Understanding consumer online shopping behaviour from the perspective of transaction costs

6.2.2 Consequences of Consumer TCs 
6.2.2.1 Online Purchase Behaviour 
The hypothesis (H4a) that a customer’s perception of TCs is negatively related to his/her 
actual online purchase behaviour is supported (
β
= -.834, p < .001).This result is in line with 
the TCT which states that consumers tend to transact in the channel that can economize on 
TCs (Williamson 1975, Williamson 1985). When making buying decisions, rational 
consumers will select a transaction channel that costs the least among all the available 
choices. That is to say, consumers weigh TCs (e.g., search cost, evaluation cost and 
monitoring cost) associated with the transactions at all possible channels and will choose one 
channel where it will incur a minimal cost (Adler
 et al.
1988, Cannon and Perreault 1999, 
Macher and Richman 2008). This cost consideration will affect their decision to buy online or 
in physical stores and further influence the amount of the items purchased and the buying 
frequency through that channel. Thus, if consumers perceive high TCs in the online shopping 

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channel, they will be less likely to buy online and more likely to reduce online purchasing 
frequency as well as the total numbers of items being purchased.
The result provides support for the proposition of perceived risk theory that increased 
uncertainties about the outcome of a purchase will lead to increased reluctance to engage in 
purchase activities (Forsythe and Shi 2003). This study also concurs with Teo and Yu’s (2005) 
findings that lower TCs in online environments induce consumers to choose online channels 
and their online buying intention is negatively associated with their perceived TCs. If the TCs 
perceived by online shoppers change, their online purchasing intention tends to change 
inversely (Yen
 et al.
2013).
It is worth noting that previous studies concentrate on the impacts of TCs on consumer 
purchasing intention or repurchase intention (Teo and Yu 2005, Yeh
 et al.
2012b, Yen
 et al.
2013, Wu
 et al.
2014), however there is a lack of a thorough theoretical understanding of the 
effects of TCs on the actual purchase behaviour. By proposing and testing the direct 
relationship between TCs and online purchase behaviour, this study offers new insights into 
the TCT and consumer behaviour theory. Given the finding of this study and other supported 
evidence from extant studies, it is safe to conclude that TCs can be regarded as a key factor 
governing consumers’ online purchase behaviour. This finding provides managers with a 
deeper understanding to how to entice consumers to buy more items and shop more 
frequently at their online store. 
 
6.2.2.2 Customer Loyalty 
This study takes a new perspective to examine the possible consequences of TCs in customer-
online vendor exchanges: a perspective directed toward relational exchanges instead of 

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discrete transactions. Consequently, the study proposes customer loyalty as another 
consequence of consumer TCs associated with purchasing from an online vendor (H4b). The 
finding regarding the negative impact of TCs on customer loyalty (
β
= -.563, p < .001) 
coheres with Chen (2007) who posits that the greater the TCs the less likely the consumer 
will be willing to stay loyal toward an online vendor. The result implies that TC economizing 
determines a customer’s future choice of an online vendor with which to conduct a 
continuing transaction after the first exchange. Customers would like to choose the most 
efficient online vendor to do business with. They evaluate the overall costs and attempt to 
transact with an online vendor where they may encounter the minimal TCs during the 
shopping process (Kim
 et al.
2014, Wu
 et al.
2014). The finding is also consistent with the 
point of view of Kim and Li (2009b) who articulate that TCs are negatively associated with 
customer loyalty towards online travel products and a low level of the online TCs play an 
important role in nurturing customer loyalty.
This study advances the TCT in relation to the outcomes of TCs by testing the effect of TCs 
on post-purchase behaviour and validating their negative influence on customer loyalty 
towards an online vendor/store utilizing data from real online shoppers who have completed 
at least one transaction with the online vendor. It also extends extant loyalty research by 
showing the important role of TCs in determining customer loyalty towards online 
vendor/stores.