Online perceived risk is an important issue in e-commerce. As China has a large Internet shopper population and online consumer spending continues to increase, better understanding Chinese online shoppers' perceived risk and risk reduction strategies becomes particularly relevant. However, research in the Chinese context is limited. Given this reality, the purpose of this study is to (1) identify and rank Chinese consumer online perceived risk; (2) investigate consumer preferences for methods of reducing risk; and (3) present a cluster analysis of e-shoppers based on their perceived risk score. Managerially, the study intends to provide e-marketers and e-retailers with an overview of risk as perceived by Chinese online shoppers and their risk reduction strategies. It also aims to demonstrate for managers the impact of this awareness on their competitiveness by illustrating how consumer types are related to different perceived risk dimensions and risk reliever strategies on the Internet. Some results from this study are consistent with previous studies, but it is interesting to note that certain findings are different. These differences might be explained by the specificity of the Chinese Internet shopping environment and Chinese culture. Cluster analysis regrouped the Chinese e-shoppers into five groups based on their perceived risk.
Keywords: Perceived risk, risk reduction strategies, classification, Chinese online clothing shoppers, e-commerce
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Internet has strongly impacted the global marketing environment and the Internet has provided companies with the ability to expand their business reach through e-commerce [Kailani and Kumar 2011; Vyncke and Brengman]. Despite the benefits of online commerce over traditional commerce and optimistic predictions for future growth of online shopping, negative aspects associated with this shopping mode are also becoming critical [Ko et al. 2004]. Exposure to new method of e-commerce transactions and information overload bring increased uncertainty for both new and experienced internet users [Angriawan and Thakur 2008; Kailani and Kumar 2011; Nugent and Raisinghani].
Consumers perceive a higher level of risk when purchasing on the Internet as compared with traditional forms of shopping. These perceived risks associated with online shopping in turn have a critical effect on consumer decision making. It is suggested that perceived risk is a powerful index for explaining consumer behavior since consumers are more often motivated to minimize potential failure than to pursue purchasing success [Mitchell 1999]. From a managerial standpoint, understanding consumer perceived risk and how consumers attempt to reduce these risks is of great concern. Perceived risk, therefore, has become a hot topic of study for many researchers [Kalakota and Whinston 1996].
China is one of the countries that have shown the fastest information technology adoption trends. According to CNNIC1 , online shopping is becoming an important shopping mode in China. In 2008, online shopping market transactions accounted for 1.1% of total retail sales. The proportion rose to 2% in 2009, and increased to 3.3% in 2010. In 2010, annual online shopping transactions amounted to 523.1 billion yuan2, increasing by 109.2% when compared with 2009. Meanwhile, the number of Chinese e-shoppers continues to grow; the rate of online shopping penetration continued to increase in 2010. As of December 2010, the online shopping penetration rate had reached 35.1% [CNNIC 2010]. There are 161 million online in china.
With such a large Internet shopper population and increasing online consumer spending, better understanding of online shopping risk as perceived by Chinese e-shoppers and risk reduction strategies used by these e-shoppers becomes particularly relevant. However, our review of the literature indicates that most previous research on perceived risk and risk relievers was conducted in the context of countries other than China, for example, Belgium [Van den Poel 1996]; India [Samadi and Yaghoob-Najadi 2009; Guptaet al. …