Internet shopping in Malaysia, which started about two years ago, is considered
relatively new and its development at infancy stage. Consumers in Malaysia are
slow in showing interest in internet shopping. However, a study
by International Data Corporation (IDC) Asia-Pacific indicates that the future
forecast for internet shopping in Malaysia looks bright and promising. IDC estimates
that sales revenue generated by internet commerce in Malaysia is expected to
grow from US$ 15 million in 1998 and US$ 46 million in 1999 to US$ 2.57 billion
in the year 2005. The expected growth in E-commerce is due to
a rapid rise in the number of PCS in Malaysia, as well as growth in the proportion
of PCS hooked up to the internet each year. This provides greater opportunities
for Malaysians to conduct both business and shop online through the internet.
Despite the statistics and success stories of many online merchants elsewhere,
the apprehension of going online by local firms is real, especially for smaller
companies. Local companies appear to be lagging and afraid to venture into online
retailing. This is because internet commerce is new and there are no hard and
fast rules to live by and no tried and tested business model to imitate.
According to IDC, it is important for the local companies in Malaysia to have
a good understanding of the marketplace for their products and their target
customers before engaging themselves in online retailing. With
a good understanding of their target customers, online retailers and entrepreneurs
are able to develop more effective and targeted online retail operations that
meet the requirements and expectations of their new internet shopping customers.
This is critical in order to ensure successful implementation of their online
retailing business in Malaysia.
However, there seems to be a lack of understanding and knowledge on consumers'
attitudes towards internet shopping. Considering that internet shopping is still
at the early stage of development, little is known about consumer attitudes
toward adopting this new shopping channel and factors that influence their attitude
towards it. This is especially true in the context of Malaysia
where internet shopping is still new and consumers are less familiar and often
more skeptical towards online shopping, but little is known about them. Therefore,
this study aims to examine current users of internet shopping in Malaysia with
the intention to establish a preliminary assessment, evaluation and understanding
of the characteristics of online shoppers in Malaysia.
The emergence of E-commerce is not revolutionarily new and it has existed for quite some time. Since in the 1970's and 1980's, businesses have been deploying E-commerce via Electronic Data Interchange (EDI) for computer-to-computer exchange of standardized electronic transaction documents within an organization or inter-organizations using proprietary private Valued-Added Networks (VANs) as a communication medium. However, this form of traditional E-commerce using private value-added networks as communication medium is costly to install and maintain and has put E-commerce out of reach of many small and medium sized businesses. The arrival of the commercial use of the internet and its World Wide Web (WWW), has been defining the new E-commerce since 1993. With the emergence of the internet and World Wide Web (WWW) as a medium for commercial transactions, has put E-commerce into the spotlight and main focus of the international community. This is because the internet and WWW have made it easier, simpler, cheaper and easily accessible for businesses of all sizes and consumers to interact and conduct commercial transactions electronically as compared with the traditional approach of using private value-added networks. By virtue of the internet's network architecture, E-commerce is born global, where geographical boundaries and political boundaries mean little in this networked environment. As a result, E-commerce through the internet dramatically shrinks the distance between producers and consumers, who can make their purchases directly without involving traditional 'middlenen' such as retailers, wholesalers and distributors. Although new intermediaries are required (for example network access providers, electronic payment system and authentication and certification services), these are far less labor-intensive than traditional channels.
Electronic retailing over the internet or internet shopping first started in 1994 and it is considered as one form of direct consumer marketing of non-store retailing using online channels. This new concept of retailing has captured the interest of many retailers and merchants because of the general recognition that online shopping through the internet will establish itself as an alternative channel alongside with traditional offline retail channels such physical retail stores. Electronic retailing first started predominantly in the form of online storefronts whereby products from a single merchant are offered to consumers through an online catalogue. Merchants tend to choose to establish online storefronts as an online retailing method when the product brand names and reputations are well established and widely known among consumers, for example The Dell Online Store that sells personal computers.
However, the suitability of the internet for marketing to consumers depends to a large extent on the characteristics of the products and services being marketed. According to a study by Rajiv Lai and Miklos Sarvary of Stanford Business School in Palo Alto, California, US, products that are being marketed through the internet can be classified into two groups. The first group of products contains items that consumers do not need to see in person before purchasing. These products, which include everything from computers to compact discs to scanned goods, can be evaluated using just text, pictures and other digitally communicable information. This group of products is ideally suited to "internet shopping whereby the internet could serve significant transaction and communication functions. The second group of products is termed as 'experience products', which include items that consumers prefer to see and touch before purchasing, such as clothes and groceries. This group of products is not suitable for internet shopping since information about the product's features may not be sufficient for consumers to engage in internet-based transactions. Consumers will only purchase such products from the internet after they have already experienced with them.
Consumers' shop on the internet because they find their choices dramatically increased. They have access too much more information when making purchasing decisions. Busy consumers can save time and find shopping more convenient as online merchants serves their needs individually. Better and greater access to information, combined with lower operating cost for many internet businesses may, in turn, drive reductions in prices or improvements in quality. Based on the study conducted by Forester research, the reasons why consumers shop online over the internet (Fig. 1).
Convenience is the most prominent factor that motivates consumers to shop online
through the internet. The timing, location and buying process through the internet
are much more superior to other traditional methods of purchasing goods and
services. The 24 hours availability of online storefront and
accessibility from almost any location makes online shopping more convenient
to consumers and provides consumers with a powerful alternative channel for
making purchases. Ease of research in gathering product information is the second
dominant factor that influence consumers to shop online through the internet.
why people shop online
In virtual market spaces on the internet, consumer searches for product information
are much more effectively and efficiently conducted as compared to traditional
channels. This is achieved by employing browser and intelligent search agents
such as comparison shopping agents who are designed to simultaneously locate
and compare products prices across multiple online retailers.
This makes the buying process on the internet much simpler for the consumers.
Some of the well-publicized examples of comparison shopping agents on the internet
are BargainFinder, Jango and MySimon.
The third dominant factor that influences consumers to shop online through the internet is the good prices offered by online retailers. The simplest reason for consumers to buy online through the internet is to save money from the cheaper prices offered by online retailers compared to traditional channels. Online retailers are able to offer cheaper prices because of the shrinking cost of information processing, lower operating cost and global reach provided by the internet. Another main reason that cheaper prices are offered to online shoppers is because of competitive pressure, especially from new online retailers. New online retailers use price as a main competitive weapon to attract customers.
The fourth dominant factor that motivates online consumers to buy goods and services over the internet is the good selection and availability of wider choice of products offered by online retailers. Online retailers are able to provide a wide range and assortments of products as compared with traditional channels simply because there is no physical space limit on the number of products that online retailers can display on their online storefronts. For example, Barnes and Noble and CD Now are able offer to their customers millions of books and music titles on their websites. Furthermore, the number of online stores that consumers are able to visit through the internet far exceeds the number of physical stores, thus, providing them with a wider selection of products to choose from. There are other less significant factors that influence consumers to shop through the internet. One of the less dominant factors is that consumers find shopping through the internet is fun and entertaining. For example, consumers find that the thrill of online bidding for products at auction sites, such as eBay and OnSale, is fun and entertaining.
The understanding of consumer behaviour in a virtual environment is limited since electronic shopping is only just beginning to penetrate mass markets. As activity in the electronic retailing market grows, it is important to develop an understanding of the factors that affect consumer behaviour in this virtual market space. This will enable online retailers to develop more effective and focused strategies for optimizing the visibility of their product offerings and to encourage consumers to make a purchase decision. An important aspect of consumer behaviour in the virtual market space is the search habits that consumers adopt in gathering information prior to making a buying decision. The first stage in the consumer buying process is the information search. This stage is recognized as an important phase during which promotional messages should reach the intended consumer. Like many other stages of the buying process, information seeking becomes more structured and constrained in the electronic shopping environment. In particular, the ability to collect product information and make comparisons between different products offering from different online retailers across the globe is often viewed as one of the main competitive challenges of electronic shopping over the internet.
Internet commerce has developed into an information intensive medium and websites intended for transactions become very much information sources for the consumers. There should be a fine balance between providing sufficient information for the consumers to make decisions and too much information which provokes information overload. From the literature reviews, the characteristics of current internet shopping users, which are the dependent variables, can be explained in terms of the following independent variables as described Fig. 2.
||Theoretical framwork for the study
Based upon literature review, with regards to the concept of theoretical framework
the following hypotheses were developed.
H1: There is no relationship or association between online shopping
through the internet and demographic variables (geographical location, gender,
race, age, marital status, number of children, level of education, profession,
income, credit card and cheque book ownership).
H2: There is no relationship or association between online shopping
through the internet and purchasing of goods and services through ordinary stores,
catalogue/mail order, TV/telephone and direct selling via salesman.
H3: There is no difference between users and non-users of internet
shopping in using online retailers' web sites to gather product information
and compare prices on goods and services.
H4: There is no significant correlation between future online purchase
variables (purchase frequency, online spending and same online retailers) and
currents areas of concern of internet shopping users variables (disclosure of
personal information, receipt of unsolicited E-mail, security of payment using
credit cards, custom checks, trust in online retailers and adequacy of customer
MATERIALS AND METHODS
A structured questionnaire was used to collect the necessary data whereby it will serve as primary data to answer the study questions and objectives pertaining to online shopping in Malaysia. The survey questionnaire consists of 10 distinct sections, each of which contains questions pertaining to different parts of the study. In view of time and cost constraints and also because of large population of internet users in the country, a convenience sampling method is used to collect data mainly from the current internet users in Klang Valley which has the highest concentration of internet users. Even though the sampling method adopted has limitations in terms of generalisibility as compared to other method of sampling, it is assumed that the sample represent the whole population of internet users in Malaysia. The survey was conducted mainly via face-to face interviews also administered through E-mail and postage service. A list of E-mail users currently registered with TMNet was obtained from Telecom Malaysia and the survey questionnaire was only E-mailed to those internet users who agreed to participate in the survey. This step was taken to avoid complaints from the internet users and also to increase the number of respondents. Apart from the ability to reach large target respondents and inexpensive way to conduct the survey, the survey through E-mail also enabled respondents to easily provide extensive responses to open-ended questions in describing their experiences in online shopping. This is particularly important because since internet shopping in Malaysia is still new and at the infancy stage, extensive responses from open-ended questions will provide valuable input to the study so that a better understanding of online shopping in Malaysia can be achieved. Besides E-mail, the survey questionnaire was posted on the usenet group and only those related to Malaysia were used. This is to ensure that the target respondents are only those who reside in Malaysia.
Total 450-sample sizes are found to be adequate for this study, of which 420 questionnaires were received. Each of the response received was screened for errors, incomplete and missing responses. Efforts were also taken to contact the affected respondents through E-mail for clarification and corrections, especially for missing or blanks responses. However, those responses that had more than 25% of the questions in the survey questionnaire that have been left unanswered or incorrectly answered were discarded from data analysis. For those responses that had a few blank answers (less than 25% of the questions) and which involve 5-point interval-scaled questions were assigned with a mid-point scale of 3. After the screening process was carried out, only 360 responses were considered complete and valid for data analysis. This represents a success rate of 86%, which is considered to be good in view of time and cost constraints.
Statistical analysis: The various statistical techniques that are used in the data analysis are described. Frequency distribution analysis is used to determine a demographic profile of the survey respondents and the current users of internet shopping. The frequency distribution analysis is also used to determine method of payment, current and future usage pattern of online shopping, areas of dissatisfactions and reasons for not purchasing goods and services online among non-users of internet shopping. Cross-tab and Chi-square test are also used to the determine relationship between online shopping and other conventional method of shopping such through ordinary stores, catalogue/mail order, TV/telephone and direct selling via salesman. The independent samples t-test is used to compare mean differences between users and non-users of internet shopping in using online retailers' websites to gather product information on goods and services. Finally pearson correlation coefficient matrix is used to determine the degree of correlation between future online purchases and areas of concern of current users of internet shopping.
RESULTS AND DISCUSSION
Frequency distribution analysis is used to examine and describe the demographic profile of current users of internet shopping with the intention of providing a preliminary assessment of current internet shoppers in Malaysia.
The results of this study showed that 61.6% of the respondents are male while 38.3% of the remaining respondents are female. In this study, the respondents are categorized into 4 levels of age group, which include the range of age <20, 21-30, 31-40, 41-50 years old. From the Table 3 below the majority, which comprises of 46.6% of the respondents, which is range within 21-30 years. This is followed by an age ranging 31-40 which covers 33.8% of the total respondents and 41-50 years age which covers 14.4% and finally very small percentage 5.0% respondents is from the range of less than 20 years (Table 1). The results in Table 2 show that majority of online consumers use credit cards (76.1%) to make payment for their online purchases and this is followed by bank draft/money order (14.2%), cheque, cash and delivery was carried very small percentages which is 4.5 and 3.7%, respectively (Table 2).
Mean value analysis is used to identify and examine dominant factors that influenced online consumers to shop online through the internet. Table 3 shows the result of mean value of important factors that influenced online consumers to shop online (where 1 being the least important and 5 being the most important factor). Based on the results shown in Table 3, the most important and dominant factors that influenced online consumers to shop online through the internet are convenient (3.83), cannot get items elsewhere (3.83) and cheaper price (3.73).
Hypotheses testing: The main aim of this part of the study was to test the four hypotheses that were developed earlier for this study. The Pearson Chi-square, independent samples t-test and Pearson correlation matrix are used to test the hypotheses and result of the tests were presented and discussed separately.
Derived from Table 4, the Pearson Chi-square test results
showed significant relationship association association between internet shopping
and race, level of education, credit card and cheque book ownership (p≤0.05).
||Demographic profile of survey respondents
||Method of payment
||Mean value of factors that influence online shopping
Among the demographic variables, credit card ownership is most significantly
associated with internet shopping (p-0.009). The relationship between internet
shopping and these demographic variables are affecting the number of users of
internet shopping in the following manner: a) within ethnic groups, Chinese
are the highest users of internet shopping (47.1%) and most significantly associated
with internet shopping of p-0.002, followed by Malay (0.097) and Indian (0.496).
b) within level of education, university graduates are the highest users of
internet shopping (0.001) followed by diploma holders (0.212) and secondary
school (0.242). c) among online consumers who owned credit card, 41.9% are users
of internet shopping with p-0.009. d) among online consumers who owned cheque
book, 43.8% are users of internet shopping with p-0.011.
||Pearson Chi-square test result between internet shopping and
|Note: * Significant at 0.05 level (2-sided)
||Pearson Chi-square test results between internet shopping
and other purchasing methods
|Note: * Significant at 0.05 level (2-sided)
Other demographic variables are found to be not significant and therefore
are not related or associated with internet shopping.
The results (Table 5) showed that there is a significant relationship and association between online shopping through the internet and purchasing through TV/telephone (p-0.001) whereby 71.4% of online consumers who use TV/telephone as method of purchasing goods and services are also users of internet shopping. Other variables are found to be not significant. The Independent samples t-test is used to compare mean differences between users and non-users of internet shopping in using online retailers' websites to gather product information and to compare prices on goods and service. The results of the independent sample t-test are shown Table 6.
The results in Table 6 shows that the F statistics is 4.908 with a p-0.027, which is less than 0.05 level, indicating that the Levene's test of equal variance cannot be used and the null hypothesis is rejected. Therefore, t-test of equal variance not assumed is used instead. The result of t-test shows that the difference in means between users and non-users of internet shopping is significant with t-value is equal to 7.194 with 282.87 degrees of freedom (df) and p≤0.05.
|| Independent sample t-test result of users and non-users of
internet shopping in using online retailers' websites
|Note: Significant at 0.05
||Pearson correlation coefficient matrix between future online
purchases and areas of concern of internet shopping users
|Note: First, second and third rows are sig. Level and number
(N) respectively, ** Correlation is significant at the 0.01 level (2-tailed),
*Correlation is significant at the 0.05 level (2-tailed)
Therefore, there is a significant mean difference between users and non-users of internet shopping in using retailers' websites to gather product information and compare prices of goods and services before making a purchase decision.
The Pearson correlation coefficient matrix is used to measure the strength, direction and significance of correlation between future online purchases and current areas of concern of internet shopping users. The results derived from Table 7 that there is a significant (p≤0.01) and positive correlation (0.260) between future purchase frequency and online shopping users' level of trust in online retailers. This indicates that users of internet shopping will increase their future online purchase frequency when their level of trust in online retailers increases. Result showed positive correlation (0.292) between future online spending and internet shopping users' level of trust in online retailers where (p≤0.01). This indicates that users of online shopping will increase their future online purchase spending when their level of trust in online retailers increases. For future purchases from same online retailers and internet shopping users' level of trust in online retailers, the result showed positive correlation (0.377) at the 99% level of significance. Between future purchase from same online retailers and internet shopping user's concern on custom checks on goods that were purchased through the internet. The result indicated significantly positive (0.275) with 99% level of significance. This indicates that users of internet shopping will purchase from the same online retailers when their concern for custom checks on goods purchased from overseas online retailers increases.
There is a significant and positive correlation (0.413) between future online purchase frequency and future purchase from same online retailers. This indicates that users of internet shopping will increase their future purchase frequency with the same online retailers. Results showed positive correlation (0.390) between future online purchase frequency and future online spending, between future online spending and future online purchase from the same online retailers (0.577), between internet shopping users' concern on disclosure of personal information and custom checks on goods purchased through the internet from overseas retailers (0.396), between internet shopping users perception on the level of security of payment using credit cards and level of trust in online retailers (0.351) and between internet shopping users perception on the level of security of payment using credit cards and adequacy of consumer protection law and regulations. These indicated that as users of internet shopping increase their future online purchase frequency, online spending, concern on the disclosure of their personal information increase, perception on level of security of payment using credit cards increase and, perception on the adequacy consumer protection law and regulations are also increase positively.
The results derived from Table 7, all the future online purchase variables indicated positive correlation except between internet shopping users' concern on disclosure of personal information and their perception on adequacy of consumer protection law and regulations. This result showed significantly negative correlation (-0.291) with the 99% level of significance. This indicates that as online shopping users concern on the disclosure of personal information increase, their perception on the adequacy consumer protection law and regulations decrease.
CONCLUSIONS AND IMPLICATION
This study is to examine and understand the profiling characteristics of current users of online shopping through the internet and its relationship with demographic variables and other relevant consumer behavioural patterns with the intention of establishing a target market for online shopping in Malaysia. In profiling the characteristics of internet shopping users in Malaysia, the study also reveals that there is a significant relationship between internet shopping and shopping through TV/telephone. The result of the study indicates the more than two third of online consumers who shop through TV/telephone shopping channel are also users of internet shopping. The result of the study also reveals that there is a significant difference between users and non-users of internet shopping in using retailers websites to gather information and compare prices of products before making a purchase decision. Users of internet shopping make use of online retailers websites more often than non-users of internet shopping to gather product information and compare prices of goods and services before making a purchase.
The next objective of the study is to establish internet shopping users' preference in choosing online retailers. The finding of the study also implies that consumers are looking for cheaper prices and bargains when they shop online through the internet. This is also one of the dominant factors that motivate online consumers in Malaysia to shop online as mentioned earlier. The finding suggests that online retailers need to provide competitive prices for their products in order to attract online shoppers to their websites and encourage them to make a purchase decision. However, this will lead to intense price competition among online retailers and the level of competition is expected to increase even further with the availability of intelligent search engines and comparing shopping agents that enable online consumers to easily compare product offerings from various online retailers. Thus, in order to avoid intense price competition, online retailers need to find other ways to differentiate themselves from their competitors.
The result also shows that the median time of online purchase made through the internet is on special occasions. However, the study also discover the time of online purchase is significantly associated with race or ethnic group of online consumers and those who own cheque books. In establishing future purchase pattern of internet shopping in Malaysia, the result of study indicates future online purchase frequency through the internet for the majority of online shoppers is likely to remain the same as it is currently. However, the result of the study also shows the future online purchase frequency is significantly and positively correlated with future online spending and future purchase from the same online retailers. Therefore, it can be concluded that as users of internet shopping increases their purchase frequency, their online spending will also increases and they more likely to make future purchases from the same online retailers.
Finally, this study is to identify and examine major areas of concern and issues currently faced by users of internet shopping and to assess their impact on future online purchases. The result of the study shows that users of shopping in Malaysia are most concerned with privacy in disclosing personal information to online retailers when they make their purchases through the internet. The study also finds that there are significant correlations among the areas of concerns and issues faced by users of internet shopping these are concern on custom checks on goods, adequacy of consumer protection law and regulations, level of trust on online retailers and adequacy of consumer protection laws. In addition, the findings of the study imply that majority of non-users of internet shopping in Malaysia is still lack of confidence and trust in using the internet to purchase goods and services. There is also a lack of awareness among the majority of non-users of internet shopping on the benefits that can be gained in shopping though the internet as compared with other traditional shopping channels.
In line with its vision, strategic direction and business objectives, it is imperative for Telecom Malaysia to take up a major role in leading the country towards an E-commerce era. As the leading telecommunications and internet service provider in the country, Telecom Malaysia needs to provide a cheaper internet access in order to encourage more consumers to become internet users. This is to accelerate the growth of internet users in Malaysia with the intention of creating a critical mass for online shopping to take off in Malaysia. Introduce more affordable high speed internet access to cater for online consumers who require high bandwidth in the delivery of digitized products such as computer software, music, videos and games through the internet, which are currently popular and frequently purchased by users of internet shopping. This can be achieved by using low cost ADSL (Asymmetric Digital Subscriber Line) technology which makes use of the existing fixed telephone copper wires to deliver high speed internet access of up to 2 MB sec-1 which should be sufficient to cater for the fast delivery of digitized products. Establish a one stop center for retailers and merchants who intend to operate online retailing through the internet. The main aim is to provide necessary advice and quick solutions to retailers and merchants in marketing their products through the internet; among the services that can be provided by the one stop center are consultancy services, multimedia application development, content creation, website/application hosting facilities and portal services.
Although the government has taken several key steps in supporting and promoting the growth of E-commerce in the country, nevertheless they can still play their role especially in accelerating the development of retail E-commerce, which are currently lacking compared with other developed nations. In this respect, The Government needs to establish commercial codes that govern commercial transactions between businesses and consumers through the internet. These commercial codes and practices will serve as a standard practice by online retailers that cover various aspect of internet shopping including consumer privacy, security and resolution of disputes. By having these commercial codes and practices the government is able to verify and certify online retailers that meet the requirements of the commercial codes and this will help to raise trust and confidence in consumers to shop online through the internet.
Sales tax on internet transactions should not be imposed by the government at this introductory stage of internet shopping because it will have a negative impact on consumers' decision to shop online through the internet. Even if sales tax is imposed on internet transaction, it will be difficult for the government to track the transaction especially when it involved digitized products such computer software, where the product is electronically delivered to consumers. At the same time, government should introduce tax breaks and other incentives for companies that are involved in internet shopping and other E-commerce activities. This will encourage more retailers and merchants to market their product and services through the internet.