Examining the Antecedents of In-Store and Online Purchasing Behavior: A Case of Nigeria

Introduction

As the world gravitates toward a knowledge economy, the contribution of the service sector to economic growth and development in both developed and developing countries has increased significantly over the years and one of the subsectors of services which engendered such growth is ecommerce. The growth of ecommerce globally can be traced to the advancement in technology which has revolutionized the conventional ways of executing tasks especially in terms of trade (Pejman and Mansoor, 2016).

With the growth in information and communication technology and the introduction of electronic payment system, the feasibility, sustainability, and survival of ecommerce in the long run becomes viable. However, the fusion of information and communication technology with psychological complex like consumer behavior presents a socio-technological problem which seems intractable. As more organizations continue to register their presence online through a website, consumers especially innovators and early adopters are gravitating toward online marketplace but not at the same speed with the sellers.

In Nigeria, virtual marketplaces like OLX, JUMIA, KONGA, etc are transforming the purchasing process by easing the process, rendering after-sale services of delivering the product to customer doorstep, and allowing customers to choose from different product varieties unlike the traditional in-store where customers need to roam the market before locating the exact product that meets their taste and budget. Though in-store and online market serve as meeting point between the buyer and the seller, there still exists a significant difference between the purchasing process of customers.

There are myriads of benefits associated with online purchase when compared to in-store purchases and these are not limited to the following: easy price comparison, variety of products and brands, time and stress minimization, locating the right products that meet consumer specification on time, ability to review past users’ comment before purchase, and after sale service. On the other hand, in-store purchase allows consumers to physically examine the products they want to purchase, feel them, communicate with the vendor verbally, and clarify any issues with the vendor immediately ( Ndeh and Reuben, 2015; Sarit and Shatabdi, 2015)

More so, online shopping provides 24/7 shopping experience to customers at lower prices but customers that want to get the product immediately prefer shopping in the physical store due to the delayed delivery of the products ordered online. More so, customers feel more comfortable buying perishable and food items in physical stores than online purchase so as to verify the hygiene and safety practice of the vendor. More so, items can be returned immediately when purchased in-store compared to items that are ordered online. The fact that some pictures of the products displayed online may not refer to the exact products delivered to customers also motivates some consumers to patronize the physical store for their purchase (Raja et al, 2015; Mohammad et al (2015).

However, the ease, convenience, house delivery, easy price comparison, after sale service, and other benefits associated with online purchase have not desisted customers from frequent physical stores. This is due to some cogent reasons considered to be the shortcomings of online marketplace especially in developing countries like Nigeria. One of those reasons is lack of security and government legislation on online marketplace. Specifically, the fear of identity theft especially of credit card makes customers reluctant to frequently purchase products online.

More so, the lack of explicit government legislation on rules that guide online marketplace and appropriate sanctions in case of fraudulent activities discourage consumers from buying their produce online (Nahla, 2014). In Nigeria where cases of financial fraud abound and agency saddled with the responsibility of apprehending and punishing defaulters is laboriously trying to curb the activities of fraudster, customers considered it safer to purchase their produce in physical store where they can feel, touch, test, and instantly identify fault in any products they intend to purchase.

In order to eradicate this threat, customers search for information about the product they intend to purchase online and visit physical store, armed with the right information, to purchase the product that meets their specification. This explains reasons why there is significant difference between the number of page views and the actual purchases made on an ecommerce site. From another viewpoint, the product type also influences the place of purchase whether online or offline (Mahbubur, 2014).

Though some researchers have investigated determinants of online purchase, only few make a comparative analysis with in-store purchase (Prafulla et al, 2016; Ndeh and Reuben, 2015; Sarit and Shatabdi, 2015; Mahbubur, 2014). Mores so, there is little or no studies that attempted to analyze in-store and online purchase by taking a historical and holistic approach in Nigeria. This study poised to fill the gap by providing a comprehensive analysis of how online marketplace delights consumers compared to physical store and how consumer satisfaction with online purchase leads to social applause and social engagement with the brand, which are part of consumer’s post-purchase behavior. By engaging with the brand online, we believed that satisfied customers are able to advocate the usage of the e-vendor by sharing and liking them on social media with their network of friends.

The remainder of the paper is divided into four sections: section two covers the literature review which presents a historical overview of ecommerce in Nigeria, conceptual clarification, theoretical and empirical review; section three covers the research methodology; section four details the findings of the study; while section five summarizes the findings of the study and policy recommendations.

Research Objectives

This study investigate the antecedents of in-store and online purchase in Nigeria by identifying key variables that influence the place of purchase of different categories of consumers. Specifically, the following specific objectives were considered

To analyze the relationship between online customer experience and brand social applause
To determine the impact of perceived financial risk on shoppers attitude toward in-store and online shopping
To determine the influence of the type of product customers intend to purchase on the pattern and place of purchase
To identify the impact of shopping experience on brand loyalty and advocacy.

Research Questions

The following research questions were raised in the course of the study:

Is there any significant relationship between online customer experience and brand social applause?
Does perceived financial risk of shoppers impact on the attitude of shoppers in-store and online shopping?
Does the type of product customer intent to purchase influence the pattern and place to purchase?
Does shopping experience directly translate brand loyalty and advocacy?

Research Hypotheses

Hypothesis one

H1: There is a significant relationship between online customer experience and brand social applause

Hypothesis two

H1: perceived financial risk of shoppers affects the attitude of shoppers in-store and online shopping.

Hypothesis three

H1: The type of product customers intend to purchase influences the pattern and place of purchase

Hypothesis four

H1: Customer shopping experience directly translates into brand loyalty and advocacy

Literature Review

Antecedents of in-store and online purchasing behavior in Nigeria

The licensed of 38 Internet service providers by Nigerian Communications Commission (NCC) in the year 1996 and the launch of Global System for Mobile Communication (GSM) in 2001 in Nigeria set the path for future advancement mobile and digital technological service in Nigeria. By the year 1997, Linkserve Limited became the first Internet provider in Nigeria with the drive to provide access to the Internet in every part of the country. With recent growth in the number of telecommunication providers in the country (MTN, Globacom, Airtel, Etisalat, etc) and data providers (like Smile, Ntel, etc), the country is witnessing amazing transformation in the conventional ways of transacting business in the country (NCC, 2015).

Both business to business and business to consumers dynamics have changed with the proliferation of Smartphone and affordability of data bundles in the country. One of the ways through which technological progress has transformed traditional business models in Nigeria is the spur of ecommerce in the country. The growth of Internet users and mobile penetration (mobile phone penetration of 94%, 30% Smartphone penetration, and feature phones 70%) necessitated physical store to register their presence on the worldwide web (NCC, 2015)

The growth of ecommerce sites like Alibaba, Olx, Amazon, which provide Nigerians with variety of goods, the frequency of purchase by Nigerians due to non-availability of such virtual marketplaces in the country, necessitate the launch of the first Africa online ecommerce sites -Konga and Jumia in the year 2012. With the growth in number of middle class that reside in key economic hubs of the country – Lagos, Abuja, Port Harcout, and the level of literacy in the country boosted the volume of purchase on these ecommerce sites.

As at now, many physical stores have registered their presence on the Internet and others follow suit. In Nigeria, the following ecommerce sites create specific services: Cheki Nigeria for cars, Wakanow for travel, slot.ng for travel, showroom.ng and furnish.ng for furniture, private property and proerty24 for real estate, Olx and jiji.ng for marketplace, mall for Africa for delivery and logistics, Fashpa and Traclist for fashion; Jumia, konga, Deaddey, Yudala, Payporte, Vconnect, and Kara for general merchandize.

Due to the confidence in the sustainability and profitability of online stores, Jumia was able to raise $325 million in capital from existing and new investors in March 2016. With an average of three million page views each day, 63% of Internet users have visited JUMIA website by the end of 2014. To prove the growth of online retail in Nigeria, Nigeria Inter Bank Settlement System (NIBSS) indicated that the volume of online transaction grew over 50 percent between 2013 and 2014.

However, Nigerians, who are not early adopters, are more risk averse to online purchases due to the level of distrust and fear of fraudsters that pervades the country. For instance, NIBSS disclosed an increase in the number of fraudulent activities in Nigeria between 2013 and 2014. While cases of financial fraud in 2013 were 822, they increased to 1,461 in 2014 validating the reasons while some Nigerians still prefer to undergo the stress of purchasing in the market. (NCC, 2015)

As technological progress continues to transform the traditional ways of carrying out business and cyber security becomes more sophisticated, there is higher probability that online retail will continue to boom in the country. However, online retailers still grapples with some challenges like infrastructural deficits (inadequate number of dispatch), delayed delivery, delivery of quality below what was ordered online, and quality of after sale service (Prafulla et al, 2016)

Conceptual framework

Empirical literature is replete with different salient variables that influence the purchasing behavior (intention, decision) and post-purchase behavior of consumers whether the purchase is made online or offline (physical store). Five of such factors are examined below:

Trust: Trust is as a result of memorable past experience with a particular brand couple with the level of integrity and perceived value for money customer derived from using the brand. When the consumer purchases a product and discovers that the quality matches the description given by the seller, trust begins to develop because the product usage experience is memorable. Also, relationship between customer and shop attendant stimulates the level of trust in the shop. But in the case of online shopping, trust is found to be dependent on past users’ comment on the quality of the product, past experience with the e-vendor and impression of given by the dispatch (Mohammad et al, 2015; Mlenga, 2014). Trust virtually depends on the belief of customers in the quality of the product and the resultant experience when the product is used. When the expectation of the consumer is met when the product is used, the resulting effect is a growing brand attachment and affinity which fuels trust in the brand and ultimately results into loyalty. Another factor that strengthens customer trust is the assurance of security of their financial information when purchase is made online. Assurance of their privacy and financial data reinforce the trustworthiness of the brand.

Reputation: Another key variable that influences the choice of in-store and online purchase is the reputation of the brand and seller. By this, we implied the character and image of the brand in the market compared to competitions. When a brand or seller is of good repute in the market and has been verified by different past users, there is higher probability that new users would be confident to purchase the brand product. For instance, the image of Jumia in the Nigeria virtual retail market as a trustworthy brand with good customer service does motivate potential customers to visit Jumia website for purchase. Though purchase is not usually made at first attempt, as customers become more comfortable with the brand due to testimony from past users, they grow more confidence in the brand. The name of some sellers in in-store marketplace travels wide because of the assurance of quality when customers purchase products from such stores (Anam, 2014; Astuti et al, 2013; Chuleeporn and Juin-Shen, 2014).

Ambience: This connotes the atmospheric elements of a shop such as background music, lightning, attractive display of items, scent/fragrances, cleanliness, queue management and shop crowd, etc. In the case of online shops, these include the website design and layout, how interactive the site, few pop-ups, and the usability of the website. In popular market like Onitsha market, Okenne, Oshodi, Idumota, etc, retailers, especially Igbos, are fond of using blue light bulb in their shops and play indigenous/hip hop music. Many customers have complained of their inability to recognize the true colour of cloth under such lightning. In modern malls like Shoprite, the light is more fluorescent and customers are able to clearly see the item they want to purchase. In empirical literature, some researchers have established that lightning influences impulse purchase (Ndeh and Reuben, 2015).

Product type: The types of products customers want to purchase also influence the place they choose to purchase. Though there is no study that explicitly established consumer place of purchase for different commodities, some authors in the course of their study found out that customers prefer searching for information online about the product they intend to buy before the actual purchase. Bridget et al (2013) found out that females in North America gather information on the Internet about the gardening produce they intend to purchase. Perishable and farm produce is preferably purchased in-store so that consumers can select the exact produce that meets their taste criteria. Also, food items are usually purchased in-store so that consumers can easily verify the level of hygiene and cleanliness of the seller. On the other hand, tangible items like watches, clothing, electronics; Smartphones, etc are purchased online. However, more in-store sellers of perishable farm produce are registering their presence on the Internet so as to reach more customers in their vicinity.

Ease of usage: Convenience of purchase is another key variable that significantly influences the purchasing decision, place, and pattern of modern consumers. Online purchase is perceived to be easy, convenient, easy to use, and effectively facilitates price comparison. On the other hand, in-store purchase is perceived to be stressful and the transportation of the products from the market to the customer residence is another issue especially in a busy city like Lagos. It is very hectic to know the store which has the most affordable products in the market and the need to roam the market before getting the exact product that meets the buyer specification is another issue. More so, the probability of being robbed in the market is another issue that cannot be ruled out. Purchase made from online store is usually from the comfort of the house, office, or where the customer finds himself. The ease of using ecommerce site and the responsiveness of the site also influence how the customer enjoys online purchase (Syed, 2014; Sharon, 2014).

Satisfaction (utility): In the traditional model of marketing, customer satisfaction is established as the key determining factor of post-purchase behavior. It is important that customers derive value for their money from every purchase made. Likewise, when the product meets the expectation of the customer, he derives maximum utility from the purchase either in-store or online. When there is a gap between consumer expectation and actual experience from product usage, it becomes implausible for such customer to purchase the same brand or patronage the store again.

Theoretical Review

In the traditional purchasing model, need identification comes first in the consumer purchase journey which is believed to be a cycle. This is literally followed by search for information on different brands that the customer is aware of. After awareness, interest is created in the customer, followed by desire, purchase action, and post-purchase evaluation. However, the dynamics of the marketplace has changed drastically due to location factors, prevalent economic condition, and technological advancement which disrupt conventional model of purchase. The AIDA model which traces back to Elmo Lewis can be included in the extended technological acceptance model.

The technological acceptance model, famous for understanding online purchase perspective of customers, identified two key variables which are perceived usefulness and perceived ease of use. The former implies the perception of customer on the degree of effectiveness and efficiency that a particular system would exert on its current activities while perceived ease of use implies that the usage of the system by the individual would be effortless. (Davis 1989). Fathema et al (2015) in the extended technological acceptance model propose that the inclusion of external variables in the model could facilitate the analysis of unobserved factors that exert significant impact on the behavioral attitude and intention of the actual users of the technology. Variables like personal innovativeness, quality of the system, favourable conditions, could influence the perceived usefulness of a new technology.

The acceptance of new technological products actually depends on the speed of adoption by a customer. The sociological model of technological adoption lifecycle classified customers according to their speed of adoption into five: innovators, early adopters, early majority, late majority, and laggards. Thus, as consumers become more comfortable with new technological products as they are launched into the market, late majority may progress to the class of early majority, early majority may progress early adopters and early adopters to innovators. As customers become more comfortable with online purchase and their risk concerns are eliminated, they tend to become early adopters as new technology in the same line is introduced. .

Raja et al (2015) established that promotional approach, store environment and attractive display, and price discount exert positive influence on impulse buying behavior of customers. More so, there are other factors that inform intending buyers where, when and how to buy. These factors include but not limited to income of the buyer, price of the product, past experiences, information at the disposal of the buyer and so on. Mlenga (2014) found out that low income customers in South Africa are motivated to patronage physical store based on price discount and credit availability, frequency of promotions and advertising, store loyalty (relationship with the store staff), and proximity of a reputed shop. In their comparative analysis of shoppers of luxury watches in-store and online, Pejman and Mansoor (2016) revealed that trustworthiness of the e-vendor encourages online purchase while inadequate in-store sellers of luxury watches limit physical purchases.

Syed (2014) empirically established trust and online attitude as determinants of online shopping intentions. Justin et al (2010) included mode of connection, personal innovativeness, product type, and brand familiarity as variables that determine young adult online purchase in South Africa. Conversely, Sharon (2014) found out that branding is the least factor influencing online purchase in South Africa. As such, intending buyers of products online rely on trust associated with the dealers of online stores to make purchase. Trust in this context depends on the past experience or information of past dealings at their disposal. In line with Mohammad et al (2015) who examine the effects of online shopping trend on the generation of young consumers in Pakistan using a one-sample T-test, five factors influencing online purchase that include trust, convenience, time, product variety, and privacy of the consumers were identified by the authors. 50 questionnaires administered to youth in the University of Punjab and 15 were returned. Using Pearson correlation and one sample T-test, the authors established trust and convenience as the most significant factors that determine youth online shopping experience in Pakistan. In the same vein, Zuroni and Goh (2012) employed a one-way ANOVA to establish customer service and product perception as significant determinants of online purchases in Malaysia.

Mohammad et al (2012) analyzed factors affecting online purchasing behavior of consumers in Iran employing a correlation analysis and regression analysis. Key variables identified as determinants of online purchases include perceived level of risk associated with online purchases (financial risk, non-delivery risk), infrastructural variables, and return policy on purchased items. From the findings, financial (insecurity of financial data) and non-delivery risk were found to negatively affect online purchases. Astuti et al (2013) established that delighting the customers from the online purchases promotes e-loyalty to the vendor.

In a comparative study of American and Taiwanese perception toward online shopping, Chuleeporn and Juin-Shen (2014) include past online shopping experience and ease of use into their model. From a sample of 326 Taiwanese and 372 American consumers using T-test, they established there is no significant difference between online shopping preference of American and Taiwanese consumers. However, online shopping is perceived to be more secured in America than Taiwan due to technological advancement in the former. This assurance of security encouraged more online purchases in America than Taiwan, whose consumers are not confident about the security of ecommerce website in their country.

With the growth of Internet in China, Guo and Noor (2011) revealed that consumers are gravitating toward online purchases as the domain becomes more secured. In their model of factors influencing online purchases, they include quality of after sales service, reputation of the ecommerce website (seller), and ease of using the website. From a total of 405 questionnaires, authors affirm that reputation of the e-seller and marketing mix exerts more impact on consumers’ attitude toward online purchase. Specifically, the reputation of e-seller, which is verified through other consumers’ comments on the ecommerce website, significantly influences the purchasing attitude of consumers. This was proved by Pejman and Mansoor (2016) who indicated that luxury watch shoppers read the comment of previous customers before making the purchase. This finding showed that different factors influence customers decision to patronize online or in-store purchase is majorly centered on the product types, location, socioeconomic class, and availability of close substitutes.

Research Methodology

This research is holistically designed to unearth deep insight and core variables that influence the purchasing preference of consumers in Nigeria. Due to the nature of the study and what is prevalent in the literature, a quantitative research methodology was employed so as to provide deep insight into the objectives of the study. Quantitative research methodology facilitates the collection of information in numerical facts for clear presentation of ideas and findings of the study unlike other research mythologies.

Sampling and sample size

Random sampling is believed to give each eligible respondent equal chance of being interviewed. Therefore, random sampling was employed in the course of selecting the respondents that participated in the study. However, eligible respondents were screened with the aid of structured questionnaires that were designed for this purpose. The population of the study includes all adults that are beyond the legal age in Nigeria and have purchased goods online in the past six months in Nigeria. Because of time and financial constraint, a sample size of two hundred respondents was conveniently selected for this study. .

Research Settings

The research setting for the study is Lagos, the economic capital of Nigeria, and the fastest growing metropolitan city in Africa. With an estimated population of 27 million, growth of the middle class, location of the headquarters of multinational companies in Nigeria, Lagos is truly representative of every ethnic group in Nigeria. Jumia, Konga, Slot, and most other ecommerce sites are headquartered in Lagos and they have been able to thrive despite the challenges in the state. Most Lagosians, as citizens that reside in Lagos are called, are perceived as early adopters of new technologies and at the forefront of leading innovation in Nigeria.

Research Instruments

The research instrument for this study was a well-structured and standardized questionnaire specifically designed to collect information about respondents’ personal demography, socioeconomic class, and key variables of the study. The questionnaire was designed and developed based on the recurring theme in empirical literature and it comprises of two sections: section A was designed to collect personal information from respondents while section B collects information on the core variables of the study. Likert Scale was used in the design of the questionnaire in order to provide respondents with options that they can easily relate. The questionnaire was pre-test before actual fieldwork in order to identify areas that need further clarification and amendment. The pre-test questionnaire was administered to ten respondents to ensure reliability of the question, and to establish content and face validity ,

Procedure

Two hundred questionnaires were administered by research assistant to different consumers’ categories in all the local government in Lagos state. The respondents are either students in higher institution, University of Lagos, bachelor degree holder, Master degree holder, postgraduate diplomas, and other institutions. There is paragraph information on the purpose of the questionnaire, and the confidentiality of respondents’ opinion as results are mainly for research purpose only. The instructions were clearly stated and field workers that administered the questionnaires are experienced and well trained.

Analysis Procedure

With the service of field workers, the two hundred questionnaires administered were successfully returned and completed, thus making the return rate to be one hundred percent. SPSS Software from IBM was used to analyze the data and both descriptive and inferential statistics were used in presenting the information collected. Descriptive statistics, especially simple percentage method, was used to present the socio-demographic information of the respondents while inferential statistics, Paired T-test, was used to test the hypotheses of the study.

Table 1: Demographic information