WEAKNESSES OF THE THEORIES

The popularity of the Internet worldwide has increased researchers’ interest in studying electronic commerce and consumers’ behaviour. Most studies in the literature review in Chapter 3 focused on constructs that affect customers’ intention to use and adopt online shopping. These studies have explored how consumers view e-shopping, with more emphasis on the antecedents of such consumer intentions and adoption.

Because most consumers now consider the technology standard, companies have begun to realize the power of the Internet for expanding their businesses worldwide. Online shopping as a new channel for doing business in B2C segments is becoming popular across all countries. With the digital economy, companies have also become vulnerable to competitors that are just a click away (see Cheung, Chan, and Limayem, 2005).

The popularity of Internet shopping is not limited to any particular business sector but rather is apparent in all types of businesses. Consider the airline industry in general as an example: e-ticketing is becoming the norm for travellers throughout the world. Furthermore, e-ticketing helps airlines meet the requirements of the International Air Transportation Association (IATA), which demanded that by January 1, 2008, all airlines and travellers would be able to enjoy the usefulness and convenience of online ticketing for easier and hassle-free travel (Arab News Newspaper, 2007).

As described in Chapter 1, one e-ticket produces a saving of $9 per transaction compared with a paper ticket. For example, considering that Saudi Arabian Airlines carries approximately 16 million passengers annually, the airlines would be able to save $17 million per year and provide better and convenient services to its customers (Alwatan Newspaper, 2006).

New regulations and factors emphasize what Cheung et al. (2005) call environmental factors or structural influences, including market-related issues such as uncertainty, competition, and concentration, as well as national and international issues such as legal structure, trade restrictions, and culture. Markus and Soh (2002) also define structural influences as the ‘physical, social, and electronic arrangements that shape e-commerce business models and influence individual and organizational use of the Internet.’

Local government regulations, national and international legal issues, and youthful and demanding customers combine to force businesses to use e-business. Therefore, companies should work to build long, sustainable relationships with their online consumers and focus beyond the first step of online adoption. However, the lack of research into’ and understanding of, the capabilities of the digital revolution in the Saudi market might prevent e-businesses from promoting e-shopping, thus causing customers to defect.

Most theories emphasize aspects that affect the intention and adoption of online shopping, ignoring the important aspects that lead to continuance, particular for Saudi Arabia where such research is virtually non-existent, especially in the e-shopping context. Previous research suggests that many factors can build a foundation for constructing a framework of online consumer behaviour. Douglas, Morrin, and Craig (1994) suggest researchers should develop theoretical and conceptual frameworks by integrating different constructs that come from varied research traditions and disciplines. However, few studies attempt to investigate the impact of the key characteristics on e-shopping continuance intentions. Thus, factors such as web site quality, subjective norms, usefulness, trust, enjoyment, online loyalty incentives, and satisfaction are under-researched and demand more investigation.

Furthermore, globalization continues to drive the rapid growth of international trade, global corporations, and non-local consumption alternatives (Alden et al., 2006; Holt et al., 2004), and advances in e-commerce diminish trade boundaries. E-commerce and e-shopping create opportunities for businesses to reach out to consumers globally and directly. In turn, business

and social science research now focuses specifically on cross-national and cross-cultural Internet marketing (Griffith et al., 2006).

The Internet has changed how businesses and customers customize, distribute, and consume products. Its low cost gives both businesses and consumers a new and powerful channel for information and communication. Business-to-consumer online sales in the United States grew by 120% between 1998 and 1999 (Shop.org and Boston Consulting Group, 2000). According to a UK payment association, the number of consumers who shop online has increased by more than 157%, from 11 million in 2001 to more than 28 million in 2006 (cited in Alsajjan and Dennis, 2009). E-commerce transactions also are growing in the Middle East (19.5 million Internet users) and the Gulf States. In 2007, Internet sales increased to more than $1.2 billion worldwide and are expected to continue to rise (World Internet Users and Population Stats, 2007).

Online customer retention is particularly difficult. Modern customers demand that their needs be met immediately, perfectly, and for free, and they are empowered with more information to make decisions (Bhattacherjee, 2001b; Crego and Schiffrin, 1995). Generally, of course, consumers now have various online and offline options from which to choose, and without a compelling reason to choose one retailer over another, they experiment or rotate purchases among multiple firms (Bhattacherjee, 2001b; Crego and Schiffrin, 1995). Within this growing marketplace we focus this research on a single issue. Despite impressive online purchasing growth rates, compelling evidence indicates that many consumers who search different online retail sites abandon their purchase intentions. How to persuade customer repurchase remains a concern for e-commerce vendors (Johnson and Hult, 2008). It is stated that only a small minority of website visitors (about 1%) proceeds to make purchases (Gupta and Kim, 2007). This research is aimed to help online businesses understand which factors encourage consumers to have continuance intention behaviour toward e-shopping. Such continuance is critical, because acquiring new customers may cost as much as five times more than retaining existing ones (Bhattacherjee, 2001b; Crego and Schiffrin, 1995; Petrissans, 1999), given the reasonably high cost of acquiring new customers and the economic value of reliable customers (Reichheld and Schefter, 2000). Raising the number of reliable costumers by as slight as 5% can raise profitability by 30-85%, depending upon the business (Reicheld and Schefter, 2000). Therefore, research into online continuance shopping has recently emerged as an important issue (e.g., Bhattacherjee, 2001a; Kim and Malhotra, 2005; Kim, Malhotra, and Narasimhan, 2005; Liao, Chen, and Yen, 2007; Limayem, Hirt, and Cheung, 2007).

Companies should think strategically and use the savings they earn through their e-business efficiently, while also raising the switching costs to retain customers. E-retailers can either remember details about the customer that reduce the effort customers must exert in future transactions or learn more about the customer to tailor the future interactions to the customer’s specific needs (Straub and Watson, 2001). Better product quality, lower prices, better services, and outcome value all help build sustainable relationships with online customers.

Theoretical explanations of online shopping intentions consider several factors. Rogers (1995) suggests that consumers re-evaluate their acceptance decisions during the final confirmation stage and decide whether to continue. Continuance may be an extension of acceptance behaviour that co-varies with acceptance (e.g., Bhattercherjee, 2001a; Davis et al., 1989; Karahanna et al., 1999). We adopt the extended expectation confirmation theory (ECT; Bhattacherjee, 2001b) and the extended technology acceptance model (TAM; Davis et al. 1989) as a theoretical basis, integrating ECT from consumer behaviour literature to propose a model of e-shopping continuance intentions, similar to the way that the TAM adapts the theory of reasoned action (TRA) from social psychology to postulate a model of technology acceptance.

The TAM, as explicated by Davis et al. (1992) and Gefen et al. (2003), and the ECT (Bhattacherjee, 2001a; Oliver 1980) both have been used widely in research in the industrialized world, but they are less commonly applied to Saudi context, which is part of the developing countries. Moreover, the research contribution is potentially valuable, as the TAM stops at intention and does not investigate continuance intentions or behaviour. Moreover, the cross-cultural aspect to our contribution is also relevant, as both models have been used widely in research in the industrialized world.

Furthermore, no widely acceptable definition for e-commerce exists. Coppel (2000) considers it business over the Internet, which includes both business-to-business and business-to- consumer markets. Increasingly, commercial websites seek to provide useful product information in order to attract potential online shoppers (Totty, 2001). Keeney (1999) pointed out that measuring only actual purchases may be too narrow a scope when assessing the online shopping activity of consumers. He contended that gathering product information is a second aspect of the online shopping activity. One recent e-commerce study (Chen et al., 2002) adopted this two-fold definition. The author of this research also employs a similar

definition of online shopping in order to get a more complete picture of continuance intention to online shopping. Online shopping in this study is a combination of both the purchase and the product information search activities. For the purpose of this research, we study the following terms which are frequently used interchangeably: E-shopping, electronic shopping, online shopping, and Internet shopping. We propose a new, comprehensive definition: “All these activities include searching, buying, and selling products and services through the Internet”. Additionally, continuance intention in this study means “a specific desire to continue an e-shopping relationship with a service or product provider”.

In recent years, the Internet has grown to include a wider range of potential commercial activities and information exchanges, such as the transaction and exchange of information between government agencies, governments and businesses, businesses and consumers, and among consumers. The author focuses mainly on the business-to-consumer (B2C) arena, which has been the source of most online progress and development. The author generalizes the two-fold definition; rather than evaluating shopping at a particular site (as in Chen et al., 2002); respondents were asked to generalize all online shopping activities.

In Saudi Arabia approximately 60% of the 24,069,943 people are younger than 30 years of age, and they are almost equally split between men (51%) and women (49%) (The Middle East Statistics, 2007). Therefore, the nearly equal gender split in the population and regional influence could be a key contributor to behavioural differences in online shopping across Saudi culture and determine whether e-shopping intentions will lead to continuance acceptance.

Previous research finds, in particular, that gender differences significantly affect new technology decision-making processes (Van Slyke et al., 2002; Venkatesh et al., 2000). Venkatesh et al. (2000) report that women tend to accept information technology when others have high opinions of it and are more influenced by ease of use. Men rely more on their evaluations of the usefulness of the technology. However, in many cultures, women represent the primary decision makers in families and households’. Greater e-commerce exposure and decision-making power may imply that males and females can attain greater satisfaction from online shopping, especially as the Internet is one of the main environments for young people to play, work, learn and communicate (Alreck and Settle 2002; Spero and Stone 2004). Saudi Arabia has a population of 25 million. Clearly young people’s behaviour is of special importance to Saudi trade.

The dearth of literature regarding Arabic countries in general and Saudi Arabia in particular prompted us to pursue this investigation in a country with a young and growing population. Looking to Saudi Arabia, no previous research considers Internet shopping or, specifically, continuance intentions toward online shopping, nor do studies address differences in online shopping behaviour in Saudi Arabia according to gender, education, geographical locations, high and low online spending, and experienced and inexperienced online shoppers. The aim of this study is to fill this research gap. The main objective, therefore, is to establish any overarching patterns of the e-shopping process, as a whole, that drives customer continuance intention.