Online shopping

Online shopping

International Journal of E-Business Development (JED) Attitudes toward Online Shopping: A Comparison of Online Consumers in China and the US Wen Gong #1, Lynda M. Maddox *2, Rodney L. Stump “‘3 Department of Marketing, Howard University, 2600 6th Street, NW, Washington, DC 20059, USA Department of Marketing, The George Washington University, Funger 301 D, 2201 G street, NW, washington DC, 20052, USA Department of Marketing, Towson University, Stephens Hall 123, 8000 York Road, Towson, MD 21252, USA 1 gong. [email protected] com; [email protected] edu; [email protected] du Abstract- As online shoppers become progressively global and multicultural, more ross-cultural research is called for to better understand online consumers’ purchase behaviour. Based on the diffusion of innovation theory, literature on perceived risk in etailing and theories of national culture, this research investigates the perceptions of online consumers in China and the U. S. toward online shopping. A total of 503 Chinese consumers participated in a nationwide Internet survey in China and the results were compared to the data revealed by Pew Internet & American Life Project.

Findings indicate that Chinese and American consumers hold significantly different erceptions regarding the relative advantage, ease of use, and risk of shopping on the Internet. Keywords- Chinese Online Consumers; American Online Consumers; Internet Shopping; B2C Electronic Commerce; Online Shopping Attitudes l. INTRODUCTION China’s Internet penetration rate reached 31. 8 percent during June, 2010, exceeding the world’s average of 28. 7 per cent at the same time (1 , 2, 3). The sheer size of China’s population means that the country now has 420 million Internet users (4).

This is the highest per country usage in the world, nearly twice as large as the U. S. , which has an online opulation of 221 million in 2010 (5). While China’s online retail market has been growing steadily with 108 million users now shopping on the Internet (6), compared to the 154 million in the U. S. who have shopped online (7), online shopping penetration in China still appears to hold considerable growth potential. Analysts have questioned whether Chinese consumers will become avid online shoppers (e. g. , 8).

Academic researchers have suggested that China’s cultural history of preferring faceto-face business interactions, coupled with the countrys restrictive regulatory climate, may inhibit the development of online shopping (9). CNNlC’s surveys have consistently shown that Chinese Internet users are less involved in e-tailing activities such as online shopping and payment, compared to their use of the Internet as a tool for entertainment, communication and information. The low adoption of e-tailing activities by Chinese consumers lags those of their Western counterparts (10). arket, one that is striving to transform its economy from being manufacturing-based to technology-based. The Chinese government has attached great importance to e-tailing in spurring economic growth and recently has released a series of policies to regularize nd guide Internet and e-tailing development (6). Furthermore, China has overtaken Japan as the world’s second-largest economy and is predicted to replace the US as the world’s top economy in roughly a decade (12). Collectively, all of these factors bode well for an improving etailing environment in China.

The focus of this study is to examine whether online consumers in China and the US share similar attitudes with regard to online shopping. While there is a wealth of research focusing on online shopping behaviour in Western countries, relatively little research has compared consumer attitudes toward online shopping across nations. Reflecting the call by Van Slyke, Belanger and Sridhar (13) for more cross-cultural comparison research on consumers’ e-tailing attitudes and behaviour, the present study examines this phenomenon in national cultures that reflect the East versus the West, namely China and the U.

S. A, respectively. This paper intends to begin filling this knowledge gap. Drawing on theories of national culture, along with diffusion of innovation theory and the literature on perceived risk in e-tailing, we hypothesize and empirically test what similarities and differences exist in the attitudes of online shoppers from these two ations. The findings of this study will guide e-marketers in their design of e-tailing Websites and their underlying information systems so that they can better cater to the needs and lifestyles of online shoppers in different countries.

The next section provides a review of the literature relevant to the current study. Following that, we describe our methodology, present the results of our analysis, discuss the implications of these findings and end by tendering recommendations for future research. RELEVANT LITERATURE A. Overview of China’s Online Retail Market Over the past two decades China’s continuous rapid conomic growth has manifested itself in its population’s China is a national market that is in a state of flux.

Younger swelling consumption power (10). During this same timeframe Chinese have grown up in an open China with rapid the growing affordability and availability of Internet access has development of information and communications technologies enabled a growing number of Chinese consumers to get on the as well as the influx of western ideologies. In addition, many Internet for information, entertainment and communication other key structural factors such as availability of purposes.

Facilitated by consumers’ increasing understanding distribution/logistics networks and online payment mechanisms, of online applications, the availability of a more transparent the dynamic business environment and relative sophistication and convenient online shopping environment, and expanding of government regulations have important bearings in shaping investments in this sector, more and more Internet users have consumers’ attitudes and behaviours toward online shopping. urned into online shoppers. This is reflected in recent Consider that the US is among the top three countries in the economic data showing that the Chinese online retail arket world in terms of e-readiness (1 1), whereas China is ranked value reached USD 18. 8 billion with a vigorous growth rate of only as No. 56. Nonetheless, China is an important national 128. 5 per cent in 2008 (14). Chinese Internet users have C JED vol. 2 NO. 1, 2012 PP. 8-35 0 2011-2012 world Academic publishing 28 increased their online spending over the years. In 2008, their online average spending totalled RMB 1,600 (USD 234. 3), an increase of RMB 582 (USD 85. 2) from 2007 (14). Chinese online shopping lists have also broadened considerably, shifting from the initial simple selection of books, music and video products to now omprise a broader array of product categories, including apparel, housewares, digital products and many others (see Appendix 1). B.

Adoption of Technological Innovations Diffusion of innovations (DO’) theory explains how adoption takes place over time within a social system (15). According to Rogers (1983), the adoption rate of an innovation is influenced by (1) characteristics of the innovation itself; (2) the communication channels through which the benefits of the innovation are communicated; (3) the time elapsed since the introduction of the innovation; and (4) the social system in which the innovation is to diffuse.

Analyses of adoption levels and diffusion rates can be conducted at both the individual level (such as measuring adopters’ demographic traits or perceptions of an innovation’s characteristics) or the system level (such as those describing the nature of a socio-economic system). While the individual versus system levels are conceptually distinct, consumers’ perceptions, attitudes and behaviours are influenced by the social system in which they are embedded (16) as well as macroeconomic and structural factors noted earlier.

Recognizing that economic and infrastructure variables do not explain all the variation at the system level (17), we nstead use a dual perspective to posit factors that influence individual level attitudes and behaviours related to online shopping. Specifically, we provide rationales for cross-country differences based on both national infrastructure conditions along with the social influence of national culture in our conceptual model. Much of the extant DOI research has focused on the “perceived attributes” of an innovation, i. . , relative advantage, compatibility, complexity, trialability, and observability. Consequently it is theorized that individuals will adopt an innovation if they perceive that the innovation is superior to an existing one or the tatus quo; compatible or consistent with existing values, beliefs, needs and practices; not too complex or difficult to use or understand; testable for a limited time without adoption, and visible or apparent to others once adopted (18).

The existing literature reveals that perceived relative advantage, complexity, and compatibility have received the most consistent empirical support (18, 19). Thus, we restrict our attention to these as the dependent measures in our model, along with risk perceptions, a mediating factor. C. Perceived Risk of Online Shopping Perceived risk plays a critical role in consumer decisionmaking and behaviours (20). This is particularly true with Internet purchases, which involve activities that are not only technology-intensive but also of an impersonal nature (21, 22, 23, 24).

Prior research has indicated that the probability of consumers’ choosing a marketing channel increases significantly if their confidence in that channel is high and the perceived risk is low (25, 26). Various types of risk are perceived in online purchase decisions. According to Park, Lee and Ahn (27), perceived risk in the online shopping context can be differentiated between those related to product/service (such as unctional loss, financial loss, time loss and opportunity loss) and those related to online transaction (such as privacy, security, and nonrepudiation).

Cases (28) found that e-shoppers are most concerned about privacy, source (i. e. , website), performance and payment risks and least about social risk. The general negative relationship between perceived risk and consumers’ attitudes toward online shopping and in turn, their intention to shop online has received wide empirical support and appears to hold across nationalities (e. g. , 25, 29, 30, 31 , 32, 33, 34, 35, 36, 37, 27, 38, 39, 40).

Previous research has also demonstrated that risk perception has cross-cultural variation (41, 42, 43), in other words, we can infer that perceived risk mediates the effect of other antecedent factors with regards to attitudes toward online shopping and intention to engage in this behavior. In view of this, we include this additional variable, perception of risk associated with online shopping (i. e. , e-trust), in our examination. D.

National Culture Differences Culture, an important element of the social environment, has long been accepted in the marketing literature as an important factor shaping consumer behaviour. On a macro level, numerous studies have shown that different cultures react differently to new product and technological innovations (e. g. , 44, 45, 46, 47, 48, 49, 50, 51, 52, 53, and 54). Thus, it is not uncommon for a new product or technological innovation to gain rapid acceptance in particular countries but take substantially longer times to penetrate in others.

While several cultural frameworks exist, we turn to Hall (55, 56) and Hofstede (57, 58), who have developed the most widely accepted frameworks for understanding cultural differences among nations. Hofstede (57, 59) identifies five dimensions along which ational cultures vary: power distance, uncertainty avoidance, individualism vs. collectivism, femininity vs. masculinity, and long-term vs. short-term orientation (57, 59), and provides ratings on these dimensions for many countries (http://www. geert-hofstede. com/hofstede_dimensions. php).

Power distance refers to the extent to which members of a society accept that power in institutions and organizations is distributed unequally; uncertainty avoidance is the degree to which a society can tolerate uncertainty and ambiguity; individualism-collectivism describes the relation between the group and the ndividual and focuses on the degree a society reinforces individual or collective achievement and interpersonal relationships; masculinity-femininity addresses the degree to which a society is characterized by assertiveness versus nurturance and is closely related to societal expectations of gender roles; and long-term orientation measures the degree a society embraces long-term devotion to traditional, forward thinking values. Table 1 provides index scores and rankings for these cultural dimensions for China and the US. These data suggests that the national culture of China significantly differs from the US in all but ne dimension, i. e. masculinity/femininity. TABLE I SUMMARY OF HOFSTEDE’S CULTURAL DIMENSIONS FOR CHINA AND THE US Dimension Measurement Uncertainty The higher the PDI, the more likely a society expects and accepts unequal power and wealth distribution (scores range from 11 to 104). The higher the UAI, the lower the US Score Power distance (PDI) c 29 Avoidance (IJAI) Individualis m/Collectivi sm (IDV) Masculinity/ Femininity (MAS) Long-term Orientation level of tolerance a society has for uncertainty and ambiguity (scores range from 8 to 112). The higher the IDV, the more likely a society emphasizes ndividuality and individual rights (scores range from 9 to 91).

The higher the MAS, the lower the level of differentiation and discrimination between genders (scores range from 5 to 95) The higher the L TO, the more likely a society values of long-term commitments and respect for tradition (scores range from O to 118). 20 91 62 118 *The four original dimensions are based on the results from 50 countries and 3 regions, while the fifth dimension is based on later results from 23 countries. **Estimated values It has also been widely recognized in cross-cultural research that people derive different meaning and often key nformation from the contextual aspects of the interaction (56). In Hall’s approach, one aspect of culture is to consider how individuals and their society seek information and knowledge. He suggests that countries can be grouped into high or low context categories. In high context cultures (e. g. China, Japan), people try to become well informed about the facts associated with a decision or a deal by obtaining information from personal information networks. In contrast, people from lowcontext cultures (e. g. , U. S. , Canada) seek information about decisions and deals from a research base and uch emphasis is placed on the use of reports, databases, and the Internet (60). As noted earlier, the adoption and diffusion of an innovation is highly dependent on the communication channel and process within a social system (15). Takada and Jain (1991) found that the diffusion rates in countries characterized by high-context cultures and homophilous communication were faster than the diffusion rates in countries characterized by low-context cultures and heterophilous communication.

Based on a large-scale secondary data study, Gong (61) found that a high-context culture rovides a communication context that is more conducive to the adoption and diffusion of Internet retailing, suggesting that culture influences consumers’ abilities and desires for online communication and purchase. The implication of this appreciation of cultural differences is that China and the U. S. represent far different cultural milieus, which in turn are apt to influence and distinguish the adoption rates of online retailing in these countries. Ill. HYPOTHESES “Anytime, anywhere” convenience has been touted as one of the major benefits associated with online shopping.

As such, Internet connectivity s fundamental to accrue the resultant benefits. Despite the phenomenal growth of Internet users, China’s Internet penetration still is only ranked the 87th in the world (6). Although broadband Internet access has gained a wide popularity in China (98% in year 2010) (62, 6, 1), download speeds remain far behind that of developed countries such as US, Japan and Korea (4) and the data transfer rate further slows down during peak hours because broadband width is shared (14). These local conditions may greatly reduce the convenience and in turn, diminish the perceived advantage of online shopping among Chinese consumers.

E-tailing takes place in the context of Web-based communication, which is considered to be a largely lowcontext medium due to its lack of contextual factors (63). As such, the relative impersonal nature (lack of face-to- face interaction) of online shopping may be viewed as a disadvantage in a high-context collectivistic society such as China where cultural values are largely formed and created from interpersonal relationships and social orientations (64). Empirical evidence has also shown that individuals in collectivist cultures are less innovative than those in individualistic cultures (65), which may also account for arying rates of acceptance of online shopping.

On the other hand, as the Internet becomes more affordable, accessibility has been greatly enhanced in recent years and increasingly more Chinese are searching on the Internet. Product information made available on the Internet via comparison sites, chat rooms, blogs or social media networks may be perceived as a great advantage. There is an old Chinese saying “never make a purchase until you have compared three shops”. Prudence and the desire to make the better consumption choice usually leads Chinese consumers to compare among shops before they make a purchase, even if the product belongs to he low involvement category (66). Such comparison convenience may be more appreciated by Chinese consumers.

Further, source credibility greatly affects Chinese consumers’ search activity and WOM is greatly valued due to their group orientation. Information shared by other consumers can be very influential because it is not controlled by the marketers and is thus seen as more credible. Since these rationales do conflict, we propose competing hypotheses. Reflecting the local conditions and context perspectives, we posit: HI a: Chinese consumers perceive online shopping to have less relative advantage than do American consumers. Conversely, the comparison argument leads us to propose: HI b: Chinese consumers perceive online shopping to have more relative advantage than do American consumers.

As a nation’s computer/telecommunications capabilities are crucial to e-tailing, so is its commercial infrastructure for ensuring the security, reliability and affordability of e-tailing (67). Right now the poor nationwide distribution networks and the lack of a safe and efficient online payment mechanism are apt to be seen as significant hurdles that hinder Internet purchases in China. Despite the growing popularity, credit card usage and ransaction volume are still very low in China, compared to those of developed economies (68). Culturally speaking, the Confucian value of “living properly’ manifests itself in the classic Chinese belief and behaviour of “saving for a rainy day’.

From a young age onwards, Chinese are taught to live within their means and avoid accumulating debts. Borrowing money is traditionally seen as a shame. Unlike Westerners who are used to credit spending and taking on loans, the traditional Chinese value of thriftiness means they are not apt to spend what they have not earned. Although this kind of mentality has been gradually hanging, particularly among the younger generations, this culture tends to have great inertia. As a collectivistic and high-context society, kinship ties and interdependence are strong. Chinese traditionally rely heavily on face-to-face communications for information. Nonverbal and contextual cues are important in the interpretation of a message.

In other words, a verbal message may have little meaning without the surrounding context, which includes physical aspects, time and situation in which the communication takes place, and the overall relationship between all the people engaged in the communication. On the ontrary, in an individualistic society such as the US where low-context communication is typical (59), people are more independent and value straight talk. Information is explicitly expressed in the words that have precise and literal meanings. As such, the computer-mediated communication environment allows people to work or live more independently from one another. Moreover, the needs of individuals can be more easily satisfied without time or location constraints of others (69).

This would seem to suit an individualistic society better as the Internet’s inherent absence of face-to-face contact may make it ore difficult for people in a collectivistic society to effectively discern and utilize the context cues. Based on this line of reasoning, we expect that consumers in China, who are more collectivistic than the US, will perceive online shopping to be less easy to use. Reflecting these multiple rationales, we hypothesize: H3: Chinese consumers will perceive online shopping to be less compatible than do American consumers. The abundance of fake or poor quality products in China has resulted in general distrust of both online and offline vendors among Chinese consumers (14). Relative to many