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Exploratory study of the adoption of online shopping in Singapore Lee Pek Lin Pearline A thesis submitted in partial fulfilment of the requirements for the degree of Masters by Research Queensland University of Technology Faculty ofBusiness 2003 Acknowledgements Sincere thanks to Professor Nell Arnold, who gave ·me much support and advice. Her dedication and great knowledge as a researcher was invaluable. Her patience and sincerity in helping me learn is remarkable and is greatly appreciated. In addition, this study would not be possible without the love and support from my family. Their confidence and faith in me gave me courage and determination. Special thanks to Adam Johns, for his time and efforts despite a busy schedule to provide assistance to this study. Lastly, many thanks to the staff from the Faculty of Business and to all at the research office for their kind friendship and assistance. CONTENT PAGE CONTENTS· PAGE NO. Chapter 1 INTRODUCTION 1) Internet 1 1.1) Research Objective 3 1.2) Research Background 4 1.3) Literature Review 7 1.4) Research Framework 8 1.5) Contribution of Research 10 1.6) Research Design 12 Chapter 2 LITERATURE REVIEW 2) Singapore 15 2.1) Singapore Internet Users 19 2.2) Infocomm Literacy in Singapore 25 2.3) Singapore Government 27 2.4) Singapore Telecommunication Infrastructure 33 2.5) Singapore Retail Shopping Scene 35 2.6) Singapore Culture 37 2.7) Credit Card Ownership 43 2.8) Innovations 45 2.8.1) Technological Innovation 45 2.9) Innovation and Adopter Categories 47 2.10) Consumer Innovativeness 49 2.11) Internet as an Innovation 51 2.12) Innovation-Decision Process 52 2.13) Innovation and Culture 53 2.14) Introduction of Internet 57 2.15) Internet Users 57 2.16) Online Segmentation 58 2.17) Online Activities 60 2.17.1) Online Activities - Communication 62 - Information 64 - Online shopping 65 2.18) Online Shopping 67 2.19) Barriers to online shopping 74 2.20) Perceived risk and de-motivators 75 2.21) Security issues 76 2.22) Privacy Issues 77 2.23) Theoretical Framework 80 2.24) Internet E-business 81 Chapter 3 RESEARCH METHODOLOGY 3) Introduction 83 3.1) Methodology 84 3.2) Sample 89 3.3) Interview Procedure 91 3.4) Recording ofData 94 3.5) Research Assistant or Second Party Recorder 97 3.6) Ethics 98 3.7) Research Tools 99 3.8) Interview Session 100 3.9) Data Analysis 102 3.10) Limitation of study 104 3.11) Delimitation of Study 106 3.12) Summary 106 Chapter4 PRESENTATION OF FINDINGS AND ANALYSIS 4.1 Question 1 108 Analysis 109 Question 2 111 Analysis 112 Question 3a 114 Analysis 115 Question 3b 116 Analysis 117 Question 4a 119 Analysis 120 Question 4b 122 Analysis 123 Question 5 124 Analysis 125 Question 6 127 Analysis 128 Question 7 130 Analysis 131 Question 8 133 Analysis 134 Question 9 135 Analysis 136 Question 10 138 Analysis 138 4.2) Unique Findings 139 4.2.1) Role of Government 139 4.2.2) Generation Gap 141 4.2.3) Culture 144 4.2.4) Perceived Risk 147 Chapter 5- SUMMARY AND CONCLUSION 5) Introduction 149 5.1) Summary 150 5.1.1) Adoption ofthe Internet in Singapore 152 Characteristics of Innovation 152 Innovation-Decision Process 155 Adoption of Innovation 156 5.1.2) Adoption of online shopping in Singapore 158 Introduction 158 Singapore 158 Adoption of online shopping 159 Unique finding 160 5.2) Main themes to non-adoption of online shopping 162 5.3) Burst of dot com 166 5.4) Comparative analysis between offline shopping and online shopping 167 with data obtained from the Interview session 5.5) Recommendation for future adoption of online shopping 169 Adoption of online activities 170 Benefits of online shopping- savings in time 172 Improvement ofTechnology 175 Change Agents 175 5.6) Conclusion 176 5.7) Recommendation for further research 179 FIGURES Figure 1 Developed for the purpose of this study 8 Figure 2 Long Qualitative Interview: Four-Part Method oflnquiry 12 Figure 3 Literate Resident Population aged 15 years and over 17 by languages literate Figure 4 Highest qualification attained for age groups 25-54 years 18 Figure 5 Main reasons for not owning home computers 20 Figure 6 Awareness and Uses oflntemet 22 Figure 7 Main reason for not shopping/buying online 24 Figure 8 National IT Plan 28 Figure 9 Four IT Policy Regimes 29 Figure 10 The Role of Government 31 Figure 11 HDB planning standards of retail facilities 35 Figure 12 The web of unique influences on Singaporean culture 41 Figure 13 The Technology Adoption Life Cycle 47 Figure 14 Consumer Innovativeness 49 Figure 15 Previous studies' conclusions on cultural influences on innovation 55 Figure 16 Developed for the purpose of this study 60 Figure 17 Consumer decision-making process 65 Figure 18 The customer life cycle from Introduction to Loyalty 72 Figure 19 Adoption and diffusion process model 80 Figure 20 E-business across the enterprise 81 Figure 21 Qualitative versus quantitative research 85 Figure 22 Components of Data Analysis: Interactive Model 102 Figure 23 Developed from this research 167 Figure 24 Developed from this research 170 Figure 25a Developed from this research 172 Figure 25b Developed from this research 173 TABLES Table 1 108 Table 2 111 Table 3 114 Table 4 116 Table 5 119 Table 6 122 Table 7 124 Table 8 127 Table 9 130 Table 10 133 Table 11 135 Table 12 138 REFERENCES APPENDIX Appendix 1 Letter to Interviewees Appendix 2 Interview Questions Abstract This paper explores the adoption of Internet and online activities amongst Singapore users. The Internet has grown phenomenally in terms ofsignificance and importance since its introduction. Usage of Information Technology is making its impact on both the conduct of businesses and consumer behaviours. Research analysts predict that Information Technology usage in Asia will increase and web-users will outnumber U.S by 2005. Growth of the Internet is attributed to the high usage of electronic mails (e-mails). Online shopping is an activity that can be conducted with the use ofthe Internet. However, this activity is more complex than the use ofe-mail. Online shopping has received much attention by consumers in U.S and Europe leading to an increase in research conducted. Factors identified from the above studies may not imply to the case of Singapore due to differences in culture. A lack of research in Asia, leads to a need to identifY factors that will influence the adoption of online shopping behaviour in Singapore. Singapore is a developed country and has excellent information infrastructure. This infrastructure is perceived to have contributed significantly to a high penetration rate of the Internet in Singapore. The 2000 consensus on household's usage of the Internet in Singapore showed that communication is the main activity among Internet users. An interesting finding from this survey revealed that the awareness level of online shopping among users was at 81.1 percent but usage was only at 16.2 percent. This gap was the largest amongst other activities measured. Exploration of factors leading to adoption or non-adoption in the case of Singapore will be identified to provide a better understanding ofonline shopping behaviour in Singapore. An exploratory study consisting of personal interviews with experts in the field will be used to investigate cause of adoption of the Internet as well as the gap existing between awareness level and adoption of online shopping. These 15 experts are from the fields of e-commerce, educators and the media. Interview data will be analysed and compared between groups of perceptions amongst these experts. Findings will show differences and similarities of perceptions between groups of factors that are motivating and de-motivating adoption. In addition, perception on future adoption of online shopping will be discussed. This would then serve to reflect upon other factors found in previous studies in oiher countries to have any relevance to Singapore context. This research has included country's culture as an explanatory variable in the study of adoption of online shopping. The research findings will contribute to the knowledge and provide input for future researchers to verifY its impact in other country's context. Practical contribution through this research offers a better understanding to consumer 's adoption of online shopping in Singapore and suggests areas of market growth. Implications for strategy suggest that retailers will then be able to understand and target effectively segments of the market with the highest potential for growth and buying behaviour ofSingaporeans. Keywords Online shopping, culture, innovation, perceived risk, Singapore GLOSSARY B2B Business to Business B2C Business to Consumer C2C Consumer to Consumer ISP Internet Service Provider HDB Housing Development Board IDA InfoCommunication Development Authority of Singapore Online Transactions - Includes online banking, online trading and online shopping Online Shopping Online ordering and payment IT Information Technology Internet activities is used interchangeably with online activities Chapter 1 INTRODUCTION 1) Internet The Internet has experienced worldwide acceptance since its introduction. The Internet industry has been phenomenal since its introduction into the consumer market in 1992 and has affected many in a myriad of ways (Prabhaker, 2000; Klobas & Clyde, 2001). The growing importance of the Internet as a technological service (Sultan & Henrichs, 2000) and consumer's usage of the Internet has interested many researchers and analysts led to many studies being conducted (Katz & Aspen, 1997). This is further demonstrated by monitoring of online usage by consulting firms such as Forrester Research (www.forrester.com), A.C. Nielsen (www.acnielsen.com), Gartner (www4.gartner.com) and Boston Consulting Group (www.bcg.com) demonstrating a collective need to understand the Internet phenomena and how it is utilized by consumers.