Adoption of online group buying.

AuthorLau, Eric K.W.

    With the advent of electronic commerce and widespread of social networking, many new and innovative business models for Internet-based selling have been created. Unlike the traditional model that retailers play an active role in product promotion and sales, customers can now take a more participatory role and to shape the market. Online group buying is seen as an effective form of electronic commerce that puts the power of volume discounts in the hands of the individual consumers. This new group buying retail platform has made rapid progress in China and United States in recent years. According to US internet analysis site, in United States has grown to a US$1.35 billion global business within two years' time and it has attracted more than 10 million users each month. Meanwhile, more than 900 group buying websites sprang up in China in six months time during 2010 as indicated by Beijing-based research firm Analysys International. (Chen, 2010).


    Group buying is a business model based on the power of collective buying that allows consumers to combine their purchasing power and to acquire lower prices than they otherwise would be able to get individually. This new group buying platform can bring benefits to all parties in the transaction, i.e. customers, intermediaries and suppliers. Consumers can pay less for their preferred products and services, while merchants can sell larger volumes and gain access to new customers. Besides, the merchants can enjoy a free opportunity to advertise its brand and its products or services even if the deal cannot be made. Meanwhile, the website operators act as an intermediary between merchants and consumers, they can get a service charge or commission from the successful transactions.

    Witness the success stories overseas, the online group buying website becomes an emerging consumer practice in Hong Kong. Many companies have begun their operation in Hong Kong since the late 2009. The online group buying websites that are now running operation in Hong Kong include:,,,,,,,,, and (Chen, 2010).

    In fact, the number of the members is significantly growing through the widespread use of the social networking such as Facebook, Twitter and Weibo., one of the popular online group buying websites, has already recruited 140,000 members within six month time via the network of Facebook. This phenomenon is not astonishing since the survey made by ComScore Inc. in February 2010 has revealed that Hong Kong has 75.4% of its entire Web population visiting a social networking site. Strong engagement was exhibited by 3.7 hours per visitor and 25 visits per visitors during the month (ComScore, 2010).


    2.1 Attitude towards online group buying

    Attitude is considered to be one of the most important constructs in consumer behavior. It is generally defined as a learned disposition to respond in a consistently favorable or unfavorable manner with respect to a given object, issue or behavior (Fisbein and Ajzen 1975). In this study, it is proposed that attitude mediates the relationship between individual beliefs and adoption intention. Attitude refers to an individual's overall affective evaluation of online group buying services as a mode of shopping.

    Prior researchers suggested that people with positive attitudes toward one behavior will have a higher tendency to perform that behavior. Attitudes affect information processing, intention formation, and actions (Boninger et al, 1995). Nelson (1990) also mentioned that attitude has been the most widely addressed individual-level variable in analysis of information-driven innovations. Researchers argued that external variables such as system design characteristics, user personality and task characteristics, etc. would influence user acceptance of technology only through internal psychological variables, i.e. attitude toward the technology. This attitude-behavioral intention relationship implies that, other things being equal, "people form intentions to perform behaviors toward which they have positive effect" (Davis et al, 1989:986). Empirical evidence showed that attitudes do predict online shopping intention (Michael et al, 2005; Gurvinder et al, 2005). Particularly, if people have volitional control over their actions, the attitude-intention-behavior linkage would be stronger (Winter et al, 1998).

    2.2 Individual Beliefs of Group Buying Adoption

    There exist a large number of studies dedicated to identify the variables that affect online shopping attitude and intention. In order to consider the relevant set of individual beliefs, the theoretical framework proposed by Jarvenpaa and Todd (1996, 1997) will be adopted in identifying the salient factors that affect the adoption of online group buying services. They have identified eleven factors conditioning the adoption of online shopping by users. These factors are classified into three different categories: product perceptions, shopping experience and customer services, with a sub-category in each.

    Product perception serves as the primary determinant of where...

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