Answer

Abstract

            The unprecedented growth and widespread of internet in the recent past has led to the emergence of online buying of services and products. Therefore, this study will investigate the effect of electronic commerce on consumer purchasing behavior. The study will be guided by three objectives including the perceived risks, perceived benefits and, as well as, impact of electronic commerce on consumer buying behavior. The study will adopt a descriptive research design to describe the factors, benefits and perceived risk factors of electronic commerce on consumer purchasing behaviors. Descriptive design will be selected for this study to enable the researcher to describe the factors influencing online consumer purchase behavior. The study targets online customers who are technologically savvy and prefer purchasing things online. Random sampling technique will be used to select the participants for the study. The data for this study will be collected through closed ended questionnaires that will be administered to the respondents. Descriptive analysis will be used to analyze the data using Microsoft Excel package, as well as, SPSS version 25. Similarly, the reliability of the data will be tested using Cronbach’s alpha that will inform the researcher on whether the data is reliable or not.

How does Electronic Commerce influence Consumer Behavior?

CHAPTER ONE: INTRODUCTION

1.1 Introduction  

Internet is transforming how consumers shop and purchase goods and services and has gradually evolved into a worldwide phenomenon. Various companies across the world have begun using internet purposefully to reduce marketing costs thus lowering the prices of services and products to gain competitive advantage over their rivals. Moreover, firms use the internet to communicate and convey information, to sell their products, take feedback and carry out satisfaction surveys with clients. Reportedly, customers use the internet to purchase products online, compare product features, prices, as well as, after sale service facilities that they are likely to get when they buy products from a given store. Most experts are hopeful about the prospect of online business.

            In addition to the significant potential of the electronic commerce market, the internet offers a distinct opportunity for firms to effectively contact existing and potential customers. While a large proportion of revenue from online transactions originates from business-to-business commerce, the practitioners of business to consumer commerce need to keep their confidence high. It has been years since business to consumer electronic commerce first emerged. Scholars and practitioners of e-commerce constantly strive to gain better understanding of consumer behavior in the internet (Adnan, 2014). In addition to the growth of- electronic retailing, researchers continue to explain the behaviors of electronic consumers from various perspectives. Most of these studies have examined various assumptions or factors related to consumer behavior and e-commerce. Therefore, this research proposal seeks to unravel ways in which electronic commerce influence the behaviors of consumers.

1.2 Problem Statement

             The use of internet across companies has grown unprecedentedly in the recent past. A report by Armağan and Çetin (2013) showed that the value of e-commerce across the world is high and the figure is expected to increase considerably in the near future. Bell, Bryman and Harley (2018) also posited that online shopping has been growing steadily across the world but the trend has not been adopted widely by international companies. This is a potential niche for global incorporations to invest in making their presence online. Nonetheless, most companies are still hesitant as they continue to question the benefits of online presence because there is stiff competition to attract the attention of consumers online. As a fact, most of consumers have become part time marketers. Apparently, they understand marketing and want brands to be honest. Worst still, most consumers are afraid of money lost through crooked deals, as well as debit or credit card fraud. Moreover, consumers have various perceived risks that influence their attitude and their previous experiences continue to influence their purchasing behavior. Despite all these, no studies have been conducted to investigate the influence of electronic commerce on consumer purchase behavior. Therefore, this research seeks to fill this gap by investigating and assessing the changes that have occurred in consumer purchasing behaviors because of electronic commerce by focusing on Amazon Incorporation as subject area.

1.3 Significance of the Study

Chen, Hsu and Lin (2010) contended that there are millions of internet users across the world thereby contributing globalization and trade. Moreover, researchers including Katawetawaraks and Wang (2011) have maintained that this significant increase in the worldwide users enable consumer sophistication and empowerment. Similarly, the rise in online buying has been reported by Keisidou, Sarigiannidis and Maditinos (2011) that revealed that South Korea’s 99% internet users are making online buying closely followed by countries such as Japan, UK and Germany. Nations across the globe have been incorporating electronic business approaches in their business models and every organization regardless of the industry or sector they belong to designs their electronic commerce enabled official website. This according to Keisidou, Sarigiannidis and Maditinos (2011) enables them to increase their sales volume but also facilitate their customers for buying.

In the recent past, several investigations have been done on the influence of electronic commerce and electronic business on the overall organizational performance such as on the brand development, intellectual property rights, natural environment and employee development and rights among others (Lee, Shi, Cheung, Lim, & Sia, 2011). Nonetheless, little studies have been conducted on various ways through which consumer purchasing behaviors have changed. This implies that there is a gap present in empirical study on how behaviors of consumers have changed because of incorporating electronic commerce in organizations’ business models. Therefore, the significance of this study is that it will fill the gap in the literature and offers a foundation for future research with regards to electronic commerce.

1.4: Research Aim

This paper aims at examining the effect of electronic commerce on consumer behavior.

1.5 Research Objectives

1. To examine the effect of electronic commerce on consumer purchasing behavior
2. To investigate the effect of perceived benefits of electronic commerce on consumer purchasing behavior
3. To examine the effect of perceived risks of electronic commerce on consumer purchasing behavior

1.6 Research Questions

The specific research questions include;

1. What is the effect of electronic commerce on consumer purchasing behavior?
2. What is the effect of perceived benefits of electronic commerce on consumer purchasing behavior?
3. What is the influence of the perceived risks of electronic commerce on consumer purchasing behavior?

2.0 CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction

This section reviews the past studies conducted to obtain necessary information to answer the research questions.

2.2: Impacts of Electronic Commerce on Consumer Behavior

Electronic commerce influences consumers buying behaviors in various ways. Lee, Shi, Cheung, Lim and Sia (2011) noted that e-commerce has a major effect on consumer behavior. The study further revealed that electronic commerce has increased the shopping opportunities and customers currently have more convenient alternatives Lee, Shi, Cheung, Lim, & Sia, 2011). According to this study, the trend of selling online has increased significantly and many people prefer purchasing services and goods online because of lack of time. The study contributed to this proposal by revealing that through electronic commerce, people have shifted their ways of doing purchases. In particular, they have changed from traditional brick and moto buying to online buying. Nonetheless, the study failed to highlight the specific internal and external factors that influence the consumers purchasing behaviors.

Time saving and convenience are major factors making consumers to shop online (Lima, Osmanb, Salahuddinc, Romled, & Abdullah, 2016). Convenience implies shopping practices using internet that can minimize effort and time for the consumers in the purchasing process. In another study, M and Chahar (2013) revealed that online buying has enabled consumers to find merchants easily thereby minimizing on time and effort. According to this study, online buying is better as compared to traditional buying because of convenience and ease of use. This study also revealed that attitude towards online buying depends on consumers’ perceptions about the activities carried out on the internet as opposed to traditional buying environments (M, & Chahar, 2013). Therefore, a consumer who views online buying as beneficial is more motivated to make online buying.

In their study, Mittal (2013) revealed that perceived product awareness and advantages had a positive influence on consumer views and purchasing behaviors in Pakistan. Similarly, a research performed by P & E, (2013) reported that the major reasons for embracing online shopping encompass time saving, fairer prices of online products, easy comparison of alternative products, as well as, user review of goods and services. Similarly, Prashar, Vijay and Parsad (2017) maintained that the attitude towards online purchase especially their behavioral beliefs had a considerable impact on their purchasing behavior. Further, it was revealed that control behavior had a stronger impact than that of consumer purchasing attitude on their buying intentions and that subjective norms had impact on the consumers intention to shop online.

2.3: Perceived Benefits of Electronic Commerce

Saving time is among the leading influential factors in online buying. Time is a major resource that consumers spend when doing online buying or when in traditional stores. A study by () revealed that going through the online catalog during online buying saves time and minimizes stress as opposed to traditional shopping. The study reported that e-commerce eliminates the need to travel physically to the store. However, Suki (1970) contradicted this position and argues that time saving does not motivate consumers to engage in online buying because it takes time for the goods purchased online to be delivered to consumers. According to customer perception, benefits of online buying are linked to buying simplicity and reduced time spent on shopping (Bucko, Kakalejčík, & Ferencová, 2018).

Empirical studies have described pricing as major factor in customer satisfaction since consumers often direct their attention to pricing when evaluating service and product value Lee and Huddleston, 2010). Many researchers have been done to establish the relationship between pricing and consumer satisfaction. Precisely, Adnan (2014) revealed that pricing directly influence the attitude on the transactions delivered usability and value and consequently customer satisfaction. The findings further revealed that more than 50% of e customers who have engaged in electronic commerce have done so because of pricing (Adnan, 2014). Precisely, e-commerce offers better buying conditions that enable consumers to purchase products at a relatively cheaper price as compared to the stores. Moreover, Vasić,  Kilibarda and Kaurin (2019) maintained that  online stores provide customers with myriad of services and products, buyers can easily compare product prices from various websites and find the product at a relatively lower price as compared to those offered in stores.

2.4: The Perceived Risks Of-Ecommerce and Consumer Buying Behaviors

Numerous studies have reported that perceived risks detrimentally affect the attitude or intention of consumers towards buying online. Precisely, Katawetawaraks and Wang (2011) noted that perceived risks may minimize consumers’ perception of environmental and behavioral control and this will detrimentally affect behavioral intentions. Further, it was reported that decrease in perceived risk is a control belief, which is expected to affect behavioral intentions and behavioral control. Moreover, Keisidou, Sarigiannidis and Maditinos (2011) posited that reduced risk linked with online buying would likely increase the possibility of a consumer buying online. According to this study, fears that a web retailer has not instituted proper steps to minimize infrastructure related risks will detrimentally influence control beliefs, transaction intentions, as well as, perceived behavioral controls, the consumers are likely to transact.

The open nature of the internet as a transaction system and its global nature have made trust a critical component of electronic commerce (Lima, Osmanb, Salahuddinc,  Romled, & Abdullah, 2016). Precisely, Mittal (2013) posited that maybe the most critical elements of consumer marketer transactions are the concept of trust. Lack of trust has been regarded as a major reason for consumers not participating in electronic commerce (Mittal, 2013). Principally, trust is one of critical factors that affect consumer behavior and therefore, developing consumer trust in online retailers is essential for continued growth of electronic commerce (Mittal, 2013).

 Prashar, Vijay and Parsad (2017) reported that there is no correlation between the frequency of online buying, as well as, perceived risk although satisfaction with the past internet buying was detrimentally linked to the perceived risk of internet buying but only for low involvement products. Essentially, differences in perceived risk were linked to whether the targeted purchase was a service or a good and whether it is a low or high involvement product. The findings revealed that the perceived risk of buying goods through the internet was relatively higher than for services. The findings further revealed that perceived risk is relatively higher for high involvement than for low involvement products, regardless of whether they are goods or services.

Different forms of risk are perceived in the buying decisions including security risk, product, risk, as well as, privacy risk. Product risk as posited by Suki (1970) refers to the risk of formulating inappropriate or poor buying decision. The aspects involving product risks can be the inability to compare prices, lacking the chance to return a product, not receiving a given product they have paid for, as well as not performing as required. With this, findings of a study by Lee and Huddleston (2010) revealed that the possibility of buying on the internet reduces with increase in the product risk.

Other aspects of perceived risk linked to consumers’ perceptions on the internet as a reliable purchasing medium. For instance, a major perception among buyers is that communicating credit card details over the internet is intrinsically risky because of the possibility of credit card fraud (Lee, & Huddleston, 2010). A study by Vasić, Kilibarda and Kaurin (2019) revealed that beliefs regarding trustworthiness of the internet were linked to positive attitudes towards online buying.

Moreover, privacy risks encompass illegal access of personal information during the internet use or the ability of companies to provider third parties with the personal information they have collected from the online users. Studies have revealed that privacy risk makes consumers to become hesitant in exchanging personal data with web providers (Vasić, Kilibarda, & Kaurin, 2019). Bucko, Kakalejčík and Ferencová (2018) maintained that with the growing privacy concerns, the possibility of buying online reduces. On the same note, Adnan (2014) established that a belief in the privacy of personal data was linked to negative attitudes towards online purchase.

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Research Design

             The research design refers to the blueprint for achieving objectives and answering the research questions. Precisely, it condenses the essentials of research design as actions and time-based plan. Quinlan, Babin, Carr and Griffin (2019) posited that research design offers a framework for specifying the correlation among the study variables. In this research, descriptive research design will be adopted because descriptive research design assists portray a correct profile of an event, situations, or persons. This research design will also be adopted for this study to help create a succinct picture of the phenomena that will be used to gather data.

3.2 Target Population

             In this study, the population will comprise of individuals who are online on various social networking sites for the purchases of services and products. In terms of gender and age, the study targets youths aged 20-35 years because this group is internet savvy and working as well.

3.3 Sampling Method and Sample Size

             For this study, the sample size that will be selected will comprise of 100 online customers. This sample size will be selected because this number of consumers is appropriate and can be handled easily thereby enabling the investigator to collect the objectives of the study (Bell, Bryman, & Harley, 2018). Moreover, the researcher will adopt random sampling technique to achieve the authentic research findings since the consumer online buying behavior through examining electronic commerce can be known.

3.4 Research Instruments and Data Collection

            A closed ended survey questionnaire will be administered to gather primary data. The questionnaire will be used for this study because it is an effective means of gathering information from large samples within a short period of time and a cheaper cost. Moreover, a questionnaire expedites easier coding and analysis of gathered data because they will be standardized. All the variables will be measured on a five-point Likert scale.

3.5. Pilot Study

             A pilot study will be conducted to minimize obscurity of interview guide and questionnaire items, and improve data integrity. Moreover, it will assist in assessing the feasibility of procedures and methods that will be used in the final research. This process will entail the selection of participants through simple random sampling. intuitively, recommendation by Kumar (2010) of 5% and 10% of the principal sample size will be used to recruit participants for this pilot study. Precisely, the research instruments will be administered to nine participants who will participate in the pilot study.

3.6 Reliability and Validity of the Research Instrument

            During this research, the validity will be ensured by going through each question in the questionnaire with the help of a supervisor appropriate revisions and adjustments will be made before administering the designed questionnaires to the target participants. Similarly, internal consistency will be measured using Cronbach’s alpha test because it is considered the most popular technique for estimating reliability.

3.7 Data Analysis and Presentation

             In this study, the data collected will be analyzed using the Statistical Package for Social Science (SPSS) version 25 software. The analysis will comprise of inferential statistics and descriptive statistics. Descriptive statistics will comprise of median, frequency, and variance, as well as, mean standard deviation. Similarly, inferential statistics encompass Pearson’s Product Moment Correlation (PPMC), as well as, regression analysis. The findings of the study will be presented in form of statistical tables and graphs.

3.8 Research Ethics

            The first ethical concern to be experienced in this study relates to study participants or respondents. The participants are likely to fear sharing their personal information during the interview. The second ethical concern likely to be experienced during the study is safeguarding the respondents’ data. Another ethical concern is data storage and security. Nonetheless, to address these ethical concerns, the researcher will restrain from asking participants personal information and will adhere to Data Protection Act (1998) to maintain and safeguard the security and privacy. More importantly, the researcher will use SPSS to record participants’ data. However, to keep the privacy of the respondents, the researcher will store the gathered information on his or her personal laptop. More importantly, the researcher will limit the access for data to only the researcher and the lecturer.

4.0 Conclusion

             While concluding this study, it can be argued that examining the aspect of electronic commerce and consumer behavior has revealed that consumers across the globe, as well as, those for Amazon have adopted the use of technology and this have led to their satisfaction. By focusing on the literature review, the study will reveal that electronic commerce has a considerable effect on the consumers’ behavior. The proposal has also focused on the effect of electronic commerce on the consumers’ buying behavior and therefore uses the explanatory approaches and it is carried out through social media websites using simple random sampling approach with the help of questionnaire. This will not only ensure better examination of the customers’ behaviors but also consumers’ purchase intentions surrounding electronic commerce.