Prague University of Economics and Business
Bachelor’s Thesis
2021 Chau Quynh Ngo
Pragze University of Economics and Business Faculty of Business Administration
Bachelors´s Field: Corporate Finance and Management
Title of the Bachelor’s Thesis:
Exploring the factors that impact
consumers‘ online shopping behaviour in Vietnam: The case of Shopee e-commerce
platform
Author: Chau Quynh Ngo
Supervisor: prof. Kottika Efthymia, CSc. / Ph.D
D e c l a r a t i o n o f A u t h e n t i c i t y
I hereby declare that the Bachelor’s Thesis presented herein is my own work, or fully and specifically acknowledged wherever adapted from
other sources. This work has not been published or submitted elsewhere for the requirement of a degree programme.
Prague, December 12, 2021 Signature
Title of the Bachelor’s Thesis:
Exploring the factors that impact consumers‘ online shopping behaviour in Vietnam: The case of Shopee
Abstract:
The main objective of this thesis is to explore the factors that impact consumers’ online shopping behaviour in Vietnam. In addition, the thesis also analyses various ways how e-commerce sites attract and reach their customers. Therefore, the methodology will be qualitative research which includes data from in-depth interviews with Vietnamese consumers who have online shopping experiences via e-commerce sites. And Shopee has been selected as a case study, which is one of the most popular online shopping sites in Vietnam. Overall, results show that there are four main elements involving the website, product, price and promotion, shipping service, truth and privacy. By understanding those factors, Shopee has successfully gained customers than the competition. Finally, recommendations for e-commerce businesses to support their shopping sites and how they can improve customers’ online shopping experience are provided.
Key words:
Buying behaviour, online shopping, e- commerce site, Shopee, Vietnam
Acknowledgement
I want to express my gratitude to prof. Efthymia Kottika for sharing her knowledge and expertise in the field of marketing research and for being helpful and supportive during the whole process of writing the thesis
Table of Contents
1. INTRODUCTION ... 1
2. LITERATURE REVIEW ... 3
2.1. E-commerce and its situation ... 3
2.1.1. E-commerce ... 3
2.1.2. E-commerce platform ... 5
2.1.3. E-commerce in Asia ... 6
2.1.4. E-commerce in Vietnam ... 7
2.2. Shopee ... 8
2.2.1. Shopee overview ... 8
2.2.2. Shopee in Southeast Asia ... 9
2.2.3. Shopee in Vietnam ... 9
2.3. Consumer behaviour ... 11
2.3.1. Consumer behaviour ... 11
2.3.2. Online consumer behaviour ... 14
2.4. Factors influence consumer buying decision via e-commerce... 16
2.4.1. The factor websites ... 17
2.4.2. The factor product ... 17
2.4.3. The factor price ... 18
2.4.4. The factor delivery services ... 19
2.4.5. The factor truth and privacy ... 20
3. METHODOLOGY ... 21
3.1. Research type ... 22
3.2. Method of data collection ... 22
3.3. Interview guide ... 23
3.4. Analysis approach ... 24
4. MAIN FINDINGS ... 25
5. CONCLUSION ... 41
5.1. Discussion of important findings ... 41
5.2. Managerial implications ... 44
5.3. Research limitations and suggestions for future research ... 45
LIST OF TABLES ... 47
LIST OF FIGURE... 47
REFERENCES ... 48
APPENDIX ... 53
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1. INTRODUCTION
Back ground
In recent years, Vietnam's economy has developed actively and achieved many remarkable achievements. Besides, the rapid development of information technology along with the process of trade liberalization is taking place quite excitingly and rapidly in the global and regional framework, which has lead to the outstanding growth of the e-commerce industry. In particular, the form of buying and selling online on the e-commerce floor is an inevitable trend today. The survey results of the Vietnam High Quality Association in 2018 show that the percentage of consumers choosing to shop online has tripled (2.7%) compared to 0.9% in 2017. By 2020. E- commerce and digital economy are estimated to have 44.8 million Vietnamese people participating in e-commerce, the average value of online shopping orders is 225 USD/person.
According to the 2020 statistics report of We Are Social and Hootsuite, there are 68.17 million Vietnamese people using Internet services, an increase of about 6.2 million (more than 10%) compared to 2019. It is because of the spiritual development. Due to the speed of the Internet, online shopping has become more familiar than ever to Vietnamese consumers. And statistics show that up to 70% of Vietnamese people have access to the Internet, which has become the driving force behind the development of e-commerce. Also according to the 2020 report of the Ministry of Industry and Trade, Vietnam has the top 3 e-commerce growth rate in Southeast Asia, Vietnam's B2C e-commerce market has a growth rate of about 25% per year, reaching 10 08 billion USD in 2019, accounting for 4.9% of the total retail sales of consumer goods and services nationwide. In which, 4 major online shopping websites, namely Tiki, Shopee, Lazada, and Sendo, are on the list of the most queried unsigned domain names on the national domain name server system (DNS) in 2020 (according to the Financial Report). Nguyen Internet Vietnam). From the above, it can be seen that consumers have paid great attention to online shopping on e-commerce websites.
Indeed, online shopping on e-commerce sites is very popular in Vietnam and Vietnamese consumers have a rather positive view of e-commerce sites. Following the development trend of Vietnam's e-commerce, Shopee is currently the leading e-commerce site. As one of the largest e- commerce platforms in Southeast Asia, Shopee has effective business strategies to achieve where it is today. By understanding the factors driving consumer behaviour online, Shopee is increasingly expanding its customer base and dominating the e-commerce market in Vietnam.
Therefore, the choice of this topic is reasonable. The aim of this paper is to explore the factors that influence consumers’ online shopping behaviour in Vietnam, and analysing different ways how e-commerce sites attract and reach their customers. To support the purpose of this paper, Shopee has been selected as a case study, which is one of the most popular online shopping sites
2 in Vietnam. Overall, results show that there are four main elements involving the website, product, price and promotion, shipping service, truth and privacy. By understanding those factors, Shopee has successfully gained customers than the competition. Finally, recommendations for e-commerce businesses to support their shopping sites and how they can improve customers’ online shopping experience are provided.
Aim and objectives
The aim of this thesis is to study e-commerce platforms in Vietnam, and explore factors that influence online consumer behaviour via e-commerce sites, especially Shopee. The following objectives are listed in order to achieve the main goal of this paper.
The first objective is to explore e-commerce in general and its current situation in Vietnam.
The next objective is to probe consumers‘ perceptions and consumer behaviour toward e- commerce plarforms.
Another objective is decribe online consumer buying decision and identify factors that influence online consumer behaviour.
In more detail, the fourth objective is to sutdy how these elements impact online consumer buying decisions. There are five main elements are determined, including website preference and design, prices and promotions, product diversity and quality, delivery service, trust and privacy.
Finally, in order to have a practical perspective and apply it to the e-commerce market in Vietnam, this thesis will use Shopee as a case study to learn about consumer buying behaviour through the most popular e-commerce site in Vietnam up to now.
Research gap
The research area is focused on the e-commerce market in Vietnam.
The study was carried out during the period from September 2021 to December 2021. Primary data were collected from direct survey samples during the period from November 2021 to December 2021. The secondary data were collected from information sources during the period from October 2021 to December 2021.
The object of the research is the factors affecting the purchasing behaviour on e-commerce websites of consumers in Vietnam, so the research object is the consumers who have been exposed to online shopping. online on e-commerce websites in Vietnam, most of which are users of Shopee e-commerce site.
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2. LITERATURE REVIEW
2.1. E-commerce and its situation
2.1.1. E-commerce Definition of E-commerce
In deed, there are a variety of definitions of e-commerce.
Firstly, electronic commerce, or e-commerce, as defined by the World Trade Organization (WTO), is the manufacturing, distribution, advertisement, sale, or shipping of products and services by electronic means. Participants who take part in an e-commerce transaction could be businesses, individuals, groups, goverments, etc.
According to IBM, a multinational computer technology and IT consulting corporation, expresses that e-commerce is a part of e-business, which involves e-franchising, e-mailing, and e-marketing. E-commerce also refers to business transactions in which trading partners use technological means to advertise, negotiate, or exchange goods and services. Those technologies like e-mail, Internet and Extranet could be used to support e-commerce activities (‘‘Introduction to Internet Business’’, 2001).
In business, e-commerce is defined as the use of electronic means and technologies to run commerce (selling, purchase or exchange of products, services or information). The delivery of a product or service might take place either on or off the internet ( Manzoor, 2005). On the other hand, Manzoor (2005) said that the phrase ‘e-commerce’ refers to the process of conducting business in the internet environment. This author has provided a basic definition of e-commerce and showed an overview of this concept.
E-commerce, or electronic commerce, often known as e-business, refers to the exchange of products and services using electronic communication. Although it is said that e-commerce has become aware of in the last decade or so, it has been operating for more than 30 years (Tian &
Stewart, 2018).
Tian & Stewart (2018) suppose that e-commerce is linked to the terms ‘internet economy’ and
‘digital economy’. These two notions are concerned with the use of modern information and communication technologies in economic activity, despite their diverse focus. The internet economy involves economic activities that gain revenue from the internet or internet-related products and services. For instance, even building internet connections for business purposes is part of the internet economy, it is not e-commerce. Digital technology such as computers,
4 software, and digital networks mainly contribute to the digital economy. Generally, the terms
‘digital economy’ and ‘e-commerce’ are the same. But, few digital economy operations are not e-commerce activities. Therefore, while there is a connection between e-commerce, the internet economy, and the digital economy, they still have different points. Nowadays, e-commerce has become the most commonly used term, as well as completely changing the way people do business (Yan & Concetta, 2018).
Characteristics of e-commerce
Q. Nguyen & K. Nguyen (2006) explain that there are four main characteristics of e-commerce.
First of all, parties doing e-commerce transactions do not have to face-to-face with each other.
For example, online consumers most often are invisible to sellers on the internet enviroment.
Secondly, e-commerce transactions take place in a market that has no boundaries (global market), which means online consumers can buy goods and services from any where in the world. E-commerce thus has a direct impact on the worldwide competitive environment. Thirdly, at least three parties are included in e-commerce transactions. They are customers, retailers, and a network service provider like e-commerce sites. Lastly, the market in e-commerce is the information network (Q. Nguyen & K. Nguyen, 2006).
Types of e-commerce
There are commonly three kinds of e-commerce including business-to-business (B2B) and business-to-consumer (B2C), and customer-to-customer (C2C).
Firstly, B2B is a form of transaction among businesses, such as suppliers, distributors, and other relevant partners. While in B2C, businesses provide products or services to customers (Tian &
Stewart, 2018).
In fact, B2B and B2C e-commerces have become more and more popular, accounting from 90%
to 95% of e-commerce all over the world (Kumar & Sareen, 2011). Agreeing with Tian &
Stewart (2018), Kumar & Sareen (2011) state that B2C is more well known but B2B is more profitable. Additionally, their study explains these two concepts in more detail. Both of them use computer networks and various digital technologies during buying and selling processes.
However, the parties involved in business activities are not the same. Buyers in B2C are individuals purchasing items for personal use, while in B2B, buyers are companies purchasing items for business purposes (Kumar & Sareen, 2011).
Nemat (2011) expresses that B2B (business-to-business) concerns transactions that occur between businesses, such as enterprises, manufacturers, wholesalers, or retailers. One of contrasting term is business-to-customer (B2C). Now, e-commerce sites, or social media are chosen by businesses to reach their customers (B2C). The B2C model, or business-to-customer, decribes companies that provide products and services to customers over the internet. B2C refers to all types of sales to customers.
5 The third type of e-commerce is customer-to-customer (C2C). Unlike those above models, C2C refers to a business model that is conducted between individuals. According to Sun & Funnie (2004), in C2C, both buyers and sellers are individuals, and they directly exchange goods and services on the internet via a third party, such as e-commerce software. As there are many different types of companies operating on e-commerce platforms, C2C is pretty insignificant.
Furthermore, C2C, or citizen-to-citizen, is a e-commerce model concerning transactions between consumers that are enabled electronically by a third party. Individuals, or users are usually charged a fixed fee or a commission by the third party. The main feature of the sites is to connect consumers together. And this e-commerce model is predicted to grow in the future as it reduces the management cost of a company, or a business (Nemat, 2011).
Yet, C2C e-commerce is worthy of expectation. Thanks to the internet’s growth, geographical distances and communication are not a big problem in trading now, which causes further development of C2C e-commerce. Hence, C2C is expected to play a strong role in supporting B2B and B2C e-commerce.
2.1.2. E-commerce platform
Generally, Albrecht et al. (2007) describes e-commerce platforms is a collection of technologies capable of handling huge volume of e-commerce transactions. Those transactions could be e- procurement systems, B2B hubs or company websites. In most case, an online buyer places a product purchase order across e-commerce platforms. This purchasing procedure have three steps. The buyer discover potential sellers on e-commerce platforms, which recommend a list of retailers, or companies that sell the product. Following that, if e-commerce platforms are successful in connecting the buyer to the right seller, they need to negotiate technical and business agreements with the supplier. E-commerce sites, for example, should provide full instructions on how to place an online order to the buyer, while confirm and inform the supplier proccessing the order. Finally, thanks to the user support features of e-commerce platforms, the buyer and the seller execute a transaction with another (Albrecht et al. ,2007).
‘’E-commerce platform’’ (n.d.) states that an e-commerce platform is a software where business activities including buying and selling products or services via the internet happen. On this online platform, sellers and buyers are the two main participants.
According to ‘’Online platforms’’ (2016) , the online platform is similar to an online marketplace where trading activity between sellers and buyers can carry on. In order to gain a commission, it provides ‘virtual space’ to third-party sellers of products and services, along with effective tools to support those transactions. For example, online platforms can minimize transaction costs by bringing diverse sellers together in one area, at the same time giving suitable product recommendations to customers, and providing convenient payment methods. Thus, there are some similarities between online platforms and physical marketplace in terms of characteristics.
6 Besides, SaaS (software-as-a-service) platforms, PaaS (platform-as-a-service) platforms, and on- premises platforms are mentioned as three basic types of e-commerce platforms. While some companies choose on-premises platforms to take more control on their own, SaaS and PaaS platforms are more preferable for small companies or retailers. Compared to PaaS platforms, SaaS platforms without hardware elements, like Shopee, primarily include only software (‘’E- commerce platform’’, n.d.).
Indeed, the online platform plays an important role in e-commerce. Schwarz (2016) suggests that e-commerce software is a cost-effective solution for businesses. It combines all necessary business functionality into a single online platform via a software-as-a-service (SaaS), which helps to optimize business activity and promote customer engagement and satisfaction.
Furthermore, for customers, any e-commerce platform allows them to buy products and services online and a truly efficient one can provide more than that. By running on a standalone and professional platform, customers should have a comprehensive view. They also have access to a variety of shopping channels and stores, as well as a wide range of product options. As a result, e-commerce software enables customers to have more creative experiences (Schwarz, 2016).
To summarize, the above section has clearly shown definitions of e-commerce and some relevant components from different perspectives. Also, knowledge about e-commerce platforms and their types has been provided, which supports the parts that follow. E-commerce refers to trading activities on the internet via e-commerce platforms between parties. And the model of e- commerce depends on which kind of parties take place in business activity including individuals and businesses.
2.1.3. E-commerce in Asia
The previous part has pointed out the basic understanding of e-commerce and its value to the digital economy. In more detail, the following section will describe how e-commerce performs in the Asian market.
Currently, the rise of internet technology has made a substantial shift in the digital economy. The digital economy is believed to increase efficiency and profitability as the traditional economy has saturated (Yi & Ngo, 2019).
As mentioned above, e-commerce contains exchange activities through the internet, usually products transactions. Yi & Ngo (2019) also agree with this statement. Moreover, by showing actual parameters, they state that within the next five to ten years, many countries are expected to have double-digit growth. The top three e-commerce retail countries with the biggest development are India, Indonesia, and Malaysia. Their annual growth rate is over 20%. The region’s overall e-commerce income has increased from 310 billion USD to over 900 billion USD in the last six years. Under this circumstance, it is expected that by 2025, Asia certainly will be the biggest point in terms of e-commerce all over the world (Yi & Ngo, 2019).
7 As a result, the tremendous expansion of e-commerce is indisputable in Asia. And Asia will become the most promising e-commerce market.
2.1.4. E-commerce in Vietnam
In more detail, in the Asian market, Vietnam is one of the countries which achieve the most significant development in e-commerce. In comparison to other Southeast Asia countries, Vietnam has the highest speed in the retail market, especially online shopping. This leads Vietnam to be ranked second place and achieved a 36% growth rate of the digital economy, following Indonesia with 41% (“Overview of Vietnam’s e-commerce market’’, 2021).
Particularly, one of the components contributing to the success of the e-commerce market in Vietnam is the expansion of big e-commercial sites such as Shopee, Lazada and Tiki. In November 2021, Shopee.vn ranked the first as the most frequented E-commerce and Shopping website in Vietnam, follwowed by Lazada.vn in second place, and Tiki.vn in third place as the leaders of th E-commerce and Shopping websites in Vietnam (‘‘Vietnam most visited E- commerce and Shopping Websites’’, 2021 November 1st).
In recent years, Shoppee is a comparatively e-commerce platform that has experienced rapid growth and is now available in 15 Asian countries. Lazasa is a well-known e-commerce site in Vietnam, having been created in 2012. It is true that Vietnam is one of the most promissing e- commerce markets in terms of future growth. Another common e-commerce site in Vietnm is Tiki. It is not a global e-commerce platform, hence it is available in Vietnam only. Apart from these three largest e-commerce websites, new and rapidly expanding websites such as Sendo and Thegioididong can be evaluated (‘‘Top 3 e-commerce websites in Vietnam’’, 2020 October 30).
There is no doubt that Vietnam has experienced an explosive boom in e-commerce. With a population of 96 million people and continuously rising incomes, Vietnam is truly a potential commerce market. Thanks to the major e-commerce platforms, such as Shopee, Tiki, Lazada, etc, more and more Vietnamese consumers are familiar with online shopping. As a result, there are more opportunities for domestic businesses, consumers, and society, but also more challenges (Duong et al., 2019).
Not only those reasons, but the COVID-19 pandemic is also contributing to an increase in the number of online buyers. Because of the Government's strict social distancing, it is crucial for Vietnamese consumers to be ready for remote shopping without no need to leave their houses, followed by ‘’E-commerce floors’’ (2021). And the article states that with a growth rate of 41%, Vietnam has the most new users from e-commerce platforms among Southeast Asia countries during this time. Despite the COVID pandemic is over, 91% of users are satisfied with using e- commerce sites.
In addition, ‘’E-commerce floors’’ (2021) and ‘’Overview of Vietnam’s e-commerce market’’
(2021) have shown several parameters, including: with 53% of the population buying online,
8 Vietnam’s e-commerce market reached 18% in 2020, achieving 11.8 billion USD, accounting for 5.5% of total retail consumer goods and services sales. In the next few years, the number of people participating in shopping online is expected to increase by 2% more by 2025.
In short, we can accept that e-commerce in Asia in general, and in Vietnam in particular, is an extremely strong and promising market. This is achievable due to the development of the internet, the rise in the number of youthful users, and their ability to keep up with the trend. In addtion, the COVID-19 pandemic is one of the relevant factors in the expansion of the e- commerce market.
2.2. Shopee
2.2.1. Shopee overview
Next, in order to clarify previous concepts, this part will refer to one of the biggest e-commerce sites in Southeast Asia, which is Shopee.
Shopee states on their official website that the Shopee is a platform designed for each specific region, so as to create a commercial environment for individuals, organizations, and businesses who want to sell, promote, and distribute their products to consumers. Its mission is to offer consumers a simple, secure, and user-friendly online shopping experience through convenient and fulfillment support. Shopee helps online shopping become easier and faster (‘’Shopee’’, n.d.).
Shopee is located in Singapore and is owned by the SEA group ( previously Garena), which was established in 2009 by billionaire Forrest Li. Shopee was first launched in 2015 in Singapore.
Until now, this e-commerce platform is available in Singapore, Malaysia, Thailand, Taiwan, Indonesia, Vietnam, the Philippines, and Brazil. During that time, Shopee was positioned as an e-commerce platform focused primarily on mobile devices. It also served as a social network allowing users to buy and sell items at any time and from any location. Shopee is an intermediary that integrates the operation, shipping, and payment support systems to make online shopping easier and safer for both buyers and sellers (Shopee Careers, 2021).
In the beginning, Shopee has followed the C2C (customer-to-customer) model and performed as an online platform where individuals exchange goods with others. Then, Shopee has expanded to B2C (business-to-customer) and acted as third-party connecting businesses with individuals.
Until now, by successfully integrating these two business models, Shopee has accomplished greater efficiency. In C2C, Shopee lets buyers and sellers connect directly with each other.
Shopee helps sellers conveniently approach their buyers, but also pushes those buyers to access a bunch of selling sources, which diversify their purchase option, regardless of distance or time.
With the C2C model, Shopee is able to build an e-commerce platform with the greatest variety of products and services. In order to upgrade the reputation, Shopee later has adopted the B2C
9 model. As in B2C, buyers can choose products with high quality from official and excellent brands.
In addition to this, buying and selling activities are not limited to the Shopee website only, but are also common on mobile devices, such as the Shopee App. Shopee’s user interface is designed specially for mobile devices, giving users a fast and simple mobile shopping experience.
2.2.2. Shopee in Southeast Asia
As mentioned earlier, in the past two years, despite the fact that most of Southeast Asia’s retail industry was severely affected by the COVID-19 pandemic, e-commerce has exploded because buyers and sellers progressively shifted to various online platforms. In early 2019, Shopee opened Shopee shopping mall, enabling famous businesses to launch their online stores. In addition, the company spent 192.9 million USD on marketing and advertising.
Over the last few years, Shopee, which operates in Southeast Asia, has promoted Chinese business selling under the ‘International Shop’ category to enter the market in the region. Shopee China also provides an opportunity for sellers in China to join the retail spreading ecosystem in Singapore. China takes its own advantage in each Shopee market. Taiwan is the first market chosen by China. As it is a part of the China market, it is easy to exploit an additional e- commerce channel. Then, there are Malaysia and Singapore, which have a parallel characteristics to Taiwan and a major Chinese population. On a third level, Vietnam shares a border with China and has similar cultures. So ‘Made in China’ products have been familiar to Vietnamese people.
In terms of Shopee’s overall investment and talent support, Indonesia is the top place.
2.2.3. Shopee in Vietnam
In contrast with other marketplaces, Vietnam is a perfect location for e-commerce, with a population of 96 million people, an average age of 31, about 85% of the population using the internet, and more than half of the netizens purchasing online. Vietnamese consumers have the highest probability of placing an order after considering a product on an online shopping platform, which is 30% higher than any Southeast Asia country.
Shopee first launched in the Vietnamese market in August 2016, with a C2C business model development strategy (a third-party in the buying and selling process between individuals). But nowadays, Shopee Vietnam has evolved into a mixed model while combining the B2C model (business-to-customer). Shopee thus has charged the seller and get commission from them as the product listing fee (Shopee, 2021)
According Shopee Career (2021), some of the highlight achievements of Shopee Vietnam can be named, involving:
● August 2016: Shopee entered the Vietnamese market with its first C2C marketplace concept. Shopee Vietnam, at present, has combined the B2C and C2C models.
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● 2018: Shopee Vietnam was voted as the most popular e-commerce platform in Vietnam.
● 2019: Shopee Vietnam recorded more than 1 billion participation in entertainment games on the app and 10,000 hours of a live broadcast on Shopee Live features, selling 80 million products in 24 hours on 12.12 Birthday Sale.
● 2020: Shopee maintains its leadership position in the Vietnamese e-commerce market in the third quarter of 2020, with average monthly traffic of 62.7 million.
● 2021: Shopee recorded 1.8 million products sold within 1 minute on 9th September Despite being a late-commer to the e-commerce race, Shopee has made an exceptional breakthrough and is currently in first place. As stated by ‘‘The map of e-commerce in Vietnam’’
in Q3 2021, there is over 77 millions monthly web visits on Shopee Vietnam. Shoppee makes it easier for online customers by simplyfing the member register, product browsing and purchasing process. Until now, Shopee still performs well, as the most popular e-commercial platform in Vietnam (‘‘Vietnam e-commerce platform’’, 2020 December 8th).
Because of receiving such great financial support from the parent company Sea Group, Shopee is able to stay on the leading position in the e-commerce marketplace. At the same time, Shopee has built a sucessful company strategie that identifies a good client category, target consumer understanding, and a strong focus on sellers and young generation shoppers (‘‘Who is the leading e-commerce platform in Vietnam?’’, 2020).
Shopee is primarily concentrated on mobile devices, which is the Shopee App. So that, the platform had 880 million app downloads overall as of 2017, with over 5 million ones in Vietnam (Shopee, 2021).
Apart from this, the e-commerce trading platform Shopee.vn is operated and managed by Shopee Co., Ltd. Sellers and buyers are two main members of this site. A seller is a business, organization, or individual who needs to use Shopee’s service to set up a booth, upload product/
service information, and/ or advertise them. While buyers are traders, organizations, or individuals who interested in purchasing product/ service offered for sale on Shopee (Shopee, 2021).
To sum up this section, we cannot deny that Shopee is one of the leading e-commerce platforms in Southeast Asia, especially in Vietnam. Shopee operates as a social network to meet users’
needs for buying and selling at any time and from any location. By integrating management, delivery, and payment support systems, Shopee makes online shopping quicker and safer for both buyers and sellers. Indeed, Shopee is performing well in both Southeast Asia and Vietnam, which means Shopee has proved its core value and mission in the e-commerce market.
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2.3. Consumer behaviour
Apart from the previous section, the following part will explore consumer behaviour and consumer purchasing decisions. To clarify that theoretical knowledge, a case study of Shopee also is laid out as a good example.
2.3.1. Consumer behaviour
Firstly, there is a wide range of concepts within the scope of consumer behaviour research.
Solomon et al. page 6 (2006) explained the definition of consumer behaviour in their book as follows:
‘’Consumer behaviour…… is the study of the processes involved when individuals or groups select, purchase, use or dispose of products, services, ideas or experiences to satisfy needs and desires.”
Indeed, consumer behaviour refers to a behaviour regarding purchasing of products. And it is a continuous process. The definition also highlights the interaction between buyers and sellers during the purchasing process. Even exchange plays an important role in consumer behaviour.
The full consumption process still includes variables that impact consumers before, during, and after purchase. Consumer behaviour also have a lot of different actors. This means various people can be included in the consumption process. In this process, consumer commonly is an individual who recognizes a need or desires, purchases and then disposes of the good or service.
But sometimes, the buyer and the consumer of a product are different person. In some case, instead of buying a product, an individual may perform as an influencer, who give recommendations for a typical product to others after using. But consumers also can be groups or companies where one person usually make a purchase of various products that will be used by many people (Solomon et al., 2006).
Another objection is that consumer behaviour is the act of one or more people purchasing and using items and services, as well as the psychological and social processes that occur before and after the act of shopping. Alternatively, the purchasing behaviour of end consumers refers to people that purchase products and services for their own consumption (Kotler & Amstrong, 2004).
It is said that consumer behaviour is the research of consumers and the process they use to select, consume, and discard goods and services, as well as their emotional, mental, and behavioral responses (‘’Consumer behaviour’’, 2021).
On another hand, Schiffman & Kanuk (2007) have the same definition of consumer behaviour, which is a wide range of activities such as searching, buying, using, evaluating, and discarding goods and services. Consumers can meet their requirements through these activities. Individuals and groups are the two sorts of consumers identified in the study. Groups commonly purchase
12 items for business purposes, such as funding and managing an organization. Whereas individuals buy items to satisfy their own consumption needs (Schiffman & Kanuk, 2007).
Clearly, the definitions mentioned above have basically specified the concept of consumer behaviour, which strongly supports the next part.
Consumer buying decision
To repeat, consumer behaviour is known as the study of how everyone makes decisions about what they buy. Thus, the consumer buying decision is one of the most important aspects of consumer behaviour (Solomon et al., 2006).
Consumer purchasing behaviour is referred to as the buying behaviour of consumers. A lot of elements influence how an individual behaves during the purchasing process. For instance, they could be his/ her shopping habits, favorite brand, or shopping locations. However, sometimes the buying decision of an individual can be driven by his/ her emotion, culture, trend, or social, etc.
By analyzing and understanding which factors impact customers, businesses and companies should easily build their marketing strategies to gain more customers (Ramya & Ali, 2016) In general, there are three issues that arise during five stages in the consumer buying decisions or consumer decision-making process. The first issue which is pre-purchase, consumers recognize needs like how they know they need a product. If they make sure about the decision of finding a product, they should look for information about it, and consider alternatives of the product. Next, if consumers know what they want, and have chosen their preferable product, they make a purchase in the purchase issues. Lastly, the final issue is post-purchase, in which consumers evaluate those products after buying them (Solomon et al., 2006).
In more detail, the buying process begins when the buyer become aware of a problem or need.
Needs can arise from internal or external environment events. One of the basic humans wants, such as hunger and thirst, are considered as internal elements. When those internal elements raise to a certain level, they highly motivate and push the buyer to consume a product like food, or water. A need also may come from external factors, such as seeing advertisements of a product on social media. All the issues listed above are indicators of a problem or necessity.
In the point of view of Solomon et al. (2006), the second stage is information research. Once looking for information of a product, if the need is strong enough, and the information of product is easy to find, consumers are more likely to purchase the product. In some cases, because of the lack of information, consumers may stop their searching and not purchase the product.
Depending on the product category and consumers’ attributes, the influence of various information sources may vary. Information sources are divided into internal and external search.
They may come from personal data, commerce information, public information, or empirical data. In general, commerce sources provide the most relevant information about the product like
13 advertisement, agencies. While personal sources like family, friends give the most effective information. In terms of influencing purchasing decisions, commercial information often notice consumers about product available, or product suppliers, whereas personal data helps to evaluate product.
The next stage is evaluation of alternatives. After having information about the product, consumers tend to consider product alternatives in term of reputation and available features.
Consumers suppose that the product should bring necessary benefits to them and satisfy their expectations. Consumers build their ow beliefs about brands by evaluating according to their attributes. Consumers’ brand beliefs will change depending on their experience, and the impact of selective perception. As consumer attitudes towards brands are formed through an evaluation process, such as comparing reputation of brands to their product quality. The preference of a certain brand is determined by its position in the market.
In the previous stage, consumers choose a product from the brand which stay at the top position after considering various suppliers. However, there are many other reasons that may affect the purchasing decision, such as product reviews from other people, expected price, etc.
Lastly, Solomon et al. (2006) state that the final stage is outcomes and evaluation. In this stage, consumers receive their product and enjoy their purchase. After purchasing, consumers will be satisfied or disappointed at a certain level. Customers will be satisfied with the product if it meets their expectations. As a result, customers may purchase the product again, and be able to give positive feedbacks about it with others. Otherwise, if the product is failed to fulfill consumers’ needs, they will be dissatisfied, thus there are bad reviews about products. However, they can consider returning or throw the product away to minimize their dissatisfaction.
But it is not required to get through all the above stages of the consumer buying decision, especially when shopping online. Some stages can be skipped or reserved by customers.
Factors influence consumer behaviour
In fact, consumer purchase behaviour is affected by four key elements, which are reasons why each consumer behaves differently. They are cultural factor, social factor, personal factor, and psychological factors (Kumar, 2019). Cultural factors first refer to culture which is a system of shared values, rules, and beliefs that bring the entire society together. Culture has a significant impact on consumer purchasing behaviour. Because of cultural diversity around the world, it is essential for marketers to apply right marketing strategies to meet their consumers’ needs. And every culture has a sub-culture that is followed by people within that culture. This group of people usually have similar habits and purchasing patterns. The social class which divided people in the society into four categories from the highest to the lowest position, is considered as one of cultural factors. The need of each social class, such as upper class, upper-middle class, middle class, and lower class, is not the same. In addition, family, friends, reference group, and the opinion leaders are socials factors that influence consumer decision-making process. The
14 family life cycle drives product demand and purchase patterns, which are determined by personality and attitude. Even friends are informal and unstructured groups, most consumers purchase a product following their friends’ recommendations of the product. Reference group is another social factor. Members in the group perform as influencers who suggest other members purchase the product (Kumar, 2019).
2.3.2. Online consumer behaviour
Consumer perceptions of online shopping via e-commerce platforms
Before exploring online consumer behaviour, it is necessary to point out consumer perceptions of online shopping via e-commerce sites in terms of advantage and disadvantage. In other words, online purchasing offer numerous advantages in modern life, but it also has several potential drawbacks for buyers.
As explained earlier, e-commerce has become more and more popular nowadays which leads consumers tend to shop online via e-commerce sites. From consumers’ point of view, shopping via e-commerce has boosted convenience by removing many of the barriers generated by time and geography. Consumers now can shop without leaving their house 24 hours a day, seven days a week (Solomon et al., 2006). It is not surprising to find that the reason why many people avoid going to the mall is the fear of queuing at supermarkets or shopping malls during rush hour. As a result, online purchasing spares customers from these inconveniences. Another advantage of online purchasing is that it saves time. Instead of spending hours in shopping malls, the average consumer spends approximately 15 to 30 minutes to find the item they require on shopping websites. Customers can also shop at any time of day, regardless of the malls' operating hours (Niranjanamurthy M et al., 2013) Aside from convenience, additional advantages of online shopping through a website include a diverse selection of products, competitive pricing, and free shipping which will be clarified in following sections.
In terms of disadvantage once buying online via shopping sites, Solomon et al. (2006) state that security is the biggest limitation of e-commerce. Other limitation is related to the actual buying experience. One of the main reasons why people avoid buying things on the internet is because they can't touch them (Solomon et al., 2006). Additionally, consumers are confused while purchasing items online because it is difficult to check the quality of the goods. For example, the product description on the website is not always accurate. It is common when received item does not match the website's description or is the wrong color (Niranjanamurthy M et al.,2013).
Consumer online shopping decision
As the aim of this paper is to study online shoppers’ behaviours, this part will concentrate on understanding how consumers behave on online platforms.
15 In more detail, Bashir et al. (2015) state that online shopping is the current trend that allows people to buy everything from home. In other words, one of the best methods of convenient shopping is online purchasing. It can be seen as a popular means of shopping among the Internet community. It is true for developed countries, where e-commerce platforms are becoming more and more popular. Now, this trend to shop online has been explored in the Asian region as well, especially in Vietnam. Vietnam tends to follow the trend fast. It has multiple websites, along with the commonly known companies, such as Shopee, Tiki, Lazada.
At present, it is so easy to buy goods and services online through the internet via e-commerce platforms. Online shopping makes a big change in the way how people consume. Even though, people keep shopping from physical stores. But shoppers feel more comfortable once purchasing online (Katawetawaraks & Wang, 2011).
To specify this concept, the online shopping decision process is viewed under comparison with offline shopping decision making. Not only detailed information of product, product alternatives but also the price have been public on e-commerce sites for customers. This helps consumers simplify their buying decision process. Thus, online shopping brings more satisfaction for people asking for convenience (Rahman et al., 2018).
Besides, Katawetawaraks & Wang (2011) suppose that there are not many differences between online and offline shopping in terms of buying decision-making. There are two biggest points that differ between online and offline purchasing, involving the shopping environment and marketing communication.
In terms of marketing, various advertisements on social media and notifications of promotion via e-mail should attract consumers, which increases their demands for products (Katawetawaraks &
Wang, 2011). As mentioned above, the purchasing process contains three phases and five stages.
After recognizing needs, consumers tend to seek for information about products on the internet.
However, before purchasing, they need to consider alternatives of products to figure out which are their preferred ones. In this stage, consumers will be persuaded to buy things via a shopping site if the website structure is well-organized and attractive. Therefore, e-commerce platforms can effectively support consumers at the pre-purchase stage. Plus, buyers who decide to buy or not also pay attention to sellers’ sale services, such as shipping service or extra gifts. Then post- purchase is a crucial phase in online shopping. As sometimes customers have problems with the product, they might want to exchange or even return it. Thus, exchange and return service or product feedback is a necessary feature on an online platform (Katawetawaraks & Wang, 2011).
To clarify the online consumers’ behaviours ad their shopping decision, it is essential to understand characteristics of online consumers. Generally, Hasslinger et al. (2007) suggest that consumer characteristics can be described by cultural characteristics, social characteristic, personal characteristics, and psychological characteristics.
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2.4. Factors influence consumer buying decision via e-commerce
By having knowledge about consumer behaviour and online shopper purchasing decision from the previous section, it is easier to understand which aspects influence customer online shopping decision making.
Truly, there are much research has been done to identify factors that impact online shopper decision-making, depending on different points of view, every researcher’s conclusion about motivations that lead people to shop online via e-commerce are not the same.
By reviewing generation behaviour towards online versus traditional shopping, Nguyen et al.
(2018) consider technological factors, consumers related factors, such as price, product quality, service, and website preference. Many online shoppers said that they prefer shopping via e- commerce in case online prices are lower than offline prices. Along with this, user-friendly shopping sites which offer effective features supporting the shopping experience are good advantages. For example, nice pictures, and clear descriptions of products are useful for online shoppers during their purchasing process. Their research concentrates on Asian consumers, especially Vietnamese ones. It is supposed that product price and favorite website are aspects Vietnamese online customers care about the most. And to win the online consumer in Vietnam, product quality and delivery options are also valuable. Products with high quality always come from trusted retailers. For instance, most e-commerce sites commit to distribute products from reliable retailers. One of the conveniences of shopping online is home delivery, which means delivery options and delivery fees affect the shopping experience (Nguyen et al., 2018).
In another case, according to a report from KPMG International in 2017, understanding and keeping up with what motivates people to shop online is crucial, to succeed in the digital world.
The analysis of consumer online shopping preference and behaviour point out that people buy online is the convenience of shopping via e-commerce. As now people can easily buy anything at anytime from anywhere through the internet in the world. Plus, because of the ability to compare price levels from different resources, it is not difficult for online customers to get the best deal while choosing a seller, or website that offers the cheapest price. Especially, excellent customer support stays at the top reason in keeping consumers loyalty. As an example of a great strategy, e-commerce sites usually offer exclusive promotions, such as vouchers, coupons, or sale days, etc. But also, positive reviews about products from customers after purchasing. Those feedbacks help to increase the attractiveness of products, as well as website loyalty for other buyers (KPMG International, 2017).
Additionally, Hasslinger et al. (2007) also have similar comments about those factors. They believe the price, trust, and convenience are the main elements that significantly influence the consumers once purchasing online. Price is frequently used by consumers to consider product alternatives and evaluate product quality. While trust refers to emotional factors linked to trust-
17 related internet behaviour like purchasing, communicating, and sharing personal information.
And factor convenience is often perceived as making consumers feel more comfortable to shop online compared to the traditional way of shopping (Hasslinger et al., 2007).
In general, consumer online shopping purchase decision is such a main reason that led to the success of online retailers, and businesses, as well as the popularity of e-commerce platforms. In this situation, there is much competitiveness in the online market now. So, determining elements that affect online shopper buying decisions is essential for sellers and e-commerce sites to build suitable business strategies and promote profit.
There are a variety of factors that influence online shoppers' behaviour toward e-commerce. For instance, consumers can make a choice among diverse products with different prices on one online platform only, instead of going to many stores like before. Additionally, affordable price offers, and extra gifts are good motivations that lead consumers to buy online. Depending on consumer willingness, products can be delivered to a specific location, such as their home through shipping services. To summarize, those factors are website, product, price and promotion, shipping service, truth and privacy which have a significant impact on online shoppers’ buying decisions. They are five main factors on which this paper will focus.
2.4.1. The factor websites
It is true that one of factors that drives online shoppers buying decisions could be website preference and website design (Solomon et al., 2006). For example, the website with freeform or grid layout most useful for consumers once searching products within the online store. The website also must include fulfill and reliable information likes product descriptions, delivery options, or payment methods, etc. At the same time. E-commerce sites should provide responsive and helpful customer service that are always ready support customers by quickly replying to their questions during purchasing process. As a result, great customer service could make online consumers shop at the site again (Solomon et al., 2006).
To repeat, Nguyen et al. (2018) state that because online shopping is a computer-bases activity, customers are unable to directly touch products. Therefore, online shoppers often use the website interface to analyze the quality of products sold on e-commerce sites (Nguyen et al., 2018) . We can suggest that consumer online shopping decisions basically based on the available information provides by retailers on e-commerce sites.
2.4.2. The factor product Product diversity
According to Prajapati (2021), the huge selection and variety of product are one of the biggest motivations that lead consumers to shop online. Physical stores most often have the most and best-selling products as they have limited stock. Since sellers want to sell their in-store products
18 to manage the inventory in their physical stores. That causes the availability of product to be limited. Online shopping, on the other hand, offers a wide range of products from multiple sellers, or businesses. Many consumers prefer to purchase online as it allows them to browse and select products based on their preferences and current trend. Online may also pre-order, or pre- own a product on the internet. It is easy for consumers to access a wide range of products on a single e-commerce platform. For example, by using e-commerce platforms, consumers even can buy second-hand products (Prajapati, 2021).
In other words, product diversity is one of the top reasons why consumers purchase online. It is easier to satisfy consumers’ needs as there is a diverse product offering on e-commerce sites. By providing a larger selection, information discovering, reliability, and product comparison, the online buying environment allows consumers to reduce their decision-making efforts (Nguyen et al., 2018).
Product quality
Indeed, one of the most important leading factors that have a direct impact on consumer online shopping decisions is product quality. Even if a business invests heavily in aggressive advertising and public relations initiatives instead of focusing on product quality. Then the product might not meet the consumer’s expectations. If consumers receive a poor-quality product, they will not repurchase it again. Thus, in the case of online shopping, a poor-quality product can cause a bad effect on future potential consumers, as some consumers may leave bad reviews about that product on e-commerce sites. Furthermore, providing low-quality products also causes bad influence on an e-commerce site’s reputation. On the contrary, in case products satisfies high-quality requirements, it will be accepted and trusted by consumers. Thus, they will repurchase the product, or suggest it to other consumers.
2.4.3. The factor price
In fact, the internet has become a worldwide marketplace where consumer can easily get information likes product information and prices. In the past, buyer could negotiate with sellers about the price of a product after checking it. But now, the price comparison can be made quickly via the internet. In most cases, consumers’ purchasing decisions are influenced by pricing. Consumers are more likely to be attracted by products that are on sale or have lower price. Consumers who are price sensitive are truly interested in price comparison on the internet.
However, instead of paying attention to the price, other consumers want to discover a unique and high-quality product that may be difficult to buy offline. Thus, the price is not their priority while deciding to buy the product. Even if the price is low, additional costs such as fright taxes, customs, or long-distance delivery can influence an online consumer’s choice to reconsider a purchase (Hasslinger et al., 2007).
19 Similarly, affordable prices are the reason why consumer decide to buy a product online. There are multiple alternatives for comparing pricing from different online stores, ore retailers. Since e- retailers understand the weakness of consumers who are sensitive with the price change. They continuously provide discounts on various products and greatest deal to motivate online shoppers to place an order (Prajapati, 2021).
Truly, e-commerce platforms daily provide deals, coupons, vouchers, rewards programs to their customers by sending e-mail or messages. Sometimes, online shoppers can receive promotions directly in their inboxes. This simplifies the price comparison process, which makes consumers feel more comfortable while deciding to buy a product Boice (2021).
Furthermore, Nguyen et al. (2018) state that price, or promotions and product features have the most significant influence on purchase decisions globally, as follow:
Figure 1. Consumer behaviour: Purchase decisions
Source: Nguyen et al. (2018)
2.4.4. The factor delivery services
In the point of view of Boice (2021), the convenience of free shipping is the difference between online and offline shopping. From a retailer’s perspective, offering free shipping encourages customers to spend and purchase more than they expected. For instance, if an online shopper spends a specific amount of money on purchasing products on an e-commerce site, the site will deliver the products to the customer without shipping fee.
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Figure 2. Top Reason People Shop Online (2021)
Source: Oberlo, 2021 It is true that e-commerce platforms offer free shipping is the number one reason why customer prefer to shop online. More than half (51%) of consumers said that free shipping is one of the key reasons they buy online. To repeat, people prefer the convenience of having their purchase delivered to them for free rather than go to physical stores. In case the product is not convenient for them to bring it home by themselves like big household, machines, they must pay extra fee for professional delivery companies. However, the amount of time consumers must wait for a product to be delivered influence their willingness to shop online. So, in addition to taking advantage of free delivery services, online buyers also want to receive their orders as soon as possible (‘‘Why do people shop online’’, 2021).
2.4.5. The factor truth and privacy
Kidane & Sharma (2016) indicate that e-commerce platforms not only need to persuade consumers that the product or service will meet their expectations, but also gain their trust. Trust is defined in the online context as the belief that allows online shoppers to readily share their personal and financial information with retailers and e-commerce sites. The factor trust helps consumers overcome their fears of uncertainty and risk and engage in ‘trust-related behaviours’
21 with e-commerce sites, such as revealing personal information, or completing purchases. At the same time, this factor sometimes delays the consumer purchasing decision as they are not feeling free to share personal information with e-commerce sites. Thus, e-commerce platforms need to build trust with their consumers to reduce fear of online transactions (Kidane & Sharma, 2016).
There is no doubt that the security policy and privacy of e-commerce platforms are key elements that earn consumers’ trust. Solomon et al. (2006) declare that this factor trust contains the security surrounding credit card payments and the privacy of shared information.
By understanding one of limitations of online shopping is that consumers can not touch items, the availability of a return policy is necessary. In terms of psychological benefit, a return policy can minimize consumers’ feeling of regret when buying. Furthermore, consumers consider a return policy as an improvement in a company’s service quality, and the perceived quality of a firm impact purchasing decisions (Kidane & Sharma, 2016). Hence, e-commerce sites should offer an easy return policy as it affects consumers’ decisions to buy online. If consumers are not satisfied with their purchase decision, for instance the product does not meet their expectations.
In this case, they may want to return the product to the seller. As a result, a money back guarantee is supposed as a risk-reduction technique, and consumers are more comfortable shopping online if they know they will receive their money back (Kidane & Sharma, 2016).
Finally, we can claim that there are basically lots of factors influence online consumer behaviour.
And the highest motivations that drive the decision of online purchase of consumers are the factor of websites, products, prices, delivery services, and truth. Whereas, depending on online consumers‘ characteristics, the influence of each element is not the same.
3. METHODOLOGY
The purpose of this paper is to explore factors that impact online consumer behaviour via e- commerce platforms, especially Shopee Vietnam. In order to achieve this goal, it is essensial to find out the key motivations that lead to the buying decision of online consumers. Particularly, website, price, delivery and privacy are determined as four basic elements. Therefore, the mothodology will be qualitative research which includes data from in-depth interviews with Vietnamese consumers who has online shopping experiences via e-commerce sites. The in-depth interviews that invovle open-ended question in a semi-structured manner are supposed suceessfully investigate wether these four factors motives consumers to puchase online. At the same time, by applying the method of in-depth interviews, it is expected to find out consumers‘
attitudes and behaviours towards e-commerce sites from their realistic responses. The six steps of theme analysis were used to analyze the collected data.
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3.1. Research type
Qualitative research has been applied to conduct the study, thus strongly support the main goal of this thesis. In other words, this method was used to investigate basic elements influence online consumers behaviours via e-commerce sites and describe how these factors drive their puchase decisions. In term of relevant human interaction issues, the use of in-depth interviews has become more and more popular now. The most common type of the in-depth interviews is one- to-one interviews. The in-depth interviews allow respondents feel free to express themselves, thus should give honest answers that investigators may not have thought before (Adams et al., 2018). Hence, the respones are always personalized and specific.
According to Corbin & Strauss (2014), qualitative research generally is consider as type of research in which questionaires are used to gather and analyze through interviews. Because ofopen and flexible characteristics, qualitative approach may provide to the researcher diverse and unexpected responses Corbin & Strauss (2014). As a result, qualitative approach truly facilitates the curent research which explore factors impact online consumer behaviours and figure out how they drives during online consumer buying process via e-commerce sites. By applying qualitative research, the data of Vietnamese shoppers about their personalities, purchasing methods, shopping habits and attitudes towards Shoppee has been shown. This significantly support the primary objectives of this paper. Based on collected data, it is confirmed that websites, products, prices, delivery services and privacy are five basic components motive Vietnamese consumer to purchase online.
3.2. Method of data collection
As a result, the in-depth interviews has been applied as qualitative data collection method to explore factors that inlfluence consumers‘ online shopping behaviours via e-commerce sites, which is the main purpose of this paper. Specially, the one-to-one interviews that are commonly conducted face to face have been used to gather primary data (Coughlan, 2009).
Moreover, Ryan et al. (2009) state that the individual interview is such a useful way to learn more about human responses, understandings, as well as their inner and realistic experiences, which effectively support the social and behavioural research. And one of the most popular types of interviews is used to approach potential interviewees, which is semi-structures interviews.
Furthermore, the semi-structured interviews with open-ended questions provide a more flexiable approach during the interview process. It permits the interviewer to gain unexpected responses from the interviewee (Coughlan, 2009). In this case, the topic is viewed under a variety of subjective ways of participants, thus the issues are explored from an individual perspectives.
Under the same concept, their responses thus may contain similar or different comments and opinion. This allows the author has a wider point of view about one specific concept.
Nevertheless, the interviews usually require a high level of knowledge and skills of the interviewer. To build a good relationship between the interviewer and the interviewee, the
