Understanding consumer online shopping behaviour from the perspective of transaction costs

 et al.
2009, Kim
 et al.
2013b). 
The finding supports the contention that the reaction of inexperienced and experienced online 
consumers to the same level of uncertainty in the online transaction process could be different 
as they have different tolerance for uncertainties (Liang and Huang 1998, Furnell
 et al.
2008). 
Liang and Huang (1998) further state that customers who do not have online buying 
experience would perceive much more uncertainties in online shopping, whereas for 
customers who have online buying experience, their perceived uncertainties would be 
reduced sharply due to the previous online transaction experience. Therefore, consumers’ 
online buying frequency is negatively related to their perception of uncertainties and TCs of 
online shopping. 
 
6.2.1.4 Product quality concern 
Findings show that the product quality concern (H2a) has a positive relationship with TCs (
β
= .057, p < .05), suggesting that the increase in concerns regarding product quality increase 
consumers’ perceived TCs. The result lends credence to the past findings in the literature 
(Liang and Huang 1998, White
 et al.
2000, Teo and Yu 2005, Yen
 et al.
2013), and serves to 
strengthen the conjecture that consumers are so worried about product quality, when they are 

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unable to physically check the products prior to purchase, that they sense a high level of TCs 
in online shopping which may hinder their purchase decision-making (Teo
 et al.
2004).
The findings of Cheskin Research (2000) further revealed that mainland Chinese consumers 
have a higher experiential orientation (need to examine merchandise physically before 
purchasing) as compared to Chinese consumers residing in North America. This can be 
explained by the fact that overseas Chinese are exposed to Western culture (e.g., American 
culture) which is characterized by a high uncertainty/risk acceptance level. Compared with 
Mainland China, America scores higher on uncertainty avoidance (one of the Hofstede’s 
culture dimensions), which means that Americans, including overseas Chinese in America, 
tend to be more tolerant of ambiguous or unknown situation (Hofstede
 et al.
2010). In an 
online setting, they exhibit a larger degree of acceptance for online shopping even though 
they cannot physically examine the products.
On the contrary, mainland Chinese people tend to avoid potential risks in online 
environments and have a strong desire to examine products before making a purchase. 
However, they are unable to physically check the online products due to the geographical 
separation between consumers and online products. Consequently, they experience high 
product uncertainties. Particularly, they are concerned about product uncertainties as to 
whether the products are genuine, whether the received products are completely consistent 
with the ones showed on the website, and whether the performance of the purchased products 
are as good as promised by the online vendors. The difficulty of inspecting products when 
buying online causes a surge in uncertainty and TCs. If online vendors could provide clear 
exchange or refund policy to minimize the product uncertainty faced by consumers, 
consumers would not worry so much about the potential risks and possible losses, and would 

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be more likely to adopt online shopping and buy more items from the online vendor 
(Ranganathan 2012). 
6.2.1.5 E-service quality
As expected in H2c, the negative relationship between e-service quality and perceived TCs is 
confirmed (
β
= -.482, p < .001). The finding indicates that lowering consumer perceived TCs 
can be achieved through offering a high level of e-service quality. Extant research has seldom 
considered e-service quality as an antecedent of the TCs of consumers in online shopping and 
examined their correlation.
The research by Teo et al. (2004) provides additional evidence to elaborate the finding of this 
study. As Teo et al. (2004) contend, consumers in China perceive higher uncertainties in e-
service than U.S.A consumers. This is probably because many consumers in China believe 
online shopping generally provides poor after-sales service and is the lack of a guarantee by 
vendors (China Electronic Commerce Research Centre 2014). On the other hand, most U.S. 
online stores such as Amazon.com have the capability to provide good after-sales service, 
differentiate themselves from others by focusing on service differentiation, and guarantee the 
exchange or return of the products purchased if consumers are dissatisfied, which enable U.S. 
consumers to sense less uncertainties of the e-service quality and less risks in online 
environments.
In some cases, since online stores may not have a physical presence, the interaction between 
online vendors and consumers are limited. Once there are problems concerning product 
performance, delivery, or product return, consumers can contact online stores only via email, 
telephone and fax. The non-face-to-face communication prompts consumers to perceive more 

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behavioural uncertainties of online stores than those of brick-and-mortar stores. As such, 
consumers would have to spend additional time and effort researching for products and store-
related information that are needed for problem-solving, and monitoring online stores to 
check if their inquiries are processed properly by the vendors.
The result also shows that among the factors affecting TCs, e-service quality has the strongest 
influence and advances prior research on the drivers of TCs by signifying the importance of 
e-service quality. The finding suggests that particular attention should be paid to e-service 
quality by online vendors. The results also provide online vendors with a full and clearer 
picture of how to improve e-service quality and reduce TCs through each dimension of e-
service quality. In line with previous research (Lee 2005, Kassim and Abdullah 2010), this 
study suggests that, to mitigate online shoppers’ perception of TCs, vendors need to provide 
superior e-service quality via the investment of resources in improving the e-service quality 
dimensions of reliability, responsiveness and personalization.
Specifically, reliable service enhances consumer trust in the online store (Zhu
 et al.
2002), 
allays consumer concerns about service quality, and will ultimately result in a drop in 
perceived TCs. Kassim and Abdullah (2010) advocate that providing prompt services to 
customers entails online vendors’ continuous effort and resource investment. Thus, 
responsiveness of the service may act as a strong value signal. If online vendors cannot 
ensure service promptness, customers may doubt their ability to present qualified e-services, 
which would increase their perceived uncertainties and risks in online environments. 
Moreover, Lee (2005) notes that providing product or service information that is tailored to 
meet the needs of the individual customer strengthens customer belief that online vendors 
have the ability to understand and meet their needs, and therefore can increase customers’ 

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perception of the benefits of online shopping, reduce sacrifices derived from online shopping, 
such as time and effort expended during the process of searching the most suitable products, 
and will finally lower their perceived TCs.