Online Risks Of Internet Shopping

Online Risks Of Internet ShoppingGlobalization of the economies in the world has created opportunities for caper. As the result of these opportunities, competition or rivalry has augmentd which means businesses select moved and looked to provide unconventional ways for marketing. One of the unconventional ways in which marketing bottom be d superstar is with the Internet, this has become much(prenominal) a must have tool for people who emergencys to do business with protrude limits.Although many businesses argon quickly adopting the Internet as the means through which they shtup efficiently and economically conduct their marketing activities, there ar many pretends associated with victimization it. For example, the Internet has real little security and any company victimization the Internet take chancess disclosure of proprietary learning. However, these are run a risks affecting companies selling through Internet. But what risks do consumers face or apprehend when b etray online?Shopping on internet is poses risks and threat unless what do we know some risk perception of consumers or buyers who get through this middling? Consumers grasp risks in well-nigh store procure decisions, and the general conclusion from direct-marketing related studies is that consumers associate a richlyer level of risk with non-store purchase than store purchase decisions (Samadi and Yaghoob-Nejadi, 2009). These questions have not been addressed in the look for on Internet marketing. In fact, most of the recent studies have been concentrated in on the pros and cons marketing on the worldly fear Wide Web, and n maven addresses the issues raised here ab turn up the consumers concerns in virtual obtain.This psychoanalyse aims to provide not only in-depth review of the types of sensed online risks and its diligence to internet shop unless as well the similarities between businesses and consumers risk perception of online shopping risk, and their influence to purchase intention.BACKGROUND STUDY _The introduction of Information and converse Technology (ICT) has changed the way business is done in a so many ways. The use of the web-enabled technologies is still on the rise and this has made it manageable to see new ways and new avenues of doing business. The diffusion of information, the development of new technologies, the promotion and sales of products and services, and the collaboration between those in a supply chain can all be regarded as the benefits of e- trading (EC) ( specify as The process of buying, selling, or exchanging products and services or information via computer (Turban, Lee, Kung and Chung, 2010, p. 46).The ability to use e-commerce technologies was made possible in late 1970s. During this while, e-commerce meant the execution of commercial transactions electronically with the help of Electronic selective information Interchange (EDI) and Electronic Funds Transfer (EFT). In 1991, the Internet was open for com mercial use and started becoming popular in 1994 (E-Commerce Land, 2004). Subsequently, it took almost four years to develop security protocols like Hypertext Transfer Protocol (https). Amazon was one of the initiative E-Commerce businesses to establish a secure market.E-commerce may be specify as The process of buying, selling, or exchanging products and services or information via computer (Turban et al, 2010, p. 46). alternately it may also be defined as All electronically mediated information exchanges between an organisation and its external stake-holders. (Chaffey, Mayer, Johnston, and Ellis-Chadwick, 2000) According to Turban et al (2010) e-commerce applications are a particular kind of web applications with similar requirements like good navigational structures, usable interfaces, a clear domain model, and separates.Electronic Commerce is classified roughly into two cat egories Business-to-Business Electronic Commerce (B2B) and Business-to-Consumer Electronic Commerce ( B2C). B2B is commerce where purchase and sale transactions occur not between soulfulnesss but between companies by use the Web and extranets. B2C is commerce where these transactions take abode between the consumers and the sellers via the Internet Lee et al, 2002a. Individuals can purchase goods and services from retailers electronically through B2C commerce, who in turn can use B2B commerce to link directly to their suppliers. For the purpose of this re attempt I leave behind use B2C category.Online consumer behaviour is a seek area with an increasing number of publications per year. Although researchers have made noticeable progress with respect to the scope, quality and quantity of research, there are still significant disagreements about the findings in this area (Samadi and Yaghoob-Nejadi, 2009).One of the most widely accepted consumer behavior theory is how consumers comprehend the various risk aspects in various buying conditions. Since Bauer (1967) turned on(p) marke ting researchers to incorporate the impression of perceive risk into the marketing literature, perceived risk has been of great interest to marketing researchers (Cox, 1967 Roselious, 1971 Mitchell and Greatorex, 1999 and Cases, 2003). In fact, shopping online brings together difference of opinion between risk perception and purchase decisions. A variety of previous studies have listed security, screen, and baffling to judge quality of product as the main concerns of online shoppers (Ainscough and Luckett, 1996 Herbig and Hale, 1997 Liberman and Stashevsky, 2002 super C and Jun, 2003, Cunningham, et al., 2005).There has also been attempts to investigate the perceived risk in Internet usage context (Bhavnagar, Misra and Rao, 2000 Liebermann and Stashevsky, 2002 Lim, 2003). However, the empirical research for online consumers perceived online risk has not been conclusive. It is possible that part of the reason for the limited findings of the previous studies is that consumers ri sk perceptions from the previous store purchasing environments have not been fully reflected into the current Internet purchasing situation.Festervand, Snyder, and Tsalikis (1986) forceful on the influence of risk perception from the previous purchase in the unlike shopping environments. There is no record of studies that has investigated or developed a comprehensive set of consumers perceived online risks both from consumer and business point of view, and examine how they are related to each other or whether the influence of some of these areas may be mediated by others to consumers purchase intention. Thus, if some types of risks are mediated by others, not all risk aspects would relate to consumers purchase intention. Only risk aspects directly associated with shopping behaviors and/or attitudes may relate to consumers purchase decision.In regards to security issues, Black (2005) said, the biggest barrier to e-commerce growth is not technology, but peoples attitude towards it. C onsumers are still finding it difficult to trust the online world as an entity. For e-commerce to become a viable market place, the public must trust the internet. The future triumph of e-commerce go away be dependant not only on forging initial trust, but also on developing long-term races to facilitate self-assurance and credibility.This dissertation aims to add to the existing literature (Baseline, 2006, Zuccato, 2007, Damini, Eloff and Eloff, 2009 and Kim, Tao, Shin and Kim, 2009) by looking at how consumer perception of risk in online shopping has impacted on their customers expectations. look into STRUCTURE _This looks is a bare bones plan which was drafted at the beginning of the research, it was reviewed at the end of the research. This is a time scale of my dissertation this has been produced victimisation Microsoft end management and transmitsheet excel applications, a Gantt chart and excel spreadsheet.On the timeline there are following highlighted main activitiesL iterature Review this will include using previous academic writing to apply to the subject and see how far these source agree/disagree with what has been already done. This section is also broken follow up into two major sectionsConsumers perceived online risk a look into how consumers perceive risks and how this affect their online engagementBusiness perceptions of consumers perceived online risks this section carries and in-depth analysis of how businesses perceive consumers online threats.Data collections using the methods mentioned under research methodology, this will entail the techniques and methods used to collect data, there will be secondary data used on business side of research and a mix of both primary and secondary data on consumer point of view.Findings this simply means, gathering all the data lay in and reporting them as they are without doing any analysis.Analysis and Conclusion lastly the thorough analysis of my findings, the quantitative data, conclusion, a nd recommendations(For more details, please see accompaniment a excel spreadsheet 1)AIMS AND OBJECTIVES _Although, e-Commerce has grown and become an important tool for some, there is still reluctance in people in embracing this because of the perceived risk of tutelage over online shop. The main aim of the study will be to find out how real are the fears in terms of system security, reliability, standards, and security of head-to-head financial information, such as disclosing acknowledgement cards and personal information for the consumers while shopping online.Below is a list of objectives in bullet points- unwrap the types of perceived online risks and threats from academic point of view (e.g. functional, physical, financial, social and psychological)Identify the concepts of perceived risks and trust in relation to internet shoppingIdentify the types of security threats in the online shopping environment from consumers point of viewIdentify online businesses perception of con sumers perceived online risks and threatsExamine whether the identified threats and perceived risks from the businesses are similar to those of the consumersFor further clear draft of the objectives in diagram (see appendix 2)ETHICS ISSUES _So far, there are no threats in regards to ethics problems during my research I will be using primary data which is will be collected by myself and plenty of secondary data available. The data collected will be treated as confidential I will deal with data collection and analyzing findings myself. If research findings contradict my developing argument, it will be my responsibility to include undermining facts as distant to the data collected and change the research objectives. Ethics review form attached. (ethics agreement form is attached at the back on this report, see appendix 3)RESEARCH LIMITATIONS _The first and foremost limitation of this study will be the honesty and accuracy of information given by research respondents/participants. Thi s can comport or affect the findings and therefore the analysis of the research. There is medium luck of this limitation to exist in this study because of the secondary data which will be used, and that most marketing firm will give money for the participants to take part in surveys.A potential limitation of this study may be time, due to the time constraints especially in the third semester of 2010 Master course. Although the probability of this limitation to exist is minimal because the programme director is looking into find temperance plans in place.Lastly, a time limitation is also due to the time, the sample population projected involved in this project will be carried out on a small scale around Oxford town centre area. There is enough literature around this subject area and any inevitable information can be obtained during my research.PERCEIVED ONLINE RISK _The term perceived online risk means the individual has subjective belief about potentially veto consequence from h is/her decision (Kim and Lee, 2008). In other words, perceived is used as opposed to objective subject distributions of an alternative or a product class with which a consumer is associated with.Davis and Olson (1985) defined risk as a situation where a decision-maker has priority knowledge of the adverse consequence and the occurrence probability. In addition, disbelief is defined as a situation where a decision-maker knows that possible outcomes for each alternative can be identified however there is no knowledge of the probability attached to each. In consumer research, risk means a situation where a consumer knows neither the consequences of the alternatives nor the probability of occurrence for the outcome (Dowling, 1986).According to Turban et al (2010) an online shopper will gain benefits in terms of vast selection, screening, reliability, and product comparisons. Additionally, consumers can judge the products relying on either the ratings or reputations of e- retailers or from those who have made a purchase in the online interactive communication environment. Finally, consumers are allowed to compare numerous items under various categories and their prices in order to make the choices among the alternatives or substitutes (Rowley, 2000).On the other hand, the incertitude regarding system security, reliability, standards, and security of private financial information, such as disclosing credit cards and personal information etc are all reasons which probably increase a certain degree of perceived risk when shopping on the Internet. Ha (2002) points that, the traditional shopping channel, at the cyber shopping environment, perceived risk is defined as the potential for loss in pursuing a desired outcome while engaged in online shopping.Besides, the Internet, just like any type of non-store shopping, makes it difficult to examine physical goods consumers must rely upon somewhat limited information and pictures shown on the computer screen (Jarvenpaa, T ractinsky and Vitale, 2000). Hence, the performance risk in online shopping tends to increase due to the lack of accurate judge of the product quality compared to the traditional shopping environment (Vijayasarathy and Jones, 2000).As in the real store, this risk is also deemed by Kim and Lennon (2000) to be greatest when the product is technologically multiform or the price is high. Additionally, the issue of financial security, invasion of solitude and hacker attacks has become the primary concern of online shopper in the worldwide (Strader and Shaw, 1999). Time risk associated with the operation of online purchases in this study focuses on the perceived lost or cost of time for customers information search activities without excluding the traditional meaning.Overall, the Internet is still considered a risky shopping channel which means a considerable portion of consumers perceives that risks outweigh the advantages of online shopping in their purchase decisions.TYPES OF PERCEIV ED ONLINE RISK _Although compared to traditional shopping channels, it is evident that online shopping is a rather innovative and convenient way, more and more recent researches have pointed out the existing problems to be settled in this constantly changing marketing channel, which make it too risky to purchase through Internet and rely on it. In this channel, individuals have to make decisions of buying products based on limited and static information displayed on the screen such as the picture and price, but cannot inspect and touch the physical goods, they see on the computer screen (Kim, Tao, Shin, Kim, 2009).Moreover, the uncertainty regarding system security, reliability, standards, and security of private financial information, such as disclosing credit cards and personal information etc are all reasons probably increase a certain degree of perceived risk when shopping on the Internet.several(prenominal) types of risk that consumers perceive can be listed as functional risk, physical risk, financial risk, social risk, and psychological risk (Jacoby and Kaplan, 1972). Roselius (1971) also proposed a slightly different conceptualization of the perceived risk types by identifying the possible losses that a consumer may experience due to a purchasing decision, these are, time loss, hazard loss, ego loss, and money loss.Financial risk is the most common online concern this type of risk is inter-connected with general security perception of consumers towards the online shop.Tian and Ren (n.d.) point out that, Many online consumers are worry about the security of online hire, and often stop payment somehow during the procedure. It should be understood that most consumers who would terminate their payment procedure are the first time.For experience online consumer, they will have devised an alternative way of making payments such as third party payment or other safe online payment services or cash payment on delivery.Privacy risk is described by Jarvenpaa and Todd (1997) to be the degree to which consumers suffer a loss of privacy owing to personal information collected when shopping online. On the other hand, it can be considered as one type of psychological risk. Previous research by Dholaka (2001) has theorized that psychological risk is the experience of anxiety or discomfort arising from anticipated post- behavioural affective reactions, or worry and regret of purchasing and using the product. Consequently, lack of privacy protecting and private information exposure constantly remaining in the Internet shopping site arouse consumers fear of the purchase. It is historied that the psychological aspect is first proposed as a major perceived risk type. Consumers form perceptions regarding intangible psychic costs in the form of anxiety, frustration, and run through time along with tangible financial and performance losses. Thus, the perceived risk can be in psychological/social terms, or in economic/functional terms, or in some combi nation of both forms (Taylor, 1974).According to Strader and Shaw (1999), the key risks in the online context are identified to be financial, performance, and privacy risks. achievement risk related to the online sellers post-sale service, good return guarantee for incorrect items and product warranty, etcPerformance risk can related to the online sellers post-sale service, good return guarantee for faulty items and product warranty, etc.Unlikely on physical shop, consumer buying online product or services have to rely on limited information on their computer screens, There is no physical examination of the product so buyers have rely on the measurements from the seller and pictures. Hence, the performance risk in online shopping tends to increase due to the lack of accurate judge of the product quality compared to the traditional shopping environment (Vijayasarathy and Jones, 2000). As in the real store, this risk is also deemed by Kim and Lennon (2000) to be greatest when the pro duct is technologically complex or the price is high.Kwon (1998) argued another risk factor at cyber-shopping malls is the delivery time gap, or named delivery interval, which is about the gap between the purchase and the delivery. Likewise, consumer easily feels anxious about the time gap between cost and consumption. Another point is, time risk associated with the operation of online purchases in this study focuses on the perceived lost or cost of time for customers information search activities without excluding the traditional meaning.Brooker (1984) has suggested personal risks and non-personal risks. in the flesh(predicate) risks are defined as the risks that are related to self-image, self-concept or social evaluation. In addition, Kotler (1984) argued that personal risks are caused by purchasing of personal items that are expensive, purchased infrequently, or socially significant products, such as clothes, accessories, sports equipment, and automobiles.Additionally, the issu e of financial security, invasion of privacy and hacker attacks has become the primary concern of online shopper in the worldwide (Strader and Shaw, 1999). identical to the traditional shopping channel, at the cyber shopping environment, perceived risk is defined as the potential for loss in pursuing a desired outcome while engaged in online shopping. However, the social and physical risks in online commerce have less to do with consumer perceived risk (Ha, 2002).PECEIVED RISK AND TRUST ON INTERNET _Internet shopping appeared as a new type of shopping method approximately 20years ago, has been getting more attention along with the spread of Internet due to the unbeatable convenience it brought about to the consumers.In addition to convenience, previous researches indicate other attractive factors. The transaction can be held in anyplace accessed to Internet. Furthermore, consumers can buy a wide choice of products across the geographic boundaries while saving time and absence of sal es pressure without anguish about the transportation and parking (McQuitty and Peterson, 2000). More importantly, concerning the study of online consumer behaviour, the Internet environment positively affects the consumers decision to shop.Hardin (1992) highlights that trust depends on three different elements 1) Properties of the individual who want to trust another individual, 2) Attributes of the trustee and 3) The context in which trust is established. All definitions are based on the individuals perception of risk. Both definitions are based on the individuals perception of risk towards a relationship where the outcomes of the relationship are more or less uncertain.Similarly, Bromley and Cummings (1995) viewed trust as an expectation of the trusted individual to be honest and fulfil its promises. The nature and development of trust, has draw the attention from different academic areas, mainly from psychology, sociology, marketing and business theory. From a psychological pers pective, similarly, Robinson (1996576) defined trust as A persons expectations, assumptions, or beliefs about the likelihood that anothers future actions will be beneficial, favourable, or at least not detrimental to ones interests.metalworker and Shao (2007) characterized trust as the undertaking of a risky course of action on the confident expectation that all persons involved in the action will act competently and responsibly.Furthermore, Pearce (1974), on developing a model of interpersonal trust, notes that trust is based on assumptions of others knowledge, competence and motivation. However, those three perspectives perceive trust as one individuals action, rather as an element of a relationship. Moving to the business literature, the concept of trust is again largely based on a relationship approach, and evolves overtime. Swan et al (1989), examining how industrial salespeople gain customers trust, mention that trust has a dynamic nature as it builds over the history of inter actions between the trade partners. firearm Doney and Cannon (1997), suggest that trust is developed under certain processes. According to their research, those areCalculative process, when one party calculates the costs of failure during the exchange.Prediction process, when one party acquires information to predict about the credibility of the other party.Capability process, based on the perception that one party has that the other has the capabilities to perform as promised.Intentionally process, based on the perception that one party has about the intention of the other.Transference process, based on gaining trust from third parties when little or no prior experience exists between the exchange parties.As previously mentioned, it is logical for consumers to engage in trust relationships, when they feel a level of uncertainty with the outcomes of an exchange, or with the circumstances under which the exchange takes place.During online purchases process that insecurity refers to the use of the Internet, as a commercial medium, or to online sellers reliability. Considering the fact that the increase of trust reduces the perceived risks during an online purchase, and that those risks has proven to be negative towards a purchase decision, we can conclude that trust is a crucial factor for the success of e-commerce or internet shopping. (Jarvenpaa Tractinsky, 1999). put off 2 authors who agree/disagree on what consumers perceptionsReferencesStudy FocusAgree/DisagreesMcQuitty and Peterson, (2000)Conducted a study of riskperceptions associated with home entertainment systems online salestechnical complex of product increases perceived risksproduct risks increases the perceived online riskage does is not a factor in perceiving riskexpensive items increases perceived riskmetalworker and Shao (2007)Conducted a study of riskperceptions associated withfinancial risks contribute to the perceivedperceived risk is higher for feel and touch productsSwan et al (1989)Condu cted a study of riskperceptions associated with consumer trust /salesincreasing experience of online shop reduced perceived online riskJarvenpaa Tractinsky, (1999)Conducted a study of riskperceptions associated with consumer trustproduct risks increases the perceived online riskage does is not a factor in perceiving riskexpensive items increases perceived riskInternet as a commercial medium poses security concerns such as credit-card fraud by hackers and also concerns about the lack of a predictable legal framework on which online purchases take place (.e. which government laws apply in every situation(Ratnasigham,1998).In addition, lack of social interactions between consumers and e-sellers and the fact that, as with other distance purchases, consumers have to pay in first in order to receive goods or services, increase the risks, therefore increase consumers concerns. According to Culnan and Armstrong (1999), another difficulty faced on e-commerce purchases is that trust has to b e communicated solely through interaction with a web site. inadequacy of trust towards e-commerce sellers has its grounds to security concerns such as fraud by illegal merchants, privacy concerns i.e. using the personal information for commercial purposes, or performance concerns such as receiving low quality products or services. Hoffman et al. (1999) emphasize that the reason many consumers do not proceed to online purchases is that they simply do not trust most of the Web merchants to give their credit card information or personal information. Lack of environmental control exists while consumers have less control of online sellers actions over their bank card information. Lack of control over personal information is very important specifically the concern that online sellers use their personal information for marketing promotional purposes, without their knowledge or permission.The significance of trust can be reassert by Keen (2000), who interviewed consumers on the advantages and disadvantages of the e-commerce, trying to identify what factors can add more value to the customers. Examining the results, we can identify that most of the factors are related to the concept of online trust, which sellers ought to convince consumer of security measure to minimise fraud or minimise misuse of personal information, guarantee reliable delivery and make clear information relating to easy return process. To conclude, the e-commerce will offer more value to the consumer, by the time it will improve in terms of security, privacy, and performance, or in other words, by the time it becomes more trustworthy.Table 3 authors who agree/disagree on what consumers perceived risksReferencesStudy FocusAgree/DisagreesRatnasingham (1998)Conducted a study of riskperceptions associated with importance of trust in e-commercefinancial risks contribute to the perceivedCulnan and Armstrong (1999)Conducted a study of riskperceptions associated with privacy concerns, impersonal trustincr easing experience of online shop reduced perceived online riskHoffman et al. (1999)Conducted a study of riskperceptions associated with information privacy in market placepositive online shopping experience reduces consumers perceived riskKeen (2000)Conducted a study of riskperceptions associated with ensuring trust onlinefinancial risks contribute to the perceivedincreasing experience of online shop reduced perceived online riskBUSINESS AND CUSTOMER PERCEPTIONS OF RISKCONSUMERS PERCEPTION OF ONLINE RISK _Previous researches (Cox and Rich, 1967 Spence et al., 1970 Gillet, 1976 and Korgaonakar, 1982) related to mode of shopping suggested that perceived risk is affected by what is purchased and how it is purchased. Their studies concluded that consumers perceive more purchasing risk when buying an item by telephone or mail catalog than when buying in a store or from a salesman. Furthermore, the level of perceived risk is related to store selection (Dash et al., 1976 Hirsch, et al., 19 76 Korgaonakar, 1982). This is to say, consumers who perceive less purchasing online risk would choose the specialty store, and low social, high economic risk products to the mall and other types of products.Overall, the Internet is still considered a risky shopping place which means a considerable portion of consumers perceive risks outweigh the advantages of online shopping in their purchase decisions. As what Darian (1987) stated, people tend to feel uneasy with faceless retailer, because they are much more familiar with offline shopping rather than the online shopping and fear about the potential deception.Because earlier consumers bought all their services straight from the service provider, research focused mostly on the consumer-provider or business-to-customer (B2C) interaction. So far little research has been dedicated to consumer perceived online risks in electronic services, from late 1990s most studies maintain that consumers perceive largely the alike risks in electron ic compare to other services. Although internet is new to many ordinary shoppers, it has a great potential for marketing and online sales. Much has been researched before but because higher risks are associated with unknown situations, it is arguable if the online risks studied in earlier research are still similar with present issues being raised regarding online shopping experiences.