Online Shopping: Exploring Perceptions of Digital Natives in the United Arab Emirates

Online Shopping: Exploring Perceptions of Digital Natives in the United Arab Emirates

Muneeza Shoaib (Middlesex University Dubai, Dubai, United Arab Emirates) and Hameedah Sayani (Dubai, United Arab Emirates)
Copyright: © 2016 |Pages: 24
DOI: 10.4018/IJOM.2016100102
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Abstract

The study aims to investigate the perceptions of the UAE digital natives regarding web vendors, and online privacy and security, that in turn determine their online shopping intentions. Despite exponential growth in e-commerce in the GCC in general and UAE in particular, and favorable economic and demographic factors, research in this realm is sparse. This study attempts to fill this void. More than 200 respondents aged between 18-30 years are surveyed and data is collected on their perceptions regarding various characteristics of web vendors, online security and privacy, and online shopping intentions. Principal Component Analysis and Binary Logistic Regression is used for dimension reduction and to examine association between the extracted factors and intention to shop online for the target group, respectively. The results highlight the importance of establishing positive brand image and adapting effective and viable privacy protection mechanisms to motivate consumers to shop online and use payment mechanisms other than cash on delivery.
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1. Introduction

Online shopping is increasingly becoming popular around the world and the Middle Eastern countries are not different. Acuity Middle East (2012) reported a 45% growth rate in B2C e-commerce in the Middle East, which was the highest in the world. The number of internet users in the Middle East increased exponentially between 2000 and 2011 from 5.3 million to 113 million representing a growth of approximately 2000% (IORMA, 2013). The GCC countries also have a high visibility on the Networked Readiness Index (NRI)1 of 2013 (INSEAD and World Economic Forum, 2013). Popularity of mobile shopping or m-commerce is facilitated by high level of smart-phone penetration (Nielsen, 2014)2, falling prices of data packages, and high capacity mobile networks like 4G and LTE (Etisalat, 2015). Subsequently, the GCC online shoppers spent nearly $3.2 billion in 2012 (IORMA, 2013).

With respect to the UAE, internet penetration stands at 80%, and the internet usage and the mobile phone subscription rate is 88% and 172% respectively (World Bank, 2014). Most importantly, smart phone penetration is estimated to be 78% and 81% of the smart phone owners are between the ages of 16 and 34 years (Nielsen, 2014). Despite high internet and smart phone penetration in the UAE, the number of internet users who actually shop online is only 15%, which constitutes less than 1% of the total retail sales of the region (ETC Digital, 2015).

Al Makahleh (2013) reports that 130% of the UAE population possess credit cards but due to high security concerns consumers are reluctant to provide credit card information to online platforms3. Moreover, the UAE is reported to be among the top five countries worldwide impacted by credit card related fraud (Inscoe, 2012). Consequently, web vendors are forced to offer alternative methods of payments to the consumers who shop online, such as Cash on Delivery (COD)4. In the GCC in general and the UAE in particular, COD is the most popular and preferred mode of payment for online transactions as reported by retailers like MarkaVIP5, whereby approximately 80% of the transactions on the retailer’s website use the COD mode of payment (Davis, 2013), which is considered to be a major impediment in the growth of e-commerce of the region.

Lack of trust is most frequently cited as a reason for consumers not shopping on the Internet (Lee & Turban, 2001). Monsuwé, Dellaert & De-Ruyter (2004) affirm that trust has an important moderating effect on the relationship between consumers’ attitude towards Internet shopping and intention to shop online. Doney & Cannon (1997) argue that in the context of traditional retail setting, the consumer trust is dependent on the salesperson’s expertise, likeability, and similarity to the customer. On the other hand, online shopping encompasses several risks that contribute to consumers’ reluctance to shop online. First, the quality of a product cannot be affirmed physically, second the safety and security of sending sensitive personal and financial information while shopping on the internet cannot be monitored (Lee & Turban, 2001) and lastly, the lack of face-to-face interaction add to consumers’ anxiety.

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