Consumer attitude toward the use of e commerce in ho chi minh city a case study of thegioididong com

CONSUMER ATTITUDE TOWARDS THE USE OF E-COMMERCE IN HO CHI MINH CITY : A CASE STUDY OF THEGIOIDIDONG.COM In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS AD

CONSUMER ATTITUDE TOWARDS THE USE OF E-COMMERCE IN HO CHI

MINH CITY : A CASE STUDY OF THEGIOIDIDONG.COM

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

CONSUMER ATTITUDE TOWARDS THE USE OF E-COMMERCE IN HO CHI

MINH CITY: A CASE STUDY OF THEGIOIDIDONG.COM

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Acknowledge

I would like to express my very great appreciation to my advisor – Dr Ho Nhut Quang with all my respect and gratitude Thanks for all his great support to provide guidelines, challenges ideas, and all of his value comment to help me finish this thesis

I would like to thank all my friends, my brother and sister to support their ideas, answer my questions during the time I do this research

And finally I want to say my great thank to my family, who always besides me to overcome all difficulties during this time

With many thanks,

Plagiarism Statements

I would like to declare that, apart from the acknowledged references, this thesis

either does not use language, ideas, or other original material from anyone; or has not been

previously submitted to any other educational and research programs or institutions I fully

understand that any writings in this thesis contradicted to the above statement will

automatically lead to the rejection from the MBA program at the International University –

Vietnam National University Hochiminh City

Copyright Statement

This copy of the thesis has been supplied on condition that anyone who consults it

is understood to recognize that its copyright rests with its author and that no quotation from

the thesis and no information derived from it may be published without the author’s prior

consent

© Pham Huy Viet/ MBA03041/ 2013

Table of contents

CHAPTER ONE: INTRODUCTION 1

1 Introduction 1

1.1 Overview of E-commerce 1

1.2 Development of e-commerce in Vietnam 2

1.3 Reasons for the Underdevelopment of E-commerce in Vietnam 2

1.4 E-commerce models in Vietnam 2

1.5 Overview about thegioididong.com 4

2 Research problem: 7

3 Research questions: 8

4 Research objectives: 8

5 Scope and limitation 9

6 Implication: 9

7 Research structure: 9

CHAPTER TWO: LITERATURE REVIEW 10

1 Consumer attitude: 10

2 Technology acceptance model- TAM: 10

3 Research model and hypothesis: 12

CHAPTER THREE: RESEARCH METHODOLOGY 14

1 Research approach: quantitative 14

2 Research process: 14

3 Questionnaire design 15

4 Sampling design 15

5 Piloting test 16

6 Data analysis 16

CHAPTER FOUR: DATA ANALYSIS AND RESEARCH RESULT 19

1 Sample demographic 19

2 Descriptive statistics 21

2.1 Perceived benefit 21

2.2 Perceived ease of use 22

2.3 Perceived quality of service 23

2.4 Consumer attitude to online transaction 24

3 Reliability test 24

3.1 Reliability statistic of perceived benefit 24

3.2 Reliability statistic of perceived ease of use 25

3.3 Reliability statistic of perceived quality of service 26

3.4 Reliability statistics of consumer attitude to online transaction 27

4 Exploratory Factor Analysis 27

4.1 Exploratory factor analysis for independent variables 27

4.2 Exploratory Factor Analysis of Dependent Variable 31

5 Cronbach’s Alpha after exploratory factor analysis 32

6 Regression analysis 33

7 Revision of hypotheses and research model 36

CHAPTER FIVE: CONCLUSION AND RECOMMENDATIONS 37

1 Conclusion 37

2 Recommendations 38

3 Limitations 39

List of Tables

Table 1: Relationship between perceived value and consumer attitudes to online

transaction 13

Table 2: coding data summary 17

Table 3: Descriptive statistics of perceived benefit 22

Table 4: Descriptive statistics of perceived ease of use 22

Table 5: Descriptive statistics of perceived quality of service 23

Table 6: Descriptive statistics of consumer attitude 24

Table 7: Reliability statistics of perceived benefit 25

Table 8: Reliability statistics of perceived ease of use 25

Table 9: Reliability statistic of perceived quality of service 26

Table 10: Reliability statistics of consumer attitude 27

Table 11: Exploratory factor analysis for independent variables 28

Table 12: Rotated Component matrix 30

Table 13: Exploratory factor analysis of dependent variable 31

Table 14: Cronbach’s Alpha after exploratory factor analysis 32

Table 15: regression analysis 33

Table 16: anova test 34

Table 17: coefficient 34

List of Figures

Figure 1: The best e-commerce website in 2012 4

Figure 2: Thegioididong.com offline store 6

Figure 3: thegioididong.com online store 6

Figure 4: Technology Acceptance Model-TAM 11

Figure 5: Research model 12

Figure 6: Research Process 14

Figure 7: percentage gender of respondents 19

Figure 8: percentage of age’s respondents 20

Figure 9: percentage of marital status 20

Figure 10: Income description 21

Figure 11: Revised Research model 36

Abstract

As an inevitable trend of the globalization process, E-commerce has become an indispensable part of today’s modern economy due to its benefits brought to consumers and businesses, including lower transaction costs, greater convenience and the power of personalization Despite the wide adoption of this technology in some developed countries, many emerging markets are still in the initial stage of implementing the Internet for their commercial activities

This research aims to investigate the consumer attitudes to E-commerce and its adoption in Vietnam In particular, thegioididong.com website will be studied to identify the extent of E-commerce usage and the factors that influence Finally, recommendations will be provided to address the problems

Key words: e-commerce, consumer, attitude

CHAPTER ONE: INTRODUCTION

1 Introduction

1.1 Overview of E-commerce

Since the early 1990s, the Internet has brought special change to every aspect in our society The Internet has created new industry structures and transformed the rules of competition in the marketplace, changing such things as intensity of rivalry, threats of new entrants, bargaining power of suppliers and buyers, and threats of substitutes (Stegwee, 2001) (Porter, 2001) The market therefore demands an entirely new business culture and set of processes for organization to better adapt to the advanced technology (Means, Faulkner, 2000).With the development of internet, it also introduced new business model: e-commerce

Electronic commerce, commonly known as e-commerce, is the buying and selling product or service over electronic systems such as the Internet and other computer networks Electronic commerce draws on such technologies as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems Modern electronic commerce typically uses the World Wide Web at least at one point in the transaction's life-cycle, although it may encompass a wider range of technologies such as e-mail, mobile devices social media, and telephones as well Electronic commerce is generally considered to be the sales aspect of e-business It also consists of the exchange of data to facilitate the financing and payment aspects of business transactions

E-commerce has become a source for organizational competitive advantage for today’s marketplace participants (Peffers, Santos, 1998) E-commerce is used as a new innovation strategy within many business sectors in order to increase business competitiveness According to Watson et al (1998), E-commerce involves the use of information technology to enhance communications and transactions with all of an organization’s stakeholders such as customers, suppliers, government regulators, managers, employees, E-commerce has changed and is still changing the way business is conducted around the world

1.2 Development of e-commerce in Vietnam

E-commerce is in the initial stage in Vietnam The local companies are improving their awareness of importance and effectiveness of the application of information technology and e-commerce to their business Most companies have established their own websites to introduce products and services to customers and clients as well as to implement online sale and purchase (B2C) or built up websites to gather many companies

to introduce products and services (B2B) A large number of e-commerce websites have made their successful online presence in Vietnam including vatgia,thegioididong.com etc Owners of these websites can be trade offices, governmental agencies, or even companies

or individuals In addition, the increasing development of middle class has given commerce good opportunities to flourish It is easier than ever for online consumers to compare products from different vendors with respect to prices, quality and promotion Together with the phenomenal growth of social networking sites, E-commerce has increasingly proven to be a very effective trading channel strongly competing with brick-and-mortar retail shops

e-1.3 Reasons for the Underdevelopment of E-commerce in Vietnam

Due to slow development of IT infrastructure as well as of policies, legal environment, intellectual property protection, privacy rights, etc, Vietnamese enterprises and consumers have not been eager and confident enough to participate in e-commerce In addition, there has been reported a considerable number of fraud incidents such as muaban24.com and nhommua.com that create negative sentiments in the market Moreover, Vietnamese enterprises lack of appropriate business models and processes which can greatly benefit from E-commerce This requires significant changes in how businesses should be conducted and supports from government

1.4 E-commerce models in Vietnam

E-commerce is classified according to the transaction There are two main types: B2B (business-to business) and B2C (business-to-consumer).Business-to-business (B2B) describes commerce transactions between businesses, such as between a manufacturer and

a wholesaler, or between a wholesaler and a retailer An example of electronic B2B is a clothing designer linking up electronically to a fabric supplier whereby the designer

specifies his/her fabric needs, pays for the order, and then the supplier initiates the fulfillment of that order by computer B2B technologies like that of E-Gov and B2C usually take some time to develop as they are fairly complex and require a certain mastery

of the technology used

Vietnam's B2B solutions at the moment are few and far between Much like the other B2C and e-gov websites mentioned, Vietnamese B2B sites tend to be more informational than interactive For example, the sites MekongSources.Com, VietVentures.Com, and VietnamE-Commerce.Com attempt to link Vietnamese businesses with foreign businesses while also giving viewers an overall sense of the business/legal environments in Vietnam Where the sites succeed is in their presentation of information Where they fail however is in their attempt to link Vietnamese companies with foreign companies, mainly by way of search engines and the presentation of contact information

A number of other websites including MeetVietnam.com, which heralded infinite hype in early 2001 as a government sponsored website to promote B2B activities, have not materialized as well

Business-to-consumer (B2C) describes commerce transactions between a company and a consumer This term may also describe a company that provides good and services for consumers.B2C is prevalent in developed countries that have established means for completing electronic transactions (i.e a developed mail system, electronic forms of payment, etc.) As such many lesser developed countries tend not to utilize B2C technologies because their infrastructures are unable to support the technology An example of B2C is Amazon.com, a world-wide Internet retailer of books and other goods

To showcase two B2C websites that defy the conventions set forth above and that

do work (though inconsistently), see Huong Viet Flowers, which allows users to have flowers delivered 24 hours a day to Vietnamese citizens from anywhere in the world, and VietnamHost.Com, which through its network allows users to transfer cash in order to complete online transactions For example about B2C model, Minhkhai book store, Fahasa, thegioididong.com,…

Beside these two models, E-commerce also have many new models such as C2C(consumer-to-consumer), C2B (consumer-to-business), G2C (government-to-citizens), and online banking

1.5 Overview about thegioididong.com

In the socioeconomic development, internet becomes more common to everyone, especially in finding product’s information, to compare and evaluate before purchase Thegioididong.com first went online in 2003 and is a complementary online store to Thegioididong.com physical store network, which includes 226 outlets as of april 30th,

2012 Since established, Thegioididong.com has become the leading mobile device retailer

in Vietnam with approximately 20% market share Thegioididong.com is the best website

in Vietnam on the mobile, laptop and others digital equipments ( camera, Mp3, Mp4…), with more than 600.000 page views/ day in mobile webpage

The number of visitors of www.thegioididong.com increase every day, www.thegioididong.com usually attach to special importance to update both its content and interface, accompany with online and offline advertising campaign creatively Visitors have an average age of 15-35 years old

Figure 1: The best e-commerce website in 2012

From the business perspective, thegioididong.com business model is B2C It earns revenue through sales and leasing advertising space on its website Remarkably,

thegioididong.com also serves as the top online manual for mobile devices, enabling quick and easy discovery of product information In 2003, mobile phone was still a luxury good

to Vietnamese people If one decided to purchase a mobile phone, he would be skeptical about which product to choose However, at that time, Vietnamese mobile phone industry was very lack of information concerning models, features, prices, etc Thegioididong.com came forth as the very first website to make all this information available specifically to Vietnamese customers and integrate them all into one place The website has helped to reduce greatly the time and effort people spend on searching information and comparing products to arrive at the best purchasing decisions

Such information transparency has increased the competitiveness in this industry, leading to lower prices and better customer services, which greatly benefits customers Retailers are forced to operate in a more cost-efficient and customer-oriented manner to remain competitive Some major direct competitors of Thegioididong.com include Vien Thong A, Phuoc Lap Mobile, Viettel and FPT Together they account for 40% of Vietnam’s mobile phone retail market Facing increasing competition, Thegioididong.com still remains the biggest player in its niche due to superior customer exposure, strategic customer relationship management and visionary leadership Despite the success of Thegioididong.com as a whole, online sales remain low In 2011, Thegioididong.com online sales account for only 9% of the total revenue According to IDC Vietnam, Vietnamese customers prefer to go to physical stores to see, touch and check the product themselves They also favor cash payment over other modes of exchange These are the primary factors that hinder online sales success

Some awards of thegioididong.com :

- Best E-commerce Website Award 2008 by PC World Magazine

- Best Mobile Phone Retail Chain for 2007 by eChip magazine

- Vietnam the best 2007 by Vietnam Network

- Fastest growth dealer of FPT Mobile

- Fastest growth dealer of FPT Mobile ( NOKIA)

Figure 2: Thegioididong.com offline store

Figure 3: thegioididong.com online store

2 Research problem:

E-commerce brings many good effects to economic, it opens many new ways for economic such as create many new jobs, reduce many unnecessary costs, stimulate competition, social stimulus and stimulate product development that satisfy the consumer demands It made business more dynamic in management and more creative business ideas

- With business:

o It help to widen the market not only domestic but also foreign With the minimum cost, business can get more customers, find the best suppliers, and suitable partners all over the world

o It reduced management cost, save information, telecommunication, postal, inventory and delivery

o Shorten response time to customers: online purchasing order will be handle quickly by salesperson with computerized tools and goods will

be deliver as soon as possible to customers

o Shorten time to introduce product to the current market, with online customer network, business can get many comments of customers With working online, all parts of a company can share information together to complete products for market

o Create many type of business model bring many benefits

o Business management is better base on computerization

o Pay more attention to customer service base on informatics tools with all data about customer

o Better price because the suppliers can reduce production and management cost

o With some special good that can be digitized like books, newspaper, film, music, software, … time for delivery can be shorten

o Customer can share experience together on website or forum

- With society:

o Make many jobs, opportunities for society: when e-commerce develops, computer industry, telecommunications, software industry, forwarder industry, also develop better Many new jobs will appear with service for e-commerce for all above industries

o Reduces many cost for society such as: management, production, transportation

o Improve quality of many services: more information, faster, more accurate …

Despite the above competitive advantages that E-commerce has brought to enterprises and consumers, and the effect of thegioididong.com to Vietnam market and transaction online, there have been rising concerns about security, lack of infrastructure and legal complications, especially in developing countries like Vietnam As the result, the use of E-commerce in Vietnamese businesses is not as high as other developed nations That is the reason make the consumer do not believe and use e-commerce as the developed country in the world This research will consider e-commerce in the case of thegioididong.com to develop a new way for changing consumer attitudes to e-commerce adoption

3 Research questions:

What are the important factors that influence consumer attitude towards the use

of Thegioididong.com website?

What are the challenges that Thegioididong.com are facing with and how to

solve these problems?

4 Research objectives:

This research aims to solve the problem of underdevelopment of E-commerce in

Ho Chi Minh city, use the case of thegioididong.com The detailed objectives are as

followed:

- Define and evaluate the factors that effect to consumer attitude of using e-commerce, especially in trading in thegioididong.com

- Suggest a policy implication for strategy to improve quality of thegioididong.com

5 Scope and limitation

- Research objects are e-commerce websites, especially the case of Thegioididong.com This research will be carried in Ho Chi Minh city, that the most attracted market for transaction online

6 Implication:

This study aimes to provide a comprehensive understand about e-commerce and trading online From the data analyzed, managers of e-commerce website will understand clearly about the negative and positive impacts of e-commerce to consumers This research hopes to find the factors that effected to e-commerce adoption and makes it useful and suitable to the business environment in Ho Chi Minh city

7 Research structure:

The structure of the thesis consist five chapters:

Chapter 1: Introduction this chapter presents research background of the thesis,

as well as, research questions, research objectives, research methodology and scope

Chapter 2: Literature review this chapter address the theory of consumer attitude,

factors that affect consumer attitude, Technology acceptance model in order to give

a clear ideas about the research area

Chapter 3: Research methodology this chapter presents the design, approach,

questionnaire of my thesis

Chapter 4: Data analysis and research results this chapter analyzes the data

collect and presents the finding of research

Chapter 5: Conclusions and Recommendations this chapter focuses on

discussing the final results of the study and suggestions for improvement

CHAPTER TWO: LITERATURE REVIEW

Important theoretical models and frameworks related to E-Commerce will be presented in this section

1 Consumer attitude:

Consumer attitudes are a composite of a consumer’s beliefs about, feelings about, and behavioral intentions toward some object within the context of marketing, usually a brand or retail store (Perner) These components are viewed together since they are highly interdependent and together represent forces that influence how the consumer will react to the object

Beliefs The first component is beliefs A consumer may hold both positive

beliefs toward an object as well as negative beliefs In addition, some beliefs may be neutral, and some may be differ in valance depending on the person or the situation Note also that the beliefs that consumers hold need not be accurate, and some beliefs may, upon closer examination, be contradictory Affect Consumers also hold certain feelings toward brands or other objects Sometimes these feelings are based on the beliefs, but there may also be feelings which are relatively independent of beliefs

Behavioral Intention The behavioral intention is what the consumer plans

to do with respect to the object (e.g., buy or not buy the brand) As with affect, this is sometimes a logical consequence of beliefs (or affect), but may sometimes reflect other circumstances e.g., although a consumer does not really like a restaurant, he or she will go there because it is a hangout for his or her friends

2 Technology acceptance model- TAM:

Technology Acceptance Model was developed by Davis(1986) base on Theory of Reasoned Action –TRA of Fishbein and Ajzen(1975) TAM is basically information system theory that covers how a user accepts and uses technology, TAM outlines number of factor that influence a user’s decision and at the same time it deals with the how and when users will use it The model deals with acceptance of information technology

This model had five main variables that influence users to make a decision are

- External variable: this was the variables that effect directly to Perceive usefulness and Perceive ease of use

- Perceived usefulness: people recognized that using the system of separate applications will develop work effectiveness to a job

- Perceived ease of use: was the easy way when people used this system

- Attitude towards using: was the attitude of using a system that created

by belief in usefulness and ease of use

- Behavioral intention of use: was the intention of people to using this system

According to Davis, PU was the main point and PEU was the second main point affect to using computer of people TAM agreed two factors PU and PEU that were the basic decisions to system acceptance of people

Figure 4: Technology Acceptance Model-TAM

This model was the result of economic foreign researcher about information technology application, they mentioned about search information, purchasing of customer on Internet However, this model just was the studies of foreign customer,

so they will have some differences from business environment in Vietnam, especially in Ho Chi Minh city

When apply this two model in Vietnam to start business transactions, on internet and special in e-commerce with the case of thegioididong.com, what factor affect to e-commerce adoption we should mentioned to success ?

The above model recommended to attitudes and behaviors of consumer, but

in this study, I only recommended to consumer attitudes because if someone had a good attitude about product/service, it will lead them to a good behavior

3 Research model and hypothesis:

H1

H2

H3

Figure 5: Research model

Figure 7 illustrates the influence of three factors to consumer attitudes to trading online base on Technology Acceptance Model(TAM)

Perceived benefit

Perceived ease of use

Perceived quality of service

Consumer attitude to online transaction

Hypothesis

From the Research model in Figure 6, a number of hypotheses were generated as table 1 indicated the relationship between perceived benefit, perceived ease of use, perceived quality of service with consumer attitudes to online transaction

Table 1: Relationship between perceived value and consumer attitudes to online

transaction

H1 Perceived benefit influences to consumer attitude to online transaction

H2 Perceived ease of use influences to consumer attitude to online transaction

H3 Perceived quality of service influences to consumer attitude to online transaction

CHAPTER THREE: RESEARCH METHODOLOGY

1 Research approach: quantitative

In this thesis, both of two methods qualitative and quantitative were also used by researcher, but quantitative approach is the main point The quantitative method is done by surveying the questionnaires with the sample size 205

This primary reason for conducting quantitative research was to learn how many people in a population satisfied about thegioididong e-commerce website Quantitative research was appropriated for measuring the perceived of consumer attitude about the use

of e-commerce Base on that, thegioididong.com will have the solution to improve their service to satisfy the consumer as well as to get more market

2 Research process:

Figure 6: Research Process

Research process began with literature review, then came up with research model and hypotheses Next, pilot test helped to get feedbacks from respondents and test the reliability of the scale before completing measurement and questionnaire for collecting data In analysis stage, reliability test, EFA, ANOVA were used Finally, base on the result

of the test, conclusion and recommendation were given

Literature review

Research model

Hypothesis

Measurement

Questionnaire Design Collecting data

Analysis of Variance

Discussion and Conclusion

3 Questionnaire design

Base on the result of the in-depth interview, the questionnaire is designed in order

to get data from consumers To avoid the respondents ‘confusedness, all the statements that given in the questionnaire are simple and easy to understand

There are two parts in the questionnaire The first part mentions some demographic question about consumer’s information And the second part includes questions consumer attitudes and perceived quality

The questionnaire will be distributed and return by two way: by google doc and direct contact to participants

Three types of questions used can be named as list questions, category question, and Grid questions Grid questions are designed as the form of five-point Likert Scale matrix Researcher used five-point Likert scale matrix in order to get respondent’s idea clearly from “totally disagree “(=1) to “totally agree”(=5)

4 Sampling design

“ A population was a group of potential participants to whom you want to generalize the results of a study” (Salkind, 2006) In order to conduct a survey, the population should be defined But in some cases, we cannot access all the units of the population because it can waste a lot of time In this case, sample was a good solution, sample was defined as a small percentage of a population

In this research, the population was defined that all consumers who lives in Ho Chi Minh city and Binh Duong

Frame sample: choosing one part of population to observation, accomplish survey with 205 consumers who used e-commerce

The sample size for this finding can be five times compared with number of variables analyzed as recommend sample size by Hair et al (1998) The model research has 19 variables, sample size is 19 multiply 5 equal 95 (n= 19*5) To meet sample size, author sent 300 questionnaire survey copies

5 Piloting test

To conduct the questionnaire survey completely, researcher used piloting test This

is the last step of constructing questionnaire process ( Churchill & Iacobucci, 2002) Saunders, et al (2007) suggested that this step should be given before the questionnaire survey Thus, to make sure the respondents easy to answering the questionnaire a pre-testing questionnaire will be conducted The validity and reliability of questionnaire survey will be examined by pilot respondents As Fink (1995) the minimum of selection for pilot questionnaire is 10 respondents Hence, researcher delivered 10 questionnaires to respondents and used their feedbacks to adjust the questionnaire After piloting test, there are 24 questions left in the questionnaires This can use to sending to participants to collect data in data analysis

6 Data analysis

a Coding data

As mentioned, the questionnaire survey is two sections The first section consists of question related to consumer information And the next section includes questions related

to perceived value of consumer about online transaction

In the first section:

Gender: a nominal variable, Male (code=1) and female (code=2) Age: a ordinal separate ranges as following

o Under 18 years old: coding =1

o 18-24 years old: coding =2

o 25-30 years old: coding =3

o 31-40 years old: coding =4

o Over 40 years old: coding =5 Marital status:

o Married : coding =1

o Single : coding =2 Income level per month: a ordinal separate ranges as following

o Less than 2 millions: coding = 1

o 2 million to 6 million : coding =2

o 6 million to 10 million : coding =3

o Over 10 million : coding = 4 Five-point scale from “totally disagree”(1) to “totally agree”(5) is used for the next section

o Totally disagree: coding =1

Table 2: coding data summary

Personal

information

B3

Put your mind at ease with a safe and convenient B4

online experience Always put your privacy and benefits their first priority

B5

Perceived

ease of use

Allows you to navigate easily without any confusion from page to page

Provide clear and comprehensive information about their products and services

You are satisfied with products and services provided

in thegioididong.com (service quality, products variety …)

C1

You feel connected with thegioididong.com via their facebook page and you are able to share a product of interest on your own facebook page

C2

You will buy a mobile phone from thegioididong.com if opportunity comes

C3

CHAPTER FOUR: DATA ANALYSIS AND RESEARCH RESULT

The following figure illustrated the percentage of gender of consumers

Figure 7: percentage gender of respondents

With 205 people response for our questionnaires, female was65% and male only 35%

35%

65%

Male Female