Understanding consumer online shopping behaviour from the perspective of transaction costs

3.3.3 The Conceptualization of Consumer TCs of Online Shopping 
Consumer TCs of online shopping is the central construct of this study. In the literature, the 
conceptualizations of this construct are not consistent across studies. As this inconsistency 
may not provide an accurate assessment of the construct or its relationship to other factors, 
more theoretical attention may be needed to further explore the nature of this construct. 
Researchers have viewed several types of B2C TCs from different perspectives (Liang and 
Huang 1998, Konana
 et al.
2000, Devaraj
 et al.
2002), such as, in terms of a consumer’s 
purchase decision process, resource lifecycle, and retail transaction chain.
Specifically, TCs occur in all steps of a consumer’s purchase decision process: needs 
recognition, search, alternative evaluation, purchase, and outcome (Engel
 et al.
1978, Ives 
and Learmonth 1984). To acquire products or resources, consumers may go through a 
resource lifecycle that includes several stages, each with associated costs: establishing and 
specifying requirements, identifying the source, ordering, paying for, acquiring and testing, 
integrating, updating, monitoring and maintaining, and retiring the product. The study on 
retail transaction chain (Chircu and Mahajan 2006) demonstrates that access to store involves 
driving and parking, taking public transportation, or walking, search involves walking 
through the store and asking salespeople for advice, evaluation implies touching and feeling 

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products, reading labels, asking salespeople or shopping partners for advice, selection 
consists of physically placing the chosen products in a shopping cart or in one’s hand, 
ordering implies checking out at a cashier station after waiting in line if any, payment 
involves paying by cash, writing a check or swiping a bank/credit card, fulfilment consists of 
carrying products home, service involves obtaining product information, in store or by phone. 
Finally, the returns step involves taking products back to the store (repeating the activities 
from the access and ordering steps). Each step is associated with relevant TCs.
Many of these costs tend to arise in any shopping situation, regardless of the medium 
employed for shopping purpose. For instance, costs of search, learning, adaptation, market 
opportunism, risks involved, etc. tend to be incurred by a consumer, irrespective of whether 
he/she shops online or in-store. However, some costs appear pertinent to a particular 
shopping medium, such as the delivery cost of online purchase owning to the separation 
between consumers and e-retailers.
In an online setting, because of the dynamic, evolving and multi-faceted nature of the online 
environment (Darley
 et al.
2010, Demangeot and Broderick 2010), consumer TCs might be 
different in some respects. However, little research attention has been devoted to 
conceptualizing consumer TCs of online shopping. In this section the researcher 
conceptualizes several types of TCs in online context based on existing research on TC 
analysis (Williamson, 1975, 1979, 1981, 1985), the switching cost approach (Chen and Hitt 
2002, Yang and Peterson 2004) and other TC-related studies (Liang and Huang 1998, Wu
 et 
al.
2014).

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To conceptualize online TCs, an emphasis is placed on consumer TCs during the online 
transaction process as the study aims to explain online consumer purchase behaviour and 
post-purchase behaviour which are embedded in different stages of online transaction process 
(Li and Zhang 2002). In general, each stage of online transaction process, in particular, has 
associated TCs. These stages relating to the time and efforts expended by online consumers 
generate specific monetary, time, or psychological TCs. Researchers (Teo and Yu 2005, 
Bauer
 et al.
2006, Darley
 et al.
2010) have proposed that online transaction process can be 
described by a similar sequences of steps such as internet access (connecting to the Internet, 
and navigating to a store website), brand and product search (browsing online product 
descriptions or running a search by brand or product), evaluation (product pictures, virtual 
tours, text-based descriptions and other customers’ online reviews), order (placing the chosen 
products in a virtual shopping cart through a mouse click and clicking the check-out button), 
payment (typing in credit or gift card information), delivery (choosing a delivery method and 
waiting for products to be delivered at home), monitoring (contacting the online store to 
check whether products ordered are processed), post-sale (products return and customer 
support) and adaptation (changes to customer service and external environment). 
Accordingly, this study defines consumer TCs of online shopping as the costs occurred 
during the entire online transaction process (pre-purchase 

purchase 

post-purchase),
consisting of both online channel-related TCs and online store-related TCs as follows: