Factors affecting online group buying intention and satisfaction: A social exchange theory perspective
Highlights
► We model the use experience of online group buying users. ► We examine the applicability of social exchange theory (SET) in online context. ► The results suggest reciprocity, trust, satisfaction, and vendor creativity predict online group buying intention. ► Consumer satisfaction with online group buying was predicted by trust and reciprocity. ► The applicability of SET is attested in online context.
Introduction
The recent rapid growth of information technology (IT), the Internet, and the e-commerce boom have created significant opportunities that are characterized by a lack of spatial boundaries. The Internet has an increasingly significant influence on people’s everyday lives, in aspects such as communication, entertainment, social activities, and shopping. Numerous businesses have also changed their business model and shifted from physical sellers to the virtual market because of the opportunities offered by an online business model. A recent survey of over 27,000 Internet users in 55 markets from the Asia Pacific, Europe, the Middle East, North America, and South America showed that the Internet market offers significant opportunities in emerging markets (Nielsen, 2010). This shows that the traditional forms of consumption have transformed.
Online group buying has become popular with the emergence of US-based sites such as Groupon, launched in 2008. The term group shopping refers to social or collective buying where items can be purchased at significantly reduced prices when enough buyers participate in the purchase. The transaction proceeds only when the required number of buyers is reached. Significant savings can be made (CTVglobemedia, 2011) by purchasing more products together to reduce the price. This popular trend in online shopping experienced significant growth during 2010 and 2011. In the United States and Europe, online group buying is highly popular and successful, and is based on a simple but powerful concept: consumers enjoy receiving significant discounts on premium products, although merchants are only willing to provide these discounts if they can sell high quantities (Pressitt, 2010). A CNN report in 2010 indicated that this concept has motivated a new category of “group buying” websites, at least one of which may be valued at more than US$1 billion. In Canada, local merchants offer their services at a discount of between 30% and 90%. Online group buying websites are also experiencing rapid growth in Asia (CNN, 2010). In China, more than 1215 group buying sites have been launched and the total transaction value of the Groupon-type market is projected to reach RMB$980 million (US$147.6 million). This market is expected to grow by an annual average of 57% over the next 3 years (NetworkWorld, 2010). Online group buying in Taiwan has also become increasingly popular. Shoppers are using online group buying primarily because of incentives to save money. Taiwan’s largest bulletin broad system site, PTT (http://ppt.cc), and Ihergo website (http://www.ihergo.com/) are the most popular group buying websites. The revenue of one renowned group buying website increased from NT$13 million in 2008 August to NT$27 million at the end of 2008, and an average of more than 700 new groups are established everyday (Taipei Times, 2010).
Incentives to save money are frequently used to demonstrate the consumer behavior of group buying. Over time, however, the factors that influence consumers to engage in group buying behavior have developed more multi-faceted dimensions because of the growth of network communities and competitive market environments. Online group buying is a new business model that has not been fully investigated. Previous studies have stressed the functionality and usability of group buying systems (Tsai et al., 2011, Zhu et al., 2010), although few studies have focused on social and psychological factors and the business perspective of online group buying. We believe that factors related to consumer psychology and relation exchange have not been addressed by previous studies. These psychological and consumer behaviors are crucial for marketers seeking to increase sales rates. The phenomena are worthy of attention, given the potentially significant market gains offered by this novel business model. This study focuses on the application of social exchange theory (SET) in the group buying context and identifies the issue in the context of online group buying by incorporating factors such as reciprocity, reputation, trust, satisfaction, and seller creativity. These factors are identified as critical factors affecting both online and psychical shopping. This study attempts to understand the most crucial factors influencing consumer continuous intention to engage in repeated online group buying. This research addresses the questions of (1) whether trust, reciprocity, and reputation are antecedents of satisfaction that influence consumer intention to engage in online group buying; and (2) whether vendor creativity is a significant factor affecting consumer intention to engage in online group buying. This paper is organized as follows: Section 2 discusses SET and the theoretical background of satisfaction, trust, and creativity; Section 3 presents the proposed research model and hypotheses; Section 4 details the research methodology used in this paper; Section 5 presents the data analysis results; Section 6 discusses the key findings of this research; and Section 7 presents the conclusion and discusses limitations of this study.
Section snippets
Social exchange theory
Originating in the 1950s and based on psychology, SET embraces the fundamental concepts of modern economics as a foundation for analyzing human behavior and relationships to determine social structure complexity. SET was initially developed for analyzing human behavior (Homans, 1958) and was later applied to understanding organizational behavior (Blau, 1964, Emerson, 1962). For example, SET was extended to the organizational context with an emphasis on the significance of norms, specifically
Research model and hypotheses
Based on SET, this study proposes that beliefs such as reciprocity, reputation, and trust, as noted in the social exchange literature drive intention. We propose that: (a) beliefs (reciprocity, reputation, and trust) and vendor creativity collectively influence user satisfaction toward websites and vendors; and (b) trust and vendor creativity have a salient effect on behavioral intention toward online group buying. Fig. 1 shows the proposed hypotheses and Table 2 summarizes the core concepts
Data collection and subjects
Empirical data for this research was obtained using an online survey that has several advantages over traditional paper-based surveys, such as fast response time, cost-efficiency, and an absence of geographical boundaries (Bhattacherjee, 2001a, Bhattacherjee, 2001b, Tan and Teo, 2000). The distributed survey was developed using the Java programming language and distributed from September to November, 2010. A hyperlink to the survey was posted on PTT and Ihergo website to reach a large number of
Descriptive statistics
A total of 215 respondents were surveyed online. Of these 215 participants, 111 were men (51.6%) and 104 were women (48.4%). The majority of respondents were aged between 23 and 30 (73.0%), had post-secondary education (95.9%), and had engaged in group buying three times within the previous year (77.7%). The most recent group buying experience for the majority of respondents was within the previous 3 months (54.0%) and the most common purchases were food items (61.0%). Table 3 shows the
Discussion
The results support satisfaction as the strongest predictor of continuous intention to engage in online group buying, followed by vendor creativity. If customers perceive value in online group buying, and the vendor satisfies their needs, the intention to engage in online group buying is greater. Thus, product and service satisfaction have a crucial influence on intention to engage in online group buying.
The positive relationship between vendor creativity and the intention to engage in online
Conclusion
This study investigates factors that affect consumer intention to engage in online group buying and whether reciprocity, reputation, trust, and vendor creativity affect consumer satisfaction, and consequently intention to engage in online group buying. The results show that consumer satisfaction with online group buying is predicted primarily by trust, followed by consumer reciprocity. Consumer satisfaction and trust are the strongest predictors of intention to engage in online group buying,
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