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Abstract: The attitude and behaviour of SMEs‟ towards online buying are two main factors that
affect e-buying potential. Based on several studies, the major reasons for buying online seem to
include convenience, flexibility of opening hours, and saving money. Subsequently, firms buy
online because they can get detailed product information, delivery, convenience, product quality
and lower prices (Durmuş, Y., et.al. 2011). The present study focused on the buying behaviour of
SMEs who are purchasing online. It includes factors that affect their online buying behaviour such
as the website characteristics, product characteristics, suppliers‟ characteristics and their online
buying experiences. Participants were the SMEs who are using the internet in browsing, reviewing
and eventually purchasing products or services. The respondents of the study were the
owners/managers of SMEs who are into service and trading businesses. SMEs purchased online
but not too often. However, they believed that online buying will save their time, money and
effort, thus, reduces their purchasing costs. They considered return policy, product specifications,
and security of transactions as important parts of online buying because these will give them a
feeling of security. Yet they have a little concern with the availability and variety of products for
sale online. With the emergence of enabling technologies, SMEs today are facing challenges in
their business strategies in order to remain competitive. Therefore, SMEs should continuously
embrace online buying as a business tool to allow many opportunities in improving their services,
which will eventually increase their sales and profits.
Key Words: SMEs online buying behaviour, web site characteristics, product characteristics,
suppliers‟ characteristics, experience in online buying
© Association of Training Institutions for Foreign Trade in Asia and the Pacific 2014 Journal of Global Business 2014
Online Buying Behaviour of SMEs 20
hours, and saving money. Subsequently, firms buy online compare prices, have a broader selection of products and
because they can get detailed product information, delivery, services, and can make purchases round the clock. A well –
convenience, product quality and lower prices (Yoruk, D., structured buying practices and procedures provide a greater
et.al. 2011). Moreover, (Betterham, B., 2009) found that possibility of meeting the demands of the customers, thus, it
online stores provide broader selection of products, competitive will capture greater percentage of the market and will lead in
pricing and greater access to information. Experience in buying realizing their mission and objectives. Therefore, it is important
online (Seckler, V., 2000), web site characteristics (Biz to recognize the numerous factors affecting the online buying
Community, 2010), goodwill (dos Santos and Fernandes, behaviour of SMEs.
2011), being able to touch and feel the products (Yousaf, et. al,
2010), product specifications (Mohammad, H., et. al., 2012),
security and privacy policies, performance and refund warranty Conceptual Model
(Ordinario, C., 2012), quality of service and return policy
(Abdul Muhlin, G., 2011) are factors that influence online This study proposed a conceptual model to provide a
buyers. comprehensive understanding on the factors that affect the
The firms‟ attitude and behaviour towards buying online online buying behaviour of SMEs.
are known as the main factors that affect e-buying potential.
Attitudinal issues play a significant role in online buying
adoption. Their buying choices are influenced by four major
psychological factors such as motivation, perception, learning
and beliefs and attitude. Attitudes serve as the bridge between Online
firms‟ characteristics and their business goals and objectives. Website Shopping
This means that, through motivation and perception, attitudes Characteristic experiences
are formed and they make decisions. Business buyers usually s
face more complex buying decisions because their purchases Online
often involve large sums of money, complex technical and Buying
Behaviou
economic considerations, and interactions among the different
r of
levels of the organization. Hence, business buyers may take SMES
longer to make their decisions. Business purchases usually call
for detailed product specifications, written purchase orders, Product
Suppliers‟
careful supplier searches, and formal approval (Armstrong and Characteristics
characteristics
Kotler, 2004).
Business buyers are assumed to be motivated to achieve
the optimal combination of price, quality, and service in the
products they buy. Business buyers are human, and their
business decisions are certainly influenced by their attitudes,
perceptions, and values. Business buyers have two goals – to
further their company‟s position (in profits, in acceptance by The model shows the factors influencing the online
society) and to protect or improve their positions in their firms buying behaviour of SMEs. In this model, the website
(self – interest). The more consistent the goals are, the easier it characteristics, product characteristics, suppliers‟
is to make buying decisions (Armstrong and Kotler, 2004). characteristics, and their experiences in online buying affect
SMEs are important elements in the economy now, and in their buying behaviour. Their behaviour is turned into
order to keep gaining competitive advantages, they should keep responses as regards product or service choice, supplier choice,
pace with the technologies changes. They must respond order quantities, delivery, and payment terms. According to
quickly to the changes provided by the internet technologies (Armstrong and Kotler, 2004), SMEs are subject to many
and must be eager to adopt new business tools. The present influences when they make their buying decisions. However,
study focused on the online buying behaviour of SMEs who are each of them has its own objectives, policies, procedures,
in the trading and service businesses. Specifically it attempts to structure, and systems; therefore, they must know these
answer the following questions: Do website characteristics, organizational factors as thoroughly as possible.
product characteristics, and supplier‟s characteristics influence 2. METHODOLOGY
the SMEs online buying behaviour? Do online buying
experiences influence the SMEs online buying behavior? Descriptive method of research was used in the study.
This study will help SMEs to conceptualize effective Questionnaire was used as a tool in gathering data. A panel of
strategies using the technology to capture greater percentage of experts examined the initial questionnaire for content validity.
the market that will lead in realizing their organizational To test its reliability, pilot testing was done. Twenty SME
mission and objectives. Moreover, this is important because it owners/managers were randomly chosen as respondents prior
enables them to understand and predict the relevance of online to data collection. The data gathered were treated using the
buying in managing their business. Online buying can be an reliability analysis test (Cronbach Alpa) with a result of 0.932.
opportunity for them to compare and evaluate product quality Omissions and modifications were made to some of the items
as well as cost before making any deal at their own comfort on the questionnaire based on their feedback. Most of the items
and convenience. Through the internet, SMEs can constantly in the final version of the questionnaire were measured on a 5-
review and analyse the market trends in order to be point Likert-scale ranging from 1 (strongly disagree) to 5
competitive. They can easily look for product specifications, (strongly agree).
© Association of Training Institutions for Foreign Trade in Asia and the Pacific 2014 Journal of Global Business 2014
Farida F. Tallud 21
The graph shows that there are more SMEs (58.9%) who
Website characteristics that influence the online buying buy online where the site is accessible and it saves their time.
behaviour of SMEs Their convenience (46.5%) in buying online is also a factor
they considered in choosing a website. They are also interested
Figure 1. Websites used for online shopping with websites that allow them to review the recommendations
of experts (31.0%), provides information (28.7%), access to
60 opinions of other customers (27.9%) and leads them to find
easily the products they are looking for (24.0%). On the other
50 hand, they are not very particular whether the sites are
annoying (14.0%), organized/not confusing (12.4%), and
Pe rcentage
40
whether individual pages are properly designed (4.7%).
30 Website quality and usability have a direct, positive effect
20 on online purchase intention of customers (Beneke, Scheffer &
Du, 2010). Online buying is influenced by web site attributes
10 such as convenience and flexibility (Mohammad, H., et. al.,
0
2012). Moreover, website quality and usability have a positive
ebay.co amazon Ayosdi lazada. sulit.co store/su Other effect on a customer‟s intention to buy online (Biz Community,
m .com to.com com.ph m pplier‟s website
website s 2010). Usability is known to be an important quality criterion
Percentage 34.9 10.1 17.8 3.9 35.7 50.4 7 of information systems and websites (Constantinides, E.,
2004). Seemingly, developing a user-friendly web sites is
The graph indicates that SMEs prefer to buy in the essential (Biz Community, 2010).
store/supplier‟s website (50.4%) than in other online stores. Customers like to buy online, because it saves time and by
However, they also consider buying in sulit.com (35.7%) and rapid access they get information quickly. It is the easiest way
in e-bay.com (34.9%) considering that these two are to purchase products. Buying online is said to be easy, fun, and
established and known in the market. Nonetheless, few of them time saving (Cheng, Han, & Song, 2011). Anent to this,
buy in lazada.com (3.9%) taking into account that lazada is still increased convenience has a direct, positive effect on online
new in the market. purchase intention of customers. Product information and
In a survey conducted by the Philippine Daily Inquirer product collections for coordination were essential (Allen, E.,
(2013), result showed that the most visited website is eBay and Fjermestad, J., 2000) because customers might rely on
followed by Sulit.com. The preference for local sites is due to information provided or the visual depiction on the screen
fear of hidden charges, concerns about security and speed of (Park and Stoel, 2005). Reviews and recommendations are
delivery, and the availability of most of the items in local sites. important factors in influencing purchase decision online. With
such products, buyers are not only able to browse through a
Figure 2. Website characteristics larger selection on the web sites, but are also able to
conveniently obtain reviews and recommendations that are
usually unavailable in offline stores (Chang, J., 2007).
However, in a study conducted by (Konradt et al., 2003)
he discovered that confusing and disorganized pages, as well as
misleading system navigation, have an adverse effect on online
purchasing.
© Association of Training Institutions for Foreign Trade in Asia and the Pacific 2014 Journal of Global Business 2014
Online Buying Behaviour of SMEs 22
© Association of Training Institutions for Foreign Trade in Asia and the Pacific 2014 Journal of Global Business 2014
Farida F. Tallud 23
2004). Thus, it can be concluded that product type have an security/privacy. Moreover, shipping speed, consumer reviews,
impact on online purchase intention (Biz Community, 2010). retailer reputation, and delivery time flexibility are all taken
into account by customers in purchasing online. Other key
factors include reasonable pricing, free and fast delivery, and a
Suppliers’ characteristics that influence the online buying wide range of products from which to choose. As to why
behavior of SMEs certain online stores become customer favorites, reasons given
are product, trust, and fast/reliable delivery (Ordinario, C.,
Figure 5. Suppliers‟ characteristics 2012).
The level of consumer trust had a significant effect on
customer repurchase intention. Trust in the company‟s website
Offer higher cost of the product 42.6 influences repurchase intention and to spread positive word-of-
Complex transactions in purchasing… 45 mouth about online retailing (dos Santos and Fernandes, 2011).
Trustworthiness of suppliers 89.1 Consequently, (Belanger, Hiller and Smith 2003) discovered
Location of store 6.2 that trust can be a barrier to the adoption of online buying.
Eas e in returning products/items 80.6 Proper complaint handling in online purchasing will have a
Offer good quality of products 96.9
positive impact on the buyer‟s trust in the company‟s site and
Security of identity of purchase 79.8
Offer reasonable prices 85.3 in online retailing. Subsequently, (Samadi and Yaghoob-
Ensure security of card trans actions 94.6 Nejadi, 2009) found that customers are unwilling to buy online
Provide standard product s pecifications 90.7 because of a perceived high risk about the payment methods,
Privacy of the information 79.1 delivery options, and information content. They tend not to
Provide guarantees and warrantees 91.5 buy online because they are not sure whether the ordered
Deliver goods purchased 92.2 merchandise will be delivered or not (Mohammad, H., et. al.,
Reputation of the company 88.4 2012). So, the greater the perceived risk associated with the act
0 20 40 60 80 100 of buying online, the lower the future purchasing intention
from the internet (Samadi and Yaghoob-Nejadi, 2009).
Not all customers are participating in online transactions
Percentage as part of the internet boom; they are still concern with security
and privacy factor (Shim et. al., 2001, Yousaf et.al., 2012).
Customers are less interested to buy online due to high
The graph reveals that SMEs considered good quality of perceived cost like extra shipping and delivery charges.
products (96.9%), security of card transactions (94.6%), Accordingly, marketers should minimize the risks that involve
delivery time (92.2%), guarantees and warrantees (91.5%), safety of card transactions, quality of product delivered and
standard specifications of the products (90.7%), trustworthiness personal data (Yousaf et.al., 2012 ).
of vendors (89.1%), reputation of the company (88.4%),
reasonable prices (85.3%), and ease of returning product/items Online buying experiences of SMEs
(80.6%) which are very important factors that affect their
online buying behavior. However, location of the store (6.2%) Figure 6. Frequency of Website Visits where SMEs Normally
has a little effect on their decision to purchase online. What is Shop
important to them is the speed delivery of the products
purchased. 40
Satisfaction in buying online can be affected by the 35
payment methods, speed and security of transactions as well as
30
delivery time (Abdul-Muhmin, 2011); ease of check -out,
Pe rcentage
© Association of Training Institutions for Foreign Trade in Asia and the Pacific 2014 Journal of Global Business 2014
Online Buying Behaviour of SMEs 24
them tend to go to the web sites they have used before About a quarter make 3 -5 purchases, and the other quarter
(Mathwick, Malhotra, and Rigdom, 2001). Previous experience make 6 or more purchases (Ordinario, C., 2012).
with internet purchasing positively influenced the customer‟s In the study conducted by Neilsen (2012), customers buy
overall attitude, as well as beliefs concerning internet online „sometimes‟ rather than „frequently‟. While most
purchasing. Customers‟ prior internet experience is a strong Filipinos who are into "online buying" use the Internet for
determinant of their online buying behavior (Yoh, E., et. al., product search or to look for online deals, but only half of these
2003). Buying experiences and process experiences of online "online buyers" actually make purchases.
seem to influence future purchase intentions and their
experiences will continue to affect their future decision-making Figure 8. Experience in transacting business online
(Schiffman and Kanuk, 2006, Lohse, Bellman, and Johnson,
2000).
People with abundant online buying experiences are more
capable in handling perceived risks of buying online (dos
Santos and Fernandes, 2011). Comparing with inexperienced
buyers, experienced online buyers make more purchases
(Goldsmith, and Goldsmith, 2002). As buyers acquire more
online buying experiences, they develop confidence that
facilitates more ambitious buying (Seckler, 2000). If buyers
have satisfactory and positive experiences this will encourage
future online buying. However, if they have negative
experiences in the past, they will probably reduce buying The above mean values are based on a 4 point scale where
online in the future (Monsuwe, Dellaert, and Ruyter, 2004). Never = 4; Always = 1
Therefore, marketers must provide a good service to online
buyers to build positive online buying experience (Samadi and
Yaghoob-Nejadi, 2009). The graph shows that SMEs have a good experience in
buying online. With a mean value of (3.84), this shows that
most SMEs never experienced credit card theft. Apparently, it
also indicates that most SMEs never experienced returning
merchandise purchased online (3.5). However, some of them
experienced contacting customer service when purchasing
Figure 7. Frequency of online purchasing online (2.91).
Nearly two - thirds (62%) of online buyers has
experienced returning products purchased online (Ordinario,
70 C., 2012). Additionally, they have certain expectations from
online stores such as being easy to contact, provide sufficient
60
information and ensure security of transaction and personal
50
Percentage
© Association of Training Institutions for Foreign Trade in Asia and the Pacific 2014 Journal of Global Business 2014
Farida F. Tallud 25
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© Association of Training Institutions for Foreign Trade in Asia and the Pacific 2014 Journal of Global Business 2014