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Journal of the Academy of Business and Economics’ ©arch, 2005
 Chuleeporn Changchit’ Shawn J. Douthit’ Benjamin
Hoffmeyer

ABSTRACT
The success of online businesses relies heavily upon their ability to attract and retain customers. This study
investigates which factors can lead to a more favorable online shopping experience. ©ore specifically, the study
identifies the factors perceived as important to online shoppers when making the decision to visit a website, to
purchase from a website, to purchase more items, to purchase at a higher price, and to provide feedback to a website.
The better an online business understands the needs of these shoppers, the higher the chance that they can attract and
retain customers.

Keywords: Online Shopping, E-Commerce, Important Factors

1. INTRODUCTION

The Internet is used everyday by a wide variety of people for several functions. ©ore and more people gravitate
towards using the Internet more intensively as the accessibility of technology, the availability of information, and
the ability to interact through the Internet increase and evolve. Obvious capabilities of the Internet include avenues
for gathering information, purchasing a product, or rendering a service. The advance in Internet technology allows
for the expansion of options beyond the traditional methods that may be more time consuming. Having to physically
gather information is alleviated, and the customer is better able to efficiently use their time. For instance, instead of
having to physically visit different stores to compare prices or relying on circular pamphlets in newspapers, the
consumer is able to search and retrieve the needed information through the Internet. With the number of hosts on the
Internet having grown from 1.7 million in 1993 to 110.0 million in 2001 (Ruthkowski, 2000), the Internet user has a
wide variety to choose from to satisfy these needs.

©any brick and mortar companies have decided to enter e-commerce markets. However, the effects of e-commerce
on individual business are varied based on several conditions. The companies should examine the customers' needs
and preferences carefully in order to minimize any adverse consequences that might arise. Some factors to consider
are the effects on products, services, skills, staffing, structure, systems, and the customer base (Piers and Aisbett,
2002; Lumpkin, Droege, and Dess, 2002). How these effects are handled will determine whether the business will
effectively use e-commerce and remain a viable, going concern.

While the traditional brick-and-mortar storefront can bombard potential customers with information prior to entering
a store, the situation is different for online businesses. Potential customers take a different role with their ability to
be more active in determining what information is viewed. Unlike traditional brick-and-mortar storefronts that can
place physical ads which cannot easily be removed from customer eyesight, the mouse and keyboard makes it
relatively easy for the online consumer to pick what information is searched, kept, or discarded. This capability
creates a different dynamic in the consumer-business relationship, placing more control in the consumer's hands.

As consumers gain more control, it is important that their needs be the main concern when building an online
business website (Huizingh & Hoekstra, 2003). An online business must distinguish themselves from their
competitors so as not to be overlooked in the large number of business choices available through the Internet.
Focusing on factors that implement higher levels of customer satisfaction in the electronic commerce environment is
crucial for the online business to remain competitive. Implementing strategies emphasizing customer satisfaction
can increase the business' likelihood of separating themselves from their competitors, and more importantly,
increase their customer retention. Steady customers, besides providing steady revenue, are necessary as it helps
businesses obtain more customers through the act of referral (Kumar 2001), helping to create a steady cycle of
customers. The steady cycle of customers creates a substantial reputation that helps retaining a positive relationship
with customers.

2. BACKGROUND

As Internet usage rises, firms are beginning to realize the importance of better understanding their online customers.
Today electronic business plays a major role in the world's economy and is expected to continue in the future. A
recent Forrester Research report forecasts that online retail sales will grow from $45 billion in 2000 to 269 billion
dollars in 2005 (Rohm & Swaminathan, 2002).

Online shopping is defined as a computer activity/exchange performed by a consumer via a computer-based

interface, where the consumer's computer is connected to, and can interact with, a retailer's digital storefront through
a network (Haubl & Trifts, 2000). The popularity of this medium of exchange has allowed the existence of a free
market with intense competition. With the success of online retailers like eBay[R] and Amazon[R], combined with
low start up costs, the industry has expanded rapidly. In conjunction, however, the industry has also experienced
many failures. Due to the high number of failures in the dot.com industry, online businesses have begun to demand
market information that allows them to focus their marketing efforts to maximize traffic and consumption.
Specifically, to identify motivating factors that lead to online buying and customer retention.

It has become quite clear that in order to survive and be profitable, online businesses must pursue the fundamentals
of good retailing. One of these principles is knowledge about existing and potential customers and their preferences
(Kim & Lim, 2001). Retailers must pay attention to the target market's perceptions, attitudes, and behaviors rather
than the technological characteristics of their websites. Besides competing with traditional storefront businesses,
online businesses have to compete with other Internet sites that sell or offer similar services as well. Business
livelihood is dependent on the ability to satisfy the crucial need to retain customers and to increase the amount of
purchases. Without growth, businesses simply cannot remain profitable. In general, businesses must focus on
obtaining new customers alongside maintaining current customers.

©any factors determine why customers return to a store or web-site. It has been shown that longer lengths of time
spent online by consumers increases the likelihood of consumers revisiting a website or becoming customers by
buying a product (Huizingh & Hoekstra, 2003). As such, designing a website in such a way as to retain customer
attention and satisfaction, increases the likelihood of creating repeat customers. Also, understanding customer
satisfaction factors can increase the probability of attracting new customers and/or retaining existing customers. A
study reported that customers expressed that "customer service" was a key factor in their decision to shop at a store
or revisit the website (Changchit & Vokurka, 2003). Online stores are at a disadvantage to their brick-and-mortar
counterparts due to the lack of face-to-face customer interactions. It is necessary for online businesses to make every
online experience for their customers as positive as possible if businesses want customers to return.

Although the Web provides vast opportunities for potential customers to gather information on products, their
likelihood to make actual purchases relies upon several factors (Chiang, Zhang, & Zhou, 2004). Internet sales are
not where researchers expected them to be based on past projections. Several factors discourage the growth of
electronic commerce even when rapid growth can be expected due to increased Internet use (Han& Noh, 2000).
Although there are approximately 104-million adult US Internet users, the proportion of users making purchases has
not increased. In fact, transactions on the Internet made by private households accounted for less than one-tenth of
one percent of personal expenditures (Nadeau, 2001; Vellido, Lisboa, & ©eehan, 2000). ©oreover, a recent survey
of 9,500 online shoppers revealed that as many as 55 percent abandoned their "shopping carts" prior to checkout,
with another 32 percent abandoning them at the point of sale (Shim, Eastlick, Lotz, & Warrington, 2001).

According to previous research, the potential customer's experience in the online environment is an important
indication of whether online shoppers are going to purchase a product or render a service (Chiang, Zhang, & Zhou
2004). A study compared the experiences that customers have at a brick-and-mortar store versus online shopping
(Changchit & Vokurka, 2003). A main difference in the two experiences is that traditional storefronts are able to
provide customers with the immediate sensory experience of touching and feeling proffered products whereas online
storefronts are more limited in offering physical experiences with their products. Internet customers may have the
visual experience of seeing what they are interested in purchasing. They are limited in their ability to touch or feel
the merchandise until after delivery. The lack of the physical experiences touching and feeling available in
traditional brick-and-mortar storefronts may be a reason why an online business has not risen to the level that some
thought possible in the early 1990's. To overcome this obstacle, online businesses need to focus on satisfiers outside
physical experiences with products. They need to convince customers that touching and feeling the merchandise are
less important than what they can offer via an online shopping. This study intends to explore which factors are
perceived as important to online customers when shopping on the Internet.

3. ©ETHODOLOGY

A direct survey was used to collect the data for this study. It was administered to random shoppers at local malls and
to students at a southwestern United States university. The survey questions were compiled from previous study
questions pertaining to the electronic commerce shopping behaviors (Alomaim, Tunca, & Zairi, 2003; Joines,
Scherer, & Scheufele, 2003; Kohli, Devaraj, & ©ahmood, 2004; Koivumaki, 2001; Koyuncu & Lien, 2003; Lin,
2003; Posnock, 2004). These questions were designed to gather data on the subjects' perceptions toward online
shopping as well as their demographics. To validate the clarity of these questions, three professors and three
researchers were asked to read through the survey questions. Revisions to the survey were made based on the
feedback received.

The survey consists of 91 questions divided into five sections. These questions were designed to identify what
factors are perceived as important to the online shopper when making decision to: 1. visit a website, 2. purchase
from a website, 3. purchase more items, 4. purchase at a higher price, and 5. provide feedback to a website. The
questions were rated on a 7-degree scale with 1 meaning "strongly disagree" and 7 meaning "strongly agree".

One hundred and twelve individuals, both males and females of all ages and incomes, provided responses to the
survey. However, fourteen of the responses were not completed, and thus were excluded from the result. The
majority of the subjects (32%) are in the age range of 22-25 years. The sample was almost evenly split between
males (51%) and females (49%). ©ore details on the subjects' demographics are provided in Table 1.

4. ANALYSIS AND DISCUSSION

To identify which factors were deemed as more important in encouraging online shoppers to visit a website, to
purchase from a website, to purchase more items, to purchase at a higher price, and to provide feedback to a website,
the mean responses to each question were calculated and examined. Tables 2 to 6 below show the top five factors
rated as more important by the subjects.

The top reasons for shoppers to return to a website, make a purchase, purchase more items, and be willing to provide
feedback are consistent throughout the data. Repeatedly, the top 5 answers were 1. Free Shipping, 2. Discounts, 3. A
picture of the product was displayed, 4. Tax free, and 5. Easy return of the products. The needs of customers that
shop online tend to be money saving motivated. Free shipping, tax savings, and discounts obtained the highest
response. Easy return policy and the ability to view the products' pictures are less important to the monetary issues.

5. CONCLUSION

This study reveals the factors which are important to online shoppers in several aspects. While information
concerning a product, such as a picture for visual specifics, is one of the main needs identified as a factor for
consumer behavior in the online business environment, the results clearly convey that online shoppers tend to focus
more on monetary savings than other factors. This does not mean that online businesses can neglect such factors as
shopping convenience and the ability to view the products' pictures when online businesses are looking at their
website design. These factors are still of importance to the consumer and, therefore, should be considered in their
endeavors to succeed over other online competitors and traditional brick-and-mortar businesses.

The results of this study suggest that in order for online businesses to attract and retain customers, a cost saving
strategy is necessary to readily supplant the consumer's need for physical interaction with a product. It is interesting
to note that the need to see the product pictures scored the highest in attracting shoppers to visit a website. However,
when it comes to the point of actually purchasing products, the need to see the pictures is not as important as saving
money. This finding suggests that the need to physically interact with products may be alleviated to the point where
it is not necessary when confronted with other more important satisfiers, thus increasing an online business's ability
to compete with traditional brick-and-mortar as well as other online storefronts.

REFERENCES:

Alomaim, N., Tunca, ©.Z., & Zairi, ©., "Customer satisfaction @ virtual organizations", ©anagement Decisions,
Vol 41 (7), 2003, 666-770.

Burke, R., "Technology and the customer interface: What consumers want the physical and virtual store", Journal of
the Academy of ©arketing, Vol 30 (4), 2002, 411-432.

Chiang, Wei-yu K., Zhang, Dongsong, and Zhou, Lina, "Predicting and explaining patronage behavior toward web
and traditional stores using neural networks: a comparative analysis with logistic regression", Decision Support
Systems.

Changchit, C. and Vokurka, R. J., "Factors Influencing the Internet Shopping Behavior," Proceedings of the
Decision Sciences Institute Annual ©eeting, November 22-25, 2003, Washington, D. C.

Han K. S. & Noh, ©. H., "Critical Failure Factors That Discourage the Growth of Electronic Commerce",
International Journal of Electronic Commerce, Vol. 4(2), 1999-2000, 25-44.

Haubl, G. & Trifts, V., "Consumer Decision ©aking in Online Shopping Environments: The Effects of Interactive
Decision Aids", ©arketin Science, Vol. 19(1), 2000, 4.
Huizingh, Eelko K. and Hoekstra, Janny C., "Why to consumers like restaurants?", Journal of Targeting,
©easurement and Analysis for ©arketing, Vol. 11 (4), 2003, 350-.

Joines, J. Scherer, C., & Scheufele, D., "Exploring motivations for consumer web use and their implications for e-
commerce", Journal of Consumer ©arketing, Vol. 20 (2), 2003.

Kim, S.Y. & Lim, Y.J., "Consumer's Perceived Importance of and Satisfaction with Internet Shopping", Electronic
©arkets, Vol. 11 (3), 2001, 148.

Kohli R., Devaraj S., & ©ahmood, A., "Understanding the determinants of online consumer satisfaction: A decision
process perspective", Journal of ©anagement Information Systems, 2004, 115-135.

Koivumaki, T., "Customer satisfaction and purchasing behavior in a web-based shopping environment", Electronic
©arkets, Vol. 11 (3), 2001, 186-192.

Koyuncu, C. & Lien, D.," E-commerce and customer's purchasing behavior", Applied Economics, Vol. 35, 2003,
721-726.

Kumar, S. Ramesh, "Combining on-line and off-line marketing strategies", Ivey Business Journal, Vol. 66 (2), 2001,
14-16.

Lin, C.C., "A critical appraisal of customer satisfaction and e-commerce", ©ana in Auditing Journal, Vol. 18 (3),
2003, 202-212.

Please contact the authors for a complete list of references.

Chuleeporn Changchit, Texas A&© University--Corpus Christi, Corpus Christi, Texas, USA

Shawn J. Douthit, Texas A&© University--Corpus Christi, Corpus Christi, Texas, USA

Benjamin Hoffmeyer, Texas A&© University--Corpus Christi, Corpus Christi, Texas, USA

Dr. Chuleeporn Changchit earned her Ph.D. in Decision Sciences and Information Systems from the University of
Kentucky in 1998. Currently she is an associate professor of ©anagement Information System at Texas A&©
University--Corpus Christi. She has published articles in several journals such as Decision Support Systems, Expert
Systems with Applications, Information Systems Journal, and International Journal of Intelligent Systems in
Accounting, Finance, and ©anagement.

Shawn Douthit obtained a BS degree in Biology (1993) from the University of Texas--El Paso and an ©.B.A.
(2004) from Texas A&© University--Corpus Christi. He is currently an Immunology Specialist with Abbott
Laboratories. He has over eight years experience in the pharmaceutical industry ranging from territory sales to
industrial account level management. His research interests are in the areas of electronic commerce and expert
systems.

Benjamin Hoffmeyer earned a BA degree in ©arketing (2003) and an ©.B.A (2005) from Texas A&© University--
Corpus Christi. He has over five years of analytical and marketing research experience and has done over three of
intelligence analysis for NATO, Northwood Headquarters London, England. Currently he is employed as a
©arketing Analyst for SSP Circle K where he is responsible for marketing and financial analysis of demographic,
promotions and category management.
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COPYRIGHT 2005 International Academy of Business and Economics

COPYRIGHT 2006 Gale Group
Chuleeporn Changchit "Online shopping: what factors are important to shoppers?". Journal of the Academy of
Business and Economics. FindArticles.com. 15 Dec, 2010.
http://findarticles.com/p/articles/mi_m0OGT/is_3_5/ai_n16619676/
COPYRIGHT 2005 International Academy of Business and Economics
COPYRIGHT 2006 Gale Group