An empirical examination of the factors influencing consumer’s purchase intention toward online shopping

Abstract

Online shopping is overgrowing around the globe. Consumers unite and combine their purchasing power in order to bargain for a significant volume discount from a seller. On the other hand, it also helps the new seller to enter the competitive markets easily. The objective of this study is to examine the relationships among the factors and to assess how it influences consumers' purchase intention on online shopping. The main problem that online retailer faced nowadays is how to attract the consumer's purchase intention toward online shopping especially among the student because we know that most student does not have fixed income. So it will prevent them from spending more on online shopping. In order to make a business successful, some good strategy needs to be implemented, and the retailer does not only need to acquire the new customers but also need to retain the existing customers. Purchase intention as the possibility of purchasing a special brand in a product category during purchase. There were 200 sets of the questionnaire had been distributed randomly among the PPIPT students. The present study used descriptive statistics, regression, and Pearson correlation. In short, price, ease of use and usefulness can only explain (R Square = 0.973) variation of factors influencing consumers' purchase intention towards online shopping. Durbin-Watson considers the accepted range of 1.486 shows there was no autocorrelation problem with data. The condition index= 77.598, VIF= 1-10, and tolerance fell =0.1-10 within the accepted range. F-value is found to be a significant level (Sig. F = 0.000). The regression model used in this study is adequate, the model is fit. As a conclusion, a lack of confidence and trust in utilizing the Internet as a shopping channel. The ethnic group also dominated by Malay only which could be a source of bias. Corresponding author: Muhammad Dharma Tuah Putra Nasution Email addresses for the corresponding author: dharma_nasution@dosen.pancabudi.ac.id First submission received: 18th July 2018 Revised submission received: 27th November 2018 Accepted: 10th December 2018 Introduction Online shopping is apart of electronic commerce in which consumers can direct to purchase the goods or services from the seller over the internet. Online shopping allows consumers to purchase faster, more alternatives and easy to order products or services with comparative and lowest price (Cuneyt & Gautam, 2004). E-bay is one of the successful online retailing corporations in the world. It is an online shopping website that allows people and business to purchase or sell their products broadly. In overall, online shopping has two specific processes, which are B2B (Business-to-Business) and B2C (Business-toConsumer). In B2B requires the retailer to purchase the products from other business and sell it out in their products and sell it out to the customers. The emergence of the internet has created opportunities for firms to stay competitive by providing customers with a convenient, faster and cheaper way to make purchases. JARING was the first to Journal of Business and Retail Management Research (JBRMR), Vol. 13 Issue 4 July 2019 www.jbrmr.com A Journal of the Academy of Business and Retail Management (ABRM) 15 introduce internet service in Malaysia back in 1990 (Harn el at., 2006). The report by International Data Corporation (2005) indicated that the future of online shopping in Malaysia is bright and promising. The government of Malaysia introduced business e-commerce in early 1998 (Kamarohim, 2003). Electronic commerce has become an opportunity due to the marketer has some basis to deliver product and services with internet market channel. It is more effective and profitable for marketers that can serve their customers if they concern and understand their customers need and want. Online shopping is designed to provide convenience to customers. Online shopping will make customers more efficient, and enhance satisfaction. For instance, customers will ease to access the product's information. Also, online shopping will save the customer's time, effort and money. In business, customer's satisfaction is an essential element to make the business success and gain high profit. In customer's perceptions, online shopping has its pros and cons. The saving time is the main advantages of online shopping. Customers need to visit the online shop's websites and find any product to fulfill their need and want. All of the financial transaction through online banking, it makes customers easier and saves their time compared to the traditional purchasing method that required the customer's visit to the retail outlet. Besides that, as compared with the retail outlets, online shopping websites provide unlimited space for the retailer to upload the images and information about their products. Other than that, many of the products that are selling online are much cheaper than products that selling in shops or malls. It is due to the products that purchase through online do not include any additional fees. So, customers can enjoy the purchasing process of products easily and low cost. However, one of the disadvantages of online shopping is the safety of customer's personal information. Criminals can steal private information such as name, mobile number, credit card, and account bank number. It is the most worrying things for customers who were using online shopping. Besides, the time consuming is also one of the reasons for customers who do not prefer online shopping. This case is because when customers purchase the products online, they expect to receive their items as fast as possible. However, in online shopping, it needs a few days for the products to deliver to the customers. Furthermore, products that sell through online cannot be touch by the customers, and they can see the images of the products. Thus, this may cause the customers do not satisfy when the products that they receive is low quality or not the same as what they are expected. All of these issues may influence the customer's purchase intention toward online shopping. According to IBIS World Research, it forecasts that there will be 8.6% increment of online revenue per year in the year in the next five years. Even though online shopping had growth rapidly nowadays, consumers still not confident toward the security of the website that required people giving their personal information to the online retailer. The objective of this study is to examine the relationships among the factors and to assess how it influences consumers' participation and purchasing intention for online shopping in Malaysia context. According to antecedent studies, although the price is the key factor that consumers concerned the most. However, other factors way consumers' purchasing intention, such as attitudes, reference group and others (Chang, Lai, & Wu, 2010). Further, limited studies are being done on consumers' purchasing intention on group purchasing websites, especially in Malaysia context. Due to the online shopping concept still in the initial stage of development, Therefore, it is necessary to investigate the factors affecting consumers' purchase intention in this area. The main problem that online retailer faced nowadays is how to attract the consumer's purchase intention toward online shopping especially among the student. The reason is mostly student does not have fixed income, and the situation will prevent them from spending more on online shopping. In order to reach a business successful, the retailers do not only need to acquire new customers but also need to retain the existing customers. From some researches that had been conducted previously, most of the customers are more prefer to purchase in the retail store rather than online shopping. Besides that, the significant problems that online retailer faced nowadays are how to improve their services and activities to stimulate the customer’s purchase intention. For many researchers that had been conducted previously, most of the consumers also choose to purchase in the retail store more than Journal of Business and Retail Management Research (JBRMR), Vol. 13 Issue 4 July 2019 www.jbrmr.com A Journal of the Academy of Business and Retail Management (ABRM) 16 through online. Around 70% of the customers also think that the security of the website is a significant factor that caused them to do not prefer online shopping. Even though there have many researchers had found out the factors that affecting purchase intention towards online shopping, but there has seldom research that examines specifically in several reasons such as price, ease of use, and usefulness for online shopping. Also, there have seldom research had to do their researches that focus in Perlis. In order to improve the purchase online and change the negative impressions about online shopping, it should focus more on several factors that affect the consumer's purchase intention to understand more the probability of each factor had influenced the consumer's purchase intention. However, some factors can lead to negative feedback meanwhile several factors can lead to positive feedback. Thus, this study is done to find out which factors among the several factors related to the consumer's purchase intention towards online shopping. This study attempts to answer the following research questions: • Does price have a significant effect on consumers' purchase intention toward online shopping? • Does ease of use have a significant effect on consumers' purchase intention toward online shopping? • Does usefulness have significant effects on consumers' purchase intention toward online shopping? Literature Review Introduction on Purchase Intention One of the primary concepts in marketing literature is purchase intention which has routine applications in researches and also covers a wide range of products and services. Kim and Kim (2004) define purchase intention as the tendency of co