An Empirical Investigation of Online Consumer

Purchasing Behavior

Manju Ahuja, Babita Gupta, and Pushkala Raman

This article is focused on examining the factors and relationships that influence the
browsing and buying behavior of individuals when they shop online. Specifically, we
are interested in individual buyers using business-to-consumer sites. We are also inter-
ested in examining shopping preferences based on various demographic categories
that might exhibit distinct purchasing attitudes and behaviors for certain categories
of products and services. We examine these behaviors in the context of both products
and services.
After a period of decline in recent months, online shopping is on the rise again.
By some estimates, total U.S. spending on online sales increased to $5.7 billion in
December 2001 from $3.2 billion in June of 2001 [3, 5]. By these same estimates,
the number of households shopping online increased to 18.7 million in December
2001 from 13.1 million in June 2001. Consumers spent an average of $304 per per-
son in December 2001, compared with $247 in June 2001. According to an analyst
at Forrester: The fact that online retail remained stable during ... such social and eco-
nomic instability speaks volumes about how well eCommerce is positioned to stand
up to a poor economy [4].
What do consumers utilize the Internet for? Nie and Erbring suggest that 52% of
the consumers use the Internet for product information, 42% for travel information,
and 24% for buying [9]. Recent online consumer behavior-related research refers to
any Internet-related activity associated with the consumption of goods, services, and
information [6]. In the definition of Internet consumption, Goldsmith and Bridges
include gathering information passively via exposure to advertising; shopping, which
includes both browsing and deliberate information search, and the selection and buy-
ing of specific goods, services, and information [7]. For the purposes of this study,
we focus on all aspects of this consumption. We include all of them because infor-
mation gathering aspects of e-commerce serve to educate the consumer, which is ulti-

Manju K. Ahuja (mahuja@indiana.edu) is an assistant professor of Management Information Systems at

The Kelley School of Business, Indiana University, Bloomington, IN.
Babita Gupta (babita_gupta@csumb.edu) is an associate professor of Management Information Systems at
California State University, Monterey Bay, CA.
Pushkala Raman (praman@cob.fsus.edu) is an assistant professor of Marketing at Florida State University,
Tallahassee, FL.

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2003 ACM

COMMUNICATIONS OF THE ACM December 2003/Vol. 46, No. 12ve 145

mately in the interest of the online shopping industry. Further, the knowledge that
consumers may be using a site for research purposes only may imply that the Web
sites in this industry are not able to meet the consumer needs adequately. Similarly,
both researchers and practitioners may be interested in learning whether consumers
are using the Internet solely for collecting information or for purchasing specific types
of products as well. Thus, online consumer behavior is of interest to consumer theo-
rists and practitioners. Researchers may wish to examine how existing theories of con-
sumer behavior can be applied to online consumer behavior. Practitioners are likely
to be interested in examining aspects of consumer needs their sites are unable to ful-
fill. Thus, our findings should help the managers design online marketing strategies
aimed at attracting consumers who do not yet shop online, as well as improving their
online offerings for those who do.
In general, advantages of online shopping as perceived by consumers include con-
venience, selection, price, original services (services that may be available online but
not elsewhere), personal attention (some consumers perceive that they get more per-
sonal attention from merchants by going online), easy and abundant information
access, privacy (consumers may be able to view, compare, and buy items that they
might be reluctant to buy in-store, and freedom from sales people). So, why are some
products sold online more successfully than others? In this article, we sought to
answer the following research questions:

Which categories of products/services are popular?

How much is being spent on various categories of products/services?
How many Web sites are visited before making a purchase?
Why do people buy or decide not to buy online?

The Study
This study focuses on general online purchasing behavior of individual consumers
and why they choose to buy or not buy online. Our product categories were derived
from a variety of sources. Our approach is consistent with that of the leading online-
shopping research company, Forrester, which uses demographic information along
with attitudinal and lifestyle data to create a composite segmentation scheme that
divides the market into ten segments reflecting typical purchases by high- as well as
low-income levels. Our approach is also consistent with that of Modahlwho
describe three motives for online shopping (career, family, entertainment)and two
technology attitude groups [8].
The study surveyed two samples to gather quantitative data. These two samples
reflect two distinct groups of the population: students (n=190, 84.6% of whom were
full-time undergraduate students) who are considered to be Internet savvy and less
concerned about privacy [10]; and non students (n=75, 78.9% of whom were faculty
or administrators) who would exhibit greater variance in their level of comfort with
the Internet, and would be more concerned about privacy. Both the samples were
almost evenly divided into females (56% and 50% for student and non-student sam-
ples respectively) and males (44% and 50% respectively). In both samples, over 70%
of our subjects had been using the Internet for over three years. Sixty-three percent of
the subjects in the student sample earned over $1000 per month while 68% of the
subjects in the non-student sample earned over $3000 a month.

146 December 2003/Vol. 46, No. 12ve COMMUNICATIONS OF THE ACM

 The questionnaire focused on online shopping behavior across eight categories to
provide a good mix of products and services. The choice of these categories was
guided by the Yahoo! Shopping portal (www.yahoo.com) [11]. All the above research
questions were investigated across demographic groups (age and gender) to see if
there were any differences in the patterns of online shopping.
What are people buying online? The survey asked respondents to indicate the
frequency of purchase of items for eight different product/service categories within
the last six months. The data (see Table 1) indicate that most people are not buying
online. Interestingly, the same categories of products and services are popular in both
the student and non-student sample. This may indicate that demographics of age,
income, and occupation alone may not account for online shopping behavior [1].
Travel (53% students; 61% non students) and audio-video (43% students; 58% non
students) were the most popular categories in both samples, followed by apparel and
computer and computer accessories. The least purchased category was groceries (7%
for both samples). This could also be due to the fact that online grocery companies
like Peapod do not operate in the regions where these surveys were conducted. Travel
accounted for higher spending amounts (see Table 2). Thirty-eight percent of stu-
dents reported spending $100 to $500 and 11% indicated expenditures greater than
$500 on travel. The corresponding numbers for the non-student sample were 40%

Categories Presently Buying Future Intentions

Non- Non-
Students Students Students Students
(n=190) (n=75) (n=190) (n=75)
Grocery 6.9% 6.8% 18.6% 9.6%
Audio-Video 43.3% 57.5% 81.2% 75.7%
Computer 31.4% 25.7% 67.8% 55.6%
Home Entertainment 20.7% 17.6% 57.1% 39.7%
Sports 11.8% 9.5% 39.6% 32.9%
Apparel 32.6% 44.6% 59.2% 58.9%
Travel 52.9% 60.8% 89.2% 75.3%
Healthcare 14.9% 13.5% 27.2% 27.4%

Table 1. Who is buyingPresent and future?

Categories Students (n=19 0) Non-Students (n=75)

$100 to $100 to >
< $100 $500 > $500 < $100 $500 $500
Grocery 12% 1% 1% 10% 1% 1%
Audio-Video 42% 7% 0% 51% 7% 1%
Computer 16% 14% 7% 8% 14% 8%
Home Entertainment 15% 8% 1% 12% 8% 0%
Sports 12% 2% 1% 10% 3% 0%
Apparel 22% 12% 3% 29% 18% 0%
Travel 9% 38% 11% 7% 40% 15%
Healthcare 17% 1% 1% 19% 0% 0%

Table 2. How much are people spending?

COMMUNICATIONS OF THE ACM December 2003/Vol. 46, No. 12ve 147

and 15% respectively. Of all the categories that were examined in the survey, travel
was the most expensive, which might account for the higher expenditures in this cat-
egory.
We asked respondents about their future intentions to purchase products/service in
the eight categories (Table 1). The responses follow the pattern of current purchasing
behavior with travel and audio-video topping the list, followed by computers and
apparel. The list is rounded off with groceries at the bottom. Interestingly, the patterns
of future intent are fairly similar across both travel and audio-video categories. However,
the figures are higher for students across all categories. This suggests that there is some-
thing inherent in the travel and audio-video categories, which makes them more or less
desirable for online purchasing. One possible explanation is that, traditionally, products
like audio-video, apparel, and computer accessories have been purchased through cata-
logs and other forms of direct mail. Thus, online shopping is seen as just another distri-
bution channel. Groceries, on the other hand, have traditionally been bought in the
store. Online grocery shopping requires new scripts and a different mindset. It also
demands more planning and forethought and less impulse buying. Second, online gro-
cery store deliveries are still not widely available, which might explain why people are not
buying groceries online. With high profile companies like Webvan.com closing down, it
might also explain the low future intent to purchase in this category. A third possibility
is that there are well-established sites for travel (major airline sites), audio-video (for
example, CD-Now), apparel (such as www.landsend.com) and computers (like
www.dell.com). This makes it easier for people to shop online. Additionally, they have
trusted brands (such as Amazon) that can ease the anxiety of shopping online.
How many sites do they visit before making a purchase decision? One of the
benefits of online shopping is the ability to obtain information and make compar-
isons, provided consumers know how to make efficient searches [10]. However, it can
lead to information overload, which in turn, might turn people off from online shop-
ping. How do consumers balance these pressures? We looked at the number of Web
sites people visit before making a purchase (see Table 3). Across the board, one to
three Web sites appeared to be the popular response. The student sample had a higher
percentage of people who indicated visiting more than three Web sites. In the non-
student sample, travel was the only category that reached double-digit numbers
(11%) for more than three Web sites visited. This may be an indication of students
being aware of more Web sites, or having more time to surf for the best deal.

Non-Students
Categories Students (n=190) (n=75)
< 3 > 3 < 3 > 3
Grocery 9.5% 1.8% 2.8% 1.4%
Audio-Video 40.7% 10.8% 39.4% 1.4%
Computer 24.4% 18.4% 28.2% 5.6%
Home Entertainment 25.3% 12.0% 15.7% 2.9%
Sports 19.5% 4.9% 10.1% 2.9%
Apparel 23.7% 15.3% 30.0% 7.1%
Travel 38.3% 21.2% 37.0% 11.0%
Healthcare 10.8% 6.6% 12.9% 1.4%

Table 3. Number of Web sites visited before making a purchase.

148 December 2003/Vol. 46, No. 12ve COMMUNICATIONS OF THE ACM

 Motivating factors and barriers. We examined reasons why people liked to shop
online (see Table 4). The primary reason for students to shop online was convenience,
characterized as shopping from home and avoiding the hassles of parking, salespeople,
and checkout lines (28%). Other reasons included better prices (25%) and saving
time (23%). The results for the non-student sample were similar in numbers but with
a different order. Convenience (31%) and saving time (27%) were cited as the top two
reasons, with better prices coming in third at 23%. Availability of products/services,
as in access to variety, was also indicated as a significant reason for shopping online.
These statistics, suggesting that people are more interested in convenience than in
price, are interesting because they contrast with popular belief. This finding has strong
implications for businesses and managers working in this area and should be consid-
ered while designing e-commerce strategies as well as Web sites.
In order to determine barriers to online shopping, we asked those respondents who
did not shop online, to indicate reasons for not doing so (see Table 4). The over-
whelming concern in both samples was privacy and security (28% for students; 31%
for non-students). The second leading reason for not buying online was the lack of cus-
tomer service (22% for students; 28% for non-students). This includes the inability to
reach someone if the consumer has a problem while shopping as well as post-purchase
service problems. Lack of social interaction was cited as a third reason (15% for stu-
dents; 9% for non-students) for not shopping online. Social interaction implies the
opportunity to interact with a salesperson. It also includes the perception of shopping
as a social activity with friends. The latter interpretation may also account for a higher
percentage of the student group who indicated this was a problem. There was also a
perception that products bought online are more expensive (13% for students; 10% for
non-students). This appears to contradict the finding that better prices are a reason to
shop online (see Table 4). However, we believe the Internet shopping mall is perceived
to be more expensive because of shipping costs. It is also possible that people feel that
they have not gotten the best deal. While comparison-shopping is possible, it is limited
by the sites that the respondent visits. If the consumer feels that s/he does not have suf-
ficient expertise to navigate the Web, s/he may also feel that the best deal has not been
secured [2]. Respondents also cited lack of time (11% for students; 8% for non-stu-
dents) and inability to touch and feel the product (4% for both samples) as reasons for

Why are people buying online? Why are people not buying online?
Non- Student Non-
Reasons Students Students Reasons s Students
Convenience 28% 31% Privacy/security 28% 31%
Saves time 23% 27% Customer service 22% 28%
Better prices 25% 23% Lack of interaction 15% 9%
Availability 19% 14% High prices* 13% 10%
Customer service 3% 2% Lack of time 11% 8%
Other 3% 4% Cant feel product 4% 4%
Other 6% 9%
Includes high shipping costs

Table 4. Motivating factors and barriers.

COMMUNICATIONS OF THE ACM December 2003/Vol. 46, No. 12ve 149

not shopping online. Other miscellaneous reasons for not shopping online included
difficult to return, too much information, and connection troubles.

Conclusions
Our findings regarding motivators and barriers to online shopping clearly indicate
that convenience and customer service can act as strong motivators when present;
they can also be strong barriers when absent. Security and privacy concerns were the
single biggest barriers to online shopping. Contrary to popular notion, these factors
were found to be more important than price.
This study does have some limitations that need to be acknowledged and addressed
in future studies. First, though these samples provide us with a good understanding of
the online purchasing behavior of a highly educated and computer and Internet savvy
consumer group, they may not provide insights into the behavior of a consumer who
is not a regular computer user, but is nevertheless buying online. As Internet use is
exploding across all demographics, it would be interesting to compare the buying
behavior of these two types of populations. Secondly, this survey only asked for income
and it did not specify whether it was personal or household income. We may have
obtained responses from both of these income categories. However, we believe that this
does not compromise the integrity of the survey since the focus is on how people spend
their disposable income.
Finally, an important element of online purchasing behavior is the use of the
Internet for research as well as for purchase. The Internet as a source of consumer
information for offline buying has implications for how Web sites are designed, their
content, and how well a site meets consumer needs. Further research should address
these issues.
While other studies of online consumer expectations in the e-commerce area have
been conducted, most of them are carried out by commercial organizations. To our
knowledge, this is the first systematic study of this issue conducted by academic and
non-biased researchers. We believe this to be a contributing factor.
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