13

2 Determinants of Online Purchasing

2.1 Introduction

To understand why consumers shop offline or online, it is required to understand
consumers motivations to use online and offline stores. A substantial body of research has
explained the reasons to shop through offline stores (for a review, see Baker et al. 2002).
Recently, the reasons to shop online have also been extensively investigated by dealing with
questions such as: What drives consumers to shop online? What do consumers really want
from their online shopping experiences? What attributes are most important in their
judgments of e-quality, e-satisfaction, e-value and e-loyalty? (Childers et al. 2001; Nicholson
et al. 2002; Monsuw, Dellaert and De Ruyter 2004; Parasuraman, Zeithaml and Malhotra
2005; Wolfinbarger and Gilly 2001; Zeithaml, Parasuraman and Malhotra 2000; 2002).

The reasons to use the Internet for purchasing cannot be univocally defined due to its
immense scope (e.g. retailer websites, comparison or review websites, auction sites, peer-to-
peer networks) and the variety of purchasing goals consumers may have (e.g. type of
product). Researchers used different perspectives with varying scopes to investigate how
and to what degree the Internet affects online consumer behavior. For example, some
researchers focus exclusively on a part of the website, i.e. the atmospherics of the website
(De Haes, Lievens and Van Waterschoot 2004; Eroglu, Machleit and Davis 2003); whereas
others investigate the websites interface and use (Ranganathan and Ganapathy 2002;
Supphellen and Nysveen 2001); still others go beyond the website and attempt to measure
the total shopping experience (e.g. Francis and White 2002; Parasuraman et al. 2005;
Wolfinbarger and Gilly 2003). Scholars have developed attributes to predict website quality
(Yoo and Donthu 2001), satisfaction with a website (e.g. Muylle, Moenaert and Despontin
2004), intention to return to the website (e.g. Supphellen and Nysveen 2001), intentions to
buy from a website (Loiacono, Watson and Goodhue 2002; Wolfinbarger and Gilly 2003),
Understanding Channel Purchase Intentions
14
satisfaction with online shopping (Evanschitzky et al. 2004; Szymanski and Hise 2000), and
e-loyalty intentions (Anderson and Srinivasan 2003; Srinivasan, Anderson and Ponnavolu
2002). Some researchers focus on service providers (De Ruyter, Wetzels and Kleijnen 2001;
Montoya-Weiss et al. 2003; Zeithaml et al. 2000), whereas others focus on e-tailers that
offer merchandise (Chen and Dubinsky 2003; Wolfinbarger and Gilly 2003). These studies
have all contributed to a better understanding of the motivations of consumers to use the
Internet for their purchasing, but still authors call for more research on this topic (Black et
al. 2002; Gupta et al. 2004; Inman et al. 2004; Nicholson et al. 2002; Schoenbachler and
Gordon 2002). Appendix I shows the main findings of the literature review.

This chapter provides a background into the determinants of online purchasing, based on
insights from the marketing and technology adoption/innovation diffusion literature.
These research fields are used to reveal (1) the motivations and impediments to shop
online, (2) the determinants of online channel adoption based on Davis (1989) Technology
Acceptance Model (TAM), (3) the determinants of e-quality, e-satisfaction, e-value and e-
loyalty, and (4) the determinants of online channel use and preference. The first stream of
research has a qualitative nature and often uses qualitative research techniques (e.g. focus
groups) to provide an answer to what drives consumers to shop online. The second stream
of research, the TAM literature, originates from the technology adoption and innovation
diffusion literature; studies in this field explain the adoption of the Internet as a
technology or innovation by relying heavily on the perceived characteristics of the
Internet itself. The third stream originates from the marketing literature and elicits the
antecedents of well-known prepurchase and postpurchase evaluations of online purchases
(i.e. e-quality, e-satisfaction, e-value and e-loyalty). Here, the focus is less on the innovation
itself, but rather on consumers perceptions of what they receive from their shopping
experiences. The last review puts the use of or preference for the Internet into a broader
perspective; it considers why consumers use the Internet vis--vis other channels, given
circumstances (situational factors), consumers needs and capabilities (consumer factors),
the online and offline offerings (retailer factors) and the type of product being purchased
(product factors). The remainder of this chapter is as follows. The following four sections
discuss each stream of research. Next, it is determined to what degree the online
determinants are unique when compared to those found in the offline context. Finally, a
summary is provided of the main determinants of online shopping.
Chapter 2: Determinants of Online Purchasing
15
2.2 Motivations (not) to shop online

Wolfinbarger and Gilly (2001) posed the important question what motivates consumers to
shop online. As such, they conducted nine focus groups to investigate the attributes and
experiences desired by (potential) online shoppers. They acknowledged that consumers
shop differently depending on whether their motivations are primarily experiential or goal-
oriented (cf. Babin, Darden and Griffin 1994). Next, they argued that online shopping is
more likely to be goal-oriented than experiential; based on prior research they concluded
that 66 to 80 percent of online purchases were goal-oriented. This high percentage can be
explained, because online shoppers tend to be time-starved and want to shop efficiently
with narrowly focused search actions (Wolfinbarger and Gilly 2001). Moreover, heavy users
of the Internet tend to have a strong internal locus of control and thus have goal-oriented
personalities (Hoffman, Novak and Schlosser 2002). Finally, the Internet facilitates
utilitarian behavior as search costs are dramatically reduced (Alba et al. 1997; Bakos 1997;
Lynch and Ariely 2000). Online shopping tends to be less hedonic, as the online shopping
experience is still far less compelling than its offline counterpart (Wolfinbarger and Gilly
2001). Contrastingly, Childers et al. (2001) conclude that, while the instrumental aspects
(saving time, shopping effectiveness) of the Internet are important predictors of attitude
towards online shopping, hedonic aspects play at least an equal role.

Wolfinbarger and Gilly (2001) suggest that goal-oriented shoppers achieve greater freedom
and control in the online environment, as they experience little pressure to purchase before
they are absolutely ready. In the online environment, they are less committed because the
investments made to visit the retailer are limited (e.g. no need for driving and parking).
Moreover, they generally feel less pressured, due to the absence of salespeople. Online
shoppers obtain more freedom and control through convenience/accessibility, selection, availability
of information, and lack of sociality
3
. Convenience is mostly referred to as the ease of shopping
and often includes elements of accessibility, comparison shopping and ease of shopping.

3
Prior research investigated the shopping orientations of online shoppers, which can be
used to elicit the motivations to shop online (see section 2.5). The results of these studies
confirm the above findings of consumers motivations to shop online; online shoppers
have a strong need for convenience, but do not have a strong need for social interaction,
immediate possession of goods, and tactile information.

Understanding Channel Purchase Intentions
16
Despite some inconveniences (e.g. difficulty of assessing quality online, insecurity about
payments and postponed gratification), online shoppers generally indicate that shopping
online is easier than offline due to the ease of access and comparison shopping (e.g.
Bobbitt and Dabholkar 2001; Childers et al. 2001; De Ruyter et al. 2001; Monsuw et al.
2004; Wolfinbarger and Gilly 2001; Yoon 2002; Zeithaml et al. 2002). Online shoppers also
address that the wide selection is a motivation to shop online (Srinivasan et al. 2002;
Szymanski and Hise 2000; Wolfinbarger and Gilly 2001; Yoon 2002). For example, the
number of books available at Amazon.com is more than 23 times larger than the number
of books of a typical Barnes and Noble superstore (Brynjolfsson, Hu and Smith 2003).
Next, the availability of relevant information is an important reason to shop online. The
wide availability of relevant information helps buyers to make more informed decisions (cf.
Chen and Dubinsky 2003; Loiacono et al. 2002; Szymanski and Hise 2000; Wolfinbarger
and Gilly 2001; 2003; Zeithaml et al. 2002). With the help of online recommendation tools,
consumers can drastically reduce their search costs and make better decisions (Hubl and
Trifts 2000). Finally, online shoppers indicate that they sometimes prefer to shop online
because of the lack of sociality (Dabholkar and Bagozzi 2002; Nicholson et al. 2002;
Wolfinbarger and Gilly 2001). They may prefer online shopping, as they believe offline
shopping is too slow due to the anticipated inefficiency of service employees or the
unwanted verbal interactions that could take place. However, the lack of sociality is
sometimes seen as an inhibitor to shop online; consumers may want to speak to an
employee when a complex product is purchased (Black et al. 2002; Francis and White
2004), or want the opportunity to interact with family and friends when hedonic products
are purchased (Nicholson et al. 2002). Wolfinbarger and Gilly (2001) argue that freedom
and control is the superordinate goal that is being fulfilled by the underlying four
motivating factors. Other authors (Francis and White 2004; Hoffman et al. 2002; Koufaris
et al. 2001) address (perceived) control as a distinct motivator to shop online. The self-
service nature of online shopping delivers a high level of control over the purchase
environment (Francis and White 2004; Meuter et al. 2000).

The factors that prevent consumers to shop online particularly refer to the increased levels
of risk. It has been shown that the level of social, performance, physical, financial and
psychological risks vary with the shopping channel (Cox and Rich 1964; Gillett 1976;
Spence et al. 1970). In the online environment, the physical and temporal distance between
Chapter 2: Determinants of Online Purchasing
17
consumers and retailers create additional uncertainty, because product characteristics and
retailer identity cannot be fully assessed during the transaction (Ba and Pavlou 2002;
Jarvenpaa and Tractinsky 1999; Pavlou 2003) and because of the greater ease of cheating
online (Einwiller 2003; Gefen 2000; Reichheld and Schefter 2000). In online environments,
consumers have fewer tangible and verifiable cues regarding the retailers capabilities and
intentions (Urban, Sultan and Qualls 2000), leading to higher risk perceptions. Although
the transaction appears to be fast and convenient, the background processes such as order
flow, price discovery and order execution remain largely inscrutable (Konana, Menon and
Balasubramanian 2000). Not surprisingly, privacy and security concerns are frequently
mentioned as inhibitors of online shopping (Swaminathan, Lepkowska-White and Rao
1999; Wolfinbarger and Gilly 2003; Zeithaml et al. 2000) In this respect, trust is often seen
as a facilitator of online shopping (e.g. Jarvenpaa and Tractinsky 1999; Pavlou 2003), as it
reduces perceptions of risk (cf. Ba and Pavlou 2002; Einwiller 2003).

Other inhibitors may become apparent when buying physical products. Not being able to
see, feel or experience a product prior to purchase may inhibit certain consumers to shop
online (Li, Kuo and Russel 1999; Zeithaml et al. 2000). Moreover, consumers have to wait
before their product is delivered, attenuating the power of immediate gratification and
discouraging impulse shopping (Francis and White 2004; Rohm and Swaminathan 2004;
Wolfinbarger and Gilly 2001). Finally, increases in consumers perceived expenditures in
returning or exchanging products might prevent consumers to shop online (Seiders, Berry
and Gresham 2000).

One of the early debates that still has not reached consensus is whether price is a motivator
to shop online. Research on online pricing has focused on whether the prices, price
dispersion and/or price sensitivity are higher online than offline. It has been hypothesized
that the Internet lowers search costs, making price information available to buyers and the
online markets more competitive than conventional markets (Bakos 1997). Websites that
facilitate price comparisons make consumers more price sensitive for common products,
and lowers demand for unique items (Lynch and Ariely 2000). When comparing online and
offline prices, Brynjolfsson and Smith (2000) found that online prices were 9-16% lower
than offline retailer prices for books and CDs. Pan, Ratchford and Shankar (2002)
compared the price levels of pure-play e-tailers (retailers that only sell online) with
Understanding Channel Purchase Intentions
18
multichannel retailers (retailers that sell online and offline). The results show that prices are
lower for pure-play e-tailers than for multichannel retailers for CDs, DVDs, and
computers; prices are similar for PDAs and electronics and higher for books and software.
In a similar vein, Ancarani and Shankar (2002) showed that when list prices are considered
for books and CDs, offline retailers have the highest prices, followed first by multichannel
retailers and then by pure-play e-tailers. However, when shipping costs are included,
multichannel retailers have the highest prices, followed first by pure-play e-tailers and then
by traditional retailers. Contrary to the expectation that price dispersion is lower online,
studies found that price dispersion online is substantial and no narrower than in
conventional markets (Clemons, Hann and Hitt 2002; Brynjolfsson and Smith 2000).
Different prices for identical products can still be justified when, for example, service
quality levels are different among e-tailers. However, even when controlling for the
heterogeneity in retailers offerings, price dispersion among e-tailers is still substantial (Pan
et al. 2002). Another explanation for the larger price dispersion online is that consumers do
not solely base their decision on price, but also on other information such as product
information, service quality and product quality. Lynch and Ariely (2000) showed that
designing the website to facilitate quality comparisons, decreases price sensitivity for unique
items. Consequently, authors have claimed that consumers may become less price sensitive,
which may lead to higher prices (Degeratu, Rangaswamy and Wu 2000). Online buyers may
also be less price sensitive because of relative high perceived time costs; they are willing to
accept high prices rather than incur additional search costs. Ratchford, Pan and Shankar
(2003) provided a final explanation for the price dispersion. They argued that the wide
price dispersion could be the result of the immaturity of the online channel; they examined
online prices based on data collected from BizRate.com in November 2000 and November
2001 and found that price dispersion decreased substantially between these two periods. In
general, the online price studies indicate that online prices may differ from offline prices;
however, this is mainly due to differences in the dispersion of prices. Consumers that are
very price conscious may be motivated to use the online medium to search for the lowest
prices, whereas less price conscious shoppers may also be motivated to engage in online
shopping as it is easier to compare nonprice information. Not surprisingly, shopping
orientations studies did not find a relationship between consumers price-consciousness
and the likelihood of online shopping (Donthu and Garcia 1999; Girard et al. 2003).
Chapter 2: Determinants of Online Purchasing
19
To summarize past research, online shoppers are generally motivated by the onlines
convenience (i.e. accessibility, comfort of shopping and saving time and effort), wide
selection/specialty merchandise, availability of relevant information, and control. Inconsistencies appear
regarding the online price level and lack of sociality as a motivator to shop online. The
inhibiting factors of online shopping relate to increased levels of perceived risk. For physical
products, additional inhibitors are identified, including the impossibility to physically examine the
product prior to purchase, the additional delivery time, and difficulties in returning faulty merchandise.

2.3 Technology Acceptance Model

Prior technology adoption and innovation diffusion research studied the adoption and use
of the Internet. Most researchers in this field applied the Technology Acceptance Model
(TAM), or a modification of it, to predict Internet adoption and use. Davis and his
colleagues (Davis 1989; Davis, Bagozzi and Warshaw 1989) introduced TAM to predict the
adoption and use of information technologies, such as computers and spreadsheet software
programs. TAM is a parsimonious yet powerful model for predicting user acceptance of
these technologies. Researchers use TAM to predict online channel adoption and use,
because the E-Commerce environment is heavily technology-driven (Pavlou 2003). The
findings of TAM-related studies provide insights into the determinants of E-Commerce
adoption and use.

TAM proclaims that perceived usefulness and perceived ease of use of a technology
influence users attitude toward using the technology, which in turn affects behavioral
intentions, which ultimately determine adoption and use (Davis 1989; Meuter et al. 2005).
Perceived usefulness (PU) is defined as the degree to which a user believes that using the
system will enhance his or her performance, whereas perceived ease of use (PEOU) refers
to the degree to which the user believes that using the system will be free from effort
(Davis 1989). While PU refers to the perceptions regarding the outcome of the experience,
PEOU refers to their perceptions regarding the process leading to these outcomes
(Childers et al. 2001; Monsuw et al. 2004). If consumers perceive the Internet easier to use
and to be more useful, it will increase their likelihood of adoption and usage (Teo, Lim and
Lai 1999). PEOU also positively affects PU, as the easier the system is to use, the more
Understanding Channel Purchase Intentions
20
useful it can be (Venkatesh and Davis 2000). The impact of other external variables on
behavioral intention is fully mediated by these two beliefs (Davis et al. 1989).

In their development of TAM, Davis et al. (1989) found evidence that attitudes predict
intentions; however, subjective norm did not have a significant effect on behavioral
intentions over and above PU and PEOU, and was therefore left out of the model. Some
studies found support that subjective norm does not contribute to explaining behavioral
intentions of using information technologies (e.g. Mathieson 1991; Keen et al. 2004),
whereas other studies (e.g. Karahanna, Straub and Chervany 1999; Taylor and Todd 1995)
show that subjective norm significantly alters intentions. Karahanna et al. (1999) more
closely investigated this issue and found that the impact of subjective norms on behavioral
intention is more profound for potential adopters than users. They explained this by the
work of Triandis (1971) who suggested that social norms have a more pronounced effect in
determining behavior when the behavior is new, as in adoption. With increasing direct
experience, individuals are expected to rely less on others and more on their personal
attitudes. Another explanation for the variation in findings is that subjective norm only
seems to have a significant effect on intentions in mandatory settings, but not in voluntary
settings (cf. Venkatesh and Davis 2000).

Self-Determination Theory and Motivation Theory (e.g. McGuire 1974) encouraged
authors to extend the TAM to capture the more hedonic aspects, by including (perceived)
enjoyment. According to these theories, consumers are motivated by extrinsic and intrinsic
motivations. Extrinsic motivations relate to the drive to perform a behavior to achieve
specific goals or rewards, while intrinsic motivations relate to perceptions of pleasure and
satisfaction derived from performing the behavior itself (Deci and Ryan 1985; Vallerand
1997). The characterization of dual motivations is consistent with prior retail research,
which has supported the presence of both utilitarian (extrinsic) and hedonic (intrinsic)
motivations (Childers et al. 2001). In the utilitarian sense, consumers want to shop
efficiently; thus, achieving their shopping tasks with a minimum of effort. On the other
hand, consumers are also motivated by the hedonic aspects of shopping (Babin et al. 1994;
Arnold and Reynolds 2003) referring to the aspects of fun and playfulness rather than task
completion (Hirschman and Holbrook 1982). In TAM, extrinsic motivation is clearly
captured by the PU construct (cf. Davis et al. 1989; 1992; Venkatesh and Davis 2000) as it
Chapter 2: Determinants of Online Purchasing
21
refers to saving time and increasing shopping effectiveness (Childers et al. 2001). PEOU
refers to the process leading to the outcome and can be seen as an intrinsic motivator, but
many authors (e.g. Childers et al. 2001; Davis et al. 1992; Monsuw et al. 2004; Pavlou
2003) argue that PEOU does not fully capture intrinsic motivations. For obvious reasons,
perceived enjoyment (or computer playfulness) is often added to capture the pleasure and
satisfaction derived from performing the behavior, apart from any anticipated performance
consequences (Davis et al. 1992).

Several studies tested TAM in the online context (e.g. Childers et al. 2001; Devaraj, Fan and
Kohli 2002; Gefen, Karahanna and Straub 2003; Gefen and Straub 2000; Lederer et al.
2000). These studies confirm that users beliefs, PEOU and PU, and enjoyment are key
predictors of E-Commerce adoption and acceptance. Childers et al. (2001), for instance,
found that each of the predictors positively affected consumers attitudes towards online
shopping. They also investigated the relative impact of PEOU, PU and enjoyment in both
a utilitarian (i.e. grocery shopping) and hedonic (i.e. gift giving) context. Although the
utilitarian aspects (i.e. PEOU, PU) of online shopping appeared to be important predictors
of online shopping attitudes, the more immersive, hedonic aspects (i.e. enjoyment) played
at least an equal role. Their final model explained 67% and 64% in the variance of the
attitudes towards online shopping for the utilitarian and hedonic shopping context,
respectively.

In search for a better understanding and prediction of E-Commerce adoption, many
researchers included trust and/or risk with TAM. Trust and risk are essential in explaining
E-Commerce adoption, as uncertainty is present in the technology-driven environment
(e.g. Lee and Turban 2001; Gefen and Straub 2000; Gefen et al. 2003; Pavlou 2003;
Swaminathan et al. 1999). Lee, Park and Ahn (2000) only incorporated risk in their TAM.
They split perceived risk into transaction risk (i.e. the risk that consumers bear during
purchasing) and product performance risk. Their findings indicate that transaction risk
negatively affects PU and purchase behavior, whereas performance risk only negatively
impacts purchase behavior, but not PU. Their model explains approximately 34% of the
total variance in E-Commerce adoption. Pavlou (2003) integrated trust and perceived risk
with TAM to predict online purchase intentions. The study predicted E-Commerce
acceptance with help of the conceptual model, which is depicted in Figure 2.1. Two studies
Understanding Channel Purchase Intentions
22
(student and consumer sample) tested the model. A reasonable part (student sample: 64%,
consumer sample: 37%) of the variance in self-reported purchase intentions is explained.
Conclusively, the results show that apart from PEOU and PU, trust and risk appear to be
major influencers of online purchase intentions.














Figure 2.1: Integrating trust and risk with TAM (Pavlou 2003)

After analyzing the TAM literature, the following tentative conclusions can be drawn. First,
when adapted to the online context, TAM is capable of explaining a substantial part of the
variance in online shopping attitudes, intentions and behavior. This supports the general
idea that the perceptions of the (expected) use of the innovation itself largely determine
adoption and usage. The important role of enjoyment, as well as perceived risk and trust,
necessitate the addition of these variables to capture online shopping intentions (Childers
et al. 2001; Lee et al. 2000; Pavlou 2003). Second, the role of subjective norms in explaining
online shopping attitudes and behavior seems to be rather small and is likely to become
even smaller in the near future, as consumers become more familiar with the Internet and
online shopping. With increasing online experience, consumers rely more on their own
shopping experiences. Consequently, social norms are left out as potential explanatory
variable. Next, this study does not adopt TAM, because of the following reasons. First, as
TAM is designed to explain the adoption or use of a technology, it does not explicitly relate
the technology to the competing alternatives from which consumers can choose. In this
way, TAM deals with the Internet in isolation of the offline channel. Although PU refers to
the relative advantage of using the Internet (i.e. the extent to which Internet shopping saves

PEOU

PU

Trust

Intention to
transact
Perceived
risk
Paths supported in both studies

Paths significant in one study
Chapter 2: Determinants of Online Purchasing
23
time and increases shopping effectiveness) compared to an implicit standard, it does not
make explicit the tradeoffs consumers have to make. Second, TAM focuses heavily on the
perceptions of using the technology itself, underexposing the role of retailers. It implicitly
assumes that e-tailers do not differ in their performance, when predicting online channel
adoption. Third, the concept of PU is very broad (i.e. it actually refers to utility), and it does
not distinguish between improving outcome quality and/or saving time and effort. Thus, it
is unclear whether consumers perceive the Internet to be more useful because of superior
products or assortments, better service, lower prices or time savings. Retail literature
treated these elements as separate constructs (cf. Baker et al. 2002), providing retailers with
more specific insights for improvement. Despite TAM predicts E-Commerce adoption and
use to a large extent, it offers little insights in why consumers are motivated to shop online.
Although a few studies explored the antecedents of TAMs key variables in the online
context (Childers et al. 2001; Lee et al. 2000; Monsuw et al. 2004; Pavlou 2003), relatively
little is known about what constitutes PU, PEOU and enjoyment. Thus, TAMs strength
particularly lies in its predicting power instead of its explaining power.

2.4 E-quality, E-value, E-satisfaction and E-loyalty

Marketing literature used the concepts of quality, value, satisfaction and loyalty to explain
online behavior. The concepts of perceived quality (e.g. Parasuraman et al. 1985; 1988),
perceived value (Bolton and Drew 1991), customer satisfaction (e.g. Oliver 1981), and
customer loyalty (e.g. Morgan and Hunt 1994; Reichheld 1996; Sirohi, McLaughlin and
Wittink 1998) have been identified as key influencers of purchase intentions and actual
purchases (e.g. Taylor and Baker 1994) and as important indicators for offline retailers
success (e.g. Bolton 1998). These consumer judgments can be made before, during or after
purchase and consumption and are likely to be important in the online context as well.
Perceived quality refers to the performance, excellence or superiority of the product or
service (e.g. Zeithaml 1988). Translating it to online retailers, perceived quality refers to the
extent to which the website facilitates effective and efficient shopping, purchasing and
delivery (Parasuraman et al. 2005; Zeithaml et al. 2002). Perceived quality is often found to
be a precursor of perceived value (e.g. Parasuraman et al. 2005; Bolton and Drew 1991)
and, sometimes, satisfaction (cf. Cronin, Brady and Hult 2000; Oliver 1993; Spreng and
Understanding Channel Purchase Intentions
24
Mackoy 1996). Perceived value refers to the consumers overall assessment of the utility of
a product based on perceptions of what is received and what is given (Zeithaml 1988). It
takes into account all perceived monetary and nonmonetary costs and benefits. Perceived
value is more personal and individualistic than perceived quality (Zeithaml 1988). Customer
satisfaction is the result of a comparison between consumers prior expectations and the
perception of what is actually received (Oliver 1980); it is universally agreed to be a
postpurchase and/or postuse evaluation (e.g. Fornell 1992; Oliver 1981). Consequently,
most authors agree that perceived value is an antecedent to satisfaction (Woodall 2003;
Woodruff 1997), although some authors argue that satisfaction is an antecedent to
perceived value (Bolton and Drew 1991). Satisfaction refers to the cognitive and affective
response (favorable versus unfavorable) (Westbrook and Oliver 1991), whereas perceived
quality and perceived value are more cognitive in nature (Woodall 2003). Recent studies on
perceived value, however, included emotional aspects as well (cf. Sweeney and Soutar
2001), making it more difficult to distinguish between the concepts. Satisfaction and loyalty
are also distinct concepts (Bloemer and Kasper 1995; Oliver 1999). It is possible for a
consumer to be loyal without being highly satisfied (e.g. when limited alternatives are
available). Customer loyalty refers to the attitudinal and behavioral response towards a
store or a brand expressed over time by consumers (Bloemer and Kasper 1995; Dick and
Basu 1994; Jacoby and Chestnut 1978). This study uses the term to indicate the loyalty
towards specific online and offline outlets and not towards channels as a whole (cf. Gehrt
and Yan 2004; Keen et al. 2004).

The marketing literature still has not reached consensus about the causal relationships
between quality, satisfaction, perceived value, and repurchase/loyalty intentions (cf. Cronin
et al. 2000; Dabholkar, Shepherd and Thorpe 2000; Duman 2002). Perceived value and
satisfaction have both been found to be predictors of repurchase or loyalty intentions (e.g.
Bolton and Drew 1991; Dabholkar et al. 2000; Grewal, Monroe and Krishnan 1998). Next,
some authors argue that satisfaction is an antecedent of perceived value (e.g. Bolton and
Drew 1991; Naylor 1996) by arguing that perceived value is a higher-order variable that
results from post-purchase evaluations, whereas others argue that satisfaction is more
strongly related to future behavior and perceived value only acts as a predictor of
satisfaction (e.g. Cronin et al. 2000). Based on the work of Oliver (1999) and Woodall
(2003), it can be assumed that satisfaction and perceived value affect each other through
Chapter 2: Determinants of Online Purchasing
25
the more or less parallel and/or transmutant existence of both constructs in the consumers
evaluation process.










Figure 2.2: Relationships between quality, value, satisfaction and loyalty

Marketing researchers have attempted to measure (the antecedents of) quality and value
perceptions, satisfaction and loyalty in online settings. Some authors argued that online and
offline environments present different shopping experiences and that existing concepts and
antecedents need to be adapted to the online context (Wolfinbarger and Gilly 2003). To
better understand the underlying forces that determine online purchase intentions, this
study reviews the e-quality, e-satisfaction, and e-loyalty literature with regarding purchasing.

2.4.1 Determinants of E-quality
Researchers used different connotations for defining e-quality. This section reviews the
literature to identify the components and/or antecedents of e-quality. In doing so, the
criteria emerge that consumers use to form their evaluations of e-quality. Although
Loiacono et al. (2002) mainly focused on the quality of the interactions with the website
rather than predicting purchase intentions, they included elements that refer to the relative
performance of the website compared to other channels in delivering services online (i.e.
online completeness, better than alternative channels). They use Fishbein and Ajzens
(1975) Theory of Reasoned action and Davis (1989) TAM as a starting point. Customer
service was initially identified as important influencer of website quality, but it was dropped
because the sample was expected to have problems in expressing their thoughts, due to the
absence of multiple interactions with the e-tailer. Their final website quality measure,
WebQual
TM
contains twelve dimensions that relate to four overlapping constructs: ease of
use, usefulness, entertainment, and complementary relationship (consistent image, better

Sacrifice

Perceived
Quality

Intention to
(re)purchase
and/or loyalty

Quality/
Value
expec-
tations


Satisfaction

Perceived
Value
Understanding Channel Purchase Intentions
26
than alternative channel, online completeness). The results showed that WebQual
TM
is
highly correlated with intention to revisit the website (=.53) and intention to purchase
(=.56).

Wolfinbarger and Gilly (2003) developed a reliable and valid scale of e-tail quality: eTailQ.
They define e-quality as the perceived quality derived from the beginning to the end of the
transaction, including information search, website navigation, ordering, customer service
interactions, delivery and satisfaction with the ordered product. They excluded price, as it
was not seen as part of the quality of the online experience. The analysis suggests four
underlying factors: website design, fulfillment/reliability, privacy/security, and customer
service. The four factors are defined as follows:
Fulfillment/reliability is (a) the accurate display and description of a product so that
what consumers receive is what they thought they ordered, and (b) delivery of the
right product within the time frame promised.
Website design includes all elements of the consumers experience at the website
(except for customer service), including navigation, information search, order
processing, appropriate personalization and product selection.
Customer service is responsive, helpful, willing service that responds to consumer
inquiries quickly.
Security/privacy is security of credit card payments and privacy of shared
information.
They also link these factors to overall quality of the purchase experience, satisfaction,
loyalty intentions and attitude towards the website, and concluded that their scale is a good
predictor of these constructs. It appears that website design and fulfillment/reliability
generally have the strongest impact on these judgments, whereas security/privacy and
customer service play a lesser role. However, the authors note that security/privacy is
highly correlated with website design (=.82); thus, it seems that security/privacy
judgments are made on website elements, such as the professional look and feel of the
website, as well as functionality of a website, and company reputation.

Zeithaml et al. (2000; 2002) conceptualized e-quality as the extent to which a Web site
facilitates efficient and effective shopping, purchasing, and delivery of products and
services. In their definition, they clearly underline the importance of the utilitarian aspects
Chapter 2: Determinants of Online Purchasing
27
of online shopping. These authors argued that compared to the original SERVQUAL
(Parasuraman et al. 1985; 1988), additional dimensions were needed to fully explain
consumer evaluations of e-services. Initially, they derived 11 factors that consumers
consider when evaluating e-SQ: access, ease of navigation, efficiency, flexibility, reliability,
personalization, security/privacy, responsiveness, assurance/trust, site aesthetics, and price
knowledge (Zeithaml et al. 2000). In a later study, they synthesized the extant literature and
concluded the following concepts to be important: ease of use, information availability and
content, privacy/security, and other criteria (access, responsiveness and personalization)
(Zeithaml et al 2002). Still later, Zeithaml and her colleagues (Parasuraman et al. 2005)
derived four dimensions efficiency, system reliability, fulfillment, and privacy forming
the core service scale. In addition, they address three dimensions that only become salient
when online customers have questions or run into problems, including responsiveness,
compensation, and contact. The more insecure online environment causes a strong
emphasis on service recovery. The authors also link the core scale with the well-known
customer judgments, and find that efficiency and fulfillment are the dominant predictors,
whereas system reliability (correct functioning of website) and privacy are of less
importance.

2.4.2 Determinants of E-value
Chen and Dubinsky (2003) developed a model based on the existent perceived value
literature (Dodds, Monroe and Grewal 1991; Sweeney, Soutar and Johnson 1999; Zeithaml
1988) and specific factors that make up the online shopping experience, including ease of
use, informativeness, and customer service. Moreover, they introduced e-tailer reputation
as a reducer of perceived risk. Surprisingly, e-tailer reputation did not significantly reduce
risk perceptions, but this was explained through the low-risk products (i.e. books) that were
bought by the respondents. Perceptions of product quality, price and the online shopping
experience all equally affected perceived value. Perceived value, in turn, strongly affected
online purchase intentions. The proposed model explained 37% and 24% of the total
variance in perceived value and purchase intentions. The authors demonstrated that the
traditional predictors of perceived value were also applicable to the online context.

Understanding Channel Purchase Intentions
28
2.4.3 Determinants of E-satisfaction
Several researchers investigated the determinants of satisfaction with online purchasing
(Balasubramanian, Konana and Menon 2003; Evanschitzky et al. 2004). Szymanski and
Hise (2000) selected several key factors and determined their influence on e-satisfaction.
They concluded that convenience, website design (i.e. website is fast, uncluttered, and easy
to navigate) and security of financial transactions are the dominant contributors of e-
satisfaction. Merchandise perceptions, i.e. product information and product offerings, are
of lesser significance to e-satisfaction. In a replication study performed by Evanschitzky et
al. (2004), convenience and website design again appeared to be the dominant drivers of
satisfaction, underling the importance of these factors in the online context.

Balasubramanian et al. (2003) investigated customer satisfaction for online investing. The
investors cumulative satisfaction with the online broker depends on perceptions of price
level, operational competence (the online brokers ability to deliver high levels of day-to-day
operational performance) and trustworthiness (reputation of and trust in the online broker).
Trustworthiness of a particular broker, in turn, was determined by operational performance
and environmental security (general trust in online brokers). The results showed, somewhat
surprisingly, that general trust in online brokers had the biggest impact on e-satisfaction,
followed by the online brokers operational excellence and trustworthiness. Price levels
appeared to have the least impact on e-satisfaction. Online brokers can improve e-
satisfaction by improving their individual performance and through collectively improving
the general trust in online brokers.

2.4.4 Determinants of E-loyalty
Customer loyalty here refers to the attitudinal and behavioral responses customers have
towards online and offline retail outlets (cf. Parasuraman et al. 2005). Srinivasan et al.
(2002) identified eight antecedents that could potentially impact loyalty, including
customization, contact interactivity, care, community, convenience, cultivation, choice and
character. Results show that all these factors, except for convenience, impact loyalty. The
eight factors are represented below:
Customization: the ability of an e-tailer to tailor products, services and the
transactional environment to its individual customers
Chapter 2: Determinants of Online Purchasing
29
Contact interactivity: the availability and effectiveness of customer support tools
on a website, and the degree to which two-way interactivity with customers is
facilitated
Cultivation: the extent to which an e-tailer provides relevant information and
incentives to its customers in order to extend the breadth and depth of their
purchases over time
Care: the attention that an e-retailer pays to all the prepurchase and
postpurchase customer interface activities designed to facilitate both
immediate transactions and long-term relationships
Community: the extent to which customers are provided the opportunity and
ability to share opinions among themselves through comment links, buying
circles and chat rooms sponsored by the e-tailer.
Choice: the ability of an e-tailer to offer a wide range of product categories and
a great variety of products to its customers
Character: an overall image that the e-tailer projects to consumers through the
use of inputs such as text, style, graphics, colors, logos, and the slogans on
the website
Convenience: the extent to which customers feel that the website is simple,
intuitive and user friendly.
Although some of the factors are typical for the online context (e.g. community), most of
these factors are also applicable to the offline context in order to stimulate loyalty. For
example, employees can provide customized recommendations to customers stimulating
customization and contact interactivity, while direct mailings can enhance care and
cultivation. The factors that affect loyalty online and offline appear similar (cf. Reichheld
and Schefter 2000), although the cost-effectiveness of channels in stimulating customer
loyalty may differ.

Prior research frequently identified satisfaction as a predictor of loyalty in the offline
context (Bolton 1998; Hellier et al. 2003; Mittal and Kamakura 2001). Anderson and
Srinivasan (2003) found that the relationship between satisfaction and loyalty holds for the
online context as well. Shankar et al. (2003) also linked satisfaction with loyalty; they
investigated the levels of satisfaction and loyalty for hotel visits for online and offline
bookers. They performed two studies; the first study investigated a group of customers
Understanding Channel Purchase Intentions
30
who had used both the online and offline channels, whereas the second study investigated
online versus offline bookers for the same hotel chain. They did not find any significant
main effect of the online channel on the levels of satisfaction; thus, whether the service was
booked online or offline did not affect satisfaction with their hotel visits. However, online
bookers were more loyal than offline bookers. The authors reason that consumers who use
the online channel gain greater control over information and choice, leading to higher
loyalty online. With the use of hotel websites, it is expected that consumers can make more
informed decisions with less surprises. As a result, customers confidence in the retailer
increases, which builds fortitude that prevents encroachment by competitive forces
(Oliver 1999). Verhoef and Donkers (2005) also found evidence that the online channel
itself has a positive effect on customer loyalty.

Past research also identified perceived value as predictor of loyalty (Cronin et al. 2000;
Sirohi et al. 1998) Chen, DeVaney and Liu (2003) investigated the relationships between
perceived value components and e-loyalty. They addressed that perceived value consists of
three components: (1) value for money (based on relative price, merchandise quality and
customer service), (2) trust (based on merchandise quality, customer service, safety and
order fulfillment), and (3) shopping efficiency (based on order fulfillment). These three
components were related to e-loyalty intentions. Shopping efficiency had the strongest
impact on e-loyalty intentions, followed by trust and value for money.

Prior studies performed on the determinants of e-quality, e-value, e-satisfaction and e-
loyalty provide useful insights into the factors that influence consumers online shopping
intentions. Studies on e-quality show that website design (navigation, layout, system
reliability), efficiency (convenience, efficiency) and fulfillment/reliability are very important
in explaining online intentions. Next, informativeness, security/privacy, and customer
service (responsiveness, contact, compensation) are also of importance, albeit to a smaller
extent. E-value literature identified similar determinants for explaining perceived value,
including valence of the online shopping experience (ease of use, informativeness,
customer service and efficiency), price and product quality. E-satisfaction studies showed
that website design and ease of use were the dominant predictors of satisfaction, whereas
security and merchandise perceptions (product information and product offerings) were of
less significance. In another study, the general trust in e-tailers and the e-tailers operational
Chapter 2: Determinants of Online Purchasing
31
competence largely determined satisfaction. E-loyalty literature also provided useful
insights, but mainly confirmed the positive relationship between e-satisfaction and e-
loyalty. All customer judgments are predominantly based on perceptions of the
performance of the retailer (trust, reputation, price, service quality, merchandise quality)
and the quality of the website interaction (ease of use, navigation, graphic style,
informativeness). Note that some factors (e.g. informativeness, ease of use, and risk) are
jointly determined by channel factors and retailer factors.

Despite some authors have stressed the unique capabilities of the Internet (e.g. Chen and
Dubinsky 2003; Srinivasan et al. 2002), most studies find evidence that traditional
evaluation criteria (e.g. convenience, information provision, price, merchandise quality,
service quality, trust, and risk) also to a large extent explain online behavior. The
Internets unique capabilities to effectively build communities, provide interactivity through
e-mail and chat, and apply personalization on a mass scale at low costs have not yet caused
a dramatic shift in consumer behavior (cf. Wolfinbarger and Gilly 2003).

2.5 Determinants of channel use and channel preference

Apart from studying the determinants of online attitudes and shopping behavior, other
studies have focused on the predictors of the use of and preference for the online channel
versus other retail formats (e.g. catalog, stores). This field of research is more in line with
this study, as it does not deal with the online channel in isolation of other channels.
Moreover, this field of research proclaims that online shopping should be seen in the light
of other general variables that are distinct from the channel itself. Most authors in this field
agree that channel choice depends on consumer factors (e.g. socio-demographics, shopping
orientations, lifestyle, past behavior), retailer factors (e.g. trust/reputation, merchandise,
service), product factors (e.g. complexity, product risk), channel factors (e.g. ease of use,
accessibility, channel risk), and situational factors (e.g. time availability, weather, mood) (e.g.
Black et al. 2002; Gehrt and Yan 2004; Girard et al. 2003; Li et al. 1999). Table 2.1 shows
the factors that were investigated in several studies performed in this field.

Understanding Channel Purchase Intentions
32
Table 2.1: General factors affecting channel preference
Study Subject
Consumer
factors
Retailer
factors
Product
factors
Channel
factors
Situational
factors
Black et al.
(2002)
Influencers
of channel
choice
Demographics
Shopping
orientations
Lifestyle
Past behavior
Image
Size
Longevity
Channel range
Complexity
Price
Product
risk


Accessibility
Channel costs
Convenience
Personal
contact
Channel risk

Swaminathan
et al. (1999)
Degree of
online
shopping
Shopping
orientations
Reliability
Convenience
Price
competitiveness
Informativeness
Security
Privacy

Li et al.
(1999)
Likelihood
of online
shopping
Demographics
Shopping
orientations
Channel
knowledge
Communication
Distribution
Accessibility

Nicholson et
al. (2002)
Preference
for store,
catalog and
online
shopping
Shopping
orientations
Hedonic
vs.
functional
Accessibility
Convenience
Distribution
Shopping
experience
Shopping
task
Girard et al.
(2003)
Preference
for online
shopping
Demographics
Shopping
orientations
Search vs.
Experience
vs.
Credence

Gehrt and
Yan (2004)
Channel
preference
for
Internet,
catalog,
store
Demographics
Past behavior
Transaction
service
Merchandise
Retailer
personality Price
Search vs.
Experience
Time
availability
Shopping
task

Consumer factors that have been studied to understand channel preference are classified
according to socio-demographics, lifestyle/psychographics, past behavior and shopping
orientations. The findings on socio-demographics initially showed that online shoppers
tend to younger, wealthier, better educated, and are more likely to be male (Korgaonkar
and Wolin 1999; Girard et al. 2003; Kwak, Fox and Zinkhan 2002; Li et al. 1999). Recent
research, however, suggests that the online population is moving from elite to mainstream
(Forsythe and Shi 2003; Gehrt and Yan 2004) and that demographics are less suited for
explaining why consumers (do not) use channels (cf. Dabholkar and Bagozzi 2002; Gehrt
and Yan 2004). Online shoppers have a wired lifestyle with scarce leisure time (Lohse,
Bellman and Johnson 2000; Swinyard and Smith 2003) and will prefer the more
convenient, easily accessible online channel (Black et al. 2002). Additionally, online
Chapter 2: Determinants of Online Purchasing
33
shoppers possess an internal rather than an external locus of control (Hoffman et al. 2002),
and act more goal-directed rather than experiential (Wolfinbarger and Gilly 2001). They
have more experience with and knowledge of computers and the Internet (Bhatnagar,
Misra and Rao 2000; Girard et al. 2003; Li et al. 1999), and are more technology ready
(Parasuraman 2000). As a result, they are more confident in using the online channel for
their purchasing (Black et al. 2002). Shopping orientations refer to the general
predisposition toward buying behavior and may help explaining the preference for a
shopping retailer format (Girard et al. 2003; Korgaonkar 1984). A number of shopping
orientations have been used to distinguish between online and offline shoppers. These
shopping orientations implicitly address the reasons why consumers shop, i.e. recreational
shoppers seek fun, economic shoppers seek low price, and convenience shoppers seek time
and effort savings. Table 2.2 shows the results of prior studies that investigated the
influence of shopping orientations on online shopping. A positive relationship (+) shows
that the shopping orientation positively affects the likelihood of online shopping or that it
discriminates between online and offline shoppers. For example, Li et al. (1999) found that
compared to offline shoppers, online shoppers were stronger motivated by convenience
(column A), but had a less strong need for tactile information prior to purchase (column I).
The need for recreational shopping and price consciousness did not explain differences
between online and offline shoppers (columns B and C).

Prior studies show mixed results. It appears that online shoppers have a strong need for
convenience, but do not have a strong need for social interaction, for the physical
examination of the product prior to purchase, nor for the immediate possession of the
product. Whether shoppers are motivated by variety (variety-seeking tendency), price (price
consciousness), best buys (economic orientation), impulse buying (impulsiveness),
shopping enjoyment (recreational orientation), brands (brand consciousness) does not
consistently impact the likelihood of online shopping. Although shopping orientations
studies provide useful insights into the motivations of online shoppers, they do not capture
the richness of why people shop online, as the number of shopping orientations in
empirical settings is often limited. Although it becomes clear which type of shoppers tend
to prefer which channel, the tradeoffs consumers make are largely ignored. For example,
convenience shoppers tend to use the Internet predominantly- for its related time and
effort savings, but it is not clear what they give up to attain these time and effort savings.
Understanding Channel Purchase Intentions
34
Table 2.2: Shopping orientations affecting likelihood of online shopping
Study A

B C

D

E

F

G

H

I

J

Donthu and
Garcia (1999)
+ n.s. + n.s. + n.s.
Eastlick and
Lotz (1999)
+ - n.s. n.s. n.s.
Girard et al.
(2003)
+ + n.s. n.s. n.s.
Li et al. (1999) + n.s. n.s. -
Rohm and
Swaminathan
(2004)
+ n.s. n.s. - -
Swaminathan
et al. (1999)
+ -

A Convenience orientation: shoppers prefer to shop with minimum amount of time and effort
B Economic orientation: shoppers prefer to comparison shop for best buys (good quality/price ratio, wide selection)
C Recreational orientation: shoppers prefer to shop for enjoyment
D Variety-seeking tendency: shoppers prefer to shop for different and new products
E Price-consciousness: shoppers have a strong need to get the lowest price
F Impulsiveness: shoppers have a strong need to purchase with no advance planning
G Brand consciousness: shoppers have a strong need to buy brand name products
H Social interaction orientation: shoppers have a strong need to socialize
I Tactile information orientation: shoppers have a strong need to experience (e.g. feel, see, touch) products before buying

J Immediate possession orientation: shoppers have a strong need to immediate possess the product purchased

Retailer factors (i.e. online and offline retailers offerings and competencies) also influence
channel choice. The more positive the consumers perceptions are towards the
online/offline retailers capabilities, the more likely the corresponding channel will be
chosen. Prior studies identified the following influencers of channel choice: retailers
reliability, convenience, price competitiveness, informativeness and merchandise (Black et
al. 2002; Swaminathan et al. 1999; Gehrt and Yan 2004). Next, as the online channel is
more novel and risky, consumers will use trust and reputation as risk relievers in channel
selection. Consequently, the size, longevity and range of channels are seen as influencers of
online channel preference (Black et al. 2002).

Product factors have a strong impact on channel choice and channel preference (Black et al.
2002; Gehrt and Yan 2004; Keen et al. 2004; Nicholson et al 2002). More expensive, risky
and complex products are less amenable to be sold through the online channel, as these
products often require personal interaction with employees (Black et al. 2002). The Internet
is particularly preferred for relatively standardized products and repeat purchases
(Nicholson et al. 2002). Hedonic products are more likely to be sold through the offline
Chapter 2: Determinants of Online Purchasing
35
channel, as this channel is better capable of addressing the need for a prolonged and social
experience (Nicholson et al. 2002). Products that require physical examination are naturally
more suited to be sold through the offline channel (Nicholson et al. 2002; Girard et al.
2003; Gehrt and Yan 2004). In this respect, the classification of search, experience and
credence goods is often used (Girard et al. 2003; Gehrt and Yan 2004). For example,
consumers who shop for clothing (experience good) tend to find the traditional store most
appropriate, followed by the catalog and the Internet (Gehrt and Yan 2004).

Clearly, the performance of the channel itself impacts channel choice. Channel factors that
have been proposed to influence channel choice include the channels accessibility and
convenience, communication utility, distribution utility, risk (privacy and security), ability to
provide personal contact and shopping experience (Black et al. 2002, Li et al. 1999;
Nicholson et al. 2002; Swaminathan et al. 1999). Online shopping is generally valued for its
convenience and accessibility, and its time and effort savings. Nicholson et al. (2002) found
that an increase in consumers cognitive effort, however, balances these temporal benefits.
A final reason for the online shopping preferences is to avoid sales personnel. Offline
shopping preference was not strongly affected by the time and effort required when
shopping for hedonic products, as you go shopping to pass time, not to save it
(Nicholson et al. 2002). Catalog shopping was often preferred for its temporal convenience
and the affective feelings derived from browsing the catalog and purchasing something
special. The ease of browsing and the related feelings of escapism were the dominant
drivers of catalog preference. Consumers did address that the delivery delays and errors
were detrimental aspects of catalog shopping (Nicholson et al. 2002).

Situational factors impact channel choice through altering the relative importance of
evaluation criteria. For example, consumers with limited time available are more concerned
with transaction service (shopping convenience and reliability) and merchandise quality,
than with retailer personality (shopping atmosphere and retailer familiarity) and are most
likely to prefer catalogs, followed by the Internet and traditional stores (Gehrt and Yan
2004; Maher, Marks and Grimm 1997). Consumers tend to prefer to shop offline, when
they feel a need to socialize and when the purchase is for themselves rather than for others
(gift giving) (Gehrt and Yan 2004; Nicholson et al. 2002), whereas they prefer to shop
online for the lack of social interaction when mood is low (Nicholson et al. 2002).
Understanding Channel Purchase Intentions
36
Prior studies suggest that consumers in general still prefer to shop through the physical
stores rather than through the online channel and catalog (Gehrt and Yan 2004; Keen et al.
2004; Nicholson et al. 2002). However, in some circumstances other channels are
preferred. Prior research also demonstrated that channel choice is a complex issue with
multiple interactions (cf. Black et al. 2002). Product-channel interactions appear, as the type
of product (e.g. search versus experience good) can strongly influence the preference for a
channel. Consumer-channel interactions are present as the consumers level of prior
experience and expertise affects the channels suitability and preference. Retailer-channel
factors may also be apparent; for example, consumers may prefer to shop online because
they believe that e-tailers hold superior assortments, because of different cost-structures
(cf. Brynjolfsson et al. 2003). Finally, situational factors can also impact the preference for
channels; consumers with little time available often prefer the most convenient channel.

Although these studies on channel use and preference provide very useful information
about why consumers adopt a channel, they are very general and mostly neglect the fact
that retailers performance within a channel can differ. They often compare channels in its
own right rather than stores belonging to a channel. In other words, similar to the TAM
studies, they implicitly assume that all retailers pertaining to one particular channel are alike
in terms of their offerings. It might be true that consumers prefer a channel, because they
like a particular retailer that happens to belong to that channel. Nicholson et al. (2002)
controlled for this by analyzing consumers motivations to buy via different channels for
the same retailer. In a similar vein, Montoya-Weiss, Voss and Grewal (2003) investigated
how consumers evaluate the use of the online and offline channel for the same retailer.
They conducted two studies to investigate the determinants of online channel use with a
multichannel service provider. They argue that consumers base their online channel use on
the relative assessment of the service quality provided by the online and the alternative
(offline) channel, and on online channel risk perceptions. In their model, online service
quality is determined by the following website design criteria: navigation structure,
information content and graphic style. Channel risk perceptions are influenced by
information content and graphic style and general Internet expertise. The authors argue
that offering multiple channels to consumers may have both competitive and
complementary effects: competitive in that higher perceived service quality of one channel
over another will lead to channel preference; complementary in that higher perceived service
Chapter 2: Determinants of Online Purchasing
37
quality will lead to higher overall customer satisfaction with the service provider. The results
suggest that consumers use of online channel and overall satisfaction is determined by
three website design factors (navigation structure, information content, and graphic style)
and two sets of consumer evaluations (relative service quality and risk). In addition,
changes in the service quality in either channel impact online channel use and overall
satisfaction. This result indicates that consumers partially base their online channel use on
the performance of alternative channel. Figure 2.3 shows the model and the tested
relationships.





























Figure 2.3: Determinants of online channel use (Montoya-Weiss et al. 2003, p. 450)

Navigation
structure
perceptions
Information
content
perceptions

Graphic style
perceptions
Website design criteria
Consumer characteristic
General
Internet
expertise
Alternative
channel SQ
Online
channel SQ
Online
channel risk
perceptions
Overall
satisfaction
Online
channel use
Paths supported in both studies
Paths supported in one study
Outcomes Relative channel assessment
Understanding Channel Purchase Intentions
38
2.6 Common or unique determinants?

With the advent of the Internet, many authors were primarily interested in demonstrating
the differences between online and offline shopping (Alba et al. 1997; Butler and Peppard
1998; Hubl and Trifts 2000). The decision to shop online or offline is the same as the
decision to buy through an online or offline store. As such, scholars have investigated
whether the evaluative criteria (i.e. store attributes) of offline retailers differ from those of
online retailers. According to Chen and Dubinsky (2003) there are predictors of value that
are unique to the online context, including ease of use, informativeness, and reputation.
However, all of these variables have already been identified in the offline context as
components of store image and influencers of consumer behavior (Berry 1969; Lindquist
1974). In a similar vein, Lim and Dubinsky (2004) argued that online stores have unique
attributes vis--vis offline stores, such as navigation and interactivity (i.e. customer support,
personal-choice helper, surfer postings). Again, a closer investigation shows that the
attributes refer to traditional ones: navigation resembles store layout, which has long been
identified as important store attribute in the offline retail context (Berry 1969), whereas
customer support and personal choice helper relate to aspects of customer service
(Dabholkar et al. 1996), and surfer postings could be interpreted as an information source
similar to word-of-mouth. Wolfinbarger and Gilly (2002) attenuated the uniqueness by
arguing that although some store attributes are common to the online and offline stores
(e.g. merchandise assortment, service policies, layout and reputation), others are not (e.g.
clientele). Based on a review of store attributes, Lohse and Spiller (1998; 1999) early
identified that consumers to a great extent consider the same attributes to compare online
stores with offline stores. This study questions the uniqueness of the store attributes and
determinants of online shopping. Appendix II provides a classification of store attributes,
which is based on prior offline studies, and inserts the store attributes found in online
studies. Appendix II shows that online and offline retailers to a great extent share common
evaluative criteria. Although the lower-level attributes may appear different (e.g. website
interface versus physical store setting, navigation versus store layout), it is posed that
consumers evaluate online and offline shopping on the same criteria at a slightly higher
abstract level (i.e. store attribute level). Consumers may attribute different scores and
different weights to online and offline store attributes, but the most relevant attributes for
shopping are common to both channels (cf. Verhoef et al. 2005). For example, due to
Chapter 2: Determinants of Online Purchasing
39
higher risk perceptions, trust plays a more important role online. However, both risk and
trust play a significant role offline (Doney and Cannon 1997; Sweeney et al. 1999).

2.7 Conclusion

This chapter reviewed the literature to investigate the determinants of online purchasing.
The motivations and impediments to shop online were first discussed. On balance, online
shoppers tend to shop online for reasons of ease of use/convenience, increased
selection/specialty merchandise, availability of relevant information, lack of sociality which
results in more control. The reasons not to shop online are mainly due to the higher risk
levels. In this respect, reputation and trust are often mentioned as facilitators of online
purchasing. For physical products, consumers may also refrain from online shopping
because of the impossibility to physically examine the product prior to purchase, the
additional delivery time, and difficulties in returning faulty merchandise. Next, a review of
TAM literature showed that adaptations of TAM are well capable of predicting E-
Commerce adoption, but are less capable of clearly explaining why consumers shop online.
TAM studies demonstrated the importance of perceived enjoyment, risk and trust as
important predictors of online purchase intentions. Subsequently, the predictors of e-
quality, e-value, e-satisfaction, and e-loyalty were reviewed. These important consumer
judgments addressed that evaluations of channel factors (interactions with the website), as
well as retailer factors (offerings/capabilities of the retailer) explained purchase intentions.
The predictors of these online consumer judgments largely resembled those found in
offline studies. Then, the determinants of online channel use and preference were
investigated. This field of research tries to understand online shopping at a more abstract
level by relating it to other retail shopping formats and by incorporating consumer, retailer,
product, and situational factors. Channel choice is by definition more complex than
product and store choice and should be seen in the context of these variables. The studies
conducted in this field, among other things, investigated the shopping orientations, which
closely resemble the motivations to shop online. Online shoppers have a strong need for
convenience, but do not have a strong need for social interaction, for the physical
examination of products prior to purchase, nor for the immediate possession. The use of
shopping orientations to explain channel purchase intentions is, however, limited as it does
Understanding Channel Purchase Intentions
40
not show the tradeoffs consumers make. Another limitation is that these studies frequently
treat channels as a whole, neglecting the fact that retailers may significantly differ in their
offerings within a channel. Retailer factors clearly influence channel choice, as they
substantially influence what and how the product or service is delivered. Differences in the
retail offerings online versus offline play a profound role in explaining why consumers
intend to shop through an online or offline retailer (cf. Montoya-Weiss et al. 2003). As it is
hardly possible to include all factors that influence channel purchase intentions, this study
decides to focus on two relevant factors: channel factors and retailer factors. Given a
particular product, channel factors and retailer factors are expected to largely explain the
motivations to use a channel.

Although past research has been very beneficial in identifying the determinants of online
buying behavior, it largely ignored the issue of channel choice. Most studies consider the
Internet in isolation of other channels (e.g. Wolfinbarger and Gilly 2003; Szymanski and
Hise 2000). As a result, the performance of the Internet vis--vis other channels is largely
disregarded; it only elicits the motivations to adopt/use the online channel. To better
understand channel purchase intentions, it is desired to make explicit the options
consumers consider. Additionally, it is desired not to treat channels as such, as it neglects
the differences between retailers within the same channel (see above). This study tries to
overcome these deficiencies by measuring the perceptions of buying through specific
online and offline stores. Based on a comparison of online and offline store attributes, this
chapter concluded that consumers consider the same criteria to evaluate online and offline
stores, but that they may differ in their scores and the weights they attribute to evaluation
criteria. In this respect, the concept of perceived value is chosen as it represents a tradeoff
between all perceived costs and benefits, enabling comparisons between online and offline
shopping. The next chapter provides a background on perceived value.