Understanding consumer online shopping behaviour from the perspective of transaction costs

 
et al.
2011). Privacy concern is the most frequent reason cited by consumers for not making 
online purchases (Buchanan
 et al.
2007, Castañeda and Montoro 2007, Wirtz
 et al.
2007, Eid 
2011, Hong and Thong 2013, Taddei and Contena 2013). Recent studies (Spake
 et al.
2011, 
Kumar and Reinartz 2012, Shareef and Kumar 2012, Yeh
 et al.
2012b) indicate that 
consumers bear the costs of losing their personal information when shopping online because 
their personal information might be used to send them unwanted offers by online stores or 
other companies or accessed by a third party for non-authorized activity. Miyazaki and 
Fernandez (2001) explicate that gathering, sharing personal information by placing cookies 
on the computer and contacting the consumer without his consent increase consumers’ 
privacy concerns and reduce their perceived benevolence and credibility of the online 
vendors. Consumers are afraid that once their information is open to other unrelated parties, 
the benefits they gain from the online transactions cannot off-set the loss they might have to 
suffer because of identity theft (Njite and Parsa 2005).
When facing a high possibility of 
opportunism by leaking personal information without the consumers’ approval and 

---

139
difficulties in protecting their personal data, a consumer’s monitoring cost of the usage of 
their personal information is very likely to increase and the overall TCs of protecting personal 
information may increase as well (Yeh
 et al.
2012b). Thus, consumers’ privacy concern may 
positively affect their TCs of online shopping. 
In addition to privacy concern, the security of financial transactions has been recognized as 
one of the obstacles in stimulating online shopping (Suh and Han 2003, Yeh
 et al.
2012b). 
Consumers worry about the security-related risks of fraud or financial loss from their use of 
credit cards during the online transaction (Eid 2011). An Internet user viewing the Internet as 
having a low level of security would perceive high uncertainties of online shopping, and is 
unlikely to become an online shopper. The issue of security has drawn much attention in 
online shopping. For example, Miyazaki and Fernandez (2001) contend that both experienced 
and inexperienced users of online shopping consider security as a major concern. Bhatnagar 
et al. (2000a) show that the uncertainties associated with financial transactions, such as 
transmitting credit card information on the web, affect consumers’ online purchasing 
behaviour. Udo (2001) argues that the security threats fuel consumer concerns over the 
uncertainties and risks of online shopping, directly affect consumers’ perceived TCs and their 
online shopping behaviour. Also, Teo and Yu (2005) confirm that security concern is an 
influential factor of TCs, and it positively influences the retail TCs. Chircu and Mahajan 
(2006) advance that consumers perceive lower TCs from booking their tickets at online 
website Firstesort.com after they perceive lower security concerns on the Internet. Kim and 
Li (2009) identifies low levels of data security positively influence consumers’ TCs in the 
online travel market.

---

140
From the studies cited above, it is argued that if the consumers do not feel secure, they may 
be reluctant to give credit card information over the online to vendors. It may take much time 
and effort to monitor online vendors’ behaviour to ensure the security of financial 
transactions carried out via the Internet. This leads to an increase in the monitoring cost of 
online shopping. Subsequently, their perceived overall TCs of online shopping would 
increase. As such it is hypothesized that consumers’ privacy and security concerns are 
positively related to their TCs of online shopping