CHAPTER I

INTRODUCTION

The internet has penetrated virtually every corner of the workplace because it is

easy to handle and easy to navigate. In the corporate world, the internet is fast changing

the way customers, suppliers, companies and other stakeholders interact. Rapid growth

of usage of internet among people is a blessing for the marketing companies who now

attract their customers through their online shopping sites. Online shopping is faster,

convenient, and generates better deals. The concept of home shopping has been here

for a long time in the form of commercial catalogues and television infomercials. But the

concept of home shopping never became a widespread phenomenon until internet came

due to internet’s vast potential that the pre-internet technologies lacked. Internet shopping

has become an integral part of our daily lives and has been adopted by every major brick-

and-mortar retailer in the Philippines. The widespread adoption of home computers and

high-speed internet connections, as well as the number of retailers offering goods online

has created a kind of shopping evolution.

Online shopping is the way through which consumer can purchase goods or

services directly even by sitting at the comfort of their home. The convenience of online

shopping is the main attraction for the consumers. With the help of online shopping, lots

of varieties are already available at a single click so people will not need to go to malls,

encounter pushy sales staff, stand in line for paying and get stuck in mad traffic.

Traditional shopping requires more and has some limitations like fix-timing for customers

to spend in market, if product is available at one shop then it is time-consuming to search

it in various shops. Compared to shopping at the store, shopping online has many
advantages. One of them is that online shopping very convenient and punctual. It can save

your some of great time. Purchasers just need to type the key word about what they wang

to find, the target (information)will appear on the screen quickly. Besides online shopping

has no spatiotemporal boundary, which means that purchase can go shopping at online

store, at any time and at any place, as long as they can connect to the Internet. Shopping

in the store have a lot of time and space constraints, for many consumers, especially office

workers inconvenient, such as their free time for shopping in the evening, when stores that

had been almost closed.

As Chris Nickson, author of “Has Online Shopping Makes Life Easier?” said that

“You can buy from anywhere in the world. It seems like a golden age of shopping.”

Shoppers find a greater variety of products on internet websites than they do in the

physical retailers. The variety of products in shopping mall stores is limited by the space

available which is not a constraint for online shopping websites. The online storage space

is easily expandable and quite cheap thus, online shopping websites are able to list far

more items than the physical retailers.

Statement of the Problem

Online shopping is convenient and easy, which is why more and more people are

turning to this alternative rather than facing the crowds in the stores. More than that, one

can research items, read reviews and score the best deals. However, there is a dark side

to online commerce. There are some high-risk dangers when purchasing online, such as

the security of your credit information, and not getting the quality of the product you
expected. Security expert Jon Heimerl says he doesn’t expect scammers to be out in

greater numbers this year. However, he says more consumers may become victims

simply because more people will be using the Web to do their shopping – especially those

who aren’t accustomed to shopping online and aren’t aware of the risks.

This study gives a comprehensive picture of the level of consumer’s awareness

and attitudes in using internet for online purchasing. The paper also aims to enlighten the

consumer to become a smart online shopper. A brochure will be given containing

information and suggestions that will help the consumer to be aware on the right things

to do to minimize online shopping risks.

Conceptual Framework

The proposed conceptual framework for this study comprises of five independent

and one dependent variable. These variables are the risks that a consumer could

encounter when doing instantaneous, unintentional unreflective and unconscious

purchase.
 Independent
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Financial
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Product Risk

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Figure 1: Conceptual Framework

Variable 1: Financial Risk

Financial risk is always the number one concern of individuals who are shopping

online. Financial risk is defined as the likelihood of suffering a monetary loss from a

purchase [Horton 1984; Jacoby and Kaplan 1972; Peter and Tarpey 1975; Sweeney et

al. 1999]. There are different reasons why online shoppers may suffer monetary loss

when shopping online. First, it is hard for online shoppers to determine whether the

price of the item purchased at a particular online retailer is the lowest available
compared to others. Second, financial losses may occur due to credit card fraud, which

is a primary financial concern among online shoppers. In addition, Caterinicchia [2005]

reports shoppers’ concerns regarding financial loss if products purchased online fail to

perform as expected. Financial risk could also happen when the product does not arrive

after completing online transaction and making payment to the online store.

Variable 2: Product Risk

Product risk is defined as the probability of the item failing to meet the performance

requirements originally intended [Peter and Tarpey 1975]. Product risk has been reported

as the most frequently cited reason for not shopping online. A relatively high level of

product risk is expected when being purchased online, particularly for some product

categories, due to shoppers’ inability to physically examine and test product attributes

online [Alreck and Settle 2002; Garbarino and Strahilevitz 2004], suggesting that risks

associated with product uncertainty are likely to negatively affect online purchase

intentions. Online consumers might be doubtful about whether they will be delivered

exactly the same product as displayed on the online store or it might not come up to their

expectations. Higher the intangibility of the product, greater will be the risk perception.
 RELATED STUDIES

This chapter presents the different literatures and studies from foreign and local

sources after the thorough and in-depth search done by the researches.

The Importance of Awareness

Awareness is the state or ability to perceive, to feel, or to be conscious of events,

objects, or sensory patterns. If you are aware then this will give you knowledge and if

you have knowledge, then you know what you need to do to and the direction you need

to go to make changes to improve and be successful. It will make you seek out more

information on the beliefs that are holding you back and how to change them. It will

give you the information for next action thinking whereby you are aware of the very next

thing you need to do to move forward.

In e-commerce context, awareness has always been perceived holistically (Najafi,

2012). In this level of consciousness, sense data can be confirmed by an observer without

necessarily implying understanding. More broadly, it is the state or quality of being aware

of something. In biological psychology, awareness is defined as a human's or an animal's

perception and cognitive reaction to a condition or event. The term "Customer

Awareness" has found many uses in commerce. Consumer awareness, which refers to

the buyer's knowledge on a product or company allows the buyer to get the most from

what he buys. Consumers know more about their choices when they have product

information and benefit from knowing their rights, hearing about alerts and warnings and

finding out about safety issues. According to Pavlou and Fygenson (2006), customers
must obtain information about a product before purchasing. Therefore, gaining knowledge

and understanding e-commerce is vital for customers’ participation and a prerequisite for

e-commerce engagement and adoption. Moreover, customers prefer information and

knowledge about the products or services before shopping online (Laudon et al., 2009;

Al-Majali, 2016). They need to compare product specifications and prices from different

sites. However, if customers do not have enough information, this may lead to them

avoiding buying online and continuing to buy from traditional stores (Dickson, 2000).

Yaseen et al. (2016b) and Choudhury et al. (2001) argued that customers do not simply

decide, but rather they consider two distinct stages: getting product information, and then

purchasing the product. Therefore, if an adequate level of awareness is achieved,

rejection and discontinuance are unlikely to result.

Asakawa and Okano (2007) analyzed the factors influencing consumers’

perception of online shopping and explained how this perception affects their online-

shopping behavior. They found that those factors were convenience, anxiety regarding

security and poor navigation. He found that convenience had a positive influence on

online shopping whereas anxiety regarding security and poor navigation had a negative

influence. Shergill and Chen (2005), discussed the relationship between the factors

affecting the buyers’ behavior towards online shopping and the type of online buyers.

They also investigated the different perceptions of different types of online buyers towards

the online shopping. They found website design, website reliability, website customer

service and website security or privacy were the factors which were influencing their

buying behavior of different people.

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