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In global world, internet gives a big impact to the retailer, businessman and shops to run their
business through online. Online shopping is convenient, save time and offer cheaper cost to the
customer. By providing online store, many customers will faced multiple issues. The purpose of the
study is to identify the risk faced by consumer in E-shopping. To identify the risk that customer might
face in online retail, several research paper from different author has been used to compare the issues.
As recommendation, e-retailers can apply some of marketing strategy to reduce the risk and issues in
online stores.
Over the past few decades, the Internet has developed into a vast global market place for the
exchange of goods and services (Javadi, Dolatabadi, Nourbakhsh, Poursaeedi & Asadollahi, 2012).
The Internet has changed the way consumers buy goods and services throughout the world.
Traditionally, consumers would actually visit a conventional retail outlet, look for the required product,
compare the alternative products available in the outlet, ask the sellers for his or her
recommendations and then, would finally purchase it by paying at the counter. However this position
has changed drastically with the emergence of ‘online shopping’ throughout the world (Sen, 2014).
Moreover, many organizations have started to use the Internet as a platform for selling their products
as it allows them to cut the marketing costs, thereby reducing the price of their products being sold.
This has become a global phenomenon, and it allows the organization to stay ahead of others in the
highly competitive markets (Sen, 2014).
Despite the significant growth and the optimistic future growth of online shopping, negative aspects
are also becoming more frequently associated with this alternative shopping method. Consumers
perceive a higher level of risk when purchasing on the Internet compared with traditional retail formats
(Lee & Tan, 2003).
In an online environment, in contrast to a physical one, greater risk and less trust are expected due to the fact that there is a
major difficulty in evaluating a product or service as there are no visual or tangible indications about the quality of the product
nor face-to-face interaction with sales staff (Laroche, Yang, McDougall & Bergeron 2005). Time, convenience, or effort may be
wasted when a product purchased is repaired or replaced (Ko, Jung, Kim & Shim, 2004). The chances of potential financial loss
concern the potential expenses of returning the product or the likelihood of any additional hidden cost such as shipping and
handling occurring. Consumers fear that delivery will be delayed due to various circumstances; the delivery company may not
deliver within the time frame agreed with customers, or consumers fear that the goods may be damaged when handled and
transported, or no proper packaging and handling during transportation (Claudia, 2012).
Consumers also perceive that a product purchased may result in disapproval by their family or friends
(Li & Zhang, 2002).
Therefore, it is assumed that people may feel a certain degree of risk when purchasing a product
through the Internet
Development of the Internet has strongly impacted the worldwide marketing environment and the
Internet has provided companies with the ability to expand their business reach through e-commerce
(Alkailani and Kumar, 2011).
Nowadays, internet has spread to almost all over the countries on earth and most of the people life was
affected by this huge technology. Because most of people affected in this giant technology, their
lifestyles tend to changed and some online aspect will be added (Khoshnampour & Nosrati, 2011).
The number of consumers buying online and the amount of people spending times in online stores has
rise up (Monsuwe et al., 2004). The major reason for consumer to shops online is because it is
convenience for them. Online shopping give advantages such as save time, affordable and can shop at
any time they want (Monsuwe et al., 2004)
According to Lennon et al., (2008), fun, convenience and quickness become the main factors that
influence the customer to shops online. In his studies, he identify about 73% people stated that
convenience as their main reason to use internet service. In further, he continued to conduct the same
research again and he still found convenience as important factor where 76.5% people admit that shops
online is convenient (Lennon et al., 2008). It is also support by (Sorce et al., 2005) that conveniences
become the acceptable reason for consumer to shops online, especially for younger people (Sorce et al.,
2005).
Nowadays, many people have busy lifestyles. The customer such as working man and woman, do not
have enough time and need to have extended working hours. As a result, online shopping becomes the
best opportunity for them (Monsuwe et al., 2004).
Dennis et al (2002) found some customer said that buying good from internet can get cheaper price. As
example, one of the responder chooses to shop online because it is cheaper especially when they
bought a CD’s. Smith & Rupp (2003) conducted a research to most people such as family, friends, social
class, age, and so on. Most of respondent in his research claimed almost all Web sites are free for
anyone to browse (Smith & Rupp, 2003). In other words, customer perceived many benefit by using
internet as their platform to buy goods. Retail companies communicate directly with customers offering
satisfactory goods and services depend on their needs. (Turley & Chebat, 2002).
Perceived Risk
Nowadays, technological development and achievement has made Internet to be used by everyone.
(Forsythe et al., 2006). However, internet has unlimited access for services and products accessible for
most of the purchaser (Ko et al., 2004) and most of shoppers will perceive the risk when they purchase
the product and goods in digital platform (Tsiakis, 2012). Customer often perceive higher risk in high
technology shopping format, such as mail order, direct sales, mobile shopping and catalogue (Forsythe
et al., 2006).
Result from a decision of future events with known probabilities is known as a risky situation. In
marketing and information technology, risk has already occurred for a long time (Zheng et al., 2012).
Perceived risk is known as evaluation of doubt or lack of knowledge regarding the distribution of
potential result and the uncontrollability of the result accomplishment (Tsiakis, 2012). According to
Sorce et al. (2005), there are two types of risk or issue that exist in online shopping. It is financial risk
and product category risk (Sorce et al., 2005) but there is still another issue to be concern. It is privacy
risk. Privacy is the problem or risk that might happen in e-shopping’s (Janda & Fair, 2004). According to
Zheng et al., (2012), perceived risk is an amount of possible or expected dissatisfaction with the product
purchase; depend on the purchasing purpose of the consumers (Zheng et al., 2012). The risk that is
occurring in virtual space can affect the buyer decision making. In fact, about 75% consumers
abandoned their shopping carts in online retail web before they make a decision to buy the product
(Cho et al., 2006).
The concept of perceived risk was first introduced by Bauer (1960) and has beenfrequently used to
address various issues in consumer behaviour. Shopping has long been regarded as a risk-taking activity
as consumers may be uncertain of a purchase decisionand the consequences of poor decisions. Mitchell
(1999) defined perceived risk as “a subjectively-determined expectation of loss. In the online shopping
setting, the level of perceived risk may be magnified due to online consumers’ limited physical access to
products and sales personnel (Park and Stoel, 2005).
A high level of product risk in online shopping may be expected due to online consumers’ inability
tophysically examine and test product quality and alternatives (Alreck and Settle, 2002;Garbarino and
Strahilevitz, 2004).
Perceived risk
According to the report by the Organization for Economic Cooperation and Development, the financial
tsunami of 2008-2009 and the global economic recession have prompted customers and businesses to find
low-priced goods through the internet (Liao et al., 2012). Thus, the global online shopping platform is
flourishing. However, the growth of online shopping will depend in part on potential obstacles and risks,
including the security of personal information, dissatisfaction with products, goods delivery that does not
meet customer expectations and so on (Liao et al., 2012).
In online shopping, when consumers' perceived risk is low, their purchase intention is high (Järvenpää
and Tractinsky, 1999). Bhatnagar et al. (2000) consider that the risks associated with internet shopping
were financial risk and product risk.
Privacy Issue
Many author claims that privacy is one of the issue exist in e-shopping. Privacy is known as private and
uncertainty paired with giving personal details on websites and the risk of such facts being made public
(Lu et al., 2013) including the retailer illegally sharing consumers personal information and the customer
received unwanted contact from the e-retailer (Lu et al., 2013).
While, Culnan (2000) that are cited in (Janda & Fair, 2004) defined information privacy as the
abilities to affect or control the way in which their personal details is used and reveal.
Furthermore, Internet privacy scam causes by violation of information. The number of violation on
customer information privacy are increases, it is because internet allowed retailers to collect customer
information when every time the customer visit the website to purchase the product (Janda & Fair,
2004).
Such as, the Bankruptcy lawyer will able to view customer database as valuable asset when the e-
retailers stop run their business even though the customer data information was keep or collected
under privacy promise (Moores & Dhillon, 2003). A date stored in a form of text file in the computer
and was created by the web server is called ‘Cookies’ (Parsons & Oja, 2011). It allows the retailer
identify the user of the website, focus advertisement for future visit and creating the customized
greetings. It is also used by most of the marketer to get information about the customer internet
habit and identifying the customer location (Janda & Fair, 2004). This is unethical practices,
because some of the customer information has high possibilities to be sold to other retailer for
them to create more personal customer profile (Janda & Fair, 2004). Zheng et al., (2012) argued
that once the customer give credit card number while he or she using internet, the cookies allowed
customer personal data information from credit card will be collected by retailers without their
knowledge (Zheng et al., 2012).
Internet creates so many issues on privacy. Customers are worried about unwanted disclosure of
personal information, or misuse of their personal details therefore invading their privacy
(Mohammed, 2014). It is also claim by (Janda & Fair, 2004) that majority of online customers are
concerned about conveying their personal information to business via internet. Usually, customers
wish to avoid telemarketing and avoiding spam because it leads to supplying the customer contact
decision to the retailers. As result, most of retailers make a promise that they would not use
consumer information for their own purpose (Jagtap, 2013).
Although there are laws and enforcement regarding consumers privacy (Jagtap, 2013), laws regarding
internet privacy is still lacking at this time (Janda & Fair, 2004).
Product Experience
Shopping experience is a special kind of familiarity, influenced by reason, motivations and prediction of
the activity (Demangeot & Broderick, 2006). Consumer experience on online shopping tend to increase,
it is because of the intention of online shopping is higher (Mohammed, 2014). Some author claims that
the product experience is valuable and most of author claim that many customer feel dissatisfied with
their product experience. Product experience is very importance and valued by consumer more than the
product marketing information itself because it is memorable, was remembered by customers and can
be easily understood by the customer (Demangeot & Broderick, 2006). But, the rapid growth of
technology in direct marketing today causes of product risk occurs in e-stores (Tan, 1999).
Even though, internet become the most acceptable platform to do shopping and most of the consumer
argued internet shopping is convenient. The shopping experience in e-shopping cannot replace
traditional retail environment (Janda & Fair, 2004). The degree of arousal and pleasure experience that
the consumer will feel will be different (Menon & Kahn, 2002). Hence, purchaser will feel scared if the
product that they order online will be different from what they see in email (Janda & Fair, 2004). If the
product that they received is not the same, they may experience the frustration (Cho et al., 2006). In
fact, the research done by (Cho et al., 2006) found that 36% of online customer reported being
dissatisfied with online shopping.
In mobile internet shopping, Cox and rich (1968) cited in (Tan, 1999) argued that customer scared
if the product could not meet their expectation is the reason why customer not choose to shops by
using mobile phone. Javadi et al., (2000), stated that consumer prefer to buy the goods which does
not need physical inspection. It is because the customers do not have opportunity to examine the
product before they purchase it (Tan, 1999) and they cannot return the product after the purchased
(Cho et al., 2006). Many customers scared that their purchase decision might be wrong because it is
not possible that the customer will regret in future with the purchase decision that they made (Cho
et al., 2006). The risk such as purchase wrong product might influence the buyer decision making
process when shops online (Ko et al., 2004).
Many people use internet tools just to view the product specification and compare the prices but would
not buy the product which they do not touch and see (Lennon et al., 2008). For example, when
customer wanted to buy clothes online, they would not be able to touch the quality of the fabrics.
Hence, the goods were not as what was displayed on screen (Dennis et al., 2002). For them, to purchase
the goods, they prefer the product in brick and mortar environment where they can experience it with
much more pleasure and reliable (Dennis et al., 2002).
Internet also providing service to the customer and it is playing important role especially in service
delivery. Some of researcher trying to identify the issue that e-shopper might face from e-retailer on
service delivery. So far the researcher successful identify that service delivery on online store also
consist of failure (Holloway & Beatty, 2003). The service problem in e-shopping is, e-retailers took so
many times to delivery products to the customer house. Mostly the delivery time for retailer to deliver
the product is just in between 2 days and 30 minutes (Lin et al., 2011) .
Recommendation
Hazel (1996) that cited in (Hart et al., 2000) stated that internet offered a supporting platform in existing
marketing activity. Due to increase number of issue, many retailers can reduce perceived risk by using
several marketing strategies such as store image, brand loyalty and word-of-mouth (Tsiakis, 2012). This
factor can be use to let the people starts buying the product (Javadi et al., 2012).
Customer will consider the risk that they should take before they purchase a product or goods from
online retailers (Javadi et al., 2012). Through product experience, customer has lack of trust on product
that they might get after purchase. Company that offer online shopping want to reduce this problem.
The company have to build more trust because according to Lennon et al., (2008) the trust concern on
internet is needed, especially credit card attractive and financial transaction (Lennon et al., 2008). Trust
is known as believing in something that is true and was a control method to monitor performance which
was treated as risk and it control problem in marketing discipline (Karayanni, 2003). Even though many
company provide security promises, customer still distrust with credit card payment system through
online (Fernie, 2000). The company can use SSL protocol which is more familiar with customer. SSL
protocol is “Secure Sockets Layer” (Dong & Chen, 2012) which can help company to solve financial issue
and it is also motivating people trust on online shopping (Javadi et al., 2012).
In other hand, when the customer facing product issue, the customer maybe face problem that the
product would not satisfy their needs. Therefore, author such as (Javadi et al., 2012) suggest e-retailers
should provide the insurance for e-buyer. Other than that, some of the retail also can provide contact
details and company address (Huseynov & Yildirim, 2014) and detail product information to reduce the
anxiety of customer feeling (Huang et al., 2004). Besides, e-retailers also can provide the website which
is user friendly for all customers. By doing this, online retailers can persuade consumer to spend more
time on the website to comparing the product price and product specifications (Huang et al., 2004).
References
Cho, C.-H., Kang, J. & Cheon, H.J., 2006. Online Shopping Hesitation. CyberPsychology & Behaviour,
9(3), pp.261-274.
Dai, B., Forsythe, S. & Kwon, W.-S., 2014. The Impact of Online Shopping Experience on Risk
Perceptions and Online Purchase Intentions : Does Product Category Matter? Journal of Electronic
Commerce Research, 15(1), pp.13-24.
Gong, W., Stump, R.L. & Maddox, L.M., 2013. Factors influencing consumers’ online shopping in
China. Journal of Asia Business Studies, 7(3), pp.214-230.
Hanjun, K.. Jaemin, J., JooYoung, K. and Sung Wook, S. (2004), “Cross-Cultural Differences in
perceived Risk of Online Shopping”, Journal of Interactive Advertising, 4(2), 20-29.
Forsythe, S. and Shi, B. (2003). Consumer
Patronage and Risk Perceptions in Internet Shopping. Journal of Business Research. Vol. 56(11), 867-
875. Retrieved from https://www.rese
archgate.net/publication/222860440_Consumer_
Patronage_and_Risk_Perceptions_in_Internet_Shopping
Definition of Terms
Perceived risks. Perceived risk is defined as the potential loss in pursuing a desired outcome while
engaged in online shopping; it is a combination of uncertainty with the possibility of serious of
outcome (Ko et al., 2004).
Product risk. The perception that a product purchased may fail to function as originally expected (Kim,
Ferrin & Rao, 2008).
Time risk. Potential loss of time associated with making a bad purchasing decision by wasting time
researching, shopping, or have to replace the unexpected goods.
Financial risk. The potential monetary outlay associated with the initial purchase price as well as the
subsequent maintenance cost of the product, and the potential financial loss due to fraud.
Delivery risk. Potential loss of delivery associated with goods lost, goods damaged and sent to the
wrong place after shopping.
Social risk. Potential loss of status in one’s social group as a result of adopting a product or service,
looking foolish or unpopular.
Research Instrument
A modified questionnaire from the study of Masoud (2013) and a self – made questionnaire
constructed from different existing studies and literature were used to gather pivotal information for
the study.
The research instrument was questionnaire consisting of three parts. The first part focused on the
participants’ demographic profile; these include questions relating to sex, civil status, occupation and
net monthly income. The second part focused on perceived risks with succeeding sub-factors including
product, time, financial, delivery and social risk which is modified from the work of Masoud (2013). The
last part was a self-made questionnaire which focused on online purchase intention of the young
professionals.
A pilot testing was conducted at the City of Biñan, Laguna with 30 selected young professionals
employed in that city as participants. The validity and reliability of the questionnaire was defined using
Statistical Package for the Social Sciences (SPSS) Program which revealed an Alpha Cronbach value of
0.877 which postulated that the survey instrument was reliable.