Online Shopping and Consumer

Phobia

Patrick Kierkegaard

1
 Online Shopping and Consumer Phobia

• The Internet offers consumers a multitude

of benefits including ready access to
information, instantaneous
communication, and twenty-four-hour
shopping.
• The increase in broadband connections
has lead to more shoppers embracing the
speed and efficiency of online shopping.

2
 Online Shopping and Consumer Phobia

• Interactive Media in Retail Group (IMRG)

– £80 billion of consumer spending is either on
or influenced by the internet
• £30 billion of retail spending is online (10% of total
retail sales)
• £20 billion of other consumer spending takes place
online
• £30 billion of offline retail sales are impacted by
internet information, research or activity

3
 Online Shopping and Consumer Phobia

• IMRG found in it’s May 2006 survey of

over 3,900 consumers that:
– 52% of respondents intended to reduce their
high street spending in 2006.
– 45% of respondents intend to increase their
internet spending this year (Baiggori, 2007).

4
 Online Shopping and Consumer Phobia

• Forrester Research (2007) predicts that:

– Online retail sales in Europe will more than double in
the next five years as the number of online shoppers
grows to 174 million.
– In the second quarter of 2006, on-line retail reached
$45 billion, and that number is expected to surpass
$211 billion by the end of the year.
– Driving the growth: an increasing number of women
bringing their shopping power to the Net.

5
 Online Shopping and Consumer Phobia

• A number of consumers are still reluctant to

convert from Internet browsers and high street
shopping to potential online purchases.
• An Internet shopping survey reveals a number of
people are suffering from Internet Shopping
phobia.
• A study commissioned by Enterasys Networks
in 2006 revealed that the public has a deep
distrust of using the Internet to shop online.

6
 Online Shopping and Consumer Phobia

• Just half of the UK population have ever

shopped online and 43% of us are putting
off shopping or banking online because of
security concerns.
• E-commerce still has a long way to go to
earn the trust of the public.
(WhatDigitalCamera, 2007)

7
Online Shopping and Consumer Phobia

• A report issued by Consumer Reports

WebWatch (2005) stated:
– A quarter of Internet users have stopped
making online purchases for fear of identity
theft.
– 80% of Internet users are concerned that
someone might steal their identity from the
personal information available on the Web.
– 86% have made at least one change in their
behaviour because of fears of identity theft.
8
 Online Shopping and Consumer Phobia

• So what is driving the user’s anxiety and

reluctance to shop online?
– Risk
– Fear
– Anxiety

9
 Online Shopping and Consumer Phobia

• Online shopping anxiety is closely related to

computer anxiety
• “the irrational anticipation of fear evoked by the
thought of using or (actually using) computers,
the effects of which result in avoiding or
minimising computer usage.” (Brosnan, 1998)
• Several researches have found that computer
anxiety is negatively related to computer use
and attitudes towards computers (Jackson et al,
2003; Durndell and Haag, 2002)

10
 Online Shopping and Consumer Phobia
• Much of the relevant literature focuses on the perceived risks associated with online
shopping and consumer attitudes that foster or inhibit online exchange.

• The theory of perceived risk has been used to explain consumers' behaviour.
– Online consumers are concerned with those risks inherent in buying on the Web
such as credit card fraud and not receiving the right products (Bhatnagar et al.
2000)
– Perceived risk of online shopping and perceived ease of use of the Web site
have been shown to influence attitude towards online purchasing (Heijden et al.
2001).
– Consumers are apprehensive when they cannot be sure that purchases will allow
them to achieve their buying goals (Cox and Rich, 1964).
– Consumers perceive Internet shopping to have higher risk than in-store shopping
(Tan, 1999).
– Jarvenpaa & Todd (1997) reported that perceived risk influenced attitudes toward
online shopping, but not the intention to shop online.
– Vijayasarathy & Jones (2000) found that perceived risk influenced both attitudes
toward online shopping and intention to shop online.
– Other studies similarly found that perceived risk negatively influenced
consumers' attitude or intention to purchase online (Liu & Wei, 2003; van der
Heijden, Verhagen & Creemers, 2003)
11
Online Shopping and Consumer Phobia

• The most common concept of perceived

risk used by researchers defines risk in
terms of the consumer's perception of
uncertainty.
• The uncertainty can be about the outcome
or about the adverse consequences of
buying a product (or service). These may
produce anxiety.

12
 Online Shopping and Consumer Phobia

• Six components or types of perceived risk have been

identified:
– Financial
– Product performance
– Social
– Psychological
– Physical
– Time/convenience loss

• Forsythe and Shi (2003) characterized four risk types: financial,

product performance, psychological, and time/convenience loss

• Lim (2003) examined a different set of perceived risks: technology,

vendor, and product risk.

13
 Online Shopping and Consumer Phobia

• Financial risk is defined as a net loss of money to a customer and

includes the possibility that one's credit card information may be
misused which is a major obstacle to online purchases (Maignan
and Lukas, 1997).
• Product risk: The consumers' inability to physically inspect
products (Spence et al., 1970 and Bhatnagar et al., 2000) and
making a poor economic decision through an inability to compare
prices, being unable to return a product, or not receiving a product
paid for (Jarvenpaa & Todd, 1997; Vijayasarathy & Jones, 2000).
• Product performance: The risk that a product will not function as
expected (Bhatnagar et al., 2000; Jarvenpaa & Todd, 1997; Tan,
1999; Vijayasarathy & Jones, 2000, Horton, 1976).
• Psychological risk: refers to disappointment, frustration, and
shame experienced if one's personal information is disclosed. The
Internet is often perceived as likely to violate users' privacy, a major
concern of many Internet users (Maignan and Lukas, 1997, Jacobs,
1997 and Benassi, 1999).

14
 Online Shopping and Consumer Phobia

• Time/convenience risk may refer to the loss of time and

inconvenience. Two leading causes of dissatisfying online
experiences that may be thought of as a time/convenience risk
include a disorganized or confusing Web site and pages that are too
slow to download (GVU's 9th WWW User Surveys, 1998).
Convenience concerns psychological cost and other forms of non-
monetary costs such as time, effort and stress (Aylott and Mitchell,
1998; Cassill et al., 1997).
• Social Risk is associated with the loss of social interaction, are
closely associated with online purchasing behaviour. Perceived risk
seems to deter Internet users from shopping online frequently and
from spending significant amounts of time and money.
• Technological risk is associated with the fear of using the
technology due to loss of security, fraud and technical errors that
have been widely reported both in the interactive and mainstream
media

15
 Online Shopping and Consumer Phobia

Security and Privacy

• A common perception among consumers is that communicating
credit card information over the Internet is inherently risky due to the
possibility of credit card fraud (Bhatnagar et al., 2000; Furnell &
Karweni, 1999; George, 2002; Hoffman, Novak & Peralta, 1999;
Jarvenpaa & Todd, 1997; Jones & Vijayasarathy, 1998; Liebermann
& Stashevsky, 2002).
• Swaminathan, Lepkowska-White, and Rao (1999) reported that
consumers in their study seemed less concerned about the security
of online transactions.
• Ranganathan and Ganapathy (2002) found that security was a
major factor in discriminating between high and low intentions to
purchase online.
• A 2007 Zogby Interactive survey has found that worry about identify
theft has now reached most online Americans—91% of those polled
said they are concerned that their identity might be stolen and used
to make unauthorized purchases.
16
 Online Shopping and Consumer Phobia

Consumers' concerns about privacy:

• Security Risks follow from the consumers' fear that the open Internet
network would allow their personal data to be compromised
(Andrianie, 1999).
• The unauthorized acquisition of personal information during Internet
use or the provision of personal information collected by companies
to third parties (Furnell & Karweni, 1999; George, 2002; Hoffman et
al., 1999; Lim, 2003; Wang, Lee & Wang, 1998).
• A large number of Internet consumers do not trust Web providers
enough to exchange personal information with them (Hoffman et al.,
1999; Liebermann & Stashevsky, 2002).
• Increasing privacy concerns is the likelihood of a decrease in
purchasing online (Hoffman et al., 1999).
• George (2002) found that a belief in the privacy of personal
information was associated with negative attitudes toward Internet
purchasing.

17
 Online Shopping and Consumer Phobia

Fraudulent card transactions

• Although online transactions only account for around
11% of all credit card transactions, they account for 23%
of all fraudulent card transactions.
• Fears of bank card fraud and identity theft prevent more
than half of consumers from shopping online if it requires
providing a bank card number over a web site
• Unisys Corp.’s Trusted Enterprise Index survey:
– 16% of 1,744 consumers surveyed say they strongly agree with
the statement “Worry about bank card fraud and identity theft
has prevented me from on-line shopping when it requires me to
provide a bank card number over a web site.”

18
 Online Shopping and Consumer Phobia

Phishing and pharming

• Phishing and pharming continue to plague many financial
institutions and e-commerce websites.
Phishing
• A form of online identity theft that employs both social engineering
and technical subterfuge to steal consumers' personal identity data
and financial account credentials.
– Social-engineering schemes use 'spoofed' e-mails to lead consumers to
counterfeit websites designed to trick recipients into divulging financial
data such as account usernames and passwords.
– Technical subterfuge schemes plant crimeware onto PCs to steal
credentials directly, often using key logging systems to intercept
consumers online account user names and passwords, and to corrupt
local and remote navigational infrastructures to misdirect consumers to
counterfeit websites and to authentic websites through phisher-
controlled proxies that can be used to monitor and intercept consumers’
keystrokes.

19
 Online Shopping and Consumer Phobia

• The Anti Phishing Working Group (APWG) has reported that in

January 2007, the number of phishing spoof sites reached an all
time high of 29,930 unique phishing URLs reported in January, an
increase of more than 25 percent from December and nearly 5
percent from the previous high in June, 2006.

• APWG saw a total of 135 brands being hijacked in January with

numerous non-traditional websites spoofed such as social network
portals and gambling sites.

• APWG notes that more brokerage company websites and many

more International banks’ brands were spoofed and hijacked in
January. The number of crimeware variants reached an all time high
in January of 345, up from 340 in December, 2006, rising 1.5% from
that month, which was the previous highpoint for keylogging
crimeware variants detected in a single month.

20
 Online Shopping and Consumer Phobia

• There can be little doubt that anxiety induced by

fear of online shopping technology constitutes a
real phenomena.
• The statistics and studies show is that people
still fear online shopping and mistrust the
technology.
• There is still a common perception amongst
cardholders that shopping online is a very risky
activity and a number of Internet users fear
online shopping!

21
 Online Shopping and Consumer Phobia

• Companies should address these concerns to:

– Convince some of the e-commerce virgins to take the
plunge
– Build greater confidence amongst those who are
occasional cyber-shoppers.
• Numerous studies have suggested that the most
appropriate and effective way of minimizing online
risk is through establishing trust.
• Specific antecedents of online trust appear to be
fundamental to perceived risk:
– security of payment, privacy of personal information and
confidentiality of processing, product quality, reliability of
fulfillment and timeliness and quality of customer service.

22
 References
• Andrianie , S. 1999c, Online shopping yet to catch on. Sunday Times, 6 June.
• Aylott, R. and Mitchell, V-W. (1998), “An exploratory study of grocery shopping stressors”, International Journal of
Retail & Distribution Management, Vol. 26 No. 9, pp. 362-73.
• Bauer, R. (1967) Consumer Behaviour as Risk Taking, Risk Taking and Information Handing in Consumer
Behaviour, pp. 23–33. Graduate School of Business Administration. Harvard University, Boston, MA.
• Baiggori, 2007 Marta Baiggori Online Retailing Creating the Right User-Experience
http://www.marketinfo.sg/articles/SRA/OnlineRetailingCreatingtheRightUserExperience.html
• Bhatnagar, Amit, Sanjog Misra, H. Raghav Rao. 2000. On risk, convenience, and Internet shopping behavior.
Comm. ACM 43(11) 98-105.
• Bhatnagar, A. and Ghose, S. (2004), “Segmenting consumers based on the benefits and risks of internet
shopping”, Journal of Business Research, Vol. 57 No. 12.
• Brosnan, M. (1998) Technophobia , The Psychological Impact of Information Technology. Routledge.
• Yang, B. and Lester, D. (2004). Attitudes Toward Buying Online CYBERPSYCHOLOGY & BEHAVIOR Volume 7,
Number 1, 2004
• Brooker, 1984. G Brooker, An assessment of an expanded measure of perceived risk. Assoc Consum Res 11
(1984), pp. 439–446.
• Choi, S.Y., Stahl, D.O., & Whinston, A.B. (1997). Economics of electronic commerce. Indianapolis: Macmillan.
• Consumer Reports WebWatch, ( 2005) Retrieved from
http://www.diamondvues.com/2005/11/consumers_fear.html
• Cox, D. and Rich, S.U., 1964. Perceived risk and consumer decision making—the case of telephone survey. J.
Mark. Res. 1 November, pp. 32–39.
• Derbaix, 1983. C Derbaix, Perceived risk and risk relievers: an empirical investigation. J Econ Psychol 3 (1983),
pp. 19–38.
• Dowling, G.R. and Staelin, R. (1994), “A model of perceived risk and intended risk-handling activity”, Journal of
Consumer Research, Vol. 21 No. 1, pp. 119-34.
• Durndell, A., & Haag, Z. (2002). Computer self-efficacy, computer anxiety, attitudes towards the Internet and
reported experience with the Internet, by gender, in an East European sample. Computers in Human Behavior,
18, 521-535.
• Furnell, S.M., & Karweni, T. (1999). Security implications of electronic commerce: A survey of consumers and
business. Internet Research, 9(5), 372-382.
• Forsythe, S.M. and Shi, B. (2003), “Consumer patronage and risk perceptions in internet shopping”, Journal of
Business Research, Vol. 56 No. 1, pp. 867-75.
• Heijden, Hans van der, Tibert Verhagen, Marcel Creemers. 2001. Predicting online purchase behavior:
Replications and tests of competing models. Proc. 34th Hawaii tiiternat. Conf. Si/stem Sci.,Maui, HI.
• Hoffman, D.L., Novak, T.P., & Peralta, M. (1999). Building consumer trust online. Communications of the ACM,
42(4), 80-85. 23
 References
• Horton, 1976. RL Horton, The structure of decision risk: some further progress. J Acad Mark Sci 4 (1976), pp. 94–
706.
• Horton, R.L. (1976), “The structure of perceived risk”, Journal of the Academy of Marketing Science, Vol. 4 No. 4,
pp. 694-706.
• Jarvenpaa, S. L. & Todd, P. A. (1997). Consumer reactions to electronic shopping on the World Wide Web.
International Journal of Electronic Commerce, 1(2), 59-88.
• Jacobs, 1997. P Jacobs, Privacy: what you need to know. InfoWorld 19 44 (1997), pp. 111–112.
• Jackson, L. A., Ervin, K. S., Gardner, P. D., & Schmitt, N. (2001). Gender and the Internet: Women
communicating and men searching. Sex Roles, 44, 363-379.
• Jacoby and Kaplan, 1972. J Jacoby and L Kaplan, The components of perceived risk. In: M Venkatesan, Editor,
Proceedings of the 3rd Annual Convention of the Association for Consumer Research, Chicago IL (1972), pp.
382–393
• Internet shopping survey reveals e-phobia, Retrieved from,
http://www.whatdigitalcamera.com/news/Survey_reveals_ephobia_in_runup_to_Christmas_spending_spree_new
s_101315.html
• Lammers, H. Bruce; Curren, Mary T.; Cours, Deborah; Lammers, Marilyn L. (2003) Social image of students who
shop and don't shop online. Psychological Reports. 92(3), Jun 2003, 823-827.
• Leyden, J. (November 29, 2005).Cybercrime More Lucrative than Drugs. UK: The Register.
• Leyden, J. (May 5, 2004). UK Police Arrests 12 Phishing Mule Suspects. UK: The Register.
• Loewenstein, G. F., Hsee, C., Weber, E. U., & Welch, N. (2001). Risk as feelings. Psychological Bulletin, 127,
267–286.
• Lim, N. (2003), “Consumers’ perceived risk: sources versus consequences”, Electronic Commerce Research &
Applications, Vol. 2 No. 3, pp. 216-29.
• Liu, X. & Wei, K.K. (2003). An empirical study of product differences in consumers' e-commerce adoption
behaviour. Electronic Commerce Research and Applications, 2, 229-239.
• Garner, 1986. SJ Garner, Perceived risk and information sources in services purchasing. Mid-Atl J Bus 24 (1986),
pp. 49–58 Summer .
• Gefen, David, Detmar Straub. 2(X)0. The relative importance of perceived ease of use in IS adoption: A study of
e-commerce adoption. /. Association for Inform. Systems 1(1) (http://jais.isworld.org).
• George, J.F. (2002). Influences on the intent to make Internet purchases. Internet Research, 12(2), 165-180.
• Maignan and Lukas, 1997. I Maignan and BA Lukas, The nature and social uses of the internet: a qualitative
investigation. J Consum Aff 31 2 (1997), pp. 346–371.
• Mitchell, 1992. V-W Mitchell, Understanding consumers' behavior: can perceived risk theory help?. Manage Decis
30 (1992), pp. 26–31.
• Mitchell, V-W. (1999), “Consumer perceived risk: conceptualisations and models”, European Journal of Marketing,
Vol. 33 Nos 1/2, pp. 163-96. 24
 References
• ONS (2002b), “Internet access: household and individuals”, Office for National Statistics, London.
• Peter, J. and Tarpey, L. (1975) A comparative analysis of three consumers decision strategies. J Consum Res 2 (1975),
pp. 29–37.
• Ranganathan, C., & Ganapathy, S. (2002). Key dimensions of business-to-consumer Web sites. Information &
Management, 39(6), 457-465.
• Swaminathan, Lepkowska-White, and Rao (1999) reported that consumers in their study seemed less concerned about
the security of online transactions.
• Swaminathan, V., Lepkowska-White, E., & Rao, B.P (1999). Browsers or buyers in cyberspace? An investigation of
factors influencing electronic exchange. Journal of Computer-Mediated Communication, 5(2). Retrieved December 22,
2004, from http://www.ascusc.org/jcmc/vol5/issue2/swaminathan.htm
• Schiffman and Kanuk, 1994. LG Schiffman and LL Kanuk. Consumer behavior, Prentice-Hall, Englewood Cliffs (NJ)
(1994).
• Sweeney et al., 1999. JC Sweeney, GN Soutar and LW Johnson, The role of perceived risk in the quality–value
relationship: a study in a retail environment. J Retailing 75 1 (1999), pp. 77–105. Abstract | PDF (1929 K) |
• Teo, T.S.H. and Yu, Y. (2005), “Online buying behavior: a transaction cost economics perspective”, Omega (Oxford), Vol.
33 No. 5, pp. 451-65.
• Tan, S.J. (1999). Strategies for reducing consumers' risk aversion in Internet shopping. Journal of Consumer Marketing,
16(2), 163-180.
• Tan, F.B., & Sutherland, P. (2004). Online consumer trust: A multi-dimensional model. Journal of Electronic Commerce in
Organizations, 2(3), 41-59.
• Taylor, J.W., 1974. The role of risk in consumer behavior. J. Mark. 39 April, pp. 54–60.
• Turban, E., Lee, J., King, D. & Chung, H. (2002) Electronic Commerce: a Managerial Perspective. Prentice Hall, Upper
Saddle River, NJ.
• Vastfjall, D., & Garling, T. (2002). The dimensionality of anticipated affective reactions to risky and certain decision
outcomes. ExperimentalPsychology, 49(3), 228–238.
• Vijayasarathy, L.R., & Jones, J.M (2000). Print and Internet catalog shopping: Assessing attitudes and intentions. Internet
Research, 10(3), 191-202.
• Weiss, T. (March 23, 2004).Feds Shut Down PayPal, AOL Scams. San Francisco, California: PC World.
• Wee, K., Neo, L. & Ramcachandra, R. (2000) Cyberbuying in China, Hong Kong and Singapore. tracking the who, where,
why and what of buying online. International Journal of Retail and DistributionManagement, 28, 307–317.
• Wilson-Jeanselme, M. (2001), “Grocery retailing on the internet: the leaky bucket theory”, European Retail Digest, Vol.
30, pp. 9-12.
• Consumers Fear ID Theft for Online Shopping. http://www.diamondvues.com/2005/11/consumers_fear.html
• www.forrester.com/ER/Press/Release/0,1769,1086,00.html
• WhatDigitalCamera, 2007 Available at :
http://www.whatdigitalcamera.com/news/Survey_reveals_ephobia_in_runup_to_Christmas_spending_spree_news_10131
5.html
25