An Empirical Study of Customers' Purchase Intentions from Australian Group Buying Sites
Total Page：16
File Type：pdf, Size：1020Kb
IBIMA Publishing Journal of Internet and e-Business Studies http://www.ibimapublishing.com/journals/JIEBS/jiebs.html Vol. 2016 (2016), Article ID 732154, 12 pages DOI: 10.5171/2016.732154 Research Article An Empirical Study of Customers’ Purchase Intentions from Australian Group Buying Sites Srimannarayana Grandhi, Ritesh Chugh and Santoso Wibowo CQ University, Melbourne, Australia Correspondence should be addressed to: Srimannarayana Grandhi; [email protected] Received date: 30 September 2015; Accepted date: 4 December 2015; Published date: 8 February 2016 Academic Editor: Amin Ahmad Copyright © 2016. Srimannarayana Grandhi, Ritesh Chugh and Santoso Wibowo. Distributed under Creative Commons CC-BY 4.0 Abstract Group buying is a form of e-commerce, but works similar to bulk buying principle, that allows selling of products and services by third party companies through their websites. Based on a survey done by Canstarblue, out of 250 registered group buying sites, Cudo, Groupon, Ourdeal, Living Social and Scoopon are ranked Australia’s top five group buying sites. Research suggests that identifying right products and services to be sold as group buying deals can improve sales and profit margins of these group buying sites. However, there is a research gap in understanding what factors influence customers’ purchase decisions. Hence, this paper studies different deals offered by the top 5 Australian group buying sites and presents an analysis based on the primary data collected using systematic sampling method from these websites to understand the role of different variables such as discount rate, deal price, product category and time to purchase deals. Findings reveal that customers’ intention to purchase products and services are influenced by discount rate and product categories. This study contributes to the growing body of knowledge and business community by revealing the influence of different factors that would have bearing towards customers’ intention to purchase from group buying sites. Keywords : Group buying sites; Customers intention; Influencing factors; Online deals. Introduction aggregators cluster disparate bargain hunters into one while offering lowest price. Internet technologies offered new It works on the principle that “prices on opportunities to businesses and created a multiple units fall as the number of buyers way for new online business models (Hsu et increase” (Yuan and Lin, 2004). al., 2014). Group buying is another form of e-commerce and relatively new business As there are several benefits with e- model. It has created new prospects for commerce web sites such as ability to businesses to sell different products and promote products globally with significant services in the form of deals on their cost savings, many businesses have opened websites. Group buying or demand their store fronts online (D&B, 2013). _____________ Cite this Article as : Srimannarayana Grandhi, Ritesh Chugh and Santoso Wibowo, “An Empirical Study of Customers’ Purchase Intentions from Australian Group Buying Sites,” Journal of Internet and e-Business Studies, Vol. 2016 (2016), Article ID 732154, DOI: 10.5171/2016.732154 Journal of Internet and e-Business Studies 2 However, fierce competition among these from their website and to achieve minimum on-line businesses has flagged the way for sale target. Usually, these timelines may new business models such as “Group change from one site to another site ranging buying” or “Collective buying” (Zhang et al., from anywhere between 24 hours to several 2012). This model resembles “Revenue weeks. sharing” model, as group buying sites sell the negotiated deals, but neither of them Undoubtedly, group buying sites are gaining manufacture goods nor deliver services attention for their unique business models themselves. This revenue sharing model and their potential to promote and sell allows group buying sites to gain percentage products and services online. However, it is of share in profit for each sale they make important for group buying sites to act through their websites. quickly to respond to customers’ needs and promote new products and services for Group buying sites negotiate price and their increasing their sales. Therefore, we trust share with the products and services’ that a clear understanding of the influencing suppliers prior to offering it as a deal, and factors mentioned in this paper can help then promote that deal on their website managers to divert their attention and (Yuan and Lin, 2004). For this deal to come resources to specific sections that are into effect, this offer needs to be purchased proven to be contributing to overall sales. by the minimum number of customers. This number is mutually agreed and set upon This paper is organized as follows. through the negotiation process with the Literature review is presented to shed light supplier. If the deal is not purchased by the on Group buying models and relevant required number of customers, then the deal research in this area. It lays the foundation will be not be made available to already for the hypotheses presented in this paper. purchased customers and the money that The research setting and methodology in the has been paid will be refunded (Coulter and following section explains the approaches Roggeveen, 2012). Although refunding adopted in this paper to understand money would not cause any financial losses relationships between different factors. to the group buying site, customers may Results are presented in the following perceive it as a “bad buying experience” section along with analysis. Based on the (Dulleck, 2011), as they have already paid findings, discussion is made to elaborate the for the deal and expects stability from the implications of this research. group buying site. This can sometimes lead to negative reputation of the group buying Literature Review site and may alter customers’ intention to return to that particular group buying site With the entry of new group buying sites, (Hsu et al., 2014). competition among businesses got intense. As a result, some group buying companies Although Group buying sites have have exited the market or changed their similarities with e-commerce business business model to become “Deal models, they do differ from regular e- aggregators”. Fig. 1 shows the online group commerce websites, but there is a significant buying model. For example, Australian similarity with daily deals websites in terms group buying market has breached $500 of the deals offered. In the case of daily deals million mark in 2012 and this trend is web sites or “Demand Aggregators”, deal expected to continue as some of these top would be offered for a day or 24 hours at a group buying sites in Australia have discounted price whereas, group buying recorded more than 40% growth in their sites will have a fixed amount of time that business (Stafford¸ 2012). can range from few hours to several days to allow its customers to purchase that deal _______________ Srimannarayana Grandhi, Ritesh Chugh and Santoso Wibowo (2016), Journal of Internet and e-Business Studies, DOI: 10.5171/2016.732154 3 Journal of Internet and e-Business Studies In the recent years, group buying model has China reached US$5.5 billion in 2012. been adopted by a record number of Groupon in USA has grown from 400 businesses around the world. Research has customers to 4 million customers in their shown that more than 1548 group-buying early years. In fact, this Chicago based websites have been launched in 2013 alone company has about 35 million subscribers in in China (Hsu et al., 2014). According to more than 300 cities worldwide (Statista, Statista (2014), group buying market in 2014). Fig. 1: Online Group Buying Model Although, there are more than 250 group Kotler et al., (2013) suggests that marketing, buying sites operating in Australia, Living economic technological, political and Social, Scoopon, Spreets (currently cultural stimuli consists of the marketing operating as a Deal Aggregator), Cudo, mix including products and services, price, Groupon and Our Deal have gained 25%, timing of sale and conditions on purchases 17%, 14%, 13%, 10% and 7% market share such as purchase limits can influence in Australia respectively in 2011 (Chang and consumer psychology. Consumer decision Chou, 2014). Most of these online sites model developed by Blackwell et al., (2001) maintain their competitive advantages by further explains that individual’s motivation offering range of products and services as to purchase a product or service and their low cost deals. As cost is one of the deciding perception of value for their purchases are factors for customers, ensuring the low cost the result of behavioral modification for the deals offered online and maintaining occurred through the stimuli. Research by these deals regularly is a key challenge for Johnson et al., (2013) also suggests group buying sites to maintain competitive consumer behavior is clearly influenced by advantage. On an average, acquiring a new different stimuli that can lead to purchase customer may cost the business in between decisions. Therefore, product or service $5-15 per customer (Johnson et al., 2013). In marketability online, cost, discounts, timing fact, the cost of acquiring new customers and restrictions such as purchase limits are would be 5 times more than retaining the considered for research. existing customers (Chang and Chou, 2014). Therefore, it is important for these sites to Research Background and Hypotheses minimize churn rates. Undoubtedly, group buying sites are gaining Theoretical Background popularity for the deals they offer on their websites. However, there is a vacuum in Consumer behavior model proposed by terms of identifying what prompts _______________ Srimannarayana Grandhi, Ritesh Chugh and Santoso Wibowo (2016), Journal of Internet and e-Business Studies, DOI: 10.5171/2016.732154 Journal of Internet and e-Business Studies 4 customers to revisit these sites to buy deals. we hypothesize the impact of discount rate In order to understand the influencing on overall sales for that particular deal.