Consumers’ Perception towards Online Shopping: A case study on Malaysian Market

1. Introduction
The emergence of the internet has created opportunities for firms to stay competitive by
providing customers with a convenient, faster and cheaper way to make purchases. JARING
was the first to introduce internet service in Malaysia back in 1990 (Harn el at., 2006). A
study by International Data Corporation (2005) indicated that the future of online shopping in
Malaysia is bright and promising.
The Government of Malaysia introduced business e-commerce in early 1998 (Kamarohim,
2003).Therefore, the attitudinal effect of online shopping by the use of the internet has
expected little direct research attentions so far. Electronic commerce has become more
important because marketer has some basis to market their product and services to the
internet channel. It is more effectively and profitability marketer can serve their customer if
they concern and understand their customer needs and wants. As an illustration, it is
important to investigate the perception of online shoppers and products offered in order to
present as a major player in Malaysia online shopping market.

1. Literature Review
Nowadays, internet is not only for platform in networking, however, it also as a medium to
bond together for almost businesses with its customers (Delafrooz et al., 2009). E-commerce
is also called online shopping. It means running the whole process of business electronically
using the internet (Chaffey et al., 2006). Online Shopping is a process where customers go
through when they decide to purchase via the internet. For online shopping retailer, in order
to ensure the achievement of business e-commerce, it is significant to establish customer
needs and wants (Chaffey et al., 2006).
Furthermore, online shopping is a new business strategy in Asia country (MasterCard, 2008).
According to research done by ACNielsen, total of internet user is increasing time by time,
627 million people in the world was used internet as a medium to shopping (ACNielsen,
2007). Research done by Joines et al. (2003) and Houque et al. (2006) had come out with the
same judgment which is the internet user has continuously growing and give impact to the
online purchase on the internet. This result shows an opportunity arrived from the technology
factor and can be as a benefit to company if they know how to use these chances.
The main objective of this research is to examine consumers’ perception towards online
shopping with a specific focus on convenience and security on consumer market in Malaysia.
Studies of this nature conducted quite extensively in developed countries but in a developing
country context is very limited. This gap was addressed with an empirical case study
conducted in Malaysia. Despite high potential of online shopping in Malaysia, there is still
lack of convenience and security issues on consumer market.
From several reviews on research paper (Changchit, 2006; Delafrooz et al., 2009; Lee et al.,
2010) many businesses has decided to penetrate internet commerce market, and yet, the
achievement of particular business is different base on how they attract and convince their
prospect. In further detail, research from Forrester (2006) figured out e-commerce market
will attain $228 billion in 2007, and increasing $30 billion for every year until 2009. The
market also will have accounted for $316 billion in sales by 2010 for retail sales. It mean,
from the internet opportunity, entire online shopping industry has drastic changes and can
give a huge profit for a marketer.
Huang et al. (2011) suggest self- attitude and past experience give a significant impact in
influencing buying decision process. Image interactive technology and experimenting
appearance positively impact on buying attitude as well as decrease perceived risk toward the
e-commerce retailer (Lee et al., 2010). Other research done by Pentina et al. (2011)
confirmed the increasing sales and visitor for online store based on the mediating of browser
satisfaction.
Internet retailing is one of the fastest growing sectors in the UK, and is having significant
effects on traditional retail provision (Gunawan et al., 2008). According to Interactive Media
Retail Group, internet sales have continued to rise from £14.5 billion in 2004 to around £26
billion, in 2006, which represents 10 per cent of total retail sales in the UK (Gunawan et al.,
2008). The actual number of internet shoppers has also grown; in 2006, approximately 26
million, over half of UK adults, bought goods via the internet (Gunawan et al., 2008). In the
case of China, the development of e-commerce faces several difficulties (Yu, 2006). Internet
penetration among households in China lags far behind developed countries because the
access price is out of reach for many. The cost of access is much higher than it is in the USA.
A study by International Data Corporation Asia-Pacific, indicates that the future forecast for
online shopping in Malaysia looks bright and promising (Chua et al., 2006). This is plausibly
because internet commerce is still relatively new and there are no hard and fast rules to
follow, with no tried and tested business model to imitate (Chua et al., 2006). It is important
for Malaysian firms to have a good understanding of the marketplace for their products and
their target customers before engaging in online retailing (Chua et al., 2006).

In Malaysia, online shopping gets more attention from customers. However, each of them has
different perception toward purchasing via the internet. This situation occurs because
purchasing from internet give many benefits to customers such as shopping from their place;
reduce cost of transportation, wide variety of choices and so on.
Online shoppers try and adopt internet shopping environment base on convenience of the
website retailer (Lee et al., 2010). They concluded convenience of online shopping include
five main issues which are time spent, flexibility, information opportunities and less effort of
going to physical shop.
Madleberger (2006) recent study has shown that convenience is the main factor to influence
shopper made online purchased. Therefore, consumer was asked about why they purchased
through the internet, and researchers found that convenience was the key point of that
problem statement (Madleberger, 2006; Chen et al., 2002; Torkzadeh et al., 2002; Becerra et
al., 2011). However, other researcher concludes that convenience is not a big issue in
stimulate customer decision making rather than risk perception (Chang et al., 2008).
Security is a privacy policy to protect such personal information from being used by other
party which include inside or outside the organizations (Flaviaan et al., 2006). Security
concern is also one of the key points that internet users were not purchased over the e-
commerce website (Flaviaan et al., 2006). Recently, as many third party companies provide
security software and maintenance to the e-commerce website to protect those websites from
becomes a hacker’s victim, online marketer try to provide secure service to their customer in
order to decrease risk perception from the customer.
Online marketers try to provide information of internet security and focused on potential risks
to internet user who used credit card to make online purchases, payment scams are major
treat to electronic merchants (Liu et al., 2005).
In Malaysia, however, despite the phenomenal growth in online retailing, a clear
understanding of the facilitators of online purchase intention of customers is still lacking due
largely to little research done within the Malaysia context. It is important for researchers and
practitioners especially those who run/manage online businesses to be aware of the factors
that encourage customers to repurchase from an online store.
Therefore, this paper aims to examine to find out consumers’ perception towards online
shopping with a specific focus on convenience and security on consumer market in Malaysia.
 3. Originality, Research Objectives and Hypothesis

The main objective of this case study is to examine consumers’ perception towards online
shopping in Malaysian market. It shows a big gap between Malaysia e-commerce market and
western countries (Changchit, 2006; Delafrooz et al., 2009; Lee et al., 2010) such as Europe
where online shopping in Malaysia is not comprehensive compare to those countries. By
looking at this gap, this study attempts to find the key point of reason why people purchase
on the internet and what the key factors influence them to make purchases.
In Malaysia, online shopping gets more attention from customers (Huang et al., 2006).
However, each of them has different perception toward purchasing via the internet. This
situation occurs because purchasing from internet give many benefits to customers such as
shopping from their place, reduce cost of transportation, wide variety of choices and so on
(Changchit, 2006; Delafrooz et al., 2009; Lee et al., 2010).
The objective for this research is:

1) To examine the factors why people perceived online shopping.

2) To investigate the relationship between antecedents (convenience and safety) and
buying decision process over the internet.

Hypothesis is a presumption which is provisionally accepted in order to expose certain

problem and to present assistance for further research and study (Saunders et al., 2007). Each
hypothesis can be verified as correct or wrong. Based on the literature review, the researcher
proposes following hypotheses;

H1. Convenience has a positive influence on customer online shopping intentions

H2. Security has a positive influence on customer online shopping intentions

4. Methodology:
The research methods include the survey questionnaire design, the sample and methods of
data analysis.
The questionnaire for this study separated into two segments thus section A and B. Section A
consists on the demographic profile such as gender, age, marital status, income, races and
employment status. Section B is made up with main research questions.
Introduction, literature review and this section is focused on the key that theoretical
framework namely convenience and security. Convenience was adapted from (Lee et al.,
2010; Chang et al., 2008; Madleberger, 2006; Chen et al., 2002; Torkzadeh et al., 2002;
Becerra et al., 2011), security was adapted from (Flaviaan et al., 2006; Liu et al., 2005). The
following figure is about hypotheses and its related questions.

Figure 1: Relationship between variables and hypotheses

Figure 2 explains about scale measurements. The extent of each variable was based on five-
point Likert scales which scale points from 1-strongly disagree to 5-strongly agree. Several
researchers have used the same measurement in their paper because the reliability of Likert
scales tends to be good and it gives a wide choices answer to respondents (Houque et al.,
2006; Changchit, 2006; Goldsmith et al., 2004).

Figure 2: Scale measurement

The main independent variables in this case study were responding to the various theoretical
framework of the buying decision process as shown in figure 3. It means all the antecedent in
above figure is independent variables that can affect on consumer decision making. However,
dependent variable is referred to the customer decision whether buy the product through the
internet or perceive physical shop.
The sample method for this research is based on snowball sampling method. This was to
ensure that the participants have used the internet to purchase a product or service. Since, this
case study was interested in participants’ willingness and ability to repurchase
products/services online, it was considered reasonable to collect data from those who have
prior experience in buying products or services online in line with the key informant
technique (Ndubisi, 2011). The key informant method was used and only customers with
online shopping experience were requested to respond to the questions.

Key informants are viewed as appropriate respondents if appropriate selection procedures are
used (John and Reve, 1982). Thus, using guidelines on selecting key respondents from
previous research (Campbell, 1955), key informants were screened and chosen on the basis of
their knowledge of the research issues, their experience with online shopping, and willingness
to respond.
A sample size of 40 people was used for this research. This study used a self-administered
survey technique to distribute the questionnaire to acquire respondent responses to the
survey. The significance method used in order to get appropriate respondents to answer the
question. The respondents screened and chosen on the basis of their knowledge of the related
issues; this is based on guidelines to select key respondents who show willingness to give the
respond (John and Reve, 1982).

Figure 3: Reliability Test for Each Variable

Figure 3 presents reliability test for each variables in the questionnaire. Overall reliability of
scales adopted in this survey questionnaire was 0.869 which shows very good consistency
among the scales (Law and Bai, 2008). However, the reliability of individual variables seems
different from each other and varied from 0.810 to 0.928. Then, this survey question can be
reliable to examine what is the key factor of online shopping intentions.
The relationship between variables and buying decision over the internet, correlation analysis
was applied to predict the correlation among them.
5. Findings, Analysis and Discussion:

5.1 Demographic Profile of the Respondent

Figure 4: Respondents profile

The demographic characteristics of the study are presented in figure 4. The female
respondents have the highest frequency (57.5%) while male respondents are only 42.5%. It
can be clarified that there might be female respondent were willing to participate in the
survey. This result meets the research done by Kamarohim (2003) and Lee et al. (2010) that
female customers are more likely to purchase online compare to male respondents. As for
marital status characteristics, both single and married have the same frequency which 50%.
For marital status, it does not match with research done by Lee et al. (2010) that they
concluded more respondents who are single (60.8%) while the rest is married.
Next is age variable. From the findings, it shows respondents who are below 20 have the
highest frequency (27.5%), 22.5% for both group 20-30 and 31-40, 15% for group 41-50,
however the group above 50 has the lowest frequency (12.5%). This can be concluded
teenagers are the major group who involve in online shopping. Lee et al. (2010) has different
argument that group age 20-30 is has made major involvement in online shopping activity.
Then, for the race variable, Malay respondents are the highest (47.5%) who participate in this
survey, Chinese respondents represent 25%, Indian respondents are 17.5% while follow by
Other only 10%. Analysis done by Kamarohim (2003) shows that 80.6% from 160
respondents were Malay, 11.9% were Chinese, 5.0% were Indian and the rest of them were
Other. So this paper matches with latter researcher in terms of race/ethnicity.
The next demographic analysis is education levels. It can be summarized that respondent who
have at least SPM/O-level were 55% from 40 respondents, 22.5% respondents have
STPM/A-level, 7.5% for Diploma and another 15% were Postgraduate such as Master Degree
or PhD. Respondents who have monthly income below RM 2,000 represents 45% of the
respondents, 27.5% respondents who have monthly income RM 2,000 to RM 4,000, 20% of
respondents belong to group RM 6,001 to RM 8,000, 5% respondents is in the group of RM
4,001 to RM 6,000, while the lowest percentage is the group RM 8,001 to RM 10,000 (2.5%).
Lee et al. (2010) have different analysis where respondents who belong to range RM 2,000 to
RM 4,000 have the highest frequency.
(57.5%) follow by student (27.5%), and then self-employed respondents are 10% of the
respondents while homemaker respondents are only 5%. Kamarohim (2003) and Lee et al.
(2010) have come out with the same analysis where employed respondents are the highest
group who involve in online shopping activity.

5.2 Correlation Analysis

Correlation analysis was used to analyse the relationship between all variables (Saunders et
al., 2007).

Figure 5: Correlation Analysis between Antecedents and Online Shopping Intentions

Seven variables were analysed by using correlation analysis. 44 correlation coefficients were
produced as shown in the figure 7. These values point out the result for hypotheses which
have been determined in the literature review section. The following summary explained the
hypotheses results. As for conclusion, correlation analysis has summarized as following
table:

Figure 6: Correlation analysis summary

Figure 6 illustrates the relationship between variables and online shopping intentions. From
the summary, it can be concluded that price is the most correlated factor with online shopping
intentions. The value is 0.551 which signified a strong positive relationship. From this
findings, it can be summarized that customer will consider the convenience and security
before involve in online shopping. They perceived online shopping because it is easy to make
comparison and search for a discounted price.

Analysis of Convenience and Online Shopping Intentions:

As presented in the correlation figure, the value between convenience factors and online
shopping intentions is 0.488. It means there is a weak relationship between convenience and
online shopping intentions. This finding confirmed that hypothesis is accepted and it matches
with Lee et al. (2010), Medleberger (2006) and Chen et al. (2002). Convenience is a
significant factor why customer perceives online shopping.
Analysis of Security and Online Shopping Intentions:
The correlation between security concern and online shopping intentions is 0.225 which
explains a weak positive relationship between the variables. The hypothesis for security and
online shopping intentions is accepted. This analysis agrees with Flaviaan et al. (2006) and
Liu et al. (2005). They conclude that such securities on the website would affect on customer
purchase behavior.

6. Conclusion
This case study contributes to addressing the limited research conducted in Malaysia. The
findings test variables established in developed countries using Malaysian sample to find out
how these factors influence consumers perception towards online shopping.
The findings of this case study suggest that global companies could find high potential
market where internet users are growing high among the population. In addition, findings
also suggest that consumers in Malaysia have intentions to purchase from the online if the
market is more convenient and secure. Such opportunities for global companies are prevalent
while domestic companies facing difficulties in setting up online business. Therefore, global
companies could achieve competitiveness through early entering advantage into Malaysian
market.
It is expected that a further study could include the following: firstly, by employing a larger
sample size using stratified random sampling. Using enlarge stratified sampling across the
population would enhance the generalisation of the hypothesis. Secondly, an exploratory
factor analysis could be used to analysis the interrelationships among variables into few
dominant factors. Finally, further studies could explore additional antecedents of online
shopping in other developing country context.

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Appendices

Figure 1: Relationship between variables and hypotheses

Variables Questions

Consumer demographic characteristics Demography 1-7

Online shopping intentions Attitude 8-10

H1. Price perception will have a positive influence Price 11-13

on customer online shopping intentions
H2. Convenience will have a positive influence on Convenience 14-16
customer online shopping intentions
H3. Security will have a positive influence on Security 17-19
customer online shopping intentions
H4. Risk will have a positive influence on Risk 20-22
customer online shopping intentions
H5. Shopping experience will have a positive Shopping 23-25
influence on customer online shopping intentions experience
H6. Time will have a positive influence on Time 26-28
customer online shopping intentions

Figure 2: Scale measurement

 Figure 3: Reliability Test for Each Variable
Component Cronbach's Alpha
Price .909
Convenience .884
Security .865
Risk .909
Shopping_Experience .810
Time .928
Online_Shopping_Intentions .782
Average .869

Figure 4: Respondents profile

Percentage
Items Categories Frequency (%)
Gender Male 17 42.5
Female 23 57.5
40 100
Marital Status Single 20 50
Married 20 50
40 100
Age Below 20 11 27.5
20-30 9 22.5
31-40 9 22.5
41-50 6 15
Above 50 5 12.5
40 100
Race Malay 19 47.5
Chinese 10 25
Indian 7 17.5
Other 4 10
40 100
Education Level SPM/O-level 22 55
STPM/A-level 9 22.5
Diploma 3 7.5
Postgraduate 6 15
40 100
Monthly Income Below RM 2,000 18 45
RM 2,000 to RM 11 27.5
4,000
RM 4,001 to RM 2 5
 6,000
RM 6,001 to RM 8 20
8,000
RM 8,001 to RM 1 2.5
10,00
40 100
Job Status Employed 23 57.5
Self-employed 4 10
Homemaker 2 5
Student 11 27.5
40 100

Figure 5: Correlation Analysis between Antecedents and Online Shopping Intentions

Correlations
Online_Sho
Convenienc Shopping_ pping_Inten
Price e Security Risk Experience Time tions
Price 1 .825 .610 .671 .691 .530 .551
.000 .000 .000 .000 .000 .000
Convenience .825 1 .560 .500 .644 .643 .488
.000 .000 .001 .000 .000 .001
Security .610 .560 1 .890 .944 .797 .225
.000 .000 .000 .000 .000 .162
Risk .671 .500 .890 1 .813 .746 .269
.000 .001 .000 .000 .000 .093
Shopping _Experience .691 .644 .944 .813 1 .658 .324
.000 .000 .000 .000 .000 .041
Time .530 .643 .797 .746 .658 1 .117
.000 .000 .000 .000 .000 .473
Online_Sho pping_Intenti .551 .488 .225 .269 .324 .117 1
ons .000 .001 .162 .093 .041 .473
**. Correlation is significant at the 0.01 level (2-tailed)
*. Correlation is significant at the 0.005 level (2-tailed)
a. Listwise N=40

Figure 6: Correlation analysis summary

Hypotheses Result

H1. Convenience will have a positive influence on Accepted

customer online shopping intentions

H2. Security will have a positive influence on Accepted

customer online shopping intentions