Proceedings of International Conference on Contemporary Management - 2014 (ICCM - 2014), pp 857-866
CONSUMERS' PERCEIVED SECURITY RISKS IN ONLINE SHOPPING:
A SURVEY STUDY IN SRI LANKA
[Link]
Abstract
Consumers' perceived security risks in online shopping is an important aspects which influence
consumer's buying behavior in online. This paper focuses ten dimensions of consumer perceived
risk such as performance risk, physical risk, financial risk, sauce risk, security risk, delivery risk, time
risk, social risk, psychological risk and privacy risk in Sri Lankan context. Research question and
hypotheses were determined after the wide spectrum of literature review. Structured questionnaire
method used to collect the data and there were 128 respondent participated in this research study.
The results also proved that privacy and security concerns are the main barriers to shopping on the
Internet. The analysis include descriptive analysis, the Pearson correlation analysis and t-test. From
this research study it can be concluded that, the column " importance" the hypotheses such as
financial risk, delivery risk, time risk, social risk, psychological risk and privacy risk has negative effect
on attitudes towards online shopping. On the other hand the column "the chance the risk occur" the
hypotheses such as performance risk, physical risk, financial risk, sauce risk, security risk, delivery
risk, time risk, social risk, psychological risk and psychological risk has negative effective on attitudes
towards online shopping.
Keywords: Security, Risk, Online shopping, Risk dimension
1. INTRODUCTION distant and impersonal nature of the market
E-commerce is defined a subset of stores, the insecurity of using open network
ebusiness in purchasing, selling, and infrastructures for transactions, involvement
exchanging of goods and services over of third parties in the transaction process,
computer networks through which online payment system, and hacker's
transactions or terms of sale are performed threaten for the buyers privacy and monetary
electronically. Basically on-line shopping information. In general the temporal
has certain characteristics than traditional separation between consumers and
shopping such as the massive use of marketers increases fears of web retailer
technology to complete the transaction, the which creates identity uncertainty, and there
Lecturer (Prob.) Management & Information Technology , MIS Unit, Department of Accountancy & Finance
Faculty of Management and Commerce, South Eastern University of Sri Lanka, Oluvil
ilmudeen16@[Link].
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is a concern about the third parties or hackers Highly protected technological
involvement that may threaten consumer's infrastructure is a necessary base and by
privacy and monetary information. itself not sufficient for creating the level of
Consumers in online may fear providing trust needed for natural electronic
credit card details to any commercial Web transactions over the Internet.
provider thus consumers simply do not trust
most Web providers enough to engage in Perceived Risk
exchange relationships connecting money. In a typical purchasing situation, a
In each day millions of consumers surf buyer perceives a certain level of risk which
thousands of e-commerce sites with the influences the choice of a particular brand
purpose of buying products and services. and how to purchase this particular product.
With the immense rate of technological Perceived risk is a key concept in consumer
advancement and globalization, internet behavior that involves consumers
utilization to obtain instant information has experience pre-purchase insecurity as to the
increased tremendously around the world. type and degree of expected loss resulting
(N. U. De Silva and R. Syed). Previous from the purchase and use of a product.
researchers identified various factors which Kaplan L B et al (1974) categorized the
pressure the buyer's online decision making. perceived risk into six category such as
Such research confirmed that “Customer performance risk - refers the chance that a
Trust” plays a key role towards buyer's product bought results in failure to function
decision making process. Web shopping as it expected, Social risk - the chance that
involves a number of concerns of a product bought not satisfied/ disapproval
consumers, including trade fraud, product by the family members or friends,
quality, monetary losses, privacy, Psychological risk the chance that a product
information quality and so on (YE Naiyi results in contradiction with self-image,
(2004). Srinivasan (2004) mentioned that Physical risk refers to the chance that a
acquiring customer trust depends on many product purchased results in personal hurt,
things such as appeal of the Web site, Time risk refers the chance that a purchase
product or service offerings, branding, results in loss of time to buy the product and
quality of service and trusted seals. A recent Overall perceived risk - refers an aggregated
research finding declared that “Any impact of these various factors. From the
purchase decision is at the conjunction of extensive literature survey the following
three factors the value or need for the dimension of consumer perceived risks were
product or service, the quality of the user identified and with their meaning. By
experience, and the potential purchaser's focusing each risk dimension the
trust” (Winch & Joyce, 2006). In this survey questionnaire developed to gather online
study ten perceived risk dimensions which buyers opinion about the importance of each
have important impact on consumer online risk and the chance that risk will occur.
shopping were verified and proposed.
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Table 1 : Consumer Perceived Risk Dimension
Perceived risk
dimension
Definition
Performance risk The product doesn't perform as expected (e.g. quality, size, or defects).
Physical risk The products have a negative effect on the body (quality, material).
Financial risk Potential loss of the current cost as well as additional charges in future
(e.g. possibility product may need to be repaired, be changed, or
difficulty to get money back).
Sauce risk False or fake online information causes that the product purchased online
doesn’t meet the expectations.
Security risk Loss of money if the credit card information is hacked.
Delivery risk Not receiving the product on time, long delivery time, or product being
damaged during the delivery.
Time risk Waste time researching information and purchasing when finally making
a bad purchasing decision.
Social risk The resistant/pressure from the friends or the family
Psychological risk Loss of self -esteem, or disappoint ment from the frustration of not
achieving a buying goal.
Privacy risk Personal information will be collected without user's cons ent when
giving one’s credit card number online or use of cookies and web bugs.
Conceptual Model security risk, delivery risk, time risk, social
The below conceptual model was risk, psychological risk and privacy risk in
used in this research to examine the effect of the perceived risks in online shopping in Sri
the risk dimensions such as performance Lankan context.
risk, physical risk, financial risk, sauce risk,
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Performance risk
Physical risk H1
H2
Financial risk
H3
Sauce risk H4
Security risk H5
Perceived Risks In
H6
Online Shopping
Delivery risk
H7
Time risk
H8
Social risk
H9
Psychological risk H10
Privacy risk
Figure 1: Conceptual Model
H1: The perceived performance risk has a H6: The perceived delivery risk has a
negative influence on consumers' negative influence on consumers'
perceived risks in online shopping. perceived risks in online shopping.
H2: The perceived physical risk has a H7: The perceived time risk has a negative
negative influence on consumers' influence on consumers' perceived
perceived risks in online shopping. risks in online shopping.
H3: The perceived financial risk has a H8: The perceived social risk has a negative
negative influence on consumers' influence on consumers' perceived
perceived risks in online shopping. risks in online shopping.
H4: The perceived sauce risk has a negative H9: The perceived psychological risk has a
influence on consumers' perceived negative influence on consumers'
risks in online shopping. perceived risks in online shopping.
H5: The perceived security risk has a H10: The perceived privacy risk has a
negative influence on consumers' negative influence on consumers'
perceived risks in online shopping. perceived risks in online shopping.
860
2. OBJECTIVE OF THE RESEARCH consumers' lack of acceptance in electronic
This research has the following commerce adoption today is not merely due
objectives such as identify which perceived to the concern on security and privacy of
risk dimension influences the online buyers their personal data, but also lack of trust and
purchasing decision and identify how the reliability of Web vendors. Ramin Azadavar
online buyers perceive the risk in terms of its et al (2011) mentioned that, e-commerce and
importance and the chance that risk occur. online shopping will rely on buyers' how
people interact with computers. Suresh and
3. LITERATURE REVIEW Shashikala (2011) mentioned that, Internet
Electronic commerce is defined as being relatively new channel of purchase,
“any form of business transaction in which consumers perceives risk and electronic
the parties interact electronically rather than commerce is perceived to be more risky than
by physical exchanges or direct physical traditional commerce. Yi Yi Thaw et al
contact" Euro Info Correspondence Centre (2009) indicated that although e-commerce
(2002). Keen et al (2000) stated that a is spreading worldwide, customers are still
working definition of “trust” as when a reluctant to deal with it because of the
customer purchases a product or service security and privacy issues. Further Suresh
from a particular “merchant”, the client has and Shashikala (2011) mentioned that the
a “confidence”, the seller will supply goods major concerns of online shopping are
with adequate quality and fitness for 'security of online payments' and 'privacy of
purpose. Basically in online shopping personal information'.
activities, risk and security have forever
been an area of concern among online 4. RESEARCH DESIGN & METHOD -
consumers. The extensive literature review OLOGY
shows that factors which influence Methodology
consumers' buying decisions can be Structured questionnaire was used
classified in to several aspects such as the to collect the data. The questionnaire was
individual level, personality attributes often developed in a electronic format and usual
play an important role in the process of printed format. The questionnaire's same
purchase decision making. content included in both electronic format
and printed format questionnaire. The
Srinivasan (2004) declared that electronic format of the questionnaire
“Two factors which significantly contribute included check boxes to be checked by the
to the success of e-business thus the trust respondents by consider their answering
people place in the online businesses and easiness and user friendliness. The
how secure they feel in transacting business questionnaire was developed by the
on the Internet”. Godwin J. Udo (2001) researcher and its content were checked by a
mentioned that privacy and security senior academic. Questionnaire included
concerns are the number one reason Web many questions in the aspect of consumer
users are not purchasing over the Web. Yi Yi perceived risk in various dimensions. The
Thaw et al (2009) mentioned that questionnaire includes two sections to
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gather the details from the respondents such 5. RESULTS AND DISCUSSION OF
as the respondent's demographic profile FINDINGS
age, gender, and education background, The below table shows the demographic
experience of online shopping. The second profile of the respondents with their
section gather the details of the different frequency and the percentage.
perceived risk dimensions in terms of their
importance and the risk occurrence. These Table 2 : Demographic statistics of the
dimensions were measured under two respondents
columns such as "importance of the risk" and Gender 89
"chance that the risk occur" Questionnaire Male 39 69.5%
Female 30.5%
included 6 point likert scale. The column " Age Category
importance of the risk" measured from 1- not 15-17 1 .8%
18-20 11 8.6%
important at all and 6 - very important. The 21-23 26 20.3%
column "chance that the risk occur" 24-26 25 19.5%
27-29 20 15.6%
measured from 1 - completely impossible 30-32 8 6.2%
33-35 13 10.2%
and 6 - very possible. This research includes 36-38 9 7.0%
analyses such as descriptive analysis, 39-41 6 4.7%
>42 9 7.0%
correlation analysis and t-test. Education
A/L 30 23.4%
Technical College 2 1.6%
Data Collection High School Diploma 17 13.3%
The electronic and usual printed Under-graduate
Post graduate degree
31
42
24.2%
32.8%
format of the questionnaire issued to Doctoral Degree 6 4.7%
How frequently purchase online
professionals, MBA students, academics more frequently 14 10.9%
and friends who purchase in online. From once a month
more than once a month 16 12.5%
the issued questionnaire, 95 printed format at least once in 6 month
questionnaires and 33 electronic format at least once a year 17 13.3%
questionnaires were received from the 18 14.1%
respondents. 63 49.3%
Data Presentation and Analysis Correlation analysis for the risk
The collected questionnaire were dimensions
entered into the SPSS 16.0 version for the The below table shows the
data analysis. Tabular format of results were developed research hypotheses and the
generated to show the results. Descriptive relationship between their perceived risk
statistics, correlation analysis, t-test, dimensions (independent variables) with the
average score with standard deviation and its perceived risks in online shopping
respective charts were generated to present (dependent variable). The perceived risk
the findings. dimension's two aspects correlation were
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measured such as the perceived risk privacy risk has negative effect on attitudes
dimensions importance and the perceived towards online shopping.
risk dimensions of chance the risk occur
separately calculated. The hypotheses and Table 4 : One-Sample Test
the results are as follows.
Table 3 : Pearson Correlation for the
Perceived Dimension
Perceived risk Pearson Pearson
dimension Correlation Correlation
for for chance
importance of the risk
the risk occur
H1- Performance risk 0.126 -0.025
H2 - Physical risk 0.062 -0.006
H3 - Financial risk -0.079 -0.105
One sample t-test was conduct to know
H4 - Sauce risk 0.081 -0.120
the significance of these factors and results
H5 - Security risk 0.149 -0.042
are show as above. From this research study
H6 - Delivery risk -0.096 -0.089 it can be concluded that, p value (0.000) is
less than the significant level of 0.001 for all
H7 - Time risk -0.075 -0.017
the risk dimension factors. Therefore it can
H8 - Social risk -0.067 0.002
be concluded that all the factors significantly
H9 - Psychological risk -0.006 -0.003 affect consumer's perceived risks towards
H10 - Privacy risk -0.040 -0.188
online shopping at 99.99% confident level.
Risk Dimensions Mean Score and
The hypotheses were tested with at Standard Deviations
0.05 significant level. The results shows that
the column, "importance" the hypotheses
such as H3, H6, H7, H8, H9 and H10 are
significantly supported; thus financial risk,
delivery risk, time risk, social risk,
psychological risk and privacy risk has
negative effect on attitudes towards online
shopping. On the other hand the column "the
chance the risk occur" the hypotheses from
H1 - H10 are significantly supported; thus
performance risk, physical risk, financial Figure 1: Perceived Risk Dimensions
risk, sauce risk, security risk, delivery risk, Importance
time risk, social risk, psychological risk and The above chart shows the average
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score for all perceived risk dimensions for ranked to "a little possible". The standard
the column "importance" from the deviation for this dimensions score lies
respondent answer. Mean scores for all between 0.824 -1.276. Therefore it can be
dimension lies between 4.11 - 5.51. Among concluded that, the perceived risk
the above 10 risk dimension except 3 risk dimensions column "chance that risk will
dimension (such as scores 4.51, 4.11 and occur" were in a kind of possible status
4.82) all other dimension reached score 5. In among respondent. Further the standard
the questionnaire 5 ranked to "important" deviation's most of the values nearing to
and 4 ranked to "a little important". The score 1 standard deviation and since these
standard deviation for this dimensions score values are closer to 1, data were somewhat
lies between 0.774 -1.293. Therefore it can away to their mean score.
be concluded that, the column "importance"
majority of the perceived risk dimensions 6 . L I M I TAT I O N S & F U T U R E
were in a kind of "important" status among RESEARCH AVENUES
respondents. Further the standard This research just addresses about
deviation's most of the values nearing to the perceived risk in online shopping using
score 1 standard deviation and since these the risk dimension. Other than this perceived
values are 1 and closer to 1, data were risk dimension other aspect of purchasing
somewhat away to their mean score. can be considered to determine the
consumer's security risk in online shopping.
The selected respondents (sample size) only
128 by using convenient sampling method.
Therefore a self-selection bias might have
influences the findings of this research and it
may also limit the generalizability of the
findings. There are more rooms to improve
the generalizability of the research findings
since it covered small limited sample size.
This research study did not cover factors
Figure 2 : Perceived Risk Dimensions of like, cultural biases, social, income and
Chance the Risk Occur buying behaviour with the formed research
hypotheses.
The above chart shows the average
score for all perceived risk dimensions for 7. CONCLUSIONS
the column "chance the risk occur" from the The rapid development of IT and the
respondent answer . Mean scores for all extensive accessibility of the Internet have
dimension lies between 4.3 - 5.02. Among facilitated for the popularity of online
the above 10 risk dimension except 1 risk shopping. Understanding people's
dimension (score 4.3) all other dimension perceptions of attitudes towards online risks
are nearing to reach score 5. In the is vital for ecommerce. This research is
questionnaire 5 ranked to "possible" and 4 focusing consumer perceived security risk in
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online shopping over the Internet
specifically targeting on the perceived risk Ellen Garbarinoa, Michal Strahilevitzb, "
dimensions. In general a consumer Gender differences in the perceived
perceives a certain degree of risk in terms of risk of buying online and the effects
brand of a particular product when buying of receiving a site
online. From this research study it can be recommendation", Journal of
concluded that, the column " importance" Business Research 57 (2004) 768
the hypotheses such as financial risk, 775
delivery risk, time risk, social risk,
psychological risk and privacy risk has
negative effect on attitudes towards online Godwin J. Udo (2001)" Privacy and security
shopping. On the other hand the column concerns as major barriers for e-
"the chance the risk occur" the hypotheses commerce: a survey study"
such as performance risk, physical risk, Information Management &
financial risk, sauce risk, security risk, Computer Security 9/4 [2001] 165 -
delivery risk, time risk, social risk, 174
psychological risk and psychological risk
Lingying Zhang, Wojie Tan, Yingcong Xu
has negative effective on attitudes towards
and Genlue Tan " Dimensions of
online shopping.
Consumers' Perceived Risk and
Their Influences on Online
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