UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Thi Quynh Trang ANTECEDENTS OF CONTINUANCE INTENTIONS TOWARDS ONLINE SHOPPING: AN EMPIRICAL STUDY IN VIETNAM MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2015 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------------ Tran Thi Quynh Trang ANTECEDENTS OF CONTINUANCE INTENTIONS TOWARDS ONLINE SHOPPING: AN EMPIRICAL STUDY IN VIETNAM ID: 22130084 MASTER OF BUSINESS (Honours) SUPERVISOR: DR. NGUYEN THI NGUYET QUE Ho Chi Minh City – 2015 TIEU LUAN MOI download : skknchat@gmail.com Acknowledge This thesis could not be finish without the help and support of many people who are gratefully acknowledged here. At the very first, I would like to express my deepest gratitude to my supervisor, Dr. Nguyen Thi Nguyet Que.
With her guidance, I could have worked out this thesis. She had offered me valuable suggestions and criticisms with her profound knowledge in rich research experience. I am grateful to express my sincere to Prof. Nguyen Dinh Tho and Dr.
Nguyen Thi Mai Trang. I have learned from them a lot not only about research design, but also data analysis technique. I am also extremely to give thankful to UEH – International School of business (ISB) supported me in all process. I would like to extent my sincere thanks to all my classmate and friends.
Their kindness and supports have contributed very much in my working process. Most important, I would like to express my most sincere thanks to my father, my mother and my brother for their continuous encouragement and support. TIEU LUAN MOI download : skknchat@gmail.com Abstract Online shopping has emerged as a new e-commerce model and received attention in both academics and practice. This research extends Mehrabian and Russell’s Stimulus-Organism- Response model to investigate website stimuli that affect emotional reaction and perceived risk, in turn consumers’ response systems.
The purpose of this paper is to test a more comprehensive model consisting of website quality (stimulus), cognition and emotion (organism) and continuance intention (response).To examine research model, information and data is accessed by using questionnaire for respondents purchasing on online shopping websites. This research employed convenience sampling. The questionnaire was distributed in Ho Chi Minh City. In total, 227 usable questionnaires were obtained in Ho Chi Minh City through online survey.
Confirmatory factor analysis (CFA) is used to test measurement scale and the structural equation modeling (SEM) is used as the main method for analyzing research model and hypotheses. Results in this study show that all four website quality dimensions had significant negative effects on perceived risk and positive effects on emotional reaction, except for customer service. Perceived risk had a slightly negative effect on consumers’ emotional reaction. Meanwhile, perceived risk had a significant influence on continuance intention.
In addition, emotional reaction also had a positive impact on continuance intention in the context of online shopping. The results may be generalized to a limited extent. With these results, research framework can be seen fitted with data market. Study results also suggest that in order to increase customer retention should not only consider about their strategies of eliciting positive emotions and reducing perceived risk, they should a also take consideration of increasing website quality.
TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS ABSTRACT CHAPTER 1: INTRODUCTION .3 Research objectives and questions .4 Methodology and scope of research. 7 CHAPTER 2: LITERATURE REVIEW .3 Emotional reaction and perceived risk .3 Hypotheses and proposed model .1 Stimuli and organism .2 Organism and responses .3 Development of questionnaire .1 Perceived risk scale .2 Emotional reaction scale. 22 TIEU LUAN MOI download : skknchat@gmail.3 Continuance intention scale .4 Website quality scale .4 Data collection method .2 Sampling method and sample size .5 Data analysis techniques .2 Exploratory factor analysis (EFA) .3 Confirmatory factor analysis (CFA) .4 Structural equation model (SEM). 30 CHAPTER 4: ANALYSIS AND RESULTS .2 Confirmatory factor analysis (CFA) .4 Structural equation model.
45 CHAPTER 5: CONCLUSIONS AND LIMITATIONS .3 Limitations and future research. 59 TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURE Figure 2.1 CFA for the full model .2 Structural equation model. 42 TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLE Table 3.1 Perceived risk scale .2 Emotional reaction scale .3 Continuance intention scale .4 Website quality scale .5 Cronbach’s Alpha Reliability Coefficient .2 Cronbach’s Alpha results .3 Construct reliability, Factor loading and AVE in CFA .4 Convergent validity result .5 The relationship between constructs in research model .6 Result of hypotheses testing. 43 TIEU LUAN MOI download : skknchat@gmail.com LIST OF ABBREVIATION AVE Average Variance Extracted CFA Confirmatory Factor Analysis CR Construct Reliability EFA Exploratory Factor Analysis E-commerce Electronic commerce ML Maximum Likelihood SEM Structural Equation Model S-O-R Stimuli – Organism - Response SPSS Statistical software package TIEU LUAN MOI download : skknchat@gmail.com 1 CHAPTER 1: INTRODUCTION 1.1 Research background The rapid growth of the Internet technology has resulted in the creation of a further form of retail transaction – electronic commerce or online shopping.
Electronic commerce, commonly known as e-commerce, includes the purchase and selling of products or services over electronic systems such as the Internet. A form of e-commerce is online shopping which is the process whereby consumers directly buy goods or services from a seller in real time, without an intermediary service, over the Internet. In recent years, the internet power, scope and interactivity provide businesses with the potential to enhance their customers shopping experience and in so doing increase their competitive positions (Doherty & Ellis-Chadwick, 2010). Retailers have more opportunities to reach their customers globally and directly via e- commerce and online shopping.
More specifically, it is easier for e-retailers to expand target markets, extend product lines, improve cost efficiency and enhance the customer relationships. By and large, consumers have responded enthusiastically to these innovations (Doherty & Ellis-Chadwick, 2010). Thereby, the Internet opens up new avenues for e-retailers in a manner that traditional store cannot achieve. As a result, there were variety of predictions, many of them highly optimistic, about the scale, scope and impact of e-retailers.
According to VECITA (2013), a company of market research in US - eMarketer announced that online retail sales totaled $262. Consequently, US continued to lead the world in e- commerce retail market with $156.1 million online shoppers and average online purchase per shopper was $2. Similarly, consumers across Southeast Asia are going online in droves, particularly with the rapid up-take of connected devices, and they are increasingly searching out online channels to research and purchase the products and services they need and want. The growth of connected device ownership across Southeast Asia is laying the foundation for a booming TIEU LUAN MOI download : skknchat@gmail.com 2 online retail sector, with the number of consumers in the region making online purchases increasing significantly in the past two years (Nielsen, 2014).
In 2014, online retail sales of China grew 63.9% over the previous year, with the expected sales of $217. It is expected that this growing rate will still be kept until 2018. Online shopping sales in China accounted for more than 50% of the total revenue of the Asia – Pacific. This figure will reach 70% in 2018.
Furthermore, eMarketer also forecast the B2C e-commerce sale will account for $391.2 billion in 2016, up 13.6% over 2015 and will reach $441. Consequently, according to Nielsen (2014), online shopping is set to continue its upward trajectory in the years ahead as consumers’ familiarity with, and trust in, online retail sites grows. Looking back to Vietnam, along with the rapid development of online retailer in the world, e-commerce or online shopping is not entirely an alien concept to Vietnam consumers. The survey conducted by VECITA showed that the estimation of e-commerce sales per online buyer accounted for approximately $145 in 2014 and total sales reached $2.97 billion, which accounted only 2.12% of total retail sales.
Besides, according to VECITA (2014), 41% of surveyed enterprises having revenue of goods, services via e-commerce channels in 2014 increased, comparing with 2013 and 9% of respondents had decreased revenue. Meanwhile, 50% of respondents said this revenue experienced almost no change. Thus, many online providers are struggling to find strategies to develop in this difficult period. According to Reichheld and Schefter (2000), chief executives at the cutting edge of e- commerce – from Dell Computer’s Michael Dell to eBay’s Meg Whitman – care deeply about customer retention and consider it vital to the success of their online operations.
Besides that, Reichheld and Schefter (2000) analyzed the relationship between the cost of serving loyal customers and the volume of their purchases. The result indicated that increasing customer retention rates by 5% increases profits by 25% to 95%. Those numbers startled many executives, and the article set off a crush to craft retention strategies, many of which continue to pay large dividends (Reichheld and Schefter, 2000). Such continuance is critical since the TIEU LUAN MOI download : skknchat@gmail.com 3 cost of attracting new consumers is considerably more expensive than retaining existing ones (Al-Maghrabi et al.
In particular, it is a financial efficiency for e-retailers, in comparison with the bricks-and-mortar retailing environment. With a good understanding of the web shopper’s continuance intention, e-retailers will be able to develop effective and efficient e-commerce strategies to have more loyal customers. Nonetheless, web-shopping continuance intention does not necessarily follow traditional consumer repurchase intention in the traditional stores. Hence, online shopping continuance intention has recently emerged as a prominent issue in research.
Exploring and analyzing which factors influence customer retention have significant meaning to online providers.2 Problems statement In Vietnam, the numbers of notification e-commerce websites which were confirmed till the end of December 2014 reaching 5,082 websites (VECITA, 2014). Total transaction value in 2014 of 85 surveyed e-marketplaces reached 2,500 billion VND. The two leading e- marketplaces were lazada.vn (21%) and sendo. Websites were mostly located in the two big cities named Hanoi and Ho Chi Minh City.
46% of websites were set in Hanoi, 44% of websites in Ho Chi Minh City, while 10% were in other cities/provinces (VECITA, 2014). Along with development of e-commerce market, perceived risk and competition between rivals also increase very strongly. More specially, Vietnamese culture whereby the trading is conducted face to face and most people have inefficient knowledge on internet transactions, so consumers perceived more risk with regard to online shopping. It is evident that according to the survey of VECITA in 2014, the biggest challenge for online shopping to Vietnamese consumers is the quality of products or services worse than being advertised (81%).
The others obstacles of online shopping are unprofessional logistic services (51%), price not lower than buying in traditional shops or not clear (46%), personal privacy disclosure (42%), and unprofessional website design (29%) (VECITA, 2014). TIEU LUAN MOI download : skknchat@gmail.com 4 Besides, according to Nielsen (2014), credit card security remains a key concern for consumers across the region with five of the six Southeast Asia markets ranking above the global average with respect to their concern around providing credit card information online. Filipinos are the most cautious when it comes to paying online by credit card (67% do not trust giving their credit card information online), followed by Thais (62%), Indonesians (60%), Vietnamese (55%), Malaysians (52%) and Singaporeans (41%), compared to 49 percent of consumers globally. In order to reduce perceived risk consumers online retailers must look for opportunities to provide reassurances around online payment security.
With many problems, websites in Vietnam are facing many difficulties in attracting customers as well as keeping existing customers (Nielsen, 2014). Customer retention is a necessary topic for helping online retailers increase their competitive advantages and maintain their market. Since Mehrabian and Russell suggested that environmental stimuli (S) lead to an emotional reaction (O) that evokes behavioral responses (R), the model has been applied in various retail settings to explain the consumer decision making process (Chang & Chen, 2008).