UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------- Dang Duy Thanh CRITICAL FACTORS AFFECTING THE CUSTOMERS’ INTENTION TO USE E-RETAILING MASTER OF BUSINESS (Honours) Ho Chi Minh City – Year 2014 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS HO CHI MINH CITY International School of Business ------------------------- Dang Duy Thanh CRITICAL FACTORS AFFECTING THE CUSTOMERS’ INTENTION TO USE E-RETAILING ID: 22120030 MASTER OF BUSINESS (Honours) SUPERVISOR: Dr. Cao Hao Thi Ho Chi Minh City – Year 2014 TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENT I would like to express my deep gratitude to everyone who helped and guided me through the entire MBA program. Foremost, I would like to express my sincere thanks to my supervisor Dr. Cao Hao Thi for the continuous support for my MBA thesis and research, for his patience, motivation, enthusiasm, and immense knowledge.
His guidance helped me in all the time of research and writing of this thesis. I could not have imagined having a better advisor and mentor for my MBA study. I am grateful to thank Prof. Nguyen Dinh Tho and the International School of business (ISB) not only because they had built this extremely practical and helpful program but also the way Prof.
Tho and ISB supported me during my MBA time. I also would like to extent my appreciation to my dear classmates. Together we have had lots of wonderful new experiences in learning and building social network. Last but not least, I would like to express my special gratitude to my family for their endless encouragement and support through my life.
i TIEU LUAN MOI download : skknchat@gmail.com Abstract During the last decade of the 21st century, internet shopping had grown in a surprising speed. With the fast development in internet and technology, people are no longer need to go out for their shopping since they can use e-retailing for almost everything they need. Although e- shopping has its huge potential to even replace the traditional way of shopping, it has its own problem. It is when people only use website for reference, and then they come directly to the physical store to pick up their items.
This research is conducted to find out the critical factors that can measure the customers’ intention to use e-retailing. From several studies about this topic, especially the theory of reasoned action (TRA), there are four factors may affect to the customer’s intention. They are trust, subjective norm, website quality and perceived risk in using credit card. In order to conduct the research, a sample size of 150 questionnaire about clothing products are collected with respondents are office employees in Ho Chi Minh city.
Then, the data are analyzed by reliability test, EFA and multiple regression analysis. Result of the thesis shows that the customers’ intention to use e-retailing is impacted only by trust and subjective norm. Therefore, it is suggested that owners of the business should try to gain trust of their customers and encourage people to shop by groups. Since this research only focused in fashion products in Ho Chi Minh city, furthers studies in this field should be conducted for other types of products and in other provinces in Vietnam to find out the general model for Vietnamese e-retailing.
Keywords: intention to use, TRA, e-retailing ii TIEU LUAN MOI download : skknchat@gmail.com Table of content Acknowledgement i Abstract ii Chapter 1_INTRODUCTION 1 1.7 Research structure 4 Chapter 2_LITERATURE REVIEW 6 2.2 Customers’ intention to use e-retailing 7 2.3 Factors impact to the customers’ intention to use e-retailing 12 2.5 Perceived risk in using credit card 16 2.6 Demographic variables 16 Chapter 3_ RESEARCH METHODOLOGY 18 3.2 Measurement scale of factors 19 3.5 Data analysis method 21 iii TIEU LUAN MOI download : skknchat@gmail.com Chapter 4_ DATA ANALYSIS 23 4.4 Multiple regression analysis 29 4.2 Tests of the regression assumptions 30 4.5 Regression analysis summary 34 Chapter 5_ CONCLUSION AND RECOMMENDATIONS 36 5.3 Limitations and further researches 39 REFERENCES APPENDICES iv TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 2.1 The theory of reasoned action (TRA) 9 Figure 2.2 Research model 12 Figure 3.1 Research process 18 Figure 4.1 Scatter plot of residuals 30 Figure 4.2 Histogram of regression standardized residuals 31 Figure 4.3 Normal P-P plot of regression standardized residuals 31 Figure 4.4 Result of testing model 35 LIST OF TABLES Table 2.1 Dimensions of e-retailing quality 11 Table 3.1 Scale items of factors 20 Table 4.1 Distribution of survey respondents 24 Table 4.2 Results of reliability test 24 Table 4.3 KMO and Bartlett's Test 27 Table 4.3 Total variance matrix 27 Table 4.5 EFA result – Rotated component matrix 28 Table 4.6 Coefficient table of multiple regression 29 Table 4.7 Model summary of regression analysis 29 Table 4.8 ANOVA result in regression analysis 32 Table 4.9 Results of multiple regression analysis 33 Table 4.10 ANOVA for Gender 33 Table 4.11 ANOVA for Age 34 Table 4.12 ANOVA for Income 34 v TIEU LUAN MOI download : skknchat@gmail.com ABBPREVIATION ANOVA Analysis of variance COD Cash on delivery EFA Exploratory factor analysis IRQ Internet retailing quality KMO Kaiser-Mayer-Olkin TRA Theory of reasoned action vi TIEU LUAN MOI download : skknchat@gmail.com Chapter 1 INTRODUCTION 1.1 Research background E-retailing, also known as online shopping, internet shopping or e-shopping, can be explained as an electronic commerce when buyers and sellers virtually meet others through a web browser. Unlike traditional shops that require physical locations, physical security services and specific timeframes to operate, internet shops need none of those requirements. Customers can access to the shop from anywhere and anytime they like as long as they have internet connection and an appropriate device like a computer, a tablet or a smartphone. Since people are more and more busy with their job and internet has been widely and easily accessible, e- retailing has “redefined business and customer relationships, business processes, even sometimes restructuring the whole industry by providing new distribution channel, new delivery methods, new payment methods and new medium for communication” (Dogerlioglu and Cosgun, 2012).
People had forecasted that in 2014 US e-retailing business can earn up to $291 billion dollars in sale (Trends & Data - Internet Retailer). With the tremendous opportunity to grow and a very promising market to exploit, e- retailing has been attracting many scholars and experts to make researches in order to become successful in this new method of selling products. As the results of that, many factors had been explored to contribute to a successful online business. In 2009, Liao and Shi found that in Hong Kong market, where people tend to shop in groups, social influence should be a big factor that influence on the shopping behavior.
Even internet retailing does not require people to go out for shopping, owners of the e-retailing business still need to think of ways like spreading information as wide as possible, focusing on group buying, encouraging group-buying activities, etc. Another research about internet shopping in Malaysia showed that one of the most important factors that lead to the customers’ intention is their attitude towards e-retailing (Ting & Lim, 2012). In that research, the authors also highlighted the easiness, usefulness and 1 TIEU LUAN MOI download : skknchat@gmail.com effortless when customers interact with the web pages can create the favorable shopping intention. Besides the attitude towards e-retailing, Gefen, Karahanna and Straub (2003) added that customers’ trust played a significant role in increasing customers’ intention to shop online.
They also proved that trust in e-vendor can be gained when people know that shop owners earn nothing more by cheating, a shop is safe to make transaction and the website is optimized to be friendly and easy to use. As mentioned above, since e-retailing has been developed with a rocket speed, there are thousands of researches have been made only for gaining customers’ intention towards internet shopping. However, not many of them were made specifically for Vietnamese market. Therefore, it is an interesting topic to discover and study.2 Problem statement In Vietnam, although traditional retailing is still playing a significant role, internet shopping has been developed so rapidly and become more important.
According to Phan (2013), 36% of Vietnamese people are using internet and they generated a 700 million US dollars in revenue for e-retailing. Although e-shopping only accounted for 0.5% of the total retailing revenue in Vietnam (according to Green Global, 2013), it can increase up to 2 times - 1.3 billion US dollars in 2015 (according to the Ministry of Industry and Trade). However, internet shopping has its own problem. It is because many of the internet users only go to the websites to find information, the price and comments about the products but they hesitate to make the paying transaction or products reservation (Ting & Lim, 2012).
Vietnamese customers would rather go direct to the shop and buy the things they saw on web. As the result of that, e-shopping as they know is nothing but an advertising or marketing channel. Nguyen (cited by vnexpress.net, 2014), a lecturer in Electronic Commerce faculty, University of Commerce stated that: In Vietnam, most of Vietnamese businesses are small or medium businesses. They are companies that can only afford small investments but want to try electronic commerce in the belief that they can be fast 2 TIEU LUAN MOI download : skknchat@gmail.com successful in this field.
However, I fear that doing business like that will lead to failure for most companies. Investing in e-retailing requires much more money than people think. Moreover, life in Vietnam is not that industrialized that people have to go online for shopping. Therefore, Vietnamese e-retailing market is very challenging to small and medium businesses but it is also very promising with the prospect of fast developing and huge revenue it can generate.
The problem is how an internet based retailing business can connect to the end clients and persuade them to make transactions through their sites. It is why the research was conducted, to find and understand what significant factors affecting the intention of people to use e-retailing.3 Research objectives As discussed in Section 1.1, e-retailing business is not only very promising in Vietnam but also very challenging. In order to be successful in this field, people firstly need to discover what factors can drive the shopping intention of clients. Therefore, this research aims to: - Identify critical factors affecting customers’ intention to use e-retailing - Identify the level in which each factors affecting customers’ intention to use e retailing 1.4 Research questions There are two questions to be answered to solve the problem identified in Section 1.2: - What are critical factors affecting customers’ intention to use e-retailing? - What is the level of impact of each factors affecting customers’ intention to use e- retailing? 1.5 Research scope First of all, surveys questionnaire are collected only in Ho Chi Minh city – this is the most crowded city in the country and also known as the biggest economic center in Vietnam.
Second, only clothing products were researched. It is because clothing products are easy to store and deliver (compare with grocery or electronic products). Besides, clothing products are fast to produce and people tend to change their clothes so many times during a year. Especially, 3 TIEU LUAN MOI download : skknchat@gmail.com clothing products are manufactured by seasons, even when a cloth is quite new, people still change it to others when season changes.
Finally, the research focus in office employees since they spend lots of their time sitting in front of a computer, have the opportunity to use internet almost daily and have good knowledge about computer or internet activities.6 Research significance Because of the development of e-retailing, customers now have more choices to buy their needs. They can choose either going to the shop to pick up the products when they have time or sitting in front of an internet devices and performing a transaction to get their products.