Asia Pacific Journal of Marketing and Logistics

The interaction effect on customer purchase intention in e-commerce: A comparison

between substitute and complement
Yung-Shen Yen,
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comparison between substitute and complement", Asia Pacific Journal of Marketing and Logistics, Vol. 26
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APJML
26,3
The interaction effect on
customer purchase intention
in e-commerce
472 A comparison between substitute
Received 13 July 2013 and complement
Revised 9 November 2013
12 January 2014 Yung-Shen Yen
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Accepted 19 January 2014

Department of Computer Science and Information Management,
Providence University, Taichung, Taiwan

Abstract
Purpose – The purpose of this paper is to explore the interaction effect of information richness,
retailer brand, and extended offers on customer purchase intention in e-commerce.
Design/methodology/approach – Hierarchical moderator regression analysis and simple slope
analysis were used to test the hypotheses, also 356 savvy internet consumers in Taiwan were investigated.
Findings – The findings revealed that information richness, retailer brand, and extended offers are
positively related to customer purchase intention. However, the interaction effects may differ in these
relationships. While information richness complements both retailer brand and extended offers on customer
purchase intention, extended offers may substitute retailer brand for increase in purchase intention.
Research limitations/implications – A bias may exist because of the sample from an online
survey. The findings suggest that complements are actually synergistic strategies of factors, while
substitution is a switching of the alternative.
Practical implications – Practitioners shall utilize information richness to the complements, such as
retailer brand and extended offers, to strengthen customer purchase intention. In contrast, they may
provide extended offers for acquiring customers in the short-term period, when retailer brand is
relatively low or unknown.
Originality/value – The findings of the study provide a new marketing strategy: managing
substitutes and complements in adequate factors can give rise to better results for purchase intention
increases in e-commerce.
Keywords E-commerce, Interaction effect, Complement, Customer purchase intention, Substitute
Paper type Research paper

1. Introduction
Customer purchase intention has gained considerable attention in the e-commerce
literature (Oliver, 2009), and as a result, previous studies have addressed the causal
relationships between direct and indirect effects on customer purchase intentions
(Kassim and Abdullah, 2010; Lee et al., 2011; Liang and Zhang, 2012). For example,
while customer satisfaction has been strongly linked to customer purchase intention
(Cooil et al., 2007), it may have no impact on purchase intentions for low-involvement or
low-income customers or when repurchase is not convenient (Seiders et al., 2005).
However, Voss et al. (2010) argued that the interaction effect, which includes substitutes
Asia Pacific Journal of Marketing and and complements, may alter the original relationship. Thus, a substitution occurs in
Logistics
Vol. 26 No. 3, 2014
the interaction between two variables when the marginal benefit of one variable
pp. 472-493 decreases as the level of the other variable increases (Siggelkow, 2002). Thus,
r Emerald Group Publishing Limited
1355-5855
substitute interactions with respect to intention suggest that the intention will be
DOI 10.1108/APJML-07-2013-0080 increased by allocating resources to either one variable or to its substitute, depending
 on the marginal return for the respective initiatives. Conversely, two variables may Customer
interact as complements, which means that the marginal benefit of one variable increases purchase
as the level of the other variable increases. Thus, a complementary interaction reinforces
the original effect on the results (Mao et al., 2012). In other words, complementary intention
interactions with respect to intention suggest that the intention will be increased by
investing simultaneously in both the variable and the complement. Therefore, the
interaction effect may differ from the effect of the causal relationships on the intention. 473
As such, to achieve a better understanding of the factors influencing customer purchase
intention, the interaction effect cannot be ignored.
A simple test can verify the possibility of the interaction effect by examining the
combined effect of the two variables on the intention vs the sum of their respective
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impacts. If the whole is greater than the sum of its parts, then these two forces clearly
complement each other in some way. Conversely, if the whole is less than the sum
of the parts, then these two variables may be substitutions rather than complements.
For example, hardware and software should be designed together to complement each
other; that is, better designed software can benefit hardware sales (Pike et al., 1985).
On this note, pizza and rice may serve as substitutes for each other for dinner as pizza
may replace rice as a meal. Thus, to explore the interaction effect on purchase intention
in e-commerce, this study utilized three antecedents, including information richness,
retailer brand, and extended offers, as examples. The reason is that these antecedents
are strongly related to purchase intention in e-commerce (e.g. Burt and Davies, 2010;
Kim and Kim, 2004), and they also highly interact with each other with respect to
purchase (e.g. Chu et al., 2005; Hume, 2008). For example, information richness enables
customers to find the desired products on the internet, while retailer brand improves
the confidence of the sellers with respect to online purchases (Hong and Cho, 2011;
O’Cass and Carlson, 2012). Consumers will have priority of consideration when
purchasing from the store with a well-known retailer brand, and information richness
may further confirm the purchase to the store. Thus, purchases in e-commerce not only
rely on the store’s reputation, but they also depend on rich information about the store
to ensure the quality of the products. For example, Amazon.com, a highly reputable
online bookstore, provides a variety of information, such as monthly sale rankings,
sample chapters, and professional comments that help buyers identify products for
purchase (Bakos, 2001). In addition, extended offers, such as peripheral services for
online transactions, are important as they induce customers to purchase in e-commerce
(Grönroos, 1978). In general, online stores offer a comprehensive service for customers
to purchase online, including product information, ordering options, payment options,
logistics, and return policies. Consumers can find the desired products through
information richness offered by the store. If there are incentive promotions or
convenient purchase processes to induce the purchase, customers will demonstrate
increased purchase intention toward the store. Moreover, incorporated extended offers
with information richness on the underlying services will enrich the experience of
trading on the internet and thus cannot be overlooked. Accordingly, it is expected that
extended offers and information richness complement one another, thereby increasing
purchase intention. For example, Lative.com.tw, a local apparel store in Taiwan,
offers rich product information (e.g. modeling photos, product specifications,
etc.) and convenient payment options (e.g. credit card, cash on delivery, etc.) for
customers. However, the relationship between extended offers and retailer brand may
not be complements of one another, but rather substitutes because customers may
prioritize extended offers as an incentive to purchase rather than well-known
 APJML retailer brand. For example, Kingstone.com.tw, a “click-and-mortar” bookstore, provides
26,3 three-hour express delivery when purchasing books, thus challenging the leading online
competitors in Taiwan (i.e. Books.com.tw).
Accordingly, we recognize that the interaction effect alters the original
results. While previous research has advanced our understanding of the factors that
influence customer purchase intentions (Hsu et al., 2008; Sanyal and Datta, 2011),
474 we know comparatively little regarding the interaction effects that lead to
purchase intention. Therefore, to identify the interaction effects, we examine the
above-mentioned assumptions regarding the relationship of information richness,
retailer brand, and extended offers on purchase intentions in e-commerce. In other
words, is the interrelationship among information richness, retailer brand, and
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extended offers on intention a substitute or a complement? This topic is important for

practitioners as they seek to manage their customer relationships in the e-commerce
environment.

2. Literature review and research hypothesis

2.1 Factors influencing customer purchase intention
The factors regarding information richness, retailer brand, and extended offers influencing
online purchase intention are displayed in Table I. For example, Chu et al. (2005)
demonstrated that infomediary reputation and online retailer brand both increase
purchase intention. Park and Kim (2003) also found that product information quality and
service information quality are positively related to information satisfaction, and thus
site awareness positively affects relational benefit, which, in turn, increases purchase
behavior. Oh et al. (2009) indicated that information richness positively affects playfulness
and usefulness and increases behavioral intention. Similarly, Pan et al. (2013) found that
sellers with high reputations can post higher surcharges to increase the total price paid by

Study Context Independent variable Dependent variable

Chu et al. (2005) Computer monitor Infomediarya Purchase intention

Online retailer branda
Park and Kim (2003) Book User interface qualitya Purchase behavior
Product information qualitya
Service information qualitya
Security perceptiona
Site awarenessa
Oh et al. (2009) Online stores Information richnessa Behavioral intention
System qualitya
Pan et al. (2013) Cell phone Seller reputationa Purchase intention
Surchargea
Kim and Lennon (2013) Apparel Reputationa Purchase intention
Electronics goods Web site designa
Household goods Fulfillment/Reliabilitya
Customer service
Security/Privacya
Kim and Kim (2004) Apparel Transaction costa Purchase intention
Incentive programa
Table I. Site design
Factors influencing online Interactivity
purchase intention in prior
studies Note: aDenotes that significant and positive relationship with the dependent variable
 the buyer, but sellers with low reputations cannot do so. Kim and Lennon (2013) argued Customer
that online retailer reputation act as a significant antecedent of consumer responses and purchase
future behaviors. Moreover, Kim and Kim (2004) indicated that the incentive program is
the most important predictor of consumer purchase intentions with respect to clothing, intention
jewelry, and accessories.
The research model of the current study is based on the theoretical frameworks used
or suggested in previous research. For example, according to Chu et al.’s (2005) findings, a 475
reputable infomediary has a greater effect on strong brands that may already be in a
consumer’s consideration set. Accordingly, it seems that information richness and retailer
brand may complement each other. Similarly, in terms of the customer value chain
proposed by Wayland and Cole (1997), information richness and extended offers, such as
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the relationship between core and peripheral services, may ensure a comprehensive
service to serve customers. Thus, extended offers may complement information richness
for purchase intention. Additionally, King et al. (2003) suggested that if a store is
obviously inferior to its competitors in a certain resource, other resources can usually be
used to compensate for the weak resources, and therefore, it may expect that extended
offers substitute retailer brand for the purchases. For comparing the complementary and
substitution effects in the interaction, this study selected information richness, retailer
brand, and extended offers as the antecedents of predicting purchase intention.

2.2 Information richness influencing customer purchase intention

Information richness, such as media richness, refers to the amount of information
that can be conveyed through a communication medium (Purdy and Nye, 2000).
The information richness theory posits that a person adopts communication
media depending on the information requirements, especially when the information
is ambiguous and uncertainty exists with respect to a given situation (Daft and
Lengel, 1986). In general, information richness is mainly based on multiple cues,
immediacy of feedback, language variety, and personalization within the
communication media (Daft and Wiginton, 1979). Fulk and DeSanctis (1995)
indicated that users perceive communication media as having greater capacity and
as being able to accomplish different types of tasks, thereby influencing media
usage intention. Accordingly, communication performance is positively related
to the utilization of information richness (Purdy and Nye, 2000). Pluralistic information
cues (e.g. visual cues and experiential cues) and symbolic languages (e.g. graphics and
pictures) are more informative than simple word catalogs as customers can clearly
understand the characteristics of the products or services presented by the media
(Lee et al., 2007). Specifically, purchases on the internet mainly rely on the cyberspace
appearance of the products, such as photos, images, and quality information
concerning the products (Lohse and Spiller, 1998). Thus, information richness
in this study refers to various information enabling customers to find the desired
products on the internet. For example, with respect to apparel retailers, the web site
may provide the interactive try-on sessions, such as the “virtual dressing room”
(Abend, 2001; Kim and Kim, 2004). On the other hand, for book retailers, the web site
may offer “sample chapters” for consumers. Therefore, information richness is
well-recognized as a key success factor behind e-commerce. This research brings forth
the following hypothesis:

H1. Information richness is positively associated with customer purchase intention

in e-commerce.
 APJML 2.3 Retailer brand influencing customer purchase intention
26,3 Retailer brand regarding customer purchase intention is a well-known factor that
affects success in the e-commerce environment (Burt and Davies, 2010). Retailer brand,
such as store image or reputation, is an important input in the consideration set
of purchasing, which influences the consumer decision (Macdonald and Sharp, 2000).
A well-known retailer brand can reduce the uncertainty of new users and help build
476 initial trust (McKnight et al., 2002). Retailer brand acts as a collateral bond that signals
quality (Chu et al., 2005) and is equivalent to the concept of site awareness (Park and
Kim, 2003). Accordingly, retailer brand is defined as “the ability of a buyer to recognize
or recall that a site is a member of a certain service category” (Aaker, 1991). Recall is
referred to as the correct identification of the brand based on a type of probe as a cue,
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whereas recognition refers to the consumer’s ability to correctly discriminate a brand

based on previous exposure (having seen or heard about the brand) (Majumdar, 1998).
As such, recall is associated, through memory, with the consumer’s set of preferred
brands that meet a particular need and is, therefore, likely to come to mind when the
consumer has such a need (Ehrenberg et al., 1997). The more easily the consumer
recalls the brand in an unaided recall situation, the higher the intention to purchase
from that particular retailer (Yasin et al., 2007). Previous research indicated that a
strong retailer brand signals high reputation and quality, thus resulting in high
consumer purchase intentions (Render and O’Connor, 1976). Thus, retailer brand in this
study refers to the store brand improving the confidence of the retailers with respect to
online purchases. For example, Amazon.com and Yahoo.com are two globally well-
known online retailer brands. Raising the quality level of retailer brand may increase
the likelihood that the retailer will be considered as a viable source by consumers,
which will, in turn, influence customer purchase intention (Nedungadi, 1990). This
research brings forth the following hypothesis:

H2. Retailer brand is positively associated with customer purchase intention in

e-commerce.

2.4 Extended offers influencing customer purchase intention

Wayland and Cole (1997) discussed the idea of extended offers for creating a customer
value chain in e-commerce. An extended offer suggests that the store plays a more
significant role in the customer’s value chain and in the customer’s total purchasing
experience (Mascarenhas et al., 2006). In this sense, the store may expand its presence
on the buyer’s value chain by offering more of the inputs used and preferred by the
customer to meet the intended objectives (Selden and Macmillan, 2006). Consequent to
this, a popular case of extended offers is the credit card, which frequently provides
free parking, bonus gifts, cash refunds, and discounts at partner stores (Fram and
Grady, 1997). However, online stores may have different peripheral services for
inducing customers to purchase online, such as additional discounts, express delivery,
and cash on delivery. Additional discounts refer to the discounts from additional
purchases, such as an extra discount on a battery charger when purchasing a smart
phone (e.g. PChome.com.tw). Express delivery suggests that the product is delivered
as soon as possible, such as a three-hour express delivery for the purchase of books
(e.g. Kingstone.com.tw). Cash on delivery means that the payment for a good is made
at the time of delivery (e.g. Lative.com.tw). Moreover, Ray (2001) suggested that
online stores can induce consumers to purchase by including incentive experiences
 such as free postage, “buy one get one free”, points rewards, and contests. Customer
Thus, extended offers in this study refer to the extra offers improving customer purchase
value for online purchases. It is believed that extended offers can benefit the value
of the purchase experience for the consumer. Accordingly, extended offers encourage intention
customers to make purchases while mitigating cost risks, time and effort related to the
transaction (Steinfield et al., 2002). Thus, the better the extended offers provided by
the web site, the greater the purchase intention in the world of e-commerce. On this 477
note, we put forth the following hypothesis:

H3. Extended offers are positively associated with customer purchase intention in
e-commerce.
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As H1, H2, and H3 are consistent with the current understanding in the field (e.g. Chu
et al., 2005; Ray, 2001), they do not represent new results but rather establish a reference
point for the study.

2.5 Interaction effect between information richness and retailer brand

As the interaction effects can be distinguished by substitutes and complements
(Voss et al., 2010), we provide a possible theoretical explanation for those
effects. For example, the increase in one of the factors can reduce or even eliminate
the positive effect of its substitute. Furthermore, when the substitute effects are
strong, simultaneous investments in the factor and in the substitute will produce
diminishing or even negative returns. Conversely, a complementary interaction
enhances the positive effect of the complement, even though complementary
interactions suggest ways to increase the results by investing simultaneously in the
factor and in the complement. Complementary products or services are, thus,
mutually dependent on each other’s successes, a situation that often leads to the
“chicken-and-egg” paradox (Stremersch et al., 2007). As such, a complement enlarges
the original effect, whereas a substitute minimizes the original effect.
As previously noted, information richness helps customers find alternatives
and provides information on the product with regard to a probable fit of their needs
(Chu et al., 2005). Retailer brand confirms consumer confidence in the retailer, which
is the result of the customer’s experience with the retailer (Keller, 2003). Accordingly,
Chu et al. (2005) asserted that a reputable infomediary can increase purchase
intention for a strong brand more than it can for a weak brand because consumers will
likely ignore the information they do not trust. In other words, consumers may first
perceive retailer brand to the store, and then perceive information richness on
the store to confirm the purchase. This is called the confirmation effect (Hoch and
Deighton, 1989). For example, consumers may rely on retailer brand to identify the
store and rely on rich information to evaluate the quality of products, especially when
they purchase experiential goods, such as travel packages (Wan et al., 2012).
Accordingly, it is assumed that information richness complements retailer brand for
increases in purchase intention in e-commerce. As such, this research brings forth the
following hypothesis:

H4. Information richness complements retailer brand for increases in customer

purchase intentions in e-commerce such that the store with high information
richness will enlarge the effect on customer purchase intention when the retailer
brand is well-known.
 APJML 2.6 Interaction effect between information richness and extended offers
26,3 Carman and Langeard (1980) argued that a service offering that consists of core
services and peripheral services is intended to provide customers with expected
benefits. Core services are those technical services that conceptually constitute
what the consumer receives, whereas peripheral services are the functional services
that comprise the way the service is delivered to the consumer (Grönroos, 1982).
478 In other words, core services denote that the basic condition is that the store be in
the market and that it represents competency in creating value for the customer
(Ferguson et al., 1999). Peripheral services are those services that facilitate the core
offers but are not, specifically, part of the core (Lovelock, 1992). For example, in the
performing arts, the act (storyline), actors, and theatre, including the lighting, stage
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settings, audio and music, are defined as the core. All other aspects of delivery
including the ticketing, seating, and physical structures of the servicescape are
considered to be peripheral to the show. For a perfect performance of the arts, the
core services and peripheral services must be well coordinated (Hume, 2008).
Accordingly, the core services will be supplemented with various peripheral
services that are essential for the success of the core services or for the necessary
improvements (Carman and Langeard, 1980). Lovelock and Yip (1996) found that
supplementary services add value to the core services and help the companies to
differentiate their offers. Previous studies have used the definition “augmented
products”, “extended products”, and “product packages” in the same context of
extended offers (Levitt, 1980).
This same concept can be applied in e-commerce. Unlike traditional
shopping, online shopping is a computer-mediated transaction for the customer.
Thus, information richness such as a core service can enrich the information
presented by online stores (Delone and Mclean, 1992), whereas extended
offers serving as a supplement can provide extra services with added value to the
customer (Mascarenhas et al., 2006). Huizingh (2000) demonstrated that as
information richness, including the contents and contexts of web sites, is an
important aspect of e-commerce for customer purchases, extended offers, such
as additional discounts, delivery conditions, and payment methods, can
supplement the online transaction experience. Accordingly, to provide customers
a satisfactory online shopping experience, stores cannot ignore any aspect of either
the core or the peripheral services (Hume, 2008). It is expected that the confirmation
effect will also occur in the relationship between information richness and extended
offers. For example, consumers may exploit information richness to find the desired
products, in which case, extended offers induce an immediate purchase because they
make the shopping more convenient or cheaper. The purchase of products is more
important for the online customer with respect to having a satisfactory purchasing
experience (Wan et al., 2012). As such, it is assumed that the store with high
extended offers will enlarge the effect on purchase intention when information
richness is high. Thus, extended offers complement information richness and
thereby increase purchase intentions. On this note, this research brings forth the
following hypothesis:

H5. Extended offers complement information richness and thus increase customer
purchase intentions in e-commerce. In other words, the store with high
extended offers will enlarge the effect on customer purchase intentions when
information richness is high.
 2.7 Interaction effect between extended offers and retailer brand Customer
As previously discussed, a well-known retailer brand can earn a high premium from purchase
customers if the market competition is not severe (MacDonald and Sharp, 2000). Thus,
the better the reputation of the store is, the stronger the consumer purchase intention intention
(Brynjolfsson and Smith, 2000). Furthermore, extended offers serve as supplements for
the purchases. Thus, according to the confirmation effect, extended offers may be
incorporated with retailer brand to propel an increase in purchase intention. For 479
example, retailer brand and extended offers both may be important for specialty stores
such as J. Crew. However, Jang and Mattila (2005) found that customers prefer
immediate, necessary, and monetary rewards, such as cash discounts, during the
purchase. On this note, Fornell (1992) found that some customers prefer lower prices
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and are less concerned about quality. Schilling (1998) also argued that discount stores
in a remote outskirt area of the city attract customers by offering lower prices to
compensate for the inconvenience of the geographical location. Accordingly, if a store
is unknown or has low retailer brand, it may require increased incentive promotions to
acquire customers and to alleviate the negative impact of a poor reputation, especially
in e-commerce. For example, many small-sized retailers in the Ruten auction market in
Taiwan (www.ruten.com.tw) tend to promote incentive programs, such as cash
discounts, to acquire new customers and to retain existing customers. Consequently,
high extended offers can transfer the attention from the reputation to the promotions.
Basically, it is expected that the effect of extended offers should have greater impact to
propel an increase in purchase intention for stores with low retailer brand. Accordingly,
extended offers can significantly strengthen customer purchase intentions when retailer
brand is relatively low or unknown. Thus, we assume that a store with low retailer brand
tends to exploit the extended offers strategy to compensate for the deficiency in retailer
brand. Therefore, extended offers may be substituted for retailer brand to increase
customer purchase intentions. On this note, this research brings forth the following
hypothesis:

H6. Extended offers substitute for retailer brand to increase customer purchase
intentions such that the store with high extended offers will enlarge the effect
on purchase intentions when retailer brand is relatively low or unknown.

H4, H5, and H6 represent an original concept that factors can complement or
substitute for each other to increase purchase intention.

3. Research method
3.1 Framework of the research
Figure 1 depicts the research framework of the study, in terms of the literature
established before.

3.2 Measures
The scale of information richness was modified from Lai and Chang (2011), which
includes five items. However, the first two items, “[y] enable me to get information
quickly” and “[y] enable me to get reliable information”, are not suitable for this study
because they are not related to the amount of information that can be conveyed. Thus,
these two items were eliminated from the original scale. The scale of retailer brand was
modified from Sanyal and Datta (2011), which includes four items. The scale of
extended offers was modified from Hume (2008), which includes three items. However,
 APJML Information richness
26,3
H1(+)
Interaction
Interaction H4(+) H5(+) (IR × EO)
(IR × RB)
Customer purchase
480 intention

H2(+) H6(–) H3(+)

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Figure 1. Extended offers

Retailer brand
Research framework Interaction
of the study (RB × EO)

the third item, “The behavior of the staff [y]”, is not suitable due to the deals with
respect to offline stores rather than online stores. Thus, the item was deleted. However,
we also inserted a new item relating to the issue of discount and promotion, that is,
“Discounts and promotions to the online retailer make me feel comfortable and
confident.” The scale of customer purchase intention was modified from Fang et al.
(2011), which includes three items. Moreover, the seven-point Likert scale was used to
rate the agreement from 1 (strongly disagree) to 7 (strongly agree) points.
To increase face validity, the instrument has been modified by three marketing
experts for identifying ambiguities in terms and meanings. Thus, a pilot test was
thereafter employed with ten online consumers to clarify the scale. The results of the
pilot test ensured that our instrument fit the study. Overall, Table II shows the revised
instrument of the study.

3.3 Subjects
This study conducted an online survey that gathered data from telnet://ptt.cc,
the most popular bulletin board system in Taiwan. This method of gathering data is
consistent with previous studies which investigated online users in Taiwan (Lu and
Hsiao, 2009; Lin and Lu, 2011; Yen and Lu, 2008). Also, we used a self-administered
questionnaire. At the beginning part of the survey, we declared that the respondents
shall have online purchases experience as well as list one shopping web site they
purchased from over the past three months. The reason is that the respondents should
have a clear picture and memory of the purchases (Wu, 2013). To encourage
respondents to complete the questionnaire and thus increase the return rate, we offered
gifts to the respondents. The e-mail and IP addresses of each respondent were verified
to avoid replication.
Moreover, data were collected for one month with the total number of respondents at
362, of which six copies were deleted, including those with incomplete data. Therefore,
the valid responses totaled 356. As Table III indicates, females were (51.1 percent) while
males were (48.9 percent). The age group focussed on 18-44 years of age (83.1 percent).
With respect to educational and occupational levels, 50.8 percent of the respondents
held undergraduate degrees, and 55.3 percent were students. Thus, the characteristics
of the sample are similar to the study of Mathwick et al. (2002), which indicated the
online shoppers tended to be younger, with 75 percent younger than 44 years of age,
and were well-educated.
 Construct Variables Sources
Customer
purchase
Information richness IR1. The online retailer enables me to obtain rich
information
Lai and Chang (2011) intention
IR2. The online retailer provides diverse types of
information, such as pictures and videos
IR3. The online retailer enables me to choose
information depending on demand
481
Retailer brand RB1. I can recall the online retailer Sanyal and Datta (2011)
RB2. I can relate the online retailer to my own
experience
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RB3. I can recognize the reputation of the online

retailer
RB4. I have better opinions about the online
retailer
Extended offers EO1. Payment and delivery to the online retailer Hume (2008)
are available and convenient
EO2. The online retailer supports the peripheral
services right the first time
EO3. Discounts and promotions to the online
retailer make me feel comfortable and confident
Customer purchase CPI1. If I could, I would like to purchase products Fang et al. (2011)
intention from the online retailer
CPI2. It is likely that I will purchase products
from the online retailer in the future Table II.
CPI3. I intend to purchase products from the The instrument
online retailer in the future of this study

Measure Item Frequency %

Gender Female 182 51.1

Male 174 48.9
Age (years) Under 18 22 6.2
18-24 142 39.9
25-34 97 27.2
35-44 57 16.0
45-54 28 7.9
454 10 2.8
Education High school or under 48 13.5
Undergraduate 181 50.8
Graduate degree 127 35.7
Occupation Student 197 55.3 Table III.
Office worker 65 18.3 Demographic
Self-employed 43 12.1 characteristics of the
Homemaker 51 14.3 sample

3.4 Reliability and validity test

Exploratory factor analysis was performed to refine the measurement, and principle
components with varimax rotation method were applied (Lin et al., 2003). The eigenvalue
criterion (l41) determined the number of factors. Accordingly, four factors were selected.
 APJML The cumulative variance which was 83.401 percent, and the standardized factor loading
26,3 for each item is shown in Table IV. Moreover, the first component accounted for 25.182
percent of the overall variance in the items thereby indicating that the majority of the
variance in the items is not accounted by common method variance (Podsakoff et al., 2003).
Cronbach’s a was conducted to test the scale reliability. Robert and Wortzel (1979)
argued that Cronbach’s a value between 0.70 and 0.98 can be considered as high
482 reliability. In this study, the evidence shows that information richness is 0.87, retailer
brand 0.92, extended offers are 0.79, and thus customer purchase intention was 0.91,
as shown in Table V. Similarly, since each construct score is 40.7, this study
demonstrates good reliability.
A confirmatory factor analysis was performed using AMOS 20.0 to assess the
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adequacy of construct validity, and convergent validity was measured by composite

reliability (CR), standardized factor loadings (SFL), and average variance extracted
(AVE). The test criteria include a CR 40.8, an SFL 40.7, and an AVE of at least 0.5
(Fornell and Larcker, 1981). As shown in Table V, all indicators were satisfied. Thus,
this study possesses adequate convergent validity.
For testing discriminate validity, Fornell and Larcker (1981) suggested that the use
of related coefficients of the square root of each construct’s AVE should be greater than
other variables’ coefficients. As shown in Table VI, the AVE square root of each
research variable is greater than the related coefficients of the variable and of the other
variables, indicating that this study has adequate discriminate validity.

4. Analysis and results

4.1 The empirical results
A hierarchical moderator regression analysis was conducted to test the hypotheses
of this study. This statistical method allows the direct assessment of change in the
explanatory power between iterative steps (Hult et al., 2007). Table VII shows the
results. For testing the regression, information richness, retailer brand, and extended

RB CPI IR EO

IR1 0.210 0.236 0.849 0.163

IR2 0.259 0.201 0.843 0.195
IR3 0.354 0.126 0.787 0.125
RB1 0.820 0.200 0.243 0.182
RB2 0.838 0.151 0.268 0.090
RB3 0.812 0.246 0.218 0.219
RB4 0.805 0.319 0.248 0.182
EO1 0.215 0.193 0.136 0.870
EO2 0.318 0.176 0.210 0.766
EO3 0.021 0.296 0.123 0.802
CPI1 0.247 0.848 0.205 0.298
CPI2 0.259 0.880 0.183 0.239
CPI3 0.280 0.836 0.222 0.230
Eigenvalues 3.274 2.686 2.495 2.387
% of total variation 25.182 20.661 19.195 18.364
Cumulative % of total variation 25.182 45.843 65.037 83.401
Table IV.
Factor analysis Notes: Rotation: varimax with Kaiser normalization. Factor loadings above 0.5 are italicized. Valid
with cross-loadings No. ¼ 356
 Construct and observable variables Mean (SD) SFL CR AVE a
Customer
purchase
Information richness 0.89 0.73 0.87 intention
IR1 5.02 (1.47) 0.87
IR2 5.42 (1.11) 0.90
IR3 5.13 (1.75) 0.79
Retailer brand 0.92 0.75 0.92 483
RB1 4.40 (1.63) 0.84
RB2 4.59 (2.29) 0.83
RB3 4.70 (1.80) 0.88
RB4 5.20 (1.84) 0.91
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Extended offers 0.86 0.67 0.79

EO1 5.21 (0.97) 0.90
EO2 5.22 (1.46) 0.82
EO3 5.92 (1.42) 0.72
Customer purchase intentions 0.95 0.87 0.91
CPI1 4.82 (1.39) 0.94
CPI2 4.83 (1.71) 0.95
CPI3 4.23 (1.87) 0.90 Table V.
Model of research
Notes: 1, strongly disagree; 7, strongly agree construct

Mean SD 1 2 3 4

1. Information richness 5.19 0.96 0.85

2. Retailer brand 4.73 1.12 0.37 0.87
3. Extended offers 5.45 1.05 0.27 0.32 0.82
4. Customer purchase intention 4.63 0.92 0.43 0.35 0.36 0.93 Table VI.
Correlations among
Note: Diagonal elements in italics represent the square root of the AVE research constructs

offers were first created as a summated index. Thereafter, we standardized all variables
to reduce the potential effects of multicollinearity (Cohen et al., 2003), and then included
three interactive terms in the equation. However, the technique of least squares was
used with the control variables as a block in step 1 (gender and age), followed by the
main effects in step 2 (information richness, retailer brand, and extended offers), and
the interaction terms in step 3. Accordingly, the following regression equation was
analyzed in three hierarchical steps:

Y 1 ¼ a þ b1 X 1 þ b2 X 2 þ b3 X 3 þ b4 X 1 X 2 þ b5 X 1 X 3 þ b6 X 2 X 3 þ e

where Y 1 is the customer purchase intention, X1 the information richness, X2 the

retailer brand, X3 the extended offers, and e the random disturbance terms. We also
examined variance inflation factors (VIFs) to assess the likelihood that
multicollinearity affects the results. In each of the three steps in the model, the VIFs
were below 2.03, indicating that multicollinearity did not affect the weights of the
controls and hypothesized variables (Mason and Perreault, 1991). In step 2, the main
effect test indicated that information richness, retailer brand, and extended offers were
positively associated with customer purchase intentions, respectively (b-value ¼ 0.34,
 APJML Predictor variables b-value t-value p-value VIF
26,3
Step 1: control variables
Gender 0.04 0.66 0.51 1.01
Age 0.15* 2.76 0.01 1.01
R2 0.13
484 Model fit F ¼ 3.87*
Step 2: main effects
Gender 0.03 0.78 0.44 1.03
Age 0.08 1.96 0.05 1.03
Information richness 0.34** 6.37 0.00 1.70
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Retailer brand 0.12* 2.04 0.03 1.73

Extended offers 0.52** 10.24 0.00 1.38
R2 0.47
Model fit F ¼ 63.49**
Step 3: interactions
Gender 0.04 0.96 0.34 1.04
Age 0.06 1.64 0.10 1.04
Information richness (IR) 0.36** 6.70 0.00 1.72
Retailer brand (RB) 0.17** 3.14 0.00 1.76
Extended offers (EO) 0.53** 10.87 0.00 1.83
IR  RB 0.15* 2.54 0.01 1.92
IR  EO 0.42** 7.58 0.00 2.03
Table VII. RB  EO 0.38** 6.94 0.00 1.74
Showed results of R2 0.53
three-step hierarchical Model fit F ¼ 40.93**
moderator regression
analysis Notes: * po0.05; ** po0.01

p-value ¼ 0.00, VIF ¼ 1.70; b-value ¼ 0.12, p-value ¼ 0.03, VIF ¼ 1.73; b-value ¼ 0.52,
p-value ¼ 0.00, VIF ¼ 1.38). The R2 indicated that 47 percent of the variance in the
outcome variable can be explained by predictor variables. Therefore, H1, H2, and H3
were supported.
Furthermore, in step 3, the evidence revealed that the interaction between
information richness and retailer brand was positively significant (b-value ¼ 0.15,
p-value ¼ 0.01, VIF ¼ 1.92) and that the interaction between information richness
and extended offers was positively significant (b-value ¼ 0.42, p-value ¼ 0.00,
VIF ¼ 2.03). Nevertheless, the interaction between retailer brand and extended offers
was negatively significant (b-value ¼ 0.38, p-value ¼ 0.00, VIF ¼ 1.74) as the R2
significantly increased to 53 percent. The two-way interaction was further investigated
using simple slope analysis developed by Aiken and West (1991). According to their
procedures, high and low levels of information richness were calculated by subtracting
one standard deviation above the mean of information richness and one standard
deviation below the mean of information richness. Thus, the same procedures were
used in estimating high and low levels of retailer brand and extended offers. Figure 2
shows plots for purchase intention regressed onto low (1 SD) and high ( þ 1 SD)
information richness at low (1 SD) as well as well-known ( þ 1 SD) values of retailer
brand. The evidence indicates that the slope of the well-known retailer brand
(b ¼ 0.484, t ¼ 3.822, po0.01) is significantly higher than the slope of low retailer
brand (b ¼ 0.252, t ¼ 0.350, p ¼ 0.727). In addition, the figure revealed two nonparallel
lines with diffusion type, which implies that the combined effect of high information
 richness and high retailer brand on customer purchase intention was clearly greater Customer
than the sum of the parts. That is, the store with high information richness strengthens purchase
the effect on customer purchase intention when retailer brand is well-known, and
accordingly, the marginal benefit of retailer brand increases when the level of intention
information richness increases. In general, information richness complements retailer
brand for increases in customer purchase intentions. Thus, H4 is supported.
In a similar way, Figure 3 suggests that extended offers moderate the relationship 485
between information richness and purchase intention. Additionally, the two
nonparallel lines with diffusion type imply that the combination of information
richness and extended offers results in higher purchase intention for customers. Hence,
the slope of high extended offers (b ¼ 0.474, t ¼ 3.805, po0.01) is significantly higher
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than the slope of low extended offers (b ¼ 0.082, t ¼ 0.114, p ¼ 0.909). Additionally, the
store with high extended offers strengthens the effect on customer purchase intention
when information richness is high. Therefore, extended offers complement information
richness and thereby increase customer purchase intentions. Thus, H5 is supported.
However, the interaction between retailer brand and extended offers is negative.
Figure 4 shows two nonparallel lines with convergence type, which implies that the
combination of retailer brand and extended offers reduces customer purchase intention
as the slope of low retailer brand (b ¼ 0.477, t ¼ 3.662, po0.01) is significantly higher
than the slope of well-known retailer brand (b ¼ 0.125, t ¼ 0.212, p ¼ 0.832). Thus, the
store with high extended offers strengthens the effect on purchase intentions when
retailer brand is low. In other words, the marginal benefit of retailer brand decreases as
the level of extended offers increases. Extended offers substitute for retailer brand to
increase customer purchase intention. Therefore, H6 is supported.

6 Well-known
retailer brand
CPI

Low retailer
5
brand
Figure 2.
4 Presents the interaction
Low High between information
Information richness richness and retailer
brand
Note: CPI stands for customer purchase intention

6 High extended
CPI

offers
Low extended
5
offers
Figure 3.
4 Presents the interaction
Low High
between information
Information richness richness and extended
offers
Note: CPI stands for customer purchase intention
 APJML 4.2 Implications for research and practice
26,3 The results of the study provide both theoretical and practical benefits. First, this study
demonstrated that information richness, retailer brand, and extended offers are
positively associated with customer purchase intentions. This finding is consistent
with previous studies (e.g. Bruce et al., 2004; Yen and Lu, 2008) and therefore affirms
the existing knowledge regarding e-commerce.
486 Second, the interaction effects may differ among factors. Information richness
complements retailer brand to increase customer purchase intention. This result supports
the hypothesis that information richness helps customers to recognize the products, and
retailer brand identifies the retailers’ credits to alleviate the risk of making a purchasing
decision (Keller, 2003). Obviously, the relationship between information richness and
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purchase intention is moderated by retailer brand. In other words, for a store with
well-known retailer brand, information richness can strengthen purchase intention due to
the confirmation effect on the confidence of trading with the store. Conversely, if a store is
unknown or has low retailer brand, customers may suspect risks associated with the
retailer, even though high information richness is provided. Accordingly, it is believed
that retailer brand and information richness are complementary with respect to purchase
in e-commerce. Practitioners, therefore, should incorporate rich information on the store
with high reputation of retailer brand to reinforce customer purchase intentions.
On the other hand, extended offers complement information richness to
increase customer purchase intentions. This result affirms the assumption of a
complementary relationship between core services and peripheral services. In other
words, measuring the online services across information richness and extended
offers ensures a comprehensive examination for the entirety of the online transaction
and its augmentations (Lovelock, 2001), as neither core services nor peripheral services
can be considered as independent factors for the purchase. Thus, it is believed
that extended offers will moderate the relationship between information richness
and purchase intention. For example, if a store provides high extended offers, it will
strengthen the effect of information richness on purchase intention. Extended offers
lead customers to anticipate a satisfactory overall experience of trading in e-commerce,
which, in turn, enhances purchase intention. Conversely, if a store lacks significant
extended offers, customers may suspect the quality of the purchase, even though it
provides high information richness. As a result, a better integration of information
richness and extended offers in the online shopping services can benefit the online
stores by helping them to acquire new customers and retain existing customers.
Practitioners should therefore incorporate information richness with extended offers as
part of the total experience to increase customer purchase intention.
7

6 Well-known
retailer brand
CPI

Low retailer
5
brand

Figure 4. 4
Presents the interaction Low High
between retailer brand Extended offers
and extended offers
Note: CPI stands for customer purchase intention
 However, the interaction between retailer brand and extended offers is negative. In Customer
other words, extended offers substitute for retailer brand to increase customer purchase purchase
intentions. This result demonstrated that the store prefers to provide extended offers to
acquire customers if the retailer brand is relatively low or unknown. Although extended intention
offers and retailer brand are directly and positively associated with customer purchase
intentions, they cannot be complementary. Conversely, extended offers substitute for
retailer brand to stimulate purchase intentions in e-commerce. Thus, it is believed that the 487
relationship between extended offers and purchase intention will be moderated by retailer
brand. That is, for a store with low retailer brand, extended offers can strengthen the effect
on purchase intention due to the substitution effect for the compensation of low store
reputation. Accordingly, we can infer that extended offers provide incentives for
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encouraging customers to purchase, especially for the store with low retailer brand.
However, it may be risky for practitioners when customers refuse to purchase from an
unknown or a less reputable retailer, even though the extended offers are considerable
( Jang and Mattila, 2005). The reason is that extended offers are relatively easy to imitate by
competitors, while retailer brand or reputation tends to represent a particular perception of
retailer quality that is difficult to imitate over the short term (Radder and Huang, 2008).
Accordingly, while providing extended offers may be a useful strategy in the short term to
acquire customers, in the long term, practitioners should provide high quality services
rather than compensate for deficiencies in retailer brand through extended offers when
facing long-term low ratings as doing so will enhance customer confidence in the retailer.

5. Conclusion and suggestions

5.1 Conclusions
This study explored the interaction effect on purchase intention in e-commerce.
Information richness, retailer brand, and extended offers were used as antecedents to
examine whether the reciprocal relationship is a substitute or a complement. While the
first three hypotheses re-affirm previous results for e-commerce, the last three
represent original ideas regarding the interactions between factors.
Therefore, the contribution of this study is twofold. First, theoretically, this study
verified the interaction effects on customer purchase intentions and thus formulates
new concepts of the interaction effects that previous studies have not addressed. This
study found that information richness complements both retailer brand and extended
offers in e-commerce, results that are consistent with the confirmation effect proposed
by Hoch and Deighton (1989). Moreover, this study found that extended offers
substitute retailer brand for increases in purchase intention, a result that is consistent
with the compensatory concept proposed by King et al. (2003). Accordingly, this study
advances the knowledge of complements and substitutes in the context of SNS.
Second, practically, this study found that consumers tend to purchase from a
well-known web site as it provides rich information about the products, such as clothes,
jewelry, and accessories (Kim and Kim, 2004). Furthermore, they also tend to purchase from
a web site that provides satisfactory service, including rich information and convenient
shopping, especially for books, computers, and tickets. However, some consumers may
purchase products because of the extra offers rather than store reputation in e-commerce,
such as online auction markets. Accordingly, the implications of the study provide a new
marketing strategy. That is, managing substitutes and complements in adequate factors
can give rise to better results for purchase intention increases in e-commerce.
Moreover, the findings of the study can be generalized and applied to other service
sectors. In the mobile phone service industry, media richness is a vital factor
 APJML influencing customer purchase intention (Lin and Liu, 2009), as it includes short message
26,3 service, internet service, music downloads, GPS navigation, e-catalogue delivery, product
searches, product orders, and so on. Thus, we speculate that the high quality of media
services complements a well-known retailer brand for mobile phone providers, such as the
iPhone. Moreover, the providers offer a comprehensive experience for customers when
using mobile phone services. For example, by partnering with telecom companies,
488 providers are able to allow customers to instantly buy phones in installments or contracts.
Thus, we expect that the complement between media richness and extended offers can be
significant in the mobile phone service domain.
However, Akerlof (1970) claimed that there are “lemons” in the market, which
indicates that there are incentives for sellers to market poor-quality products to
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increase customer purchases. Thus, with respect to mobile phone services, mobile
phone providers may offer low prices or discounts to induce customer consumption
(Shapiro and Varian, 1999), especially for low-brand providers, such as bandit phones.
Therefore, we expect that extended offers may substitute retailer brand for customer
acquisition in the mobile phone service domain.

5.2 Limitations and future research

Along with these findings, this study contains certain limitations. First, a bias may exist
because of the sample representativeness from an online survey (Wu, 2013). However, the
respondents were adequately investigated as the survey is online, and thus, it is easy to
access as well as easy to answer. This result is consistent with previous research on
motivation to respond (e.g. Lin and Lu, 2011). Second, online experience is an important
antecedent influencing purchase intention in e-commerce (George, 2002). Experienced
customers will be more trustworthy than those with little experience, thus experience
leads to increased purchase intention. However, while this study investigated subjects
who have online purchasing experience, it did not include the online experiences of the
subjects as a control variable in the hierarchical moderator regression model. Subsequent
studies may add this item as a control variable in the model for the analysis. Third,
extended offers provided by online retailers may vary in different countries. For example,
cash on delivery may exist in Taiwan but is almost non-existent in the USA, and express
delivery in a few hours would only be applicable in limited geographic areas. Thus,
extended offers in this study focus on the extra values for the consumers, but they are not
limited to specific services. Fourth, as previously discussed, retailer brand may not be as
important as extended offers for selling search goods such as books. Conversely, in terms
of experiential goods, such as travel packages, retailer brand, and extended offers may
both be important for travel agencies. Therefore, retailer brand and extended offers in this
situation may complement each other and lead to sales increases. Subsequent studies may
have adequate control for types of products or types of stores to determine (for what types
of products or for what types of stores) whether retailer brand and extended offers
complement or substitute. Fifth, there are other antecedents that could be predictors of
purchase intention, such as convenience, perceived risk, service quality, perceived value,
etc. (Chu and Lu, 2007; Garbarinoa and Strahilevitz, 2004; Lee and Lin, 2005; Phau and
Poon, 2000), and the interaction effect may exist between them. For example, convenience
may substitute perceived risk to enhance purchase intention. If the consumer perceives
convenience with respect to the purchase, such as an online purchase, the perceived
risk in the transaction, such as the loss of privacy and security, may be ignored.
Thus, subsequent studies may explore the interaction between factors for benefits of the
academic research and the practice.
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About the author

Dr Yung-Shen Yen is an Associate Professor of Computer Science and Information Management
at the Providence University, Taiwan. He obtained his PhD in Business Administration from the
National Chengchi University, Taiwan. His research has been focussing on customer relationship
in electronic commerce. He has published numerous articles on related journals, such as Internet
Research, The TQM Journal, International Journal of Mobile Communications, International
Journal of Computer and Information Technology, African Journal of Business Management.
Dr Yung-Shen Yen can be contacted at: ysyen@pu.edu.tw

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