Consumer Behavior towards buying electronic goods online in Saudi Arabia

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Consumer Behavior towards buying electronic goods online in Saudi Arabia

Abstract

Electronic Commerce (E-commerce) has not only enhanced innovation in the business industry but also given consumers a convenient and time saving platform for shopping. The behavior of consumers as they shop online is different from the behavior they demonstrate in the physical market where they can assess and evaluate the product. The purpose of the current research is to explore consumer behavior in online shopping with specific focus on shopping for electronic products in the Saudi Arabian context. The main question in this research is how consumers behave when they shop online and the factors that influence their behavior. The survey was conducted  through the use of questionnaires distributed to respondents via email, personal contacts and physically to residents of Riyadh, the capital of Saudi Arabia. Convenience, timeliness and affordability have been identified as the key factors that prompt online purchases. Online consumers have social networks and have the ability to influence buying choices of others as they share their experience.

Keywords. E-commerce, online shopping, consumer behavior, electronic products, Saudi Arabia


Table of Contents

Abstract 2

Table of Contents. 3

List of Figures. 6

List of Tables. 7

Chapter 1: Introduction. 8

1.1 The Background of the Study. 8

1.1.1 Consumer behavior. 8

1.1.2 E-commerce/internet shopping. 9

1.1.2.1 Benefits of online shopping. 10

1.1.2.2 Drawbacks of online shopping. 11

1.1.3 Current trends in online shopping. 12

1.1.4 Factors affecting online shopping behavior. 12

1.1.5 Ecommerce, Saudi Arabian context. 13

1.2 Statement of the Problem.. 15

1.3 Objectives of the Research. 16

1.4 Research Questions. 17

1.5 The Justification for the Study. 18

1.6 Scope of the Study. 19

1.7 The Limitations of the Study. 19

1.8 Research purpose. 20

Chapter 2: Literature Review.. 21

2.1 E-Commerce. 21

2.2 Offline Versus Online Shopping. 23

2.3 E-commerce in Saudi Arabia. 24

2.4 E-commerce and Consumer Behavior 26

2.5 Online Consumer Purchasing Behavior 27

2.6 Factors that Determine Online Shopping. 28

2.6.1 Consumer behavior-goal oriented. 29

2.6.2 Online shopping behavior based on experiment. 29

2.7 Factors Motivating Online Consumer Behavior 30

2.8 Online Shopping Intention. 31

2.8.1 Human computer interaction. 31

2.8.2 Concerns of online consumers. 32

2.8.3 Characteristics of online consumers. 32

Chapter 3: Methodology. 34

3.1 Research Design. 34

3.2 Data Collection. 34

3.3 Target Population. 35

3.4 Research Approach. 35

3.5 Sampling. 36

3.6 Format of Questionnaire. 40

3.6.1        General variables. 40

3.6.2        Key variables. 40

Chapter 4: Results and Analysis. 43

4.1 Age Analysis. 44

4.2 Respondent’s Educational Background. 45

4.3 Income Distribution. 46

4.4 Frequency of Online Purchase. 47

4.5 Product Segments. 48

4.6 Preview of Online Channel 48

4.7 Frequency of online purchase. 50

4.8 Online Purchase Motivation Factors. 50

4.9 Factors Affecting Consumer Behavior 52

4.10 Barriers to Online Shopping. 54

Chapter 5: Discussion, Conclusion and Recommendations. 56

References. 59

Appendices. 66

Appendix 1: Questionnaire. 66

Appendix 2: Results of Demographic Variables. 70

Appendix 3: Results of online Purchasing Behavior 70

 


List of Figures

Figure 1: Consumers Online Behavior 13

Figure 2: A chart of consumer mind set Approach. 28

Figure 3: Forces that influence the online consumer actions. 31

Figure 4: Typical online consumer intention factors. 33

Figure 5: Respondent’s gender analysis. 43

Figure 6: Respondent’s analysis based on age. 44

Figure 7: Analysis of respondents’ educational background. 45

Figure 8: Income distribution among the respondents. 46

Figure 9: Respondents’ frequency of online purchase. 47

Figure 10: Online consumer product segments. 48

Figure 11: Preview online store before purchase. 49

Figure 12: Number of electronic goods purchased online within the past year 50

Figure 13: Motivation of online electronic product purchase. 50

Figure 14: Visit of online stores before purchase. 51

Figure 15: Crucial factors affecting online consumer buying decisions. 52

Figure 16: Reviewing the behavior of the online consumer after receiving the product 53

Figure 17: Barriers that hinder consumers from shopping online. 54

 


List of Tables

Table 1: Distribution of Questionnaires. 39

Table 2: Attributes of online consumers in the responding sample. 40

 


Chapter 1: Introduction

The development of web technologies has enabled entities to operate e-commerce ventures that supplement or are independent of the brick and mortar establishments. For successful establishment of e-commerce business, entrepreneurs need to have succinct knowledge of the consumer online purchasing behavior so that they can adopt appropriate strategies to attract and retain customers. This paper focuses on consumer online purchasing behavior in Saudi Arabia.  In the subsequent parts of this chapter, information regarding the background of the research, its purpose, research objectives, research questions, scope of the research, limitations and theoretical framework is presented. The section will provide a background to the latter sections that will present a literature review and then conduct a primary evaluation of consumer behavior towards online shopping in Saudi Arabia.

1.1 The Background of the Study

The invention of the internet and the advancement of web technologies have resulted in a paradigm shift in the way people shop. In virtually any place and at any time, a consumer can access and purchase services or products as he or she is no longer restricted to specific locations or business operation hours. In our everyday life, the internet plays a vital role as it has relatively become a new medium for information exchange and communication. As Chang, Cheung and Lai (2005) observe, the increase in the number of internet users has corresponded with increase in number of online purchases. The change in consumer behavior combined with web technologies that enable entities to set up interactive and secure web portals and websites may explains such an increase in online purchasing.

1.1.1 Consumer behavior. Consumer behavior refers to how consumers select, purchase and dispose products in their clamor to satisfy their needs and the effects that such individual experiences have on the consumers’ subsequent purchasing preferences (Laudon & Traver, 2011). With reference to this definition, consumer behavior varies among consumers since their attitude is shaped by both psychological and social factors that, in turn, influence an individual consumer’s buying habits. The purchase decision process affects the behavior of the consumers since the consumers are not aware of their changing mind perceptions when they make purchasing choices. For most buyers, the change in their mind reconstructs their opinion that in turn influences the purchase choices they make.

As analyzed above, consumer behavior is concerned mainly with decision-making patterns, affected by a complex set of factors and, hence, unpredictable. However, relying on the past consumer experiences, an entity can decipher possible future trends in the market and thus develop an ideal strategy. In the wake of the current technological revolution, the popularity of internet use in making transactions and the World Wide Web is increasing at a rapid pace (Moon, 2004). Concerning demand for products and services, many companies are now launching their business on the internet marketplace using company websites to market their products and services. In addition, an upsurge in consumer segments has arisen because of increase in consumer needs and demands that include the convenience offered by online shopping.

1.1.2 E-commerce/internet shopping. The internet has not only transformed people’s lives but has also enhanced innovation and created a platform for conducting business on the online platform. Businesses can be promoted online and hence company websites have become the essence of online business as companies market and sell their products and services online. To the enterprise, the internet is a resourceful marketing tool since it gathers all the information regarding competitors and consumers in one place (Veronika, 2012). It creates a new platform to promote and advertise products and services on a global scale.

1.1.2.1 Benefits of online shopping.

Statistics indicate that the global ecommerce sale in 2012 had grown to over $1 trillion, with an expected rise of 20% in the next five years (Mooji, 2003, p.184). In terms of ecommerce use, the Asia Pacific region leads in market growth compared to renowned markets such as the US, Japan, UK and the European region. China, which is part of the Asia Pacific region, recorded 140% growth in ecommerce in 2012 compared to the preceding year (Petra, 2012, p.26). Saudi Arabia has been categorized under nations with moderate application of ecommerce (Veronika, 2012). The online retailing business has become an integral part of the global economy as more and more consumers gain confidence and trust while making online transactions.

Since last two decades, the internet has developed rapidly. The information technology driven by the relevant digital economy is also being developed worldwide. Through the website, firms can enhance and promote images of their services and products and build an online platform where the customers can interact with their services and products (Zhou, Dai & Zhang, 2007). Such technologies help the firms to offer improved service and detailed product information that can serve to attract more online shoppers.

The online shopping has become popular among many shoppers and online shopping in Business to Consumer (B2C) commerce has risen, in accordance with recent research. As cited by Richard (2005), currently over 20% of shoppers visit online sites. Ecommerce companies can earn significant profits if they understand the online shopping business and its impact on the behavior of consumers. As noted by Fick (2009) the benefits provided by the internet may be the main reasons behind such rapid development of online shopping. To the online consumer, the internet offers a convenient platform for conducting business. The internet not only enhances consumer experience while shopping online but also enables companies to list limitless number of goods on the online store (Lian & Lin, 2008).  In addition, availability of product information online enables the customers to make comparisons among different products thus enhancing their purchase decisions.

The internet plays an integral role in online purchase as a medium by providing an interaction platform for consumers and products. The interactive nature of the internet facilitates consumer feedback regarding the product or service experience and comparison for a wide range of products or services available to make purchase based on their preferences. Moreover, the internet availability is limitless making ecommerce a more reliable means of making purchases compared to traditional shopping avenues that require physical location. Bluschke (2011), cites convenience as the key reason why consumers shop online. Previously, most online consumers preferred to shop online for preferable pricing but many consumers are now considering shopping online for accessibility. Many consumers are now finding the online channel a convenient platform where they can shop for goods and services across the globe irrespective of their geographical location.

1.1.2.2 Drawbacks of online shopping.

  1. a) Potential risks

Irrespective of the benefits noted of online shopping, customers face many potential risks when engaging in online shopping. These include issues regarding the security of information and privacy of their personal details. Although internet payment in online shopping increases consumptive efficiency, it at the same time reduces  security of customer information.

  1. b) Lack of tactile experience

The internet is an online platform where virtual transactions are conducted. As a result, customers are not able to physically evaluate the products before purchase and thus may not identify the flaws in such products.

1.1.3 Current trends in online shopping.

Online shopping refers to a series of procedures that consumers undertake in order to purchase products or services online. The internet has developed a new distribution channel which together with information explosion has led to the emergence of ecommerce. One of the primary reasons users access the internet is to search for products and services to locate relevant information regarding the product specifications and use the information to make purchase (Hsu & Et.al, 2006).

Kotler (2004), asserts that ecommerce is benefiting from various positive trends on the global business including the extensive development of broadband and other networks infrastructure even within developing economies. This development has enhanced user experience and decreased the need for brick and mortar retailers. Online buyers are always seeking online products that are attractive in their usability and pricing. Many consumers are realizing that the internet is the best approach to save money and time since buyers are able to make purchases irrespective of their physical locations. Online consumers have access to limitless offers online and can make price and brand comparison prior to making online purchases.

1.1.4 Factors affecting online shopping behavior.

According to Moon (2004), online shopping behavior is mainly affected by four factors that include shopping motive, personality variables, internet knowledge, shopping incentives and previous experience. These factors are the key determinants that also influence consumer behavior. As online information is the main source of information regarding goods and services, online buyers want to access brand information within the least possible clicks to reach the most resourceful information to meet their needs. This information concerns competitive brands, pricing, product specification and recommendation by other consumers.

When shopping online, consumers demonstrate different behaviors. According to Klopping & McKinney (2004), two in every ten consumers indicate that they prefer shopping online because of tough economic times and 56% of consumers say that they spent equally the same time online as they spent in physical shopping. Consumer behavior and attitudes are important aspects for the enterprise to consider prior to making the online venture, an emerging approach that will determine ecommerce venture in the near future (Soopramanien & Robertson, 2007). In the same context, the current research sought to provide insight into the potential of investing in ecommerce for researchers and practitioners, by examining consumers’ perception and attitudes while shopping online.

1.1.5 Ecommerce, Saudi Arabian context.

Although Saudi Arabia remains behind in ecommerce infrastructure, the country is embracing online commerce with many methods of online payment emerging. Many companies in Saudi Arabia cite challenges in opening ecommerce sites because of unavailability of secure and trusted online payment method, lack of regulation framework in controlling ecommerce and low public awareness regarding existence of ecommerce in the country. Regardless of these challenges, a recent study conducted by the Qatar Foundation in collaboration with the Northwestern University found out that there is a huge potential for ecommerce in Saudi Arabia (Qin, 2007).

As the second largest ecommerce hub in the Middle East, Saudi Arabia recorded over $ 530 million in ecommerce transactions in 2011. Saudi Arabia currently offers a huge opportunity for upcoming ecommerce companies. This is because trends indicate that more and more people are buying products online as major companies launch their operations on the online platform. Many people are now accessing the internet to pay their bills online. The country also has a well-developed online infrastructure supporting a wide range of payment gateways such as PayPal, Skrill, Gate2Play and CashU. A recent study indicates that Saudi Arabia has the highest rate of credit card usage within the Middle East.

Many businesses on the global scale have adopted electronic commerce platform as part of their strategy in order to gain the benefits of ecommerce. Ecommerce entails business enabled by the internet which incorporates both pre and post-sale activities. Since the launch of ecommerce in the 1980s, the platform has grown in both developed and developing nations. currently, the global ecommerce spending has reached over $ 10 trillion (Dennis, 2012). Although the US and European region have the largest share of ecommerce use, Africa and the Middle East regions have the smallest ecommerce share with 3% of the global ecommerce share (Flick, 2009). In Saudi Arabia, ecommerce is a developing concept given the rapid technology revolution and the rich infrastructure to support ecommerce. According to the Saudi Arabia Ministry of Commerce Saudi Arabia has the largest and most rapidly growing ecommerce infrastructure in the Middle East. However, ecommerce in the country is not progressing at the same speed.

1.2 Statement of the Problem

The online platform has attracted millions of online consumers as they access goods and services that companies offer online. In addition, the online platform is undergoing rapid transition. As more and more companies launch their operations on the web, competition is also increasing.  As consumers turn towards online shopping, they seek the most appealing and trustworthy online platform that gives them value for their money. The best retailer is gauged based on the consumer’s experience on the web. Hossein (2012), in his study on ecommerce efficiency says that “it is becoming increasingly imperative for retailers to provide consumers with a positive online shopping experience” (p. 9). It is important for enterprises to understand the kind of strategies that increase online sales by enhancing consumer attitude and increasing competition and sales on the online platform. Given the high expectations of online consumers, the purpose of the current research is to show that online sites that offer the best consumer experience record remarkable online sales.

To attract and enhance more consumers online, it is important to study consumer behavior in order to establish their needs and requirements while shopping online. Because online shopping is the new platform for consumers to access goods and services, it is important to identify and satisfy their desires and demands to identify and learn about online consumers (Hn & Kühn, 2010).

Online buying and online consumer behavior is shaped by factors such as website layout, credibility of online stores, convenience,  level of education, previous experience, privacy and payment security. In addition, cultural, social, psychological and personal behavior also determines the consumer’s perception of the online store. The behavior of consumers in traditional shopping and online shopping differ to a large extend. Although they are both affected by psychological, social and cultural factors, traditional shopping is the form that is mostly affected by these factors as compared to online shopping. The reason for the difference is that individual thinking, personal viewpoint and perceptions mostly shape online shopping behavior. There are many challenges facing ecommerce in the Saudi context. The problem among many Saudi Arabian online enterprises is that they do not understand the consumer behavior and how consumer perception affects the online business (Veronika, 2012). The current research therefore seeks to help online businesses in Saudi Arabia to promote their goods and services online in light of consumer behaviors with the help of this study.

1.3 Objectives of the Research

Studies in internet use and the development of online shopping indicate that the dramatic development of the internet and competitive advantage attached to technology through web selling has prompted many organizations to launch transactions on the online platform (Ahn, Ryu & Han, 2005). Considerably, only few studies have been conducted to investigate the impact the online shopping platform has on consumer behavior, attitudes and perceptions. The point of view in the current study seeks to establish a more reliable marketing channel through the internet which overcomes the hurdles in traditional marketing strategies, which has been the central focus for previous studies. Therefore, the main focus of this study has been assessing the behavior of online consumers. The objectives of the study were facilitated through the review of related literature and conducting investigations on various aspects of consumer perception. The aim of the study was to examine how ecommerce has changed the shopping concept from shopping in stores to internet shopping and how the new platform has influenced consumer behavior over time.

The research aims to attain the following objectives

  • To examine the factors that motivate Saudi consumers to purchase products online.
  • To identify product segments that online Saudi consumers purchase.
  • To critically analyze the factors that influence online consumer behavior.
  • To analyze the barriers that hinder Saudi Arabian consumers from shopping online.

1.4 Research Questions

To address the gaped in literature regarding the behavior of online consumers, the study has been categorized in various sections. Answers to the research questions are catered for in each section of the study and the behavior of consumers is assessed from the context of online shopping for both products and services

The research questions for the study are;

  • What factors influence online consumer behavior?
  • What are the benefits of buying electronic products online?
  • What factors motivate consumers to buy products via the internet?
  • What barriers prevent online consumers from buying online?
  • How frequent do Saudi Arabian online consumers purchase goods online?
  • What product segments do consumers purchase online?
  • What factors interests online consumers to acquire a product online?
  • What are the restraining and motivating factors of online shoppers that impact their behavior of shopping?
  • Within the identified online consumers, what kind of segments can be found?
  • What is the relationship between the segment groups of the consumer and the identified factors?

1.5 The Justification for the Study

The advance in technology and the rapid popularity of the internet has prompted organizations to launch operations online to attract the global market. Organizations are using the online platform as a means of attaining competitive edge over other players in the industry since they have limitless online presence that has been enabled by the internet. Consequently, there is need to understand the needs of consumers to enhance online consumer satisfaction (Y Monsuwé & Et.al, 2004). It is also important to analyze the factors that influence the consumer to purchase on the internet. There have been new demands set by the consumer since the internet is a new medium.

The factors that influence the online consumer behavior are directly connected to the online retailer. Analyzing the behavior of the online consumer is not a new field of study. This is because several renowned marketing experts have published related works and the most notable work is by Philip Kotler on “theories of consumer behavior” (Kotler, 2004).These theories have been applied for many years to get an insight on the appropriate marketing strategy for online consumers and understanding their buying behaviors. The theories are also useful in analyzing different aspects of consumer behavior to isolate a particular consumer segment that identifies the online consumer (Kotler, 2004).however, it is important to outline the distinct attributes of the online consumer when considering his behavior to be different from that of the traditional shopper.

It is important to highlight the factors that impact on the online consumer since compared to the traditional shopper, online consumer behavior is more diversified given that the online platform is a new retailing forum (Hn & Kühn, 2010). The factors considered by the online consumer are depicted by the analysis of the process from which the online consumer goes through when making or deciding a purchase over the internet. In order to compete in the online market and to satisfy the demands of the consumers, these factors are required to be taken into account and identified by the online retailers. Researches and surveys have been conducted in recent years to analyze the reaction of consumers to the phenomenon of online shopping, however, much are required to be recognize and identify the online shopping behavior of the users of the internet.

1.6 Scope of the Study

The focus of this research was to examine the relationship between online shopping and consumer behavior alongside factors that influence consumer perceptions while shopping online. Electronic commerce is gaining large audience and the increasing use is attributed to increase in information literacy levels and the rapid evolution in technology. For the current study, the general population for the study is the Saudis. The behavior of online Saudi consumers will be analyzed with specific focus on their purchase of electronic goods via online channels. The ecommerce channels considered in this study are Namshi, Amazon.com and Marka VIP.  Online shopping has increased consumer opportunities given the increase in internet proliferation and growth in number of portable internet-enabled devices (Klopping & McKinney, 2004). Prior to the ecommerce venture, organizations need to conduct thorough analysis and research regarding the online market to understand the target users and the online marketplace.

1.7 The Limitations of the Study

A number of factors influence the online consumer. To facilitate the investigation of the online consumer behavior, the research limited the aspects of online shopping in order to highlight the main factors that directly influence the online consumer. Various models and theories in consumer behavior have been put forward to analyze the potential online consumer. By highlighting the process of consumer acquisition, the study was limited to the identification of consumers. Based on the various categories of products and services, consumer perception and attitudes differ according. Consequently, depending on the category of product or service, consumer choices are influenced by a complex set of factors.

1.8 Research purpose

Because of the increasing globalization, the online platform is gaining wide popularity at the same time enabling businesses access a fast and convenient way of reaching consumers. The current research seeks to investigate how consumers behave while shopping online. Based on the primary objective of the research, the purpose of this study is to identify and provide insight into consumer behavior towards shopping for electronic goods in Saudi Arabia. Furthermore, the research seeks to establish online consumer segments and the effect of the identified factors on consumer choices.


Chapter 2: Literature Review

For most consumers, purchasing products and services on the online platform is viewed as an innovative venture for most consumers yet this is a phenomenon that has not been well understood. As with most strategies in their formative stages, there is need to understand the drivers behind online consumer purchases. As a result, only with a few exceptions, most research conducted regarding online consumer purchasing habits is largely descriptive. Whereas some of the studies seek to facilitate the attributes of products and services that prompt them to be purchased online, other studies seek to examine the decisions that prompt buyers to purchase products and services over the internet (Hse, Yen, Chiu & Chang, 2006).

However, most studies are dedicated to identifying the attributes of online buyers that distinguish them from non-buyers. Factors investigated in this context incorporate demographics, attitudes and innovativeness. For example Kenrick (2010), found that online shoppers in the United States are relatively young, highly educated and have high incomes. In another study that was conducted by Qin (2007), adopters of online shopping modes have high-income range with more males shopping online compared to females. Ecommerce

2.1 E-Commerce

Electronic commerce (e-commerce/ecommerce) refers to any form of business transactions that is facilitated via public or private computer networks. The key aspect of the ecommerce business model is mainly depended on the application of video, text and sound alongside other multimedia elements to facilitate data transmission and processing (Turban, Lee, King & Liang, 2010). Within the global economy that is driven by technology, aspects such as after sales service, public procurement, consumer-driven marketing, sourcing online, engineering and manufacturing, commercial auction and collaborative designs are included in online shopping. Other aspects of online business include electronic bills lading, trading in shares electronically, online delivery, internet-based funds transfers, online delivery of digital material and online distribution of products and services.

Ecommerce integrates new activities and products such as personalized medical equipment, consumption goods, offline services, financial and legal services as well as virtual shopping malls. Multimedia technologies are also applied in the re-design and automation of workflows and online transactions. The global ecommerce capability is facilitated by the network architecture of the internet platform which is not limited by political and geographical restrictions (Barnes & Chen, 2007).  The emergence of the ecommerce platform via the internet has significantly shrunk the distance between the consumer and producers. With the emergence of the internet, purchases are made directly by the consumer without the mediation of intermediaries such as distributors, wholesalers and retailers. The first instance of online shopping was recorded in 1994 and the use of online channels has since been considered as an integral component of direct consumer marketing via virtual stores (Kim & Et.al, 2007).

Online shopping has establishes recognition as an alternative channel to offline traditional physical stores, capturing the interest of many merchants who are now adopting the new retailing platform. In the context of online storefronts, electronic retailing was predominantly established through the use of an online catalogue whereby consumers only accessed products and services from a single merchant (Richard, 2005). The elimination of international boundaries governing trade was led by the emergence of the World Wide Web and the internet that has transformed the world business platform into a global village. Since its inception, ecommerce has recorded remarkable growth. The ratio of business to consumer on the online platform is increasing at a rapid rate (Laudon & Traver, 2011). Consumer online shopping is a field that has attracted the interest of many researchers and study in consumer behavior for internet shoppers is expected to increase substantially.

2.2 Offline Versus Online Shopping

To a large extend, online and traditional shopping approaches differ significantly. Online shopping offers an interactive and convenient models whereas offline shopping offers the consumer high quality products in a conducive environment. To enhance the product appeal to the consumer, the online platform has enhanced features such as 3D techniques and virtual reality which are popular across most online stores (Chen & Barnes, 2007). The online store also offer consumers a new and exciting shopping experience. Other factors that explore the nature of online shopping include aspects such as price, product, technology and convenience.

Consumers are neither limited to time nor location when shopping via the internet. The online platform enables consumers to save both time and money through the online store since consumers do not incur travel expenses vising online stores but shop online regardless of their location. Moreover, the information technology framework that comprises the internet also facilitates consumer decision making (Cheung Et.al, 2005). However, one of the key significant factors that make ecommerce preferable among many consumers is the security of online paying modes, which are preferred by most online shoppers. The online platform also allows consumers to change and make orders conveniently, compare the price ranges and product categories and access information regarding the latest offers of products and services on the online store.

In a study that was conducted to assess the demographic profile of online shoppers among the Hong Kong population, adopters of online shopping have similar demographic profiles as well as being self-confident, time conscious and frequent users of the internet (Soopramanien, 2007). In a related study Zhou, Dai and Zhang (2007), found out that online shoppers are more innovative than their offline shopping counterparts. The studies present a general picture of the online consumer as being young, well-educated and higher than average shopper scoring highly on the innovative scale.

In a study that was conducted by Kim, Fiore and Lee (2007) on online consumer behavior in the Saudi context, a significant proportion of online consumers are mainly composed of high-income earning people who also constitute professionals. The study however incorporated only the expatriate population that has also been the focus for many studies of this nature. Expatriates are the focus for study in ecommerce research because they have high demand for goods that are not manufactured locally, making them more likely to purchase goods online than ordinary Saudis. However, given the growth in technology and infrastructure, many companies are launching their operations on the internet platform. Thus, it is expected that by way of hypothesis that there will be increase in prevalence of online shopping among the Saudis.

2.3 E-commerce in Saudi Arabia

Statistics indicate that international investors are launching their operations in the Middle East’s emerging and prospective ecommerce industry given the promising opportunity of the Saudi Arabian Market. In 2012, PayPal launched its operations in the Middle East. At the same time, Middle East’s biggest online retailers Namshi, Marka VIP and Souq.com launched massive investment for their ecommerce infrastructure. Namshi is a UAE-based internet retailer that ventures into the fashion industry selling both footwear and clothing. On the other hand, Marka VIP is Marka VIP sells flashy goods online with heavy backing by capital investment firms. On the other hand, Souq.com is a large retailer in the region with a capital base of over 8 million customers (Flick, 2009).

A study conducted to establish the extend of ecommerce prevalence in the Middle East ranks Saudi Arabia as the second top destination of ecommerce business, with the prospective of expansive growth in the near future. The central focus of ecommerce in Saudi Arabia has been addressing the challenges and opportunities presented by the industry in the country. In a forum that brough together all the states of the UAE, the resolution on the need to capture the Saudi Arabian market was viewed as a critical factor for the prosperity of ecommerce in the region (Turban, Lee, king & Liang, 2010). Saudi Arabia will witness a rapid phase of ecommerce growth in the near future, facilitating the growth of the industry in the region.

Hofstede & Mooji (2011) explores the challenges facing the ecommerce business in Saudi context which are viewed in terms of payment and logistics problems. As opposed to other forms of online payment, studies indicate that over 70% of Saudis prefer cash on delivery to make payment for online deliveries. The approach strains the cash flow of ecommerce startups because cash on delivery purchases are 8times more likely to be returned by the consumer because they do not meet their preferences. The practice subjects ecommerce companies at a loss since they incur additional shipping costs returning goods that have been rejected by consumers. Moon (2004), however argues that the recent entrant of PayPal into the Saudi market could enable ecommerce companies alleviate some of the payment challenges stimulating rapid growth for the ecommerce sector. PayPal is dedicated to assisting as many shoppers as possible to conveniently and securely shop online within the UAE region.

A research to explore the opportunities in ecommerce within the UAE region indicates tremendous opportunities for offline business to transition into the digital realm of internet business. In a study conducted by Google in 2012 show that over 85% of businesses in the UAE region have no online presence, losing over 66% of the sales they would record on the online business (Bick, 2005).

2.4 E-commerce and Consumer Behavior

From the concept of marketing, the basis of consumer behavior is derived from the notion of formulating resourceful relationships between the consumer and the enterprise. The consumer is the most important entity in any business and hence is an essential in facilitating the online exchange process. Consumer behavior refers to the evaluation of the physical activities that are conducted by groups or individuals to generate decisions related to income disposal, to purchase goods and services (Fillip & Voinea, 2011). Both external and internal factors to the consumer environment influence their purchasing habits. Internal factors are intrinsic to the consumer’s mind whereas external factors are generated from environmental conditions (Constantinides, 2004).

Consumer behavior is influenced by many factors. Marketing approach, reference groups, culture, socioeconomic, technological factors and demographics are the key external factors that influence consumer preferences (Cai & Xu, 2006). The numerous psychological processes are the internal influence that incorporate the semiotics, personal motivation, consumer perceptions, behavior acquisition and attitudes. The motive of the online consumer when buying on the internet can either be functional or non-functional. Consumer needs and place of product availability are the functional motives. the functional motive also include the availability of affordably priced products, conducive shopping place and one-stop shopping location to save consumer time. According to Lian and Ling (2008), social and cultural factors such as brand name and chain stores reputation are attributed to the non-functional motives.

While shopping online and traditionally, consumers behave differently. According to Dennis (2012), based on the character of online consumers, they either portray a unique behavior model or show some unique behavior. For online shopping of electronic goods, the strategies of marketers are dynamic as they devise new designs and features to facilitate online shopping ventures. Ecommerce companies strive to provide a rich shopping experience for their customers and make them loyal to the site by enhancing its physical appearance and design to increase traffic into the site (Feigenbaum, Parkes & Pennock, 2009). With the emergence of ecommerce, the internet has led to rapid transition in innovation and invention to enhance user experience. Users now access to a wide range of alternatives to purchase online without any limitations.

2.5 Online Consumer Purchasing Behavior

The online shopping behavior of consumers defines the conduct that consumers portray when shopping online. The behavior of consumers is affected by factors such as the nature of the online store, online consumer support, product features, nature of website and the presentation of the internet site. Studies indicate that consumers with limited income and restrained lifestyles are likely to spend less time on online shopping (Dai, Zhang & Zhou, 2007). Various authors have defined consumer behavior based on different contexts. In addition, research on online consumer behavior has attracted the attention of market researchers and scholars as they seek to establish factors that prompt users to shop online. Related research on consumer behavior is valuable since it enables ecommerce companies understand the perception of consumers as they shop online. According to Cheung, Chan & Limayem (2005), the electronic environment is based on consumer perception as well as the online contest acting as moderating variable of online shopping.

Bluschke (2010), views the online consumer behavior as a mindset whereby the cognitive orientation of consumers determines their purchasing behavior. Based on this context, online consumers have different thoughts that are shaped by their emotions and information processing. Consequently, a consumer’s propensity to shopping online is affected by their mindset. Based on this explanation, consumer decision to purchase online is intentional to reach a certain goal rather than experimental. According to the European Parliament Council (2004), a consumer mind set can either be goal oriented or experimental. In a study that was conducted by a baby toys retailer outlet to assess the motivation factors of consumer shopping behavior, it was found out that experimental mindset consumers were less likely to purchase toys than goal oriented consumers who preferred to buy toys via online channels. Bharati, (2002) further contributed to the mindset approach by introducing website layout and design as important factors that affect online consumer behavior. The consumer mindset therefore determines the actionable insight of the consumer since understanding the behavior of online consumers creates more opportunities for ecommerce companies.

2.6 Factors that Determine Online Shopping

Most research conducted indicates that consumers possess both the ability to bargain for and purchase goods and services (Baumeister, 2008). The lifestyle of a consumer has an impact on their acquisition of electronic goods via the online channel. For consumers to purchase goods online, they should possess positive attitude towards internet access and have to accept transition in technology, possess internet browsing skills and experience transaction on a wide range of internet channels. Since all these factors have a large impact on consumer lifestyle, then online purchasing perception is dependent on these factors. In a study that was conducted to assess the impact of external environment on consumer internal beliefs, attitudes and perception found out that positive perception enhances usability (Flick, 2009). The willingness of the consumer to purchase a commodity is based on their attributes and intention to proceed with their decision.\

The perception of the online consumer is influenced by their personal experience, social networks, online marketing and  internet knowledge in general. Scholars indicate that direct consumer experience regarding product usage affects their subsequent acquisition (Head & Hassanein, 201). As a result, marketing managers are required to possess profound understanding of consumer behavior to enable them focus their marketing efforts on targeting consumer segments likely to bring the highest returns to the company. With this understanding, marketers are able to predict the consumer purchasing behaviors in order to reap more profits from their online channel. The analysis is a true affirmation that attitude is an important determinant in predicting consumer behavior towards shopping for online goods via the internet.

2.6.1 Consumer behavior-goal oriented. According to Alam & Bakar (2008), consumer behavior can be viewed from a utilitarian viewpoint. This implies that consumer behavior is deliberate and it is predetermined as influenced by their decision making approach. Goal oriented online shoppers have a specific task to accomplish, are efficient in making decisions and have specific targets. They want to complete their shopping online in an efficient manner because they have a specific goal to accomplish. As a result, it is easy to attract goal-oriented consumers to purchase online electronic products because they view the online channel as convenient. Therefore online consumers value online channel as convenient.

2.6.2 Online shopping behavior based on experiment. Experimental online shoppers prefer the channel because of its benefit and the pleasure they attain from shopping online.  Some consumers seek online information as a method of recreation and hence they experiment with online shopping which pursues them as a motivator.  Repeated online shopping from the same website prompts consumers to repeat purchasing from the site since they are aware of all purchasing procedures having had a previous experience.

2.7 Factors Motivating Online Consumer Behavior

Online consumer behavior is a complex field to study because it is affected by a so many factors. While shopping online, the perception of consumers is affected by their culture, personality, education level, personality, the external environment and the availability of resources. Whereas some of the variables that affect online commerce are controllable, others cannot be controlled as they automatically prevail in any online transaction. However, factors such as the exchange medium, choice of products and services as well as the medium of exchange are within the consumer’s span of control. This has the implication the online consumer has certain level of control for online shopping (Chen, Hwang & Wen, 2001). For ecommerce companies to attract the online consumer, it is important to consider aspects such as website appearance, addressing privacy concerns, boosting consumer loyalty and confidence and  providing comprehensive information regarding products and services to encourage positive consumer decisions.

 

 

2.8 Online Shopping Intention

In the process of online purchasing, there are three dimensions that determine the acquisition process. These incorporate aspects of Human Computer Interaction (HCI), consumer orientation and behavioral approach.

2.8.1 Human computer interaction. The interaction of the consumer with the online channel to conduct an online purchase is mainly affected by the user interface, layout and design of the website, the ability of the user to learn and efficiency of the online channel. In a study that was conducted to assess the impact usability on online consumer behavior, it was found out that visual effects on the online channel affects its usability (Barnes & Vidgen, 2002). To attract reasonable traffic on the site, the ideal website should have a user-friendly interface, well-documented and quality information, ease of navigation to consume less time and well defined transaction procedures.

2.8.2 Concerns of online consumers. In a study that was conducted to study human behavior and attributes regarding online shopping, the trust between the consumer and the ecommerce channel is a key determinant of online channel success. When consumers trust the online channel, they are motivated to process current and subsequent transactions through online shopping (Belanger & Schaupp, 2005). To enhance the trust factor for online channels, elements of online privacy and security for confidential information needs to be considered. Security and product delivery within the expected time are also important factors.

2.8.3 Characteristics of online consumers. Another study conducted to investigate consumer personal traits found out that personal characteristics such as demographics and personality affect shopping behavior. An individual’s culture and personal profile affect online shopping behavior. Current and future online consumer behavior also affected by other factors such as technology literacy, past experience shopping online and conformity of the channel to the needs of the consumer

 


Chapter 3: Methodology

This chapter presents how research was conducted to obtain primary data for the study and reach conclusion of the research based on different approaches that were used.

3.1 Research Design

The current study is inductive in nature and its primary aim was to collect data regarding online consumer behavior and analyze it. By doing so, factors that affect online consumer purchase such as user interface, website design and privacy concerns in online shopping were derived (Aggarwal & Hooda, 2012). The primary data for the study was collected with the help of a survey. The major objective of the survey was to collect data from respondents regarding online purchase of electronic goods in Saudi Arabia in order to assess how consumer behavior affects ecommerce. The main purpose of this research was to collect data regarding ecommerce and consumer behavior for consumers who purchase electronic goods on line.

3.2 Data Collection

Prior to collecting data using the questionnaire, an exploratory study was conducted in order to highlight the demographic factors to incorporate in the research. A comprehensive literature review was conducted in order to provide a rich background of the study and provide understanding of the subject of consumer behavior and ecommerce. Related studies on consumer behavior were also reviewed to give focus to previous work that has been conducted in this field.

The data used for this study was collected as part of a survey to examine the incidence of online purchasing among consumers in Saudi Arabia. To collect data for the study, self-administered questionnaires were devised and given to consumers to fill in. The residents were required to indicate whether they had made any online purchases and the frequency within which they had done so. Those who indicated that they had made online purchases were required to indicate the category of goods that they had bought alongside the reasons for buying products online as opposed to traditional channels.

Participants were also requested to share their experience while shopping online and indicate the likelihood of making online purchases in future alongside the reason for their decision. Once the respondents had completed the above section, they were then required to complete a range of attitudinal statements regarding online purchasing at the same time providing demographic information.

3.3 Target Population

The population for study were the general population were public specifically residents of the Saudi Arabia capital of Riyadh. To increase the response rate among respondents, the questionnaire was limited to three pages of well-structured questions. The current study is based on exploratory research and this is why the research begins by presenting comprehensive information regarding consumer behavior and their attitudes towards ecommerce channels. With insight into the field of research, it was possible to analyze the factors that influence consumer online buying decisions in the Saudi Arabian context. The collected data was analyzed using Excel spreadsheet and SPSS programs in order to establish relationships, means and correlation between the study variables.

3.4 Research Approach

In research, there are two types of approaches that are commonly used, one is inductive whereas the other is deductive. Inductive approach strives to formulate a theory based on collected data whereas deductive research applies theory on the gathered data. The current research is deductive in that it assesses the factors affecting online consumer behavior based on the primary data collected during the study. The strategy used in the research approach was to collect primary data and analyze the respondents’ response in order to analyze factors that influence online shopping and their relation to the experience of the participants (Chebat & Richard, 2010). The primary data for the research was collected to analyze and conclude the research questions.

To conduct the study, the research embarked on conducting investigation regarding related work on consumer behavior. A review of similar studies was then conducted to establish the research aspects of previous studies. Survey approach is the method used to facilitate this research whereby questionnaires were administered to participants to establish their purchase behavior. To collect data regarding the impacts of internet shopping on consumer behavior and attitudes, the questionnaire was formulated and administered in accordance with the aims and objectives of the study. The main aim of the research was to establish current and future trends regarding current and future trends in consumer behavior. The behaviors include aspects such as motivation, attitude, beliefs and attributes of respondents. Other information that was gathered through the survey included aspects such as the respondents’ experience using the internet, ecommerce websites feedback, attitudes to online purchase and categories of products that consumers purchase (Chang et al, 2005). The quantitative research approach was applied for the study and data was analyzed once feedback had been generated. Moreover, to generalize the conclusion of the study on the basis of the study outcome, the researcher used Excel and SPSS to analyze the data. To facilitate complementarities of the study, additional data such as official reports from affiliate organizations and the Saudi Government were used to substitute the data gathered.

3.5 Sampling

The sample used in this study was drawn from residents of one of the busy cities in Saudi Arabia. The urban population was considered for this study because residents have access to computer infrastructure and are likely to be users of the internet unlike their rural counterparts who have less probability of accessing the internet to purchase online. The interest population for the study is hence limited to the city residents who engage in ecommerce. For the current study, online consumers were regarded as people who access the internet to make purchases online via ecommerce tools.

The sample collected for this study was applied to investigate consumer behavior while shopping online for the entire Saudi population. The sample to represent the whole population was selected for this study because of resource constraints. As a result, the findings of the study would be generalized for the whole population.

To gather data for this study, a census of part of the population was conducted. In this context, the population for study refers to consumers who shop electronic goods via the internet. In many instances, online shoppers contribute to online blogs and forums regarding issues relating to ecommerce. By personally participating in this forums and contributing to blogs, it was possible to seek the opinion of online shoppers regarding their perception of ecommerce. After weeks of engagement, it was possible to convince the forum and blog members to participate in my study. They voluntarily provided their personal email addresses where the questionnaire for the study would be send. A survey questionnaire was then send to respondents, whose email they had provided with their authorization via online blogs and forums. The respondents of online blogs and forums are the major users of ecommerce sites and have adequate information regarding products and services.  By engaging in discussion on blogs and contribution in ecommerce forums, it was possible to gain the opinion of other online shoppers who agreed to undertake the study.  Information obtained was regarding their use of ecommerce companies in Saudi Arabia such as Amazon.com, Namshi and Marka VIP. A survey questionnaire was then sent to all respondents who had provided their emails and were willing to engage in the study.

The decision to collect data from a sample of the population was reached because the population is infinite. It is not possible to establish the exact number of online shoppers in Saudi Arabia. Once information from leading 8blogs and forums generated adequate emails for response, this is the study sample from where data would be obtained. As a result, the sample drawn from the email list from shoppers on blogs and forums would determine the final population size because the data must be collected from as many respondents as possible in order to be representative to the whole population.  Although the original plan for the research was to collect data from the entire population of online shoppers, the selected sample facilitated efficiency in data collection process.

The factor that the research intended to investigate was to analyze the behavior of online consumers and factors that motivate their purchasing choices (Cai & Xu, 2006). Because of financial and time constraints, this is why a specific population of the study was approached, the sample composed of 229 respondents. Physically, the questionnaires were distributed to residents of Riyadh, Saudi’s capital. However, the major reliance of response was through emails and personal contacts that the researcher had established.Innitially,229 respondents were approached for response. However, out of the 229 who had been initially approached, 79 of them were excluded from the research because they indicated that they had never engaged in online shopping. Consequently, the remaining 150 respondents were studied for analysis in the research.

Prior to the study, the email addresses of all respondents were located and the study questionnaires were dispatched. Emails that had been generated from the blogs and forums were verified to omit duplicated addresses. Whereas 100 questionnaires were send via email and personal contacts, the remaining 50 questionnaires were physically administered to Riyadh residents who had initially responded that they had previously engaged in ecommerce. The table below presents a total breakdown of how questionnaires were dispatched.

 

Respondents Number of questionnaires Percentage
Riyadh residents (questionnaires physically administered) 50 33%
Email contacts (From blogs and online forums) 70 47%
Personal contacts 30 20%
Total 150 100%

 

To ensure that demographic factors were considered, gender of respondents was equal in number whereas the age range of the respondents was 18 and above. Once the initial bulk of questionnaires had been send, a second collection of questionnaires were send after two weeks after the initial questionnaire had been send. In an effort to increase the overall response rate, a second set of questionnaires were send after a period of one month to collect data from as many agencies as possible. A final follow-up questionnaire was then send after 6 weeks as a short summarized version of the initial questionnaire for respondents who had not responded to the preceding questionnaires.

Once all the 150 dispatched in questionnaires were returned, the fully documented questionnaires were then analyzed for study. Out of the 150 dispatched questionnaires, 142 had been appropriately filled whereas 8 of them had some sections left blank. Both the fully completed and abbreviated versions of the questionnaires formed the basis of the data analysis. Once the response was obtained, the categories of online consumers in the responding sample were as follows.

Attribute Number Percentage
Category of respondent
Riyadh Residents

Email respondents (from blogs and online forums)

Personal contacts

Total

48

 

65

29

 

142

96%

 

93%

97%

 

3.6 Format of Questionnaire

A self-administered questionnaire is the survey tool that was used to conduct the study. Prior to developing the questionnaire, an exploratory study was conducted in order to assess the factors to include in the research.  For the current study, questionnaires were used to be filled by the general public. To develop the questionnaire for the current study, the key variables that needed to be investigated were listed.

  • General variables. The general variables for this research include:
  • Personal details
  • Demographics
  • Social attributes
  • Consumer perception towards online shopping
    • Key variables. The variables of interest included:
  • Buyer perception during online buying process
    • Online purchase idea
    • Decision to purchase
    • Issues determining consumer behavior in online buying
  • Online consumer issues in online buying:
    • Confidentiality, personal privacy and security
    • Brand attributes and reputation
    • Delivery channel and complaints channel
  • Post buying behavior and practice

The questionnnaire was distributes to 150 Saudis who are who are are convesant with english language and are frequent internet users. To send quationaires to rspondents, emails, personal contacts and hand delivery were used. The participants were requested to hand in the filled in questionaire pesronaly or send it via email.

Chai and Pavlou (2012), state that for questionaires to be reliable, they ought to fulfil two major objectives. These key aims are maximising the response rate and providing accurate and reliable information. Accompanying the questionnaire, personalised cover letters were administered to the respondents explaining the imposrtance of their participation, the authority responsible for the study and the gurantee for confidentaility and anonymity if they engaged in the research. The layout of the quationaires was from general approach to particular, simple to comples and began with closed fromat questions. To maximise response rate and usability of this tools, only questions relevant to the research objective were asked.

To enable participants easily respond to the questionaire, closed format style questions, the questionaire format was closed inclusing checklist questions that prompted the respondent to tick maximum responses depending on the nature of question asked. To limit bias and facilitate statistical analysis of the respondent’s feedback, ambigous questions were omitted. The next chapter presents the results and analysis of the study based on the response of the 150 active intenrt users who undertook the survey.


Chapter 4: Results and Analysis

This chapter presents the results of the questionnaire survey regarding the behavior of online consumers. The collected data from respondents is analyzed using Excel and SPSS and presented.

The survey questionnaire collected primary data on how respondents behaved when they shopped online. Consumer beliefs, attributes, attitudes and motivation factors that affect consumer decisions when purchasing online were the factors being analyzed. Consumer behavior while shopping online was compared against the importance of loyalty, privacy, convenience and trust of the brand when shopping online. The questionnaire was categorized into demographic segmentation in the first part and the second part intended to collect data regarding security, brand awareness, trust and efficiency of ecommerce channels that influence consumer choices. As presented in the appendices, the questionnaire was categorized into four main parts that incorporated general approach, consumer behavior during the purchasing process, buyers’ concerns while conducting online shopping, post purchase behavior and consumer experience. The response from participants based on the questionnaires is categorized as follows.

From the analysis, it is evident that majority of the respondents who undertook the survey are male as compared to their female counterparts. From the analysis, 65% of the respondents were male compared to female who were only 35%. This survey was conducted in the Saudi’s capital Riyadh.

4.1 Age Analysis

The distribution of respondents can also be categorized on the basis of age distribution based on their frequency. From the analysis of the age gap of respondents, the survey demonstrates that the age gap of 18 to 24 years has the most online consumers with a frequency of 42% and a frequency of 63.  Moreover, the age bracket of 25 to 30 years recorded a frequency of 52 that accounted for 35% of the study population. Those aged 36 and above were the least accounting for only 11% of the population.

The results of the analysis show that most respondents who undertook the study are young people within the age bracket of 18 to 30 years. This is an indication that the young generation actively participated in the research.

 

4.2 Respondent’s Educational Background

The analysis on the participants’ educational background indicates that most respondents had attained a Bachelor’s degree level. Those who had undergraduate education and used online shopping sites were 61% of the total with a frequency of 92. Moreover, those who had attained masters level of education and above were the second highest with a frequency of 51% which translated to 51 respondents. Those with intermediate education and below marked the least number of respondents with a frequency of seven, which translates to 5% of the total. The distribution of respondents who shop online, on the basis of education level, indicates that most online consumers possess undergraduate education and above. This has the implication that they shop online because they have skill and access to technology alongside disposable income to spend online.

 

4.3 Income Distribution

Figure 8: Income distribution among the respondents

Based on the frequency of the respondent’s income distribution, participants with an income range of $2001 to $3000 form majority of the respondents who engaged in the study at a frequency of 60, which translates to 40% of the total. Those with over $3000 are the least ones who engaged in online shopping and undertook the study, ranging at 6% with only 9 participants. Respondents with an income below $300 accounted for8% of the total with a frequency of 12. Moreover, respondents earning a margin of $1001 to $2000 accounted for 29% of the total respondents with a frequency of 44. The results of income distribution among online shoppers indicate that individuals with disposable income are the ones who mainly shop online.


4.4 Frequency of Online Purchase

The frequency of online purchase among respondents indicates that frequency of purchase is evenly distributed within the timelines that have been listed. Majority of the respondents had made an online purchase once in five years accounting for 35% of the total purchases. 22% of the respondents had made an online purchase at least once every month whereas 21% had accessed a ecommerce site to shop at least once in a year. Those who have shopped online at least once in the past two years had accounted to 23% of the total respondents. This is an indication that most online consumers in Saudi Arabia have at least conducted an online purchase within the past five years. This outcome is attributed to the fact that ecommerce is an upcoming industry in the region hence it gaining popularity among the Saudis.


4.5 Product Segments

From The chart indicating the product segments acquired by the respondents, 117 out of the total 150 respondents who participated in the study had purchased electronic products online. This is the highest frequency of product choice at 78% followed by clothing which accounts for 8%. Music accounts for 4% of online products purchase whereas cosmetics and jewelry accounted for 3%. Other product range accounted for 7% of the total. This is an indication that most respondents who had acquired products online had purchased electronic products.

4.6 Preview of Online Channel

The survey questionnaire required the respondents to indicate the number of times that they had acquired electronic products online within the past year. Based on their response, most of the respondents had at least acquired an electronic product once online within the past one year and this accounted for 47% of the total. Moreover, 28% of the respondents indicated that they had purchased electronic devices online 1 to 4 times within the past one year whereas 25% had purchased more than 4 times. From the sample, it can be easily analyzed that most online consumers in Saudi Arabia purchased electronic goods at least once a year.

This information was sought from the respondents in order to assess the consciousness of their decisions regarding selecting the online channel to use to acquire products online. The analysis indicates that 51% of the respondents had visited the online store and physically checked the product in outlets prior to making the purchase whereas 49% of the total did not bother to visit the site or assess the online product prior to their purchase.


4.7 Frequency of online purchase

4.8 Online Purchase Motivation Factors

To analyze the motivation behind consumer acquisition of electronic products online, the respondents were required to state how they got an idea regarding the availability of the electronic product on the ecommerce channel. 73 out of the 150 respondents indicated that they had been referred by friends and family whereas 41 of the respondents had learned of the product through online advertisement. Mass media advertisements accounted for 27 incidences whereas 9 of the respondents had learned about the electronic product from launch information. This is an indication that most ecommerce sites in Saudi Arabia stocking electronic products rely on referrals from users to get other users to access the product online. As a result, it is important to provide a rich user experience so that existing users can recommend the online channel to other users.

Data collected regarding the number of online stores the respondent had visited prior to making the purchase indicate that most of the respondents visited between 1 to 4 stores to make comparisons before they acquired the product, this comprised of 54% of the total. 27% visited between 5 to 6 stores whereas 19% visited over 6 online stores for comparison prior to making the final purchase decision. This is an indication that most online consumers in Saudi Arabia conduct online searches by going through different stores before they make their buying decision. Consequently, online companies selling electronic goods in Saudi Arabia need to conduct substantive market research and consumer analysis before launching their product online. Ecommerce companies could increase sales by conducting reviews to improve product quality based on user feedback.

4.9 Factors Affecting Consumer Behavior

As evaluated from the results of online shopping for electronic goods in Saudi Arabia, the factors that influence consumer decisions to purchase online products and services incorporate factors such as convenience, timeliness, pricing and the availability of the product. Out of the total 150 participants who engaged in the study, 55% of online consumers consider pricing as the most important factor in online shopping followed by convenience at 21% and unavailability in local stores at 14%. The other 10% accounts for products with frequent reviews available and products whose price comparisons can be assessed.

In Saudi Arabia, online consumers demonstrate similar behavior demonstrated by other consumers across the globe in accordance with consumer norms. Consumers are keen on cutting costs and saving time while shopping online. Majority of consumer buying decisions are influenced by product pricing and hence consumers tend to prefer the best price offers. As a result, ecommerce channels must take into consideration pricing decisions in their online store to boost sales.

Once Saudi Arabian online consumers purchase the electronic product online, they share the purchasing process and product experience with their friends and family. Out of the total, 70% of the online consumers share their purchasing experience with friends and family whereas 21% of the consumers seek additional guidance regarding product use and maintenance from its manufacturers. The family system and social networks in the Saudi context play a significant role in enhancing online marketing. Online consumers share their purchasing experience and brand information with people within their social networks. As a result, ecommerce companies selling electronic products should consider the impact of the family norm in the Saudi Arabian context in order to provide quality products that provide consumers with rich user experience.

4.10 Barriers to Online Shopping

In the questionnaire used for the survey, respondents were required to explain the barriers that hindered them from shopping electronic goods online. This question was asked to all respondents who were incorporated in the study in order to assess the impact of ecommerce barriers on the consumer. Although some respondents experienced more than one barrier when shopping online, they were required to pick only one barrier that they feel is the major impediment towards online shopping. The result of this question is a clear indication that security and privacy concerns are major barriers of online shopping. Out of the total, 50% of the respondents stated that security of the payment system and privacy concerns is a major factor that hinders their online shopping.

Whereas 23% of the respondents lack trust on online stores, 9% felt that shipping costs for online shopping were a major impediment because shipping costs would escalate the eventual cost of the product. Moreover, 8% of the respondents prefer traditional stores because they do not have to pay additional levies in the form of custom duty and tax when shopping locally. The remaining 10% of the respondents do not shop online because of delay in product delivery, lack of credit cards and other factors such as poor past online experience and additional expenses. This question was asked from the viewpoint of ecommerce companies in order to understand the barriers that hinder consumers from accessing their sites, to minimize the barriers and change the consumer’s mind set to experience a positive online shopping experience. The online seller should provide secure safety payment mechanism that guarantee security while shopping online. Delivery should also be done in time to enhance convenience and satisfy online consumer needs.


Chapter 5: Discussion, Conclusion and Recommendations

Growth in e commerce has been attributed to the growth in technology and the increasing functionality of the World Wide Web in facilitating business (Qin, 2007). Recent studies indicate that it is important to customise online products and services in order to fulfil the needs of clients. Customization of online products and services to reflect consumer needs and impact on the behaviour of consumers has been the main focus of this study. Since the emergence of ecommerce, the differences in consumer behaviour can be reflected by comparing product acquisition in physical and online stores (Boeck, Galarneau & Lamarre, 2010).

Online consumer behaviors, online shopping and traditional shopping behavior of the consumers are the three main sections that have been discussed in the literature review. The main focus of the research is online consumer behaviors and the online shopping. The online consumer behaviors include the decision-making process and the motivation of shopping, whereas, the online shopping include the privacy, online security, and e-commerce website. To reveal the influence on the online consumer behaviors, these factors were examined.

The current study was accomplished in order to analyze consumer behavior in Saudi Arabia and factors that affect online shopping for the Saudi context.

Although online shopping in Saudi Arabia has increased and IT infrastructure developed to a large extend, the growth of online shopping in Saudi Arabia compares poorly to developed economies such as the United States and the United Kingdom. However, Saudi Arabia presents a great potential for ecommerce companies that would like to launch their operations in the region. The purchasing behavior off online consumers is affected by their mindset which define their characteristics. By studying consumer behavior, ecommerce companies such as Amazon.com, Marka VIP and Souq.com are able to develop products and services that fulfill the needs of their clients.

The literature review part of this study has identified factors upon which consumer behavior is based. This includes factors such as beliefs, attitudes and motivational factors that influence their online buying habits. Previous studies on ecommerce and consumer behavior reveal that social networks, personal relations and previous experience have a significant impact on consumer perceptions of online products. Most consumers are motivated to purchase online products because of their convenience and time saving. The experimental online shopping habits of consumers have been analyzed to explore the impact of consumer mindset in making online purchase decisions.

To conduct the study, questionnaires were prepared to conduct the survey. To get response from participants, the questionnaires were send to personal contacts, distributed via email and physically delivered to Riyadh residents to seek their views regarding online shopping. A total of 150 questionnaires were returned by respondents and they formed the basis of the data analysis for this study.  The questionnaires were categorized into three main segments with general section, section to collect data regarding the identified variables and the last segment on consumer issues regarding online shopping. The analysis based on gender shows that online shopping in Saudi Arabia is popular among men than in women. Out of the 150 respondents who participated in the study, 65% were male whereas 35% were female. This has the implication that ecommerce companies in the region have their consumer segment mainly composed of males.

In addition, majority of online shoppers were young people whereby 77% of the total respondents were aged between 18 to 30 years. In the same contest, people with average income distribution of between $1000 and $3000 are the ones who participated in online buying. Moreover, education also played a role in online buying since most online shoppers as per the study had attained undergraduate education and above. However, majority of Saudis are not frequent online shoppers. Only 43% of the total population conducts online purchase at least once a year. Although online shopping is not very popular among the Saudis, the trend in online shopping can be improved by positively impacting on the behavior of consumers.

Among the young Saudi generation, online shopping is gaining popularity and becoming a part of their lifestyle. This popularity is attributed to the convenience and autonomy online shopping to the user. From the survey, a consumer choice to make an online purchase is influenced by various factors. The greatest factors to online shopping adoption are convenience, attractive pricing and time saving. Among the Saudis, the affordability of online electronic products is popular since consumers are keen on buying genuine products at reasonable prices. Prior to making an online purchase, consumers review other shoppers’ feedbacks and rating of the product or service before making the final decision to purchase. However, the greatest barrier towards online shopping is safety concerns. Many Saudis are hesitant to share their personal information on online sites. Some online consumers are also concerned about the security of their credit card information when they purchase commodities online. In addition, credit cards are not available to the entire population. In addition, making online transaction is a complex process and hence consumers who are not conversant with online transaction procedures are reluctant to buy online. Ecommerce companies have to reformulate their strategies by addressing the highlighted issues to offer a more fulfilling online experience to the online consumer. There is need to conduct further research on how Saudi Arabian ecommerce company can apply studies in consumer behavior to enhance their service delivery process.

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Appendices

Appendix 1: Questionnaire

  1. Select your gender?
  2. . Male
  3. Female
  4. Please tick against your age bracket?
  5. 18 -24
  6. 25-30
  7. 31-35
  8. 36 and above
  9. What is your current education?
  10. Intermediate and below
  11. Bachelors/Degree
  12. Masters and above
  13. What is your monthly income in $?
  14. Below $300
  15. $300-$ 1000
  16. $1001-$2000
  17. $2001-$3000
  18. Over $ 3000
  19. How often do you buy products via the internet?
  20. At least once every month
  21. Once in a year
  22. Once in two years
  23. Once in five years
  24. What product types do you purchase online? (You may choose more than one)
  25. Electronic products (e.g. Mobile phones, Computers, iPads, iPhones, Television, computer software
  26. Clothing
  27. Cosmetics and Jewelry
  28. Music
  29. Other (kindly explain) _______________________________
  30. What is the main reason you shop online?
  31. Appropriate pricing
  32. Convenience and timeliness
  33. Unavailability in local stores
  34. Availability of product reviews
  35. Availability of price comparison

 

  1. Before you purchase online, do you visit physical outlets to compare products?
  2. Yes
  3. No
  4. within the past year, how many times did you shop for electronic products?
  5. At least once
  6. 1 to 4 times
  7. More than 4 times
  8. How did you get an idea of purchasing electronic goods online?
  9. Referral by friends and family
  10. Online advertisement
  11. Mass media advert
  12. Product Launch information
  13. How do you identify online electronic products that meet your needs?
  14. Information from other users
  15. online product analysis
  16. recommendation by physical store
  17. Referral by other users
  18. comparison with other products based on prices
  19. Launch of new products
  20. Prior to purchase, did you visit any online store?
  21. Yes
  22. No

If yes, on average how many stores do you visit prior to making the purchase?

  1. 1 to 4 stores
  2. 5 to 6 online stores
  3. Over 6 online stores
  4. What important factors affect your decision when buying electronic products online?
  5. Appropriate pricing
  6. Convenience and timeliness
  7. Unavailability in local stores
  8. Availability of product reviews
  9. Availability of price comparison
  10. Once you receive the online product, which of the following define your action?
  11. Discussion with friends and family regarding the product
  12. Contact manufacturer for additional guidance
  13. Documentation of a product review
  14. Others ……………………………………..explain
  15. What Barriers Hinder you from shopping online?
  16. Security of Payment system and privacy concerns
  17. Lack of trust in online stores
  18. Expensive shipping
  19. Tax and duty fee for online goods
  20. Warranty claims and refund approach
  21. Slow delivery
  22. Lack of credit cards
  23. Others…………………………………………….please explain


Appendix 2: Results of Demographic Variables

Gender Male 98 65.3
Female 52 34.7
Total 150 100
Age (years) 18-24 63 42
25-30 52 35
31-35 18 12
≥36 17 11
Total 150 100
Education Intermediate & Below 7 5
Bachelor’s 92 61
≥Master’s 51 34
Total 150 100
Income ($) <300 12 8
300-1000 25 17
1001-2000 44 29
2001-3000 60 40
>3000 9 6

Appendix 3: Results of online Purchasing Behavior

Attribute Sub- item No. of respondents Percentage
Acceptance of Online purchases At least once every month 33 22
Once every year 31 21
Once in two years 34 23
Once in Five years 52 35
Total 150 100
Types of products purchased online Electronic (e.g. computers, phones, TVs, software) 117 78
Clothing 12 8
Music 6 4
Cosmetics & Jewelry 5 3
Other 10 7
Preview online store Yes 77 51
No 73 49
Frequency of online purchase At least once 70 47
1 to 4 times 42 28
Above 4 times 38 25
Online purchase motivation factors Referral 73 47
Online adverts 41 27
Mass Media 27 18
Product launch information 9 6
Number of online stores’ comparison 1 to 4 82 54
5 to 6 40 27
Over 6

 

28 19
 

Critical factors affecting consumer behavior

Pricing 83 55
Convenience 32 21
Availability 20 14
Product reviews 11 7
Price comparison 4 3
Consumer behavior after online product acquisition Discussion with friends and family 105 70
Contact manufacturer 31 21
Product review 14 9
Barriers to online shopping Security 74 50
Mistrust 34 23
Shipping costs 14 9
Tax and duty costs 12 8
Warranty claims 8 5
Slow delivery 5 3
Lack of credit cards 2 1
Others 1 2

 

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