An examination of trust in online shopping.

• Author: Kuenzel, Sven

1. INTRODUCTION

   1982 saw the first efforts to use a browser and develop coding for the World Wide Web. This has led to the easy to use interface that is known know today as the Internet. Rowley (1996: p27) defines the Internet as, "a collection of interlinked computer networks, or a network of networks". This relatively new communication medium has led to new companies selling goods and services online to consumers, i.e. (R)etailing. Jones et al. (2002: p229) define (R)etailing as "the sourcing, purchase/selling of and payment for goods and services between businesses and consumers in which the interactive process is mediated by information or digital technology at both locationally separate ends of the interchange". (R)etailing established itself in the mid to late 1990s with a boom in what was known as 'Dot.com' businesses. The fortunes of this new business phenomenon soon took a down turn and the collapse of many dot.com businesses in April 2000 provided a wake-up call to many e-tailers. Kolsaker and Payne (2002) suggest that the collapse of many dot.coms has shown that there may not be room for all in the online shopping market.

   Also online retailers are experiencing a shift in the balance of power between retailers and consumers in favor of the latter. Hart et al. (2000) observe that a retailer's adoption of online shopping will be based ultimately on the level of consumer demand for the Internet. The Internet has not warmed to as many consumers as commentators had previously predicted, Jones et al (2001: p5) explains "The jury still seems to be out on the future of (r)etailing". Most Commentators dramatically scaled down early predictions that (r)etailing will take a very rapidly growing share of consumer spending. The new millennium however has seen an up turn in the fortunes of online shopping. It has begun to grow and is becoming increasingly more popular after its initial misfortunes. Marketing Week (2003) reported that in January 2003, Internet shopping enjoyed its second 1bn [pounds sterling] month. According to the IMRG e-retail sales index, online shopping grew 19 times faster than traditional 'Bricks-and-mortar' retailing in December 2002. IMRG also stated that mainstream retailing fell by 44% from December 2002 to January 2003 and Internet shopping now accounts for 6% of all UK retail sales. Dwek (2003) suggests that people are taking to online shopping in exactly the same way that they took to supermarkets in 1949. Even though online shopping is growing and increasing in popularity, there are still reservations for many consumers in switching to online shopping from traditional methods. Kalsaker and Payne (2002) highlight that Business to Consumer environment e-shoppers are still an albeit increasing minority. Hart et al. (2000) underline that growth of retail formats is a gradual process, as the infrastructure has to have time to establish itself. This will then provide time for consumers to adapt to the new methods of delivery. Although there are advantages to purchasing goods and services online, there are fundamental reasons why consumers do not adopt online purchasing behavior. Jones et al. (2002) point out that at the start of the new millennium in the UK, less than twelve million people had Internet access and surveys at the time revealed that twenty million people had no intention of ever going online. Although these statistics are not current, it indicates that consumers have some underlying issues concerning the adoption of the Internet impacting on online shopping. One of the most important factors that stops consumers from using the internet is trust. Therefore, consumer trust in an online context will be critically examined in this paper.

2. CRITICAL REVIEW OF THE LITERATURE

   In the following the relevant literature will be evaluated critically. Jarvenpaa and Todd (1997) showed that convenience was the most salient benefit of online shopping. Other writers such as Dennis et al. (2002), Alreck and Settle (2002) and Chiang and Dholakia (2003) all highlight that convenience is a key factor for a consumer choosing to switch to online shopping. Convenience may be achieved through time saved in searching for products, ease of comparing items or just avoiding the 'hustle' and 'bustle' of traditional shopping methods. Price savings on products and services is another motivation for consumers to adopt online shopping, (Chiang and Dholakia, 2003; Alba et al., 1997; Weinberg, 2001). The Internet offers the ability to compare prices more easily than traditional shopping methods and business to consumer e-commerce websites can offer lower prices as a result of lower overheads. Certain product characteristics also motivate online purchasing behaviour (Chiang and Dholakia, 2003). Nelson (1974) distinguishes between 'Search goods' and 'Experience goods'. 'Search goods' are products that the consumer has full information about before the purchase is made. Information may be obtained through product labeling or shop floor sales staff. Alternatively, 'Experience goods' are products where full information can only be obtained through experiencing them. This may be true of a motor vehicle--only will a customer know how it feels to drive by physically testing it. 'Search goods' are far easier to purchase online as all the relevant information is in front of the consumer.

   Barriers to online shopping include financial and technological factors. Set up costs can be quite high for consumers for PCs and laptops and there are additional call charges for Internet usage. Internet connection speed can also be an issue. Broadband connection in the UK is still in its infancy and using a 56K modem connection can make online shopping slow and frustrating. The idea of online shopping being quicker and more convenient is somewhat dependent on the quality of equipment being used. There are also some operational features of online shopping that some people find off putting. Jones et al. (2001) indicate that people find some web sites difficult to navigate, dull and uninviting. If a web site does not catch the eye and is unappealing to the customer, customers become disillusioned and may turn to an alternative website or traditional shopping methods instead. There can also be issues concerning ease of navigation around websites. If a website is difficult to navigate, or if the customer is inexperienced with the Internet, online shopping may become a chore to the consumer. Again, this contradicts convenience being an advantage of online shopping. Dennis et al. (2002) also explain that customers are put off online shopping by delivery procedures. Customers have not fully warmed to waiting days for their goods when they could have purchased them from the high street and have ownership of them immediately. Customers have also been frustrated by unsuitable times of delivery and unreliable delivery services. These factors may also encourage the consumer to reject online shopping. Cultural and social issues also play their role in prompting consumers to reject online shopping. Interpersonal aspects of traditional shopping are also missing from the online equivalent. Dennis et al. (2002) and Harris et al. (2000) explain that involvement with other humans is a key factor in shopping enjoyment, something difficult to replicate in a virtual environment.

   Probably the biggest barrier to online shopping adoption is the level of trust that exists for the customer. According to Kolsaker and Payne (2002), recent studies have shown that the emergent critical success factor for online shopping is trust. They suggest that certain characteristics of e-commerce: lack of physical presence, availability of information, ease of access and transparency increase the relative importance of trust within the retailer/consumer relationship. In the case of online shopping, trust is even more critical than with other forms of business exchange as the 'trustor' (consumer) does not have...