An Exploratory Study of Consumer Adoption of Online Shopping: Mediating Effect of Online Purchase Intention

Introduction

Internet as a medium of business transaction has gained in importance in spite of the dot-com bubble burst we witnessed at the end of the century. Jupiter forecasts that online retail sales will surge to a new level, reaching $117 billion in 2008, representing 5% of total retail sales in the U.S. (Gonsalves, 2004). Although the trend of online shopping continues and shows no sign of slowdown, Internet retailing is far from reaching its full potential; only about 3% of Internet users actually make an online purchase (Betts, 2001), a particularly low percentage that must be improved in order to usher in the new era of e-commerce.

The purpose of this study is to explore the factors influencing consumer adoption of innovation in the case of online shopping. The research question is among all Internet users who are likely to make a commercial transaction through the Internet, a topic of importance and yet under-researched. In the past, many Internet firms provided free services or services for a nominal fee, a business model that turned out to be fragile and unsustainable, one of the reasons the dot.com bubble burst (Guo, 2002). As millions of consumers enjoyed the free ride that Internet technology had to offer, the challenge facing online businesses was and always has been to distinguish valuable consumers from those cheap riders who take full advantage of amenities that new technology provides, such as free e-mail and networking, but who are not willing to spend money or symbolically consume in the online community. This task is critical to company success, as e-businesses learned the lesson the hard way that they cannot treat every customer or potential customer the same, simply because not all consumers are created equal.

The organization of this article is as follows: a literature review is conducted to develop research hypotheses that are tested, followed subsequently by methodology and results analysis. Limitations and implications of the results are also discussed.