion dresses or jewelries. I think the

reason they do not buy cosmetics online is that usually women are sensitive and

cautious in using makeup they do not trust without checking on their skins.

10


We wanted to know reasons that push people to buy online as it is one of the most

important factors affecting their purchase decision. We found out that reasons

differ for people. 37% of respondents which indicates the largest number of them

buy online to save time!! Maybe they do not have time to go for shopping due to

their responsibilities and tasks. Whereas 28% of respondents go to online

shopping because of lack of the product, as some products may not be available or

are so unique to be available in the market. Only 18% shop online for saving

money which might mean that many people consider online shopping as

expensive one, then finally 17% for saving effort.

11


What are the threats you face?

Frequency Percent Valid Percent

Cumulative Percent

Valid Credit card stealing 31 31.0 31.0 31.0

Hackers 18 18.0 18.0 49.0

Doubtful website 12 12.0 12.0 61.0

Product not as ordered 39 39.0 39.0 100.0

Total 100 100.0 100.0

Threats have a great impact in people’s decision as well. It can change their

buying behavior. This figure and the table above show some reasons which make

people anxious about buying online. We see here that ‘product is not as ordered’

‘39%’ is the main threat facing people. They order one thing but get something

else or different from what they desired or demanded. ‘Credit card stealing’ is

another threat ‘31%’ they do not want to take a risk for their credit cards which

might b stolen in seconds. Hackers might make people hesitated from buying

online-18%- and sometimes doubtful website which are uncertain-12%-.

12


What is the most important factor when buying online?

Frequency Percent Valid Percent Cumulative Percent

Valid Price 35 35.0 35.0 35.0

Free shipping 18 18.0 18.0 53.0

Special promotion 22 22.0 22.0 75.0

Speed/ efficiency of check out

25 25.0 25.0 100.0

Total 100 100.0 100.0

This question was about the most important factor people take in account when

they buy online and we here is what we got, as you can see above in the table and

figure, most of respondent’s buying decision ‘35%’ depends on the price as it has

always been the most important factor for most customers. Then quarter of the

people we asked depends mostly on speed and efficiency of check out which is

also a very important factor as life is so fast everything is running so fast, so many

people really hate standing hours in line while cashing or the long procedures

while checking out and wasting their expensive time. 22% are attracted by

special promotion and 18% care about ‘free shipping’.

13


Online shopping is the best way to shop

Frequency Percent Valid Percent Cumulative Percent

Valid

Strongly Agree 19 19.0 19.0 19.0

Agree 42 42.0 42.0 61.0

Undecided 17 17.0 17.0 78.0

Disagree 19 19.0 19.0 97.0

Strongly Disagree 3 3.0 3.0 100.0

Total 100 100.0 100.0

Our last question was a statement as u can see above ‘Online shopping is the best way to

shop’ by this question we wanted to know the level to which people today trust or like

online shopping. And we got the answer that not only most of people ‘42%’ do agree

with this statement but some people strongly agree with that ‘19%’. Well this is a good

indicator that yes people somehow trust online shopping. On the other hand, there are

also some people who disagree ‘19%’, even there is few people who strongly disagree,

they prefer traditional shopping on online which they think is complicated, boring or

distrustful.

14

Ag e

31-4020-30less t han 20

Co

un

t

40

30

20

10

0

Ty p e o f p ro d u c t y o u

Cosmet ics

Clot hing, shoes & je

welry

Elct ronics

Movies, Music & G ame

s

O t her

16

6

12

2

11

4

35

75

Tabl e1: Cross t ab bet w een age and t ype of product you usual l y purchase i t onl i ne

Count

7 4 2 6 19

5 35 11 12 16 79

1 1 2

5 43 15 14 23 100

less t han 20

20- 30

31- 40

Age

Tot al

Cosm et ics

Clot hing,shoes &jewelr y Elct r onics

M ovies, M usic& G am es O t her

Type of pr oduct you usually pur chase it online

Tot al


Graph 1: Relation between age and type of product.

The table shows the relationship between the age and the type of product bought through

internet. By these results we can notice that the majority of our customers are between the

age of 20-30 and they usually buy clothing, shoes & jewelry. So we notice here that most

of them are young and in this age usually women have a craze to have a beautiful and a

fashionable look, so they look for latest fashion dresses or jewelries through the internet.

This information will help online shopping marketers to focus on specific segment to

serve. Graph 1 illustrates the results in a clearer way.

15

Tabl e 2: Rel at i onshi p bet w een i ncom e and how of t en t hey pur chase onl i ne per m ont h

Count

2 8 9 11 60 90

2 1 2 1 6

1 2 3

1 1

5 9 12 13 61 100

Less t han 20, 000 Dhs

20, 000- 35, 000 Dhs

35, 000- 50, 000 Dhs

50, 000- 65, 000 Dhs

I ncom e

Tot al

M or e t hanonce a m ont hEver y m ont h

Ever y 2- 3m ont hs

Ever y 4- 5m ont hs

Ever y 6m ont hs

or m or e

How of t en do you pur chase online?

Tot al

In c o me

50, 000-65, 000 Dhs

35, 000-50, 000 Dhs

20, 000-35, 000 Dhs

Less t han 20, 000 Dhs

Co

un

t

70

60

50

40

30

20

10

0

Ho w o fte n d o y o u p u r

More t han once a mon

t h

Every mont h

Every 2-3 mont hs

Every 4-5 mont hs

Every 6 mont hs or mo

re

60

1198


Graph 2: Relation between income and number of purchase online per month

Table 2 describes the relationship between the incomes and how often they purchasing

per month, the results show that as the income decreases, the number of purchases

decrease per month, as it is shown in this figure, 60% of the respondents whose income is

less than 20,000 Dhs buy online every six months or more. This information might help

online shopping marketers have to adjust the prices and to make the products and services

affordable for customers; also promotions can be useful and support purchasing decision .

CONCLUSION

16


By this study, we found out that most of our respondents were Emirates female;

their ages were between 20-30 years old. They were students and their income was less

than $20,000 per month. Also, most of the respondents purchase online every 6 months

or more, which means that still online shopping is not that common or it might have some

threats. The preferred products they purchase were clothing, shoes & jewelries with 43%.

Moreover, the most important reason we noticed was saving time. The main two threats

affecting buying decisions are the fear that product may not be as ordered and credit card

stealing. Finally, the factor considered the most while buying online differs between

respondents as they have different personalities and purchasing attitudes, so we got no

‘one’ significant factor considered the most. However, price is the most important one

with ‘35%’ as it has always been the most important factor for most customers.

In the end, we would like to say that by this study, we have learned how to make a

questionnaire, how to conduct a survey and what are the steps that followed. We’ve also

learned how to use SPSS which was very helpful in finding our analysis. At last, we

really want to thank our instructor for giving us a chance to have an idea about doing a

survey and analyzing the data which will help us more in our projects in future. Also, we

appreciate him for all his efforts and for being so helpful and patient with us.

RECOMMENDATIONS

Trust in online shopping is difficult and challenging to achieve, so marketers should be

aware of how to gain customer’s trust, here are some recommendation that we realized

from the graphs and tables and we advise marketers to:

Online shopping marketers have to adjust the prices and to make the products and

services affordable for customers.

Promotions can be useful and supportive in purchasing decision.

Online shopping marketers have to focus on the market segments with their

appropriate products and services which they are interested in.

REFRENCES

17


[Sonja G.K., 2002, p. 2] Sonja G. K., 2002, “The Role of Consumers’ Trust in

Online-Shopping,” Journal of Business Ethics, 39: 43–50

[A. Jøsang, R. Ismail, and C. Boyd], “A Survey of Trust and Reputation Systems

for Online Service Provision”, Decision Support Systems, 43(2), pp. 618-644,

2007

[A. F. Salam, L. Iyer, P. Palvia, and R. Singh], “Trust in Ecommerce”,

Communication of ACM, 48(2), pp. 73-77, 2005.

[Mayer, R. C., Davis, J. H, & Schoorman, F.D], (1995) “An integrative model of

organizational trust”. Academy of Management Review, 20(3), 709-734.

[M. Koufaris &W. H.Sosa], (2002) “Customer trust online: examining the role of

the experience with the website”. Zicklin School of Business, p.2

[T.W. Tang, W.H.Chi), (2002) “The Role of Trust in Customer Online Shopping

Behavior”Perspective of Technology Acceptance Model, 331, 1–11.

www.rogerclarke.com/SOS/Asimov.html

www.rightnow.com/crm-news-565.php

www.msnbc.msn.com/id/20321999/

C:\TeMp\Rar$EX08.469\building-customer-trust.htm

C:\TeMp\Rar$EX00.641\build trust in online shop.htm

C:\TeMp\Rar$EX14.235\trust-as-the-most-important-online-value.htm

Other(Please specify)

SyriaPalestineSaudi Arabia

EmiratesNationality

More than 51

41-5031-4020-30Less than 20Age

18

http://www.rightnow.com/crm-news-565.php

http://www.rogerclarke.com/SOS/Asimov.html


otherEmployeehousewifestudentOccupation (current or most recent)

Over $65,000

$50,000- $65,000

$35,000- $50,000

$20,000- $35,000

Less than $20,000

income

Master degree

Bachelor degree

Diploma High school or less

Education level

How often do you purchase onlin More than once a month Every month Every 2-3 months Every 4-5 months Every 6 months or more

Type of product you usually purchase it online Cosmetics Clothing, Shoes & Jewelry Electronics Movies, Music & Games Other

The reason you shop online Saving time Saving money Saving effort Lack of product

What are the threats you face? Credit card stealing Hackers Doubtful website Product is not as ordered

What is the most important factor when buying online? Price. Free shipping. Special promotion. Speed / efficiency of check out.

Online shopping is the best way to shop Strongly agree Agree Undecided Disagree Strongly Disagree

19

customer trust in shopping online

Documents