Redefining online shopping clusters: A cross-cultural analysis of Western demographics, attitudes and behaviour

Breitsohl, J., Eschweiler, T., Parry, S., Khammash, M. Bangor University

Contemporary research on cross-cultural segmentation dominantly focuses on Western vs. Eastern marketing comparisons. Moreover, established research on offline shopping behaviour is largely assumed to hold in an online context as well. This paper analyses to what extent Western countries differ in crucial demographic, attitudinal and behavioural online shopping patterns. Findings on the three chosen cultures (Germany, the UK and the US) indicate that common international marketing clusters will need reconsideration as consumer attitudes (e.g. Convenience, Value, Trust, Choice), behaviour (e.g. Frequency, Spending volume) and demographics (e.g. Gender, Literacy) significantly differ in supposedly known markets when shopping online. Keywords: Cross-cultural marketing Internet shopping Attitudes Online behaviour Track: International and Cross-Cultural Marketing

1. Introduction Despite the tendency of contemporary international marketing scholars to focus on a comparison between fast-growing, developing Eastern markets and supposedly mature and known Western markets, e-commerce in the West is still growing significantly. In 2008, the United States experienced 15, the UK 25 and Germany 23 percent growth in e-commerce. In addition, these three countries account for almost 20 percent of the worldwide users (Internet World Stats, 2009a, 2009b). Even though these target markets may have many political and cultural similarities, one can expect substantial differences in their consumers attitudes, behaviour and background with regards to the online shopping context. Notwithstanding the large quantity of research on the Internet shopping behaviour of different cultures (e.g. Yang et al., 2007), there has not been to the authors knowledge - any study comparing these three important cultures. Since online and offline consumers has been shown to greatly vary regarding demographic, attitudinal and behavioural shopping patterns (e.g. Lynch et al., 2001), this study sets out to analyse the core factors of distinction in order to identify whether established cultural marketing assumptions still hold. Culture has been found to be an important factor for Internet behaviour (Samiee, 2001). Encouraged by studies which found significant differences in online shopping between developed Western cultures (e.g. Brengman et al., 2005) this study will focus on three low context cultures: Germany, the United Kingdom and the United States of America. Even though, at first sight, there are many similarities between the target countries, evidence for cultural differences can be found in Hofstedes (1984) cultural dimensions for example. The three countries have similar rankings across three of Hofstedes 5 dimensions: small power distance, masculine values and long-term orientation. Larger differences can be found in the degree of individualism and uncertainty avoidance. With culture being the major influence under investigation in this study, further core factors of online shopping behaviour will be explored, namely gender, Internet- and PC-usage, computer literacy, spending volume and shopping frequency. According to Brady (2000), more men than women participate in e-commerce. Suesskind (2004) discovered that men spend significantly more money than women when shopping on the Internet. Swinyard and Smith (2003) found that online shoppers had a higher computer literacy and spent more time on the computer and on the Internet than non-shoppers. Furthermore, a differentiation is made between online shoppers and non-shoppers. In combination with the factors named above, this study will utilise the revised online shopping behaviour model by Chang, Torkzadeh and Dhillon (2004). The model differentiates between Fundamental objectives (i.e. end objectives) when shopping online and Means objectives (which support to achieve the former). The attitude objectives investigated here are shopping convenience, product choice, vendor trust, online payment, shopping travel, shipping errors, ecology, customer relations and product value. Further rationales and hypotheses are given below. H1: Online shoppers will differ from non-online shoppers in all three countries as they a) Are more likely to be male, b) Have a higher computer-literacy, c) Spend more on a computer and d) Spend more time on the Internet Moon, Chadee and Tikoo (2008) found that Hofstedes dimension of individualism influences the purchase intention of consumers: The higher the individualism, the higher the purchase intention. This leads to the conclusion that American consumers shop online more than British citizens, followed by German consumers. However, it can be expected that shopping frequency and the amount of money spent online will not be significantly different (Ho, Kauffmann and Liang (2007). Therefore,

H2: The online shopping frequency and money spent online will not vary significantly for American, British and German consumers Yang et al. (2007) conducted a study with British and American college students which reported ambiguous findings regarding differences in respective attitudes toward shopping convenience. Yet, results for customer relations indicate a higher significance for British consumers than American consumers. Hence, H3: a) Attitude towards shopping convenience will be similar for British and American shoppers and b) British shoppers will rate customer relations as more important than American shoppers According to Marquart-Pyatt (2008), German consumers are more concerned with the environment than British or American consumers (who scored similarly). Therefore, different attitudes towards Internet ecology are expected. H4: The attitudes of German, American and British shoppers for Internet ecology will vary The high Uncertainty Avoidance Index in Germany is expected to lead to different findings for the dimensions of online payment. Furthermore, a high UAI is expected to lead to a larger fear of Internet shipping errors. Therefore, H5: a) German consumers will rate online Payment higher than American and British consumers and b) German consumers will rate Shipping errors higher than American and British consumers Trust significantly affects consumers in their decision whether to buy online or not (Mahmood at al., 2004). Inglehart, Basanez and Moreno (1998) show that the level of trust in the three countries under examination varies: Germany showing the lowest level of trust. Accordingly, H6: The highest demand for Internet vendor trust will come from German consumers Little academic literature is available on the attitude of Western consumers towards driving to shopping locations. One potential indicator may be taken from daily commute times, where British consumers are used to drive the least (Stutzer & Frey, 2007). Hence, H7: British consumers will be the most concerned culture regarding travelling to shop Finally, this paper sets out to close the literature gap on differences in Internet product choice and product value. Since customers in all three countries use both price and quality as an indicator of the value of a product and are used to the ability to choose from a range of different products, the following may be assumed: H8:The attitude of German, American and British young adults will be similar for a) Internet product choice and b) product value

2. Methodology This research used a self-administrated online questionnaire which was allocated to a convenience and a snowball sample of universities in Germany (2), the UK (1) and the US (2)

as well as 2 online social networking sites. It underwent several rounds of pre-testing and professional linguistic revision as recommended in cross-cultural studies. The questionnaire was based on demographic information, a computer-literacy index developed by Swinyard and Smith (2003) and the aforementioned Online shopping measurement model. The 12-iteminstrument reflects the ability of an individual to perform certain tasks on a computer. A total number 711 individuals attempted the questionnaire. However, 131 respondents were excluded because country or age criteria were not met, resulting in a total number of 580 usable responses. 185 respondents were from the United States (31.9 percent), 124 from the United Kingdom (21.4 percent) and 271 from Germany. The gender distribution was 60% female and 40% male. The average age across the three countries was between 22 and 23. To examine differences between online shoppers and non-online shoppers, independent sample t-tests were utilised. In addition to conducting ANOVAs for the comparison of the three target countries, Hochbergs GT2 post-hoc test was chosen to identify the individual significant differences and due to its appropriateness in the case of unequal sample sizes. Since a number of items and constructs did not show normal distribution, Kruskal Wallis tests were conducted. However, in order not to inflate Type I errors, the Bonferroni correction was used. The reliability for the online shopping behaviour model was reliable (Cronbachs alpha = 0.73. and 0.84 respectively)

3. Analysis and Results In total, 89.5% of the participants were online shoppers, 10.5% had not shopped online in 2010. The one-way ANOVA showed no significant differences for the percentage of online shoppers in each of the three target countries with F(2, 503)=1.06. The mean time that respondents spent on a computer per week was 34.45 hours, the mean for shopping frequency was 10.16. Spending ranged from 0 to 3324.15, with a mean of 290.74 and a standard deviation of 14.179. The Computer Literacy Index can range from -12 (cannot perform any of the tasks) to +12 (able to perform all tasks). With a mean of 9.15 and a standard deviation of 2.796 the computer literacy of the sample can be described as high. Overall, the fundamental objectives of the online shopping behaviour model indicated the highest mean for customer relations (4.38), followed by product value and shopping convenience (4.27 and 4.17 respectively).The least important fundamental objective for all respondents was Internet ecology with a mean of 3.85. The means for the fundamental objectives were in general higher than those for the means objectives (Internet product choice 4.15; Online payment 3.95; Internet vendor trust 3.67; Shopping travel 3.34; Internet shipping errors 3.06) No significant gender differences were found for the question whether or not the respondent had purchased goods online in 2010. Therefore, Hypothesis 1a was rejected. Online shoppers had a significantly higher Computer Literacy Index than non-shoppers: While the former demonstrated a mean Computer Literacy Index of 9.29, the latter only achieved a mean score of 7.90 (t[54.93]=-2.93, p=.005). Hence, Hypothesis 1b was confirmed. Furthermore, the amount of hours consumers used the computer seemed to have a significant positive influence on whether they shop online or not. While those respondents who said they had bought goods or services online in 2010 used the computer an average of 35.04 hours per week, the nonshoppers only used it 28.77 hours per week (t[500]=-2.02, p=.044). Therefore, Hypothesis 1c was confirmed. Moreover, online shoppers used the Internet almost five hours more per week than those who did not buy anything online in 2010 (27.26 vs. 22.33 hours per week). However, this result was not significant on a 0.05 level, with t(499)=-1.74. Hypothesis 1d was therefore rejected. To examine the differences in online shopping behaviour in the three target countries, oneway ANOVAs were used. The hours of computer usage differed significantly between the

three countries with F(2, 544)=22.54 and p=.00: German consumers use a computer 40.24 hours, British 33.74 hours and American consumers 26.61 hours per week. No significant differences were found in Internet usage (F[2, 544]=4.53, p=.011), online shopping frequencies F(2, 427)=.118, p=.888, and online spending (F(2, 495)=0.628, p=0.534). Accordingly, Hypothesis 2 was confirmed No significant difference between the target nations was found for the Computer Literacy Index, with F(2, 481)=1.88 and p=.154. For Internet Shopping Convenience, no significant differences were detected in the Kruskal Wallis test (X(2)=4.65, p=0.098). Hypothesis 3a was not confirmed. The overall construct Internet ecology (X(2)=32.19, p=0.000) indicates significant differences between German and British subjects (0.002, effect size small 0.18) and German consumers and American consumers (0.000, effect size small to medium 0.29), implying that respondents from the United Kingdom with a mean of 3.97 as well as from the United States with a mean of 4.17 were significantly more concerned about ecological issues than German consumers (mean: 3.58). Hence, hypothesis 4 was confirmed. No significant differences for Internet Customer Relations between the three target countries were examined (X(2)=1.55, p=0.46), thereby rejecting hypothesis 3b. There were significant differences between the countries for Internet Product Value (X(2)=29.13, p=0.000): American and German results differ significantly (p=0.000, effect size small to medium 0.2767). The difference between German and British respondents was also significant (p=0.009, effect size small 0.1514). Therefore, product value was most important for American consumers, leading to the rejection of Hypothesis 8b. The overall construct Internet product choice (X(2)=53.27, p=0.000) showed a significant difference between German and American consumers as well as German and British consumers. Product choice was significantly more important for American (mean: 4.43) and British (4.32) than for German consumers (3.90). Hypothesis 8a was therefore not confirmed. The total construct online payment showed significant differences between the three countries with X(2)=20.04 and p=0.000. The Mann Whitney test stated that participants from the United States (mean: 4.20) were significantly more concerned about online payment than German consumers (3.74, alpha = 0.000, effect size small 0.23). Accordingly, hypothesis 5a was rejected. The overall construct of Internet vendor trust (X(2)=54.76, p=0.000) received the highest ratings from American consumers (mean: 4.05). The difference to German respondents (mean: 3.33) was significant with p=0.000 and a medium effect (0.37). Consumers from the UK (3.83) were also significantly more concerned than German consumers (0.000 effect small 0.25). Hence, hypothesis 6 could not be confirmed. Overall, the construct shopping travel revealed significant differences for the three target nations (X(2)=27.69, p=0.000). American consumers (mean: 3.63) responded more negatively to shopping travel than German consumers (3.07), with a significance level of 0.000 and a small to medium effect size. British respondents (3.52) were also less in favour of shopping travel than German consumers (see fig. 21), with a significance of 0.001 and a small effect. Therefore, hypothesis 7 could not be confirmed. For the construct shipping errors, there was a significant difference in the Kruskal Wallis test between Germany and the two other nations (X(2)=28.33, p=0.000). With p=0.000, the effect for the comparison between German (mean: 2.77) and American consumers (3.38) was small to medium. The British-German p was 0.003 with a small effect only (British mean: 3.16). Accordingly, hypothesis 5b was rejected.

4. Discussion The most challenging and paradoxical findings that this study offers were elicited from the German sample. While it was predicted that German consumers would worry more about

the security online payment and misuse of personal data, the results for this sample showed the opposite. Reasons may be the strict laws regarding the storage and use of consumer data in Germany as well as the little use of credit cards for online shopping in Germany (Humphrey (2004). Another paradoxical finding was the higher concern about shipping errors expressed by American and British respondents in comparison to their German counterparts. This may support the suggestion that the differences in the Hofstedes Uncertainty Avoidance Index do not influence attitudes towards online payment and Internet shipping errors to a large extent. This is in agreement with Gong (2009) who found that countries with a high UAI shop less than those with a low UAI. A further surprise was the low score for concern about Internet vendor trust by German consumers. It was expected, not only because of the UAI, but also due to international research on trust (Inglehart et al., 1998) that German consumers would be most concerned about this issue. In order to gain clarity for these results, further research is needed. American consumers and British consumers are more travel-averse than German consumers. It was expected that British respondents would be most averse. Reasons could be that American consumers have a different perception of scale when driving is concerned since travel distances for them tend to be longer in general. Again somewhat surprisingly, American consumers and British were more concerned about the environment than German consumers. A possible explanation for this may be found in Liefferink et al. (2009) who shows that Germany was the top performer in the number of existing environmental policies and their related strictness. While similarities across all three countries were predicted for Internet product choice and product value, American and British consumers expressed a greater importance for both constructs than German consumers. One reason for the variation in product value can be found in different perceptions for German consumers (Crawford and Garland, 1988). The attitudinal differences for Internet product choice may be explained by the size of convenience stores which tend to be much larger (i.e. include a larger variety of products) in the US and UK than in Germany. American, British and German consumers did not show significant differences for online shopping frequency and the amount of money they spent shopping on the Internet. This result was not surprising because various statistics about Internet and online shopping adoption rates pointed in this direction (Internet World Stats, 2009a, 2009b). This paper found some significant gender differences with men spending more money through online shopping than women (except for the UK). The here confirmed higher computer literacy of males as well as higher Internet usage comes as no surprise (Potosky (2007). The higher shopping frequency of males can also be explained by the findings of Chiu et al (2005) who showed that for female Internet users, the ease of online shopping was lower than for their male counterparts. Womens lower level of trust towards online shopping confirmed in this study - had been proven by various other studies (e.g. Cho & Jialin, 2008). The Computer Literacy Index as well as the hours spent on a computer were significantly higher for online shoppers than for non-online shoppers. Such results were predicted by several studies including Swinyard and Smith (2003).

5. Conclusion This research shows that established assumption on Western attitudes, behaviour and lifestyles needs a revision in the context of online shopping. Overall, differences between American consumers and British consumers were much smaller than between German consumers and either of the two others. Therefore, they can be approached more similarly, e.g. via attitudinal segmentation, overlayed with lifestyle and demographic variables to inform

cross-cultural marketers in an increasingly complex market based on amalgamated Western consumption ideologies. Henceforth, the crucial conclusion this study may draw is that Western cultures cannot be seen as one target entity in cross-cultural marketing campaigns since both Hofstedes (1984) assumptions as well as common stereotypes did not hold. This study should therefore be repeated on a larger scale with a more representative sample and on a regular basis in order to determine changes in the online shopping behaviour. In addition, income factors could be taken into account as the national Gross Domestic Product (GDP) may have an influence on a countrys Internet adoption and shopping rates.

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