ABSTRACT
Despite increase in technology and convenience associated with online shopping, the progress of acceptance has been very slow in Ghana. There is a theoretical argument that the perceived fear people associate to technological innovations serves as a barrier for it acceptance. However, in Ghana, perceived fear and online shopping adoption been under researched. The current study examined how different dimensions of consumer perceived risk influence online shopping behaviours in Ghana. A total of 200 online shoppers were conveniently selected from the Accra Metropolis in Greater Accra region of Ghana. Data was collected through cross-sectional survey and analysed using structural equation modelling. Findings showed that participants have been engaging in online shopping behaviours in the last five years, with majority of them shopping online in the last two years. Consumer perceived risk constructs had negative effect on online shopping behaviours. Specifically, financial, privacy and delivery risks had significant negative impact on online shopping behaviour. Perceived financial risk had the greatest effect on online shopping behaviours among the participants. E- word of mouth moderated the effect of perceived risk on online shopping behaviours, such that an increase in e-word of mouth reduces the negative impact of perceived risk on online shopping behaviours. The findings are discussed within the context of promoting online shopping in Ghana.
CHAPTER ONE
INTRODUCTION
Background of the Study
Globalization and the emergence of technological innovation have changed the business landscape. Nowadays, many businesses have sort to rely on information technology when it comes to provision of services that customers need (Arora & Rahul, 2018; Doolin, Dillon, Thompson & Corner, 2005). With the advent of internet and its related activities, organizations are putting in efforts and measures to utilize the benefits that the internet brings with it. In current times, advancement in the internet technology has offered customers wide range of choices, but also an integral way of shopping. For this, businesses have align strategies to fully take advantage of it. One of such is the selling of goods and services online known as online shopping (Chang & Wu, 2012; Faqih, 2013; Masoud, 2013).
Online shopping is becoming an increasing phenomena in the business landscape over the years coupled with its benefits that comes with it such as convenience, prior online experiences (Li & Huang, 2009; Tsai & Yeh, 2010), usage usefulness and other motives such as coverage, delivery of information based products and after sales service (Hsieh & Tsao, 2014; Wu & Ke, 2015), becoming a possible threat to traditional form of shopping (Zendehdel & Paim, 2012). Hence, online shopping removes geographical barriers that traditional brick and mortar firms face. Moreover, firms adapting online platform have the ability to easily customize according to a customer’s preference (Dillon, Buchanan & Al- Otaibi, 2014) which some studies have confirmed to encourage confidence and in the long run leads to an increase in purchase intentions (Tsai & Yeh, 2010). Now, shopping online has become a viable way of purchasing products and is now posing severe competition to traditional shopping channels, in certain product areas (Dillon, et al., 2014).
In Ghana, the overall internet penetration rate increased from forty percent to forty-point seven percent as at the end of August, 2013(Kwarteng & Pilik, 2016). Ghana has witnessed rapid technological changes having impact on people’s lives and commerce (ISSER Report, 2007). Making it possible for organizations to infuse technological innovations into their operations. In recent times many online shopping companies have sprang-up and more developing. However, considering the population of Ghana with over 27 million (Internet World Statistics, 2017) it is expected that the numbers in online shopping should have increased proportionally to the population.
Telecommunication and bank companies have been at the forefront of providing online shopping behaviours in the Ghanaian market. The challenge is that, Ghanaians perceive online shopping as risky due to what happened in 1995 a report by the US Federal Bureau Investigations about fraudulent activities by some internet users which tarnished the image of some Ghanaian online shoppers (Alemma & Ndanu 2005; Olatunji-Osei, 2010). Many people doubt the security of their accounts (Credit Cards) while shopping online, others include high cost, time loss, high levels of electronic fraud, high levels of illiteracy. This generates a situation that imitate the effort to accelerate the growth of online shopping in Ghana (Awiagah et al., 2016; Boateng, et al., 2011).
Upon all the benefits, the advancement of online shopping innovation has been growing steadily, but still has not reached the high growth projections made in the later years of the 1990s (Ariff, Sylvester, Zakuan, Ismail & Ali, 2014). Research has proven that consumers used the internet for information searching than for purchasing purpose (Tandon, Kiran & Sah, 2018). This situation indicates that there have been slow adoption behaviours on the part of consumers. Apart from the slow acceptance of online shopping, people’s trust and adoption of technological innovation continues to be a concern. Some studies in the past has argued that one of the key inhibitors of technological adoption in general and online shopping
in particular is the perceived risks that consumers usually associate with online shopping (Amir& Rizvi, 2017; Xie, 2017). More so, previous studies reported findings to the effect that potential online shoppers perceive the act of shopping online to be very risky transaction and that the perceived risk is capable of affecting their likelihood of purchase (Amir & Rizvi, 2017).
For this reason many scholars assumed that perceived risk among consumers negatively affects their online shopping behaviour (Tamatompol, Pangemanan & Pandowo, 2017), preventing many of them from online shopping. Perceived risks are the beliefs of uncertainty or doubts regarding possible negative consequences (dangers) in using a good or service (Padhi, 2017). Perceived risks that consumers associate with online shopping activities negatively impact online purchasing intention and behaviour (Hassan, Kunz, Pearson & Mohamed, 2006). The online platform, unlike the traditional market, involves uncertainty because the online vendors are not personally known and the products cannot be touched among others (Naiyi, 2004).
Therefore consumers have the fear of conducting transaction online because of the risk of being exploited. Most online consumers consider shopping online as a dangerous activity because unqualified web site infrastructures fail to provide a secure and private transaction environment. The perception of possible risk exposure of online shopping customer is a potential hindrance to the adoption of the service. The risks allied with the online shopping could be, social, financial, functional (performance) or psychological risk (Ariff, et al.., 2014; Arora & Rahul, 2018). Many studies have reported three components of perceived risks that are considered to be particularly important in the adoption of online transactions. These include financial risk, security risk and product risk (Tandon et al.., 2018).
More so, a host of the studies on perceived risks towards online shopping focused mainly on the developed economies in Turkey (Arslan, Geçti, & Zengin, 2013), where connectivity and technological infrastructure is high (Effah, 2016). Comparably, studies from a developing country’s perspective are limited and there is a call for research in this regard (Chowdhury, 2003). Hence, a study in a developing nation such as Ghana will generate new insights. Xie (2017) points out that the digital gap of online adoption among countries is at a widening pace, and more studies such as this current investigation will benefit developing countries in taking full advantage of the benefits since attitudes and behaviour differs. There are difference that exist between Ghana (and other developing economies) and those in developed economies in terms of adoption and uptake of technological innovation (Effah, 2016). The difference encompasses both technological development and facilities provision that influence online shopping environment. Thus it is understandable that risk and risk reduction strategies used by these consumers may differ from that observed in other countries. There is the need to identifying these differences so that it can help online companies improve their online marketing strategies.
Since online shopping activity is a technologically-oriented form of shopping, it make reasonable sense to expect that some consumers eventually perceive a higher sense of risks with regards to transacting business online. On one hand, some consumers still feel uncomfortable to purchase online due to perceived risk. According to Griffin and Viehland, (2010) suggest that online stores put in measures on their online platforms which helps to minimize perceived risk. Currently in Ghana there are many online shopping sites providing shopping services to hundreds of Ghanaians (Olatunji-Osei, 2010), some of the online shops in Ghana are Jumia, Tisu, Tomato, Olx and zoobashop.com. However, what are the potential risks consumers perceive in relation to online shopping and how can online retailers address
these consumer perceived risk dimensions with its underlying issues that has an impact on online shoppers. This study is being conducted in the service industry where technological innovation is very paramount in their operations.
