1.1 Introduction
1.1 Background of the
study
1.1.1 E-commerce growth and cross-border
shopping
Globally, sales on the
internet have been on an upward trajectory for a couple of years. The rise of
the value of the e-commerce market globally is steady with an annual average
increase of at least 20% (Wodnick et al., 2021). Cross-border e-commerce has increasingly
become popular because customers purchase products internationally.
Consequently, there are many reasons why consumers would prefer to buy from
other countries and not products from their host country. Some of the reasons
include but are not limited to the availability of shipping options, payment
methods, product quality and alternative varieties. The presence of online
platforms facilitates buyers to choose their sellers anywhere in the world. The
development has made the brands and retailers incorporate the urgency of
exhibiting their products worldwide. Therefore, cross-border e-commerce
can be defined as a situation when the customer trades online with a business
or a brand that is operating from a different world (Tu et al., 2018).
The circumstances encompass a brand or a wholesaler that employs an inventory
management system to deliver to their customers in their respective countries.
Also, it may entail when a business engages in trading activities with a
customer through platforms such as the electronic auction platforms.
The unprecedented
increase in cross-border e-commerce is attributed to the rise of the young
metropolitan population heavily relying on technology. According to the
research by Forrester, they estimated that the value of cross-border e-commerce
as of 2022 was $627 billion which amounts to 20% of the entire value of
e-commerce in totality (Wodnick et al., 2021). Research on the trends in global e-commerce
indicates that the difference between emerging economies countries and
developed economies is getting smaller. These countries such as India, Brazil
and India have positioned themselves as the most promising e-commerce market
for cross-border e-commerce in the world (Statista, 2020). They are ranked in the top five amongst the
biggest e-commerce cross-border markets globally. In the narrow sense, India is
ranked the third largest market with over 50 million e-buyers. The
development has been triggered by the upgrade of the logistics and broadband
infrastructure. Mexico is ranked fifth
globally with at least 40 million e-buyers (Statista, 2021). The growth is due to the availability of cheap
internet over the past several years. Government initiative to set up fee
internet access countrywide has been central in expediting Mexico’s customs
process for less costly imports hence benefiting the cross-broader merchants
and shoppers. According to Cisielski (2020), several countries have
different determinants of cross-border online shopping. E-buyers in China
are expecting better quality of the purchased food and also, they have
hesitation to buy a product that is not common in their country. American
buyers are moved by the lower prices and also targeting products that are not
available in the US. The Europeans purchase products online because of the lower
prices, also they are driven by promotions that include but are not limited to
free shipping, taxes and haggling prices.
1.1.2 Generation Z
The lifting of restrictions on
trade between various countries worldwide and the evolution of a free trade
economy has presented a perfect opportunity for the consumer to select products
from a wide range of varieties. Previously, marketers were considered to attain
a high level of success in accomplishing this dream (Kahawandala
et al.,2020). However, as
consumers were exposed to a wide range of product varieties, manufacturers were
up against intense rivalry to grab the attention of the ever-changing tastes of
consumers. Additionally, the purchasing behavior of consumers is pegged such as
social, cultural and economic factors. Age is an important social factor
that influences purchasing behavior. Young people especially Generation
Z have known a world without the internet and handheld devices
since technology has been readily available and accessible to them. Since
the generation is considered tech-savvy their input in e-commerce has proven to
be significant (Zorn et al., 2017). Due to the tremendous technological
advances and consumer connectedness, it has become easy for companies to adapt
to the exposure to the unique expectations of Generation Z. With the rapid
growth of the e-commerce market segment as well as the impact of their demands
and decisions, there has been an effort to review and understand the knowledge
on the purchasing behavior inclining towards generation Z. Some of these
reviews on the aspects of purchasing behavior of generation Z such as
consumer’s perceptions and expectations have impact heavily the dynamics of
this market segment. The key influential factors controlling the purchasing
behavior of Generation Z include but, are not limited to the payment options,
peer and social impact, product design as well as brand and the perception of
enjoyment (Kahawandala et al.,2020). However, since Generation Z are yet to be
heavily involved into the goods market, there is a huge deficit of proper
consumer behavioral analysis on the e-commerce market segment.
1.1.3 Customer Psychological impact in
cross-border e-commerce
In comparison to e-commerce,
the interest in cross-border e-commerce has been gaining momentum only in
recent times. The market segment is becoming a salient channel for the
promotion of international trade since it provides significant opportunities
for all nations to gain benefits as a result of global transactions.
Notably, though cross-border e-commerce benefits enormously both the sellers
and the buyers, it has intensified market competition at all tiers. In
the cross-border e-commerce environment, due to the existence of differences in
language, age and many more factors, consumers fundamentally reveal different
levels of attention to CBEC’s characteristics. Therefore, considering
this situation creating the awareness of a consumer to be familiarized with a
particular product and induce their purchasing intention is increasingly
becoming an important issue for the traders. Thus, it's important to
understand the role of product cognition on consumers’ purchase intention on
cross-border e-commerce platforms. There has been various literature on
the purchase intention of the CBEC, however, a significant number of them only
focused on the exploration and analysis of the motivation and risk
viewpoints. Thus, for this paper to build a comprehensive argument
on the consumer psychology of the CBEC it will focus on the purchasing
intention of cross-border e-commerce. Based on various available
literature, Yoon and Zhang (2018) have proven that some of the main factors
that are affecting the cross-border adoption on the responses posted on the
social media platforms. An experiment conducted indicated that the
adoption of an opinion about a cultural food product in a particular country
influences consumers in a different country to purchase the same products.
According to Han and Kim (2019), while testing a research model to assess the
influence mechanisms on purchase intentions that exist with the cross-border
e-commerce framework, it was found that consumer informedness positively impacts
purchase intentions. Furthermore, a test using the valence framework that seeks
to analyze the repeat buyer purchase intentions within the framework, indicates
that the positive valences exerted the strongest effects on the repeat purchase
intentions while the negative valences were pivotal. Another research on the
factors that trigger fashion consumers to have repeat intentions, indicated
that motivations such as utilitarian, social and hedonic possess positive
effects on cross-border e-commerce shopping purchase intentions. Even though,
to a significant extent it was perceived risky, the research revealed that it
did not negatively influence purchasing intentions.
1.2 Problem statement
1.2.1 challenge of shopping hesitancy in cross-border e-commerce
Shopping
hesitancy in cross-border e-commerce within the generation Z consumers is a
multifaceted change that is pegged on numerous factors. Although Generation Z
is widely known for frontier tech savvy and preference for online shopping,
they have shown reluctance when it comes to cross-border shopping due to a lack
of trust in foreign websites. The reluctance can be attributed to various
reasons that include but they not limited to. 1) trust and security issues have
raised storage of personal and final information as well as data breaches and
fraud. Generation Z are wary of these issues and has heavily attributed this to
their reluctance to engage such websites. 2) shipping and delivery issues are
seen to have impacted uncertainty surrounding the shipping duration. The young
people are known to be very impatient and thus expect fast and reliable
services. Furthermore, the frequent cases of delays and loss of packages
reported in cross-border e-commerce have discouraged them to partake in
purchasing products online. 3) price and hidden additional
costs that eventually make online purchases to be very costly.
Conventionally, generation Z is attracted to competitive pricing, any hidden
additional costs such as the costs associated with shipping and customs make
the overall purchasing of products online less appealing. The lack of
transparency regarding these costs can greatly contribute to shopping
hesitancy.
1.2.2 Perceived uncertainty influencing shopping hesitancy
Although CBEC contributes significantly to the
promotion of business opportunities, it is common knowledge that this type of
e-commerce is far more complicated and has more risks compared to domestic
e-commerce. It is worth noting that e-commerce is not widely preferred in
various markets such as the European markets. According to the research by the
CMI (2023) cited in Jakobsson et
al., (2023), the majority of European buyers
prioritize purchasing from domestic sellers at a value estimated at 81%. Precisely,
In Hungary, the majority of the people engaging in the e-commerce markets also
have a high tendency to shop from the Hungarian online shops. It's only
less than 40% of the Hungarian online shoppers that are involved in the CBEC.
Thus, the inquiries on the perception and behaviour of Hungarian e-consumers in
cross-border e-commerce may be very pivotal.
According to Kamalul Ariffin et al., (2018),
perceived risk in e-commerce is based on the consumers’ concerns regarding the
emergence of both financial and product risks. While the financial risk entails
the possibility of incurring losses due to losing money or incurring additional
charges in the process of engaging in e-commerce, product risk arises as the
result of the goods not meeting expectations. Therefore, according to the
principal-agent perspective, the potential fraud risk in the CEBC may be
the result of the scepticism of the e-buyers in respect to the potential impact
of the undisclosed information and actions while engaging e-commence.
1.3 Research Questions
The primary research question How does perceive
uncertainty influence shopping hesitancy among young Gen Z consumers in
cross-border purchases?
The other research questions
What role do flow experiences play in mediating this
relationship?
What are the characteristics and buying behaviours of
Gen Z?
1.4 Significance of the study
The
study delves into a certain traits and preferences of generation Z consumers,
who are well informed on the digital natives and exhibit distinct online
shopping behaviours compared to the others generation. Therefore, by the
examination of their attitudes towards CEBC, the study aim is to enrich the
consumer behaviour theory with profound insights into how the development of
technology and the global connectivity influence the buying decisions.
Notably, the
studies on the traditional consumer behaviour models most of the cases nexus is
on the domestic market. In this context,
this study expands on the theoretical framework by the inclusion of the
complexities of CEBC such as the logistical complexities. It provides a nuanced
understanding on the ways in which these impact Gen Z’s shopping habits, thus
broadening the scope of consumer behaviour theory. Furthermore, the study
focuses on the highflying the role of technology and how they are shaping Gen
Z’s shopping experiences. By the integration of these technological aspects
into the consumer behaviour theory, the paper offers a more comprehensive view
of a contemporary consumer dynamics.
1.5 Organization of the Thesis
The paper is structured into the following segments
Introduction
Literature
review
Methodology
Findings
Discussion
Conclusion and
recommendation
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