Understanding consumer online shopping behaviour from the perspective of transaction costs

Adaptation cost:
the cost for adapting to changes, such as the customer service and external 
environment. For example, if the product quality is not as good as expected but consumers do 
not wish to return products, at this point they must bear costs of adapting to the products, 
which is a part of the psychological cost. When online stores change the design or appearance, 
consumers need to adapt to the change, leading to time and psychological cost. Consumers 
have to bear adaptation cost when the external environment is changed, such as the changes 
in circumstances surrounding government regulation, mass media reports and online 
consumer reviews.
Compared with brick-and-mortar traditional shopping, online transactions may have higher 
costs in some categories and lower costs in others. For example, online shopping can lower 
the access cost as it removes the need to drive to the store, and it can lower search cost by 
providing a search engine (Malaga 2001), and reduce ordering cost by easily placing products 
in shopping cart and allowing instant check-out with no waiting. Yulihasri et al. (2011) argue 
that consumers do not have to go anywhere to shop, stand in lines, and have any problem 
finding a product. Despite benefits derived from the reduction of some TCs associated with 
online transaction process perceived by consumers, online shopping also increases some TCs, 
such as the evaluation cost, since online shopping adds new forms of consumers’ risk and 
uncertainty due to the lack of physical examination and face-to-face contact (Teo and Yu 
2005). The increased need for monitoring the transaction in the electronic market due to 
uncertainties leads consumers to bear additional costs incurred in preventing risk and 
ensuring that the terms of contract have been met. Unexpected changes in the electronic 

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market, such as product delivery rescheduling, make consumer adaptation a necessity, 
thereby resulting in an increase in consumer TCs.